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CONDITIONS FOR FOREIGN INVESTORS TO TRADE IN PETROL
What is the petroleum business?
According to Clause 2 Article 3 of Decree 83/2014/ND-CP on petroleum trading: “Petroleum business includes the following activities: Export (petrol, domestically produced raw materials and petrol, raw materials of imported origin), import, temporary import for re-export, transfer and processing of petroleum export, material; petroleum production and blending; petroleum distribution in the domestic market; services for leasing warehouses, ports, receiving, storing and transporting petroleum.”
Thus, it can be seen that the current law defines “petroleum business” by listing a series of activities that are supposed to be carried out petroleum business.
Laws governing foreign investors trading petroleum in Vietnam
Foreign investors wishing to invest in the petroleum business need to satisfy investment conditions according to the provisions of Vietnamese law and international treaties to which Vietnam is a signatory. Specifically, foreign investors’ investment in basic telecommunications services will be governed by the following documents: WTO Agreements, FTAs, ACIA; Investment Law 2020, and several guiding decrees.
Conditions for foreign investors to trade in petroleum with international regulations (According to WTO, FTAs, ACIA)
Provisions in international treaties, to which Vietnam has acceded, place restrictions on the right to distribute crude and processed oil to foreign investors. This has important implications for managing and controlling the nation’s oil resources.
Foreign investors are not allowed to directly or operate in the form of owning or managing the right to distribute crude and processed oil on the Vietnamese market. This regulation limits the rights of foreign investors in the oil industry and aims to protect national interests and ensure energy security and sustainable development of the domestic oil industry.
Instead, foreign investors can engage in cooperation with entities in the process of oil extraction, processing and transportation. They can invest in oil exploration projects, set up processing plants in Vietnam, or export processed petroleum under the country’s export and import regulations.
This regulation helps create a fair business environment while ensuring the protection and control of Vietnam’s oil resources. This also demonstrates Vietnam’s commitment to comply with international rules and norms in the oil and gas industry, while ensuring the sustainable and safe development of the domestic energy industry.
Conditions for foreign investors to trade in petroleum according to Vietnamese law
Petroleum import and export business
- Conditions on occupational registration
Investors wishing to do petroleum business shall have petroleum business registration certificates issued under Vietnamese law in the Enterprise Registration Certificate.
- Conditions of facilities
- The investor must own or co-own or lease for 5 years a dedicated wharf located in Vietnam’s international port system provided that such wharf must receive petroleum tankers or other petroleum transport vehicles with a tonnage of at least seven thousand tons.
- Owning or leasing for 5 years for imported petroleum receiving warehouses with a minimum capacity of 15,000 m3. Within 3 years from the date of issuance of a sublicense for petroleum import and export business, it must own/co-own with a capital contribution of at least 51% of the charter capital for the warehouse system and meet at least 1/3 of the reserve demand of traders
- Owning or leasing at least 5 years of domestic petroleum transport vehicles. Within 2 years from the date of issuance of the license for petroleum import and export business, it must own/co-own with a contributed capital of at least 51% for domestic petroleum transport vehicles with a total capacity of at least 3,000 m3.
- Have a qualified petroleum distribution system
- There must be a means of loading jet fuel owned or co-owned by the trader.
Ensure conformity with the planning of traders doing petroleum import and export business.
Petroleum production conditions
- Firstly, having business registration in the Enterpríse Registration Certificate.
- Secondly, investors having petroleum production establishments under the planning shall be granted investment certificates.
- Thirdly, investors own laboratories and ensure sufficient capacity to inspect and test petroleum quality indicators according to national technical standards
Petroleum distribution conditions
- Having petroleum business registration in the Enterprise Registration Certificate.
- Having warehouses, tank with a minimum capacity of 2,000 m3
- Having a contingent of managers and employees directly doing business must be trained and have certificates of professional training in fire prevention and fighting and environmental protection under current laws.
- Having gasoline transport vehicles
- Having a petroleum distribution system
- Having a testing laboratory
In addition, the State also separately stipulates with details of some other petroleum business lines in Decree 83/2014/ND-CP, amended by Decree 95/2021/ND-CP, investors need to learn carefully or receive advice from Siglaw to be able to conveniently invest in this field.
Above is information on the topic “Conditions for foreign investors to trade in petrol” from the staff of Siglaw Law Firm. If you still have any problems to solve, please contact Siglaw for completely free support in the fastest way.
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