Improving investment incentive policies for petroleum activities in Vietnam
Abstract
This paper presents the legal framework for investment incentives in Vietnam's petroleum sector and analyzes incentive policies for marginal fields and enhanced oil recovery (EOR) based on the practical experience of Indonesia, Malaysia, Thailand, India, Canada, and the United States. Based on these experiences, the authors recommend that Vietnam continue to improve its legal framework by adopting more flexible fiscal terms and enhancing investment incentives tailored to different categories of petroleum assets (including incentives for the development of marginal oil and gas fields and enhanced oil recovery (EOR) projects): (i) increasing the cost recovery ceiling; (ii) introducing a mechanism that allows contractors operating marginal fields to retain the entire share of profit oil and gas after fulfilling their tax obligations and recovering all eligible costs, thereby enhancing the investment attractiveness of petroleum assets with marginal economic viability; (iii) conducting applied research to operationalize the provisions of alternative petroleum contracts, integrated with preferential conditions in subordinate legislation tailored to the specific characteristics of fields, field clusters, and petroleum blocks, in cases where breakthrough mechanisms are required to facilitate petroleum operations.
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