Special policies needed to foster oil exploration: legislators

Nguyen Lam Thanh, who is also deputy chairman of the National Assembly’s Ethnic Council, pointed out at a session Friday where deputies discussed amendments to oil and gas laws that exploration and extraction are hit-or-miss but very expensive, said.

PetroVietnam, the country’s main oil company, has to pay for all this from its pocket.

Hoang Anh Cong, a representative of the northern province of Thai Nguyen, said without provisions to mitigate losses, oil drillers would not be encouraged to continue exploration in faraway places.

Minister of Industry and Trade Nguyen Hong Dien agreed that no company would be willing to foot the bill for exploration unless there are special policies to mitigate losses.

In a bill to amend laws governing energy, his ministry has proposed a 7 percentage point cut in corporate income tax for the oil industry to 25 percent.

The comparable tax is 20 percent in Thailand, 25 percent in Malaysia, 30 percent in Myanmar, and 90 percent in Indonesia, Dien said.

Nguyen Thi Yen, a lawmaker representing the southern province of Ba Ria-Vung Tau, said supporting and heavy industries need to be developed to assist the oil industry.

This would help reduce the dependence on imports and remove the label of “simple processing only” from Vietnam, she said.

Foreign companies account for around 80 percent of the value of the oil produced in the country, while Vietnamese contractors only build low-value sub-projects, she added.

Nguyen Ngoc Bao, chairman of the National Assembly’s Economic Committee, said Vietnam has seen the number of new oil selling contracts fall in the last decade.

From 35 contracts in 2009-14, the number plummeted to just one in 2015-19. There were none in the last two years.

This is because most of Vietnam’s oil fields are depleted and production is low.