Regulations on decommissioning trust funds of petroleum installations in Vietnam

Regulations on decommissioning trust funds of petroleum installations in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Regulations on decommissioning trust funds of petroleum installations in Vietnam

Regulations on the decommissioning trust funds in Vietnam according to Article 51 of the Petroleum Law 2022 are as follows:

- Financial security in decommissioning of petroleum installations shall be done by the method of setting up a fund.

- Within 01 year from the date of commercial production of the first oil and gas flow from the petroleum contract area, the contractor must prepare a decommissioning trust fund.

This fund is annually allocated on the basis of the approved decommissioning plan and transferred to PVN. The fund annually allocated of each contractor is related to the participating interest of such contractor prescribed in the petroleum contract and is included in the recovery cost of the petroleum contract.

- Before the petroleum contract terminates or the extraction period ends, the contractor must complete the allocation and transfer of the decommissioning trust fund.

- The decommissioning trust fund shall be managed by PVN in a manner that is in accordance with the regulations of law and meet requirements for decommissioning according to the approved decommissioning plan.

In the period of using this fund, PVN shall pay the amount of money of this fund into a commercial bank in which the State holds a controlling interest; and interests generated annually after fulfilling financial obligations according to relative laws shall be recorded as an increase in the decommissioning trust fund.

- In case the balance of the decommissioning trust fund does not meet necessary demands in the decommissioning of petroleum installations, the contractor must make an additional contribution to ensure the fulfillment of the obligation to decommission petroleum installations.

In case the fund for decommissioning of petroleum installations is not completely used, the remainder shall be refunded to the contracting parties according to regulations of the petroleum contract.

2. Regulations on decommissioning of petroleum installations in Vietnam

Regulations on cleaning up oil and gas works according to Article 52 of the Petroleum Law 2022 are as follows:

- The contractor shall decommission petroleum installations according to the approved decommissioning plan. Petroleum installations must be decommissioned in a manner that meets requirements for safety and environmental protection in accordance with laws.

- The contractor shall submit a proposal to leave part or the whole petroleum installations in place, suspend or terminate the decommissioning of petroleum installations to PVN, which will submit a report to the Ministry of Industry and Trade for approval.

- The contractor must immediately decommission part or whole of petroleum installations which are severely damaged; petroleum installations which are seriously degraded but can not be repaired affecting the safety of petroleum operations.

- During the extraction period, the contractor is entitled to decommission each part or several of petroleum works and equipment and destroy the wells which are included in the approved decommissioning plan but are no longer used in order to reduce operation and maintenance expenses according to the regulations in Clause 7 Article 50 of the Petroleum Law 2022.

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