Vietnam: Term of an oil and gas contract according to the Law amending and supplementing the Law on Petroleum in 2008

Specifically, according to Clause 9 Article 1 of the Law amending and supplementing the Law on Petroleum in 2008, which amends and supplements Article 17 of the Law on Petroleum 1993 of Vietnam, the term of an oil and gas contract is specified as follows:

1. The term of an oil and gas contract must not exceed twenty five years, of which the exploration and prospecting period must not exceed five years.

For encouraged oil and gas investment projects and projects on natural gas exploration, prospecting and exploitation, the term of an oil and gas contract must not exceed thirty years, of which the exploration and prospecting period must not exceed seven years.

2. The term of an oil and gas contract may be extended, but for no more than five years; the term of the exploration and prospecting period may be extended but for no more than two years.

In special cases, the Prime Minister may consider and decide to permit the extension of the exploration and prospecting period or the term of an oil and gas contract.

3. A contractor, who has announced a commercial discovery, but has neither found sale outlets nor had suitable pipelines and processing equipment may retain its discovered gas area. The time limit for retaining such area is five years and may be extended for two subsequent years in special cases. Pending the time to find out sale outlets and secure suitable pipelines and processing equipment the contractor shall perform its jobs as committed under the oil and gas contract.

4. In force majeure circumstances or other special cases, parties to an oil and gas contract may negotiate to suspend the execution of a number of rights and obligations under the contract. The suspension caused by force majeure events may last until the force majeure event ends. The suspension time limit in other special cases shall be decided by the Prime Minister, but must not exceed three years.

5. The extended time of the exploration and prospecting period, the period of retaining the discovered gas area which has been announced commercially viable, and the period of suspending the execution of a number of rights and obligations under an oil and gas contract in force majeure cases or other special cases is not included in the term of an oil and gas contract.

6. An oil and gas contract may terminate ahead of its term provided that the contractor must complete its committed obligations and such termination is agreed upon by the contractual parties.

7. The Government shall prescribe conditions for suspending the execution of a number of rights and obligations under an oil and gas contract in special cases; and conditions and procedures for extending exploration and prospecting period or the term of an oil and gas contract.

View more details: The Law amending and supplementing the Law on Petroleum in 2008 of Vietnam takes effect from January 01, 2009.

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