Specific regulations to select petroleum service contractors are a must: experts

Workers at work at an oil rig offshore. — Photo courtesy of PetroVietnam

Specific regulations to select contractors who provide goods and services for petroleum activities should be established to create fair competition for contractors, industry insiders said.

The Law on Petroleum was first introduced on July 6, 1993 and revised in 2000, 2008 and 2018. Together with guiding documents, it has facilitated the development of the oil and gas industry. However, there have been a number of challenges emerging in the enforcement of the law. For example, there are major gaps between several provisions and the changing reality amid robust growth in the energy sector. Some parts of the law are also not consistent with related laws and regulations.

In discussion sessions to collect opinions from National Assembly deputies and seminars on a draft Petroleum Law, many opinions about the selection of petroleum service contractors were voiced.

Deputy Trần Hồng Nguyên of Bình Thuận Province said regulations about selecting a contractor providing goods and services for petroleum services should be stipulated in the draft law so as to create fair competition and transparency for PetroVietnam, domestically-invested enterprises and foreign contractors to avoid overlapping participation.

According to the National Assembly Standing Committee, oil and gas is the property of the people and managed by the State. The majority of Việt Nam’s oil and gas reserves are located offshore which is why it is necessary to protect Việt Nam’s rights and legitimate interests at sea in line with international law while respecting Việt Nam’s sovereignty, territorial integrity and national security. Therefore, strict regulations to select petroleum service contractors are a must.

Oil workers check oil pump at Bach Ho oil rig. — Photo courtesy of PetroVietnam

To ensure strict implementation of oil and gas projects in Việt Nam’s territory, article 59 of the revised law has been added with regulations for the obligation to ensure fair competition and transparency in the selection of contractors.

The National Assembly Standing Committee affirms that the Law on Petroleum is not a law for PetroVietnam alone given that PetroVietnam and domestically-invested enterprises are permitted to sign oil and gas exploitation contracts with other partners. Under the law, PetroVietnam, domestically-invested enterprises and foreign contractors must have the same rights and obligations.

In addition, PetroVietnam still has to comply with other relevant laws for its organisation and operation. Currently, the draft law does not have specific regulations to select contractors to provide petroleum services. 

Therefore, experts believe that it is essential to consider adding specific regulations to the Draft Law on the selection of contractors who provide petroleum goods and services to avoid a "legal gap" between parties.

Nguyễn Quốc Thập, Chairman of the Vietnam Oil and Gas Association, said the revised draft Law on Petroleum may cause conflict with the Bidding Law. He noted that the oil and gas industry has its own characteristic as there are a number of oil and gas exploration blocks located in special areas that are not allowed to make international bids that hinder selecting contractors in accordance with international practices.

Thập said it was essential to adjust the selection of contractors in line with provisions of the Petroleum Law and oil and gas contracts so as to ensure fair, competitive, transparent and effective principles in oil and gas services.