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On October 15, 2024, the Vietnamese Government issued Decree No. 132/2024/ND-CP, prescribing regulations for offshore investments in oil and gas activities. This comprehensive decree provides a legal framework for investors seeking to engage in overseas oil and gas exploration, production, and related operations, ensuring alignment with both Vietnamese laws and the laws of host countries. The decree will take effect on December 5, 2024.
Sources of Offshore Investment Capital
Under the new decree, offshore investment capital for oil and gas activities can be derived from various lawful sources, including:
- Equity and loans in Vietnam transferred abroad.
- Recovered expenses, profits, and distributions from other oil and gas projects retained for further offshore investment.
- Other lawful assets of the investors.
These sources enable investors to fund activities such as capital contributions, share purchases, fulfillment of guarantee obligations, and other financial commitments as required for overseas oil and gas projects.
Establishment of Operating Companies
To initiate or manage overseas oil and gas projects, investors are permitted to establish or jointly establish operating companies. These companies may be formed in Vietnam, the host country, or a third country, depending on the requirements of the host country’s laws and the specifics of the oil and gas contracts. This flexibility ensures that investors can adapt to diverse legal environments while maintaining compliance with relevant regulations.
Transfer of Overseas Oil and Gas Projects
The decree allows investors to transfer part or all of their interests in overseas oil and gas projects. Such transfers must comply with the following:
- Provisions of oil and gas contracts and relevant agreements.
- Licenses issued by the host country.
- Applicable laws of the host and other concerned countries.
- Provisions of Decree No. 132/2024/ND-CP.
Usage of Investment Capital
Investment capital is used to cover a range of financial obligations, including:
- Contributing capital or purchasing shares and capital contributions.
- Fulfilling guarantee obligations (if applicable).
- Meeting financial requirements of oil and gas contracts, licenses, and other agreements throughout the project lifecycle, from initiation to completion.
Implications for Investors
Decree No. 132/2024/ND-CP provides a structured and legally secure pathway for Vietnamese investors to engage in offshore oil and gas projects. It emphasizes adherence to the laws of host countries while safeguarding the financial and operational interests of Vietnamese enterprises. The clear guidelines on capital sources, project transfers, and the establishment of operating companies will facilitate smoother cross-border investment activities.
As the decree comes into force, it is expected to bolster Vietnam’s participation in the global oil and gas sector, fostering growth and collaboration in this critical industry.
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