Guidance on establishing a company for managing overseas petroleum projects in Vietnam

Guidance on establishing a company for managing overseas petroleum projects in Vietnam (Image from the internet)

On October 15, 2024, the Government of Vietnam issued Decree 132/2024/ND-CP regulating overseas investment activities in the petroleum activities

Guidance on establishing a company for managing overseas petroleum projects in Vietnam

According to Article 12 of Decree 132/2024/ND-CP, the establishment of a company for managing overseas petroleum projects is regulated as follows:

(1) To undertake the establishment of an overseas petroleum project or to implement such a project, investors are allowed to establish or participate in the establishment of an operating company in Vietnam, in the host country, or a third country according to the legislation of the host country, or in accordance with the petroleum contract.

(2) If the investor decides to establish an operating company to represent them in participating or implementing an overseas petroleum project, the operating company and the investor will be listed in the overseas investment registration certificate. The operating company is allowed to use the overseas investment registration certificate for activities related to the project implementation.

(3) Investors can use one operating company to manage and run one or several overseas petroleum projects in accordance with the host country's regulations. Costs for each petroleum project must be allocated and accounted for separately.

Limit on transfer of investment capital abroad for petroleum activities in Vietnam from December 5, 2024

According to Article 13 of Decree 132/2024/ND-CP, investors can transfer investment capital overseas for petroleum activities overseas in Vietnam as stipulated in Article 66 of the Investment Law 2020.

(*) Investors may transfer foreign currency, goods, machinery, and equipment overseas before being granted an overseas investment registration certificate to meet the expenses for forming an overseas petroleum project, including:

(1) Market research and investment opportunities;

(2) Field surveys;

(3) Document research;

(4) Collecting and purchasing necessary documents and information for project selection;

(5) Compilation, evaluation, and assessment, including selecting and hiring experts and consultants to approach, evaluate, and assess the project;

(6) Organizing seminars and scientific conferences;

(7) Establishment and operation of liaison offices overseas related to the project's formation;

(8) Contract negotiations;

(9) Purchase or lease of assets, services supporting the project's formation;

(10) Participation in international bidding, depositing, escrow, or other forms of financial guarantees, payment of costs, fees as required by the bid solicitor, or host country related to bidding conditions, project execution conditions;

(11) Participation in buying, merging companies, depositing, escrow, or other forms of financial guarantees, payment of costs, fees as required by the selling party or in accordance with the host country's legal regulations.

Among which:

- The limit for foreign currency transfers stipulated in points (1) to (9) does not exceed USD 500,000;

- The limit for foreign currency transfers stipulated in points (10) and (11) does not exceed USD 2 million.

If the investor is a state-owned enterprise, transactions exceeding the stipulated limits in this section are decided by the company's board of members or board of directors after obtaining the opinion of the representative state owner within 15 days from the date of receiving the investor's opinion request and notifying the State Bank of Vietnam for tracking within its authority.

If the investor is not a state-owned enterprise, transactions exceeding the limits stipulated in this section are decided by the investor and notified to the State Bank of Vietnam for tracking within its authority.

Note: The investor is responsible according to law for the foreign currency transferred overseas to implement the contents stipulated in section (*), ensuring its use for the intended purpose, based on presenting full valid documents and vouchers as per the regulations of authorized credit organizations when transferring foreign currency abroad; responsible by law for the authenticity of documents and vouchers presented to authorized credit organizations.

- The foreign currency amount transferred overseas to implement the contents stipulated in section (*) is included in the total overseas investment capital.

- The transfer of foreign currency overseas before and after being granted an overseas investment registration certificate is carried out in accordance with the legal regulations on foreign exchange management and the regulations in Decree 132/2024/ND-CP.

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