FAQ relating to Cancellation of MOFCOM Approval for Sino-Foreign Cooperative Petroleum Contracts
Q: What was the previous situation in the petroleum contract before the effectiveness of Decision on further Eliminate Certain Administrative Examination and Approval Items (“Decision”) on May 15, 2013?
A: Such executed Petroleum Contracts as petroleum agreements, production sharing contracts, etc. previously had to be approved by Ministry of Commerce (“MOFCOM”). The approval process could take up to 40 days in total.
Q: What are the new changes in the approval of Petroleum Contracts in accordance with this Decision?
A: There is no longer a requirement to obtain MOFCOM approval for Petroleum Contracts. Accordingly, once the Petroleum Contract is negotiated and executed by the parties, it will not require any further approval. However, the foreign oil companies still must be qualified to enter into a Petroleum Contract with the relevant Chinese oil company for the purposes of developing petroleum resources in China.
Q: Theoretically, what is the main effect in the new Decision?
A: This Decision may simplify the application process for foreign oil companies that want to conduct petroleum operations in China, reduce the overall transaction time by up to 40 days, and add more certainty to the overall application process and future petroleum transactions for foreign oil companies.