The New Law On Petroleum: Key Changes For Investors

On 23 August 2026, the National Assembly of Vietnam officially passed Law on Petroleum No. 10/2026/QH16 (the New Petro Law), which will take effect on 1 March 2027 and replace Law on Petroleum No. 12/2022/QH15 (the Old Petro Law). 

The New Petro Law introduces several notable changes to Vietnam’s legal framework for petroleum activities, notably on streamlining certain regulatory and approval processes which is aimed at providing greater flexibility in the implementation of petroleum contracts and accommodating new forms of activities associated with petroleum operations. Contractors may now incorporate carbon capture and storage (CCS) activities into their existing petroleum contracts and develop offshore energy facilities within their field development areas, using existing petroleum infrastructure.

In this legal update, we highlight certain key changes introduced by the New Petro Law.

1.  Contractor selection for petroleum contracts

The New Petro Law removes competitive offering as a method for selecting contractors vying to win petroleum contracts. Accordingly, contractor selection can now be conducted through one of three (3) methods through: (i) open bidding; (ii) limited bidding, or (iii) direct appointment.

The New Petro Law provides greater flexibility for direct appointment by expressly e the Prime Minister, but what it does is that it will provide a mechanism to address circumstances arising from the practical implementation of petroleum activities in Vietnam.

2. Decentralisation of approval authority 

One the most encouraging and positive features of the New Petro Law aimed at improving efficiency, is the redistribution of a number of regulatory and approval powers previously exercised by the Prime Minister or the Ministry of Industry and Trade (MOIT). This entails an expanded role for Petrovietnam with fewer matters requiring approval at ministerial or Prime Minister level. 

We illustrate below certain matters previously subject to approval or decision by the Prime Minister, which will now be assigned to the State petroleum management authority (i.e., MOIT), being the following:

• approval of the list of fundamental petroleum investigation projects;
• decisions on coordination where fundamental petroleum investigation activities overlap with areas allocated for geological investigation, mineral exploration or mineral exploitation; 
• approval of the contents of petroleum contracts; and 
• approval in principle for petroleum field development projects involving an integrated chain of onshore and offshore petroleum facilities and equipment.

Further, under the New Petro Law, certain matters previously subject to approval by the Prime Minister will now be assigned to the Vietnam National Industry – Energy Group (formerly the Vietnam Oil and Gas Group, Petrovietnam) which includes approval of contractor selection plans and bidding or request dossiers. Petrovietnam will also be responsible for considering proposed transfers of participating interests and contractors’ rights and obligations under petroleum contracts and reporting to MOIT for the corresponding amendment of the petroleum contract and investment registration certificate.

Added to the above, certain matters previously requiring MOIT approval will now be assigned to Petrovietnam, and importantly these include

• retention of the entire petroleum contract area or postponement of relinquishment obligations; 
• exploration or appraisal activities in adjacent open petroleum blocks and expansion of petroleum contract areas; 
• amendments to, and execution of, unitisation and joint development agreements that were approved and became effective, or unitisation and joint development principles that were approved, before the New Petro Law took effect; 
• unitisation of petroleum fields, discoveries for appraisal, where applicable, and joint development; and 
• approval of outline field development plans, early production plans, field development plans and petroleum facilities decommissioning plans.

3. Arrangements towards expiry of petroleum contracts

The New Petro Law introduces a clearer and more transparent mechanism relating to how to administer petroleum fields, field clusters or blocks approaching the expiry of the relevant petroleum contracts. 

If, two (2) years before expiry, the contractor has not submitted a proposal for additional investment and entry into a new petroleum contract on appropriate economic and technical terms, Petrovietnam may determine one of the following courses of action:

• discontinue production and proceed with decommissioning;
• select a contractor to enter a new petroleum contract; or
• implement tail-end production, under which Petrovietnam, or a wholly-owned enterprise designated by Petrovietnam, may take over and continue production until further production is no longer economically viable. 

4. New legal framework for CCS and offshore energy development 

For the first time and brining Vietnam in line with contemporary international oil and gas practices, the New Petro Law establishes a legal framework for CCS activities and offshore energy development associated with petroleum activities, including mechanisms for utilising existing petroleum contract areas and infrastructure for such activities.

For CCS activities, the New Petro Law provides importantly that:

• contractors may propose to incorporate CCS activities into an existing petroleum contract and carry out such activities within the existing contract area. Where the storage formation or injection area extends beyond the contract area, an expansion of the contract area or coordination with the contractor of an adjacent petroleum block may be proposed;
• CCS activities may be incorporated into the field development plan or petroleum facilities decommissioning plan, or implemented under separate CCS development and decommissioning plans;
• costs incurred for CCS activities may be treated as recoverable petroleum operation costs; and
• contractors may own, exchange and trade carbon credits generated from CCS activities, with proceeds from the sale of such credits accounted for as a reduction of recoverable costs.

Additionally, on offshore energy development activities, contractors can research and develop offshore energy facilities within the field development area of an existing petroleum contract, including by using existing petroleum facilities or integrating such facilities with newly constructed facilities. Costs of offshore energy facilities serving petroleum activities can now be treated as recoverable petroleum operation costs. Contractors can also propose independent offshore energy projects within the petroleum contract area in accordance with applicable laws, provided that such projects do not adversely affect petroleum activities.

5. Greater flexibility in extensions, retention and suspension

Under the New Petro Law, the permitted duration of certain petroleum contract and exploration periods can now be extended and revised, and the approval authority for certain extensions, retention periods and suspensions, are summarised below.

6. Other operational flexibilities

Several practical adjustments to the performance of petroleum contracts have also been introduced under the New Petro Law and they are as follows:

• where committed work cannot be performed due to complex geological conditions, a contractor can propose conversion of its work commitments. An exemption, reduction or conversion can also be proposed in cases involving national defence, security or force majeure;
• no outline field development plan is required where a petroleum field is developed without investment in a production platform or floating storage facility and is instead connected to existing petroleum facilities for processing; and
• the notice period for early termination of a petroleum contract is now reduced from six (6) months to three (3) months.

Conclusion

Overall, the New Petro Law is a welcome initiative. It streamlines the approval procedures and processes for oil and gas investors, gives contractors more flexibility in performing their petroleum contracts.  The new framework for CCS and offshore energy has in our view, a positive effect of brining Vietnam more in line with international oil and gas practice.

It is anticipated that further procedural requirements and detailed implementation matters will be prescribed and these will be in the form of decrees implementing the changes introduced in the New Petro Law.

Petroleum investors and contractors are advised to review their existing and any interest in future projects to assess the potential impact of these changes, and to continue monitoring the implementing decrees and other guidance expected to be issued to provide further details on the implementation of the New Petro Law.

Click here to download: The New Law On Petroleum: Key Changes For Investors

This material provides only a summary of the subject matter covered, without the assumption of a duty of care by Frasers Law Company.
The summary is not intended to be nor should it be relied on as a substitute for legal or other professional advice.

© Copyright in this article is owned by Frasers Law Company