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October 1, 2020

Vietnam Reduces Fines for Administrative Violations in Oil and Gas Sector

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On August 26, 2020, the Vietnamese Government issued Decree No. 99/2020/ND-CP stipulating penalties for administrative offenses in the petroleum sector, and in the petrol, oil, and gas trading sector. Decree 99 will take effect on October 11, 2020, replacing Decree No. 67/2017/ND-CP dated May 25, 2017.

Decree 99 stipulates that the maximum fine in the sector of exploration and production of petroleum is VND 1 billion (approx. USD 43,000) for an individual and VND 2 billion (approx. USD 86,000) for an organization.

Broadly speaking, Decree 99 provides less strict penalties on prospecting, exploration, development, and production of petroleum compared to Decree 67, by reducing or removing the fines for certain violations that were set out under Decree 67.

For example, Decree 99 has removed the fines for failure to prepare and submit an annual work program in compliance with commitments made in a petroleum contract; the fines for commissioning offshore production works or facilities prior to certification of technical and environmental safety quality; and the fines for failing to re-calculate petroleum reserves when required by regulations.

Decree 99 has also lowered the fines in other areas. For example, Article 6 of Decree 99 provides that a fine of up to VND 400 million (approx. USD 17,250) will apply to drilling outside the petroleum contract area when the competent agency has not provided permission, provided no profit source has arisen or the illegal profit is below VND 100 million. By contrast, the monetary fine for the same violation under Decree 67 is up to 500 million VND (approx. USD 21,600). Another example is that a fine of up to VND 600 million (approx. 25,925 USD) will be imposed under Decree 99 for prospecting and/or exploring for petroleum before the petroleum contract has been approved by the competent level, provided no profit source has arisen or the illegal profit is below VND 100 million, whereas the maximum monetary fine of VND 800 million (approx. USD 34,500) is applied under Decree 67.

For more information on Decree 99, please contact us at [email protected].

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