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PETROLEUM BUSINESS INVESTMENT CONSULTANCY
Currently, petroleum retail activities in the Vietnamese market are developing very strongly, attracting a lot of domestic and foreign investors. Foreign investors can invest in petroleum business in many forms of investment: establishment of joint ventures, purchase of shares, contributed capital in economic organizations; investment in the form of a business cooperation contract. The following article Siglaw will share about business investment activities of foreign investors in the petroleum sector, invite readers to follow along.
Conditions for foreign investors to do petroleum business in Vietnam
Foreign investors investing in petroleum business in Vietnam need to satisfy the conditions under international treaties to which Vietnam is a contracting party and the conditions of Vietnamese law. Concrete:
First, the condition under international treaties to which Vietnam is a party: foreign investors are not allowed to exercise distribution rights for crude oil and processed oil
Secondly, the conditions prescribed in Vietnamese law, foreign investors wishing to invest in petroleum business must meet:
- Foreign-invested economic organizations may not exercise export rights to petroleum and oils obtained from bituminous minerals, in their crude form; crude petroleum; condensate and others. In case the foreign investor is an oil and gas contractor, he shall be entitled to export the petroleum part under his/her ownership;
- Foreign-invested economic organizations may not exercise import rights for petroleum-derived oil and oils obtained from bituminous minerals, except crude oil;
- Foreign-invested economic organizations may not exercise distribution rights over crude and processed oil, including: petroleum and oils obtained from bituminous minerals, in crude form; Oil derived from petroleum and oils obtained from bituminous minerals
- Foreign-invested economic organizations may produce petroleum under conditions consistent with approved plannings.
Conditions for foreign investors to invest in petroleum business in Vietnam shall be granted certificates of eligibility for petroleum distribution by the Ministry of Industry and Trade.
- The enterprise is established in accordance with the provisions of law, in the Certificate of Business Registration with petroleum business registration.
- Foreign investors trading in petroleum need to have warehouses and tanks with a capacity of at least 2,000 m3, owned by enterprises or co-owned or leased for use by petroleum service traders for 05 years or more.
- Foreign investors trading in petrol: Having petroleum transport vehicles owned by enterprises or co-owned or leased for use by petroleum service traders for 05 years or more.
- Foreign investors trading in petroleum Having laboratories owned or co-owned or having service contracts hired by state agencies with laboratories capable of inspecting and testing petroleum quality indicators in accordance with national technical regulations, applicable disclosure standards.
- Foreign investors trading in petroleum Having a petroleum distribution system in 02 provinces or centrally-run cities or more, including at least 05 retail stores owned by enterprises or owned and co-owned, at least 10 shops belonging to petroleum retailers granted certificates of eligible stores for sale petrol.
- Foreign investors trading in petroleum with sufficient managerial staff and employees directly doing business must be trained, trained and have certificates of professional training in fire prevention and fighting and environmental protection in accordance with current laws.
Petroleum investment and trading procedures in Vietnam
Option 1: Domestic investors and companies contribute capital to establish economic organizations in the field of petroleum distribution in Vietnam.
Step 1: Carry out procedures for applying for an Investment Registration Certificate at the Department of Planning and Investment of provinces/cities
The investor shall make 01 dossier including the documents specified in Clause 1, Article 33 of the Law on Investment 2020, including:
- A written request for implementation of a petroleum investment and trading project (This form is specified in Circular 03/2020/TT-BKHDT);
- Documents proving the legal status of petroleum trading investors:
+ For investors trading petroleum as individuals: Passport / Identity card / Citizen ID;
+For petroleum investors being organizations: Decision on establishment/business registration/equivalent papers;
- Documents proving financial capacity of petroleum business investors: One of the following types:
+ Financial statements of the last 02 years;
+ Commitment to financial support of the parent company;
+ Commitment to financial support of financial institutions;
+ Guarantee on financial capacity of investors;
+ Other documents proving financial capacity.
- Written proposal for petroleum investment and trading project (According to the prescribed form)
- Documents on land use rights or other documents determining the right to use locations for implementation of petroleum investment and business projects;
- Documents with technology explanation (For technology-related projects)
- BCC contract (when investing in the form of BCC contract)
- Other documents (if any)
- Regulations on the time limit for settling dossiers for issuance of investment registration certificates at the Department of Planning and Investment: 15 days. If they disagree, the Department must respond in writing stating the reasons.
Step 2: After obtaining the Investment Registration Certificate, the Investor shall carry out the procedures for issuance of the Business Registration Certificate at the Business Registration Office – Department of Planning and Investment of the province/city where the head office is located
- The investor prepares a set of documents including:
- Written request for registration of an enterprise with petroleum business lines (prescribed form)
- Charter of petroleum trading company;
- For limited companies, investors submit the list of members; For joint-stock companies, investors submit the list of founding shareholders and shareholders being foreign investors (prescribed form);
- Documents on the legal status of the representative:
+ Individual investors: Passport/citizen ID/identity card;
+ Investor being an organization: establishment decision/business registration certificate/equivalent document and written authorization to represent contributed capital in Vietnam + Passport/citizen ID/identity card of that person;
- Investment registration certificate has been issued (certified copy);
- Regulations on the time limit for processing dossiers for issuance of Business Registration Certificates at the Business Registration Office: 03 – 07 days. If they disagree, the Department must respond in writing stating the reasons.
Step 3: The investor submits an application for the Certificate of eligibility for petroleum purchase and sale business at the Department of Industry and Trade of the province/city where the enterprise’s head office is located
- Application forms: Apply in person or by post or electronically to the Department of Industry and Trade.
- Deadline: 15 working days
Option 2: Foreign investors invest in the form of capital contribution, share purchase, capital contribution to Vietnamese economic organizations.
In this case, investors trading in petroleum are not required to carry out procedures for issuance of investment registration certificates.
However, because petroleum business is a conditional business line applicable to foreign investors, investors shall register capital contribution, purchase shares and contributions to economic organizations at the Department of Planning and Investment where the economic organization is located.
Thus, Investors need to take three steps:
- Step 1: Carry out procedures for registration to buy shares and purchase contributed capital at the Department of Planning and Investment where the Company is located.
- Step 2: Carry out procedures for changing shareholders/members at the business registration office;
- Step 3: Carry out procedures for applying for a Certificate of eligibility for petroleum trading at the Department of Industry and Trade.
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