TABLE OF CONTENT “PRODUCTION SHARING CONTRACT”

PRODUCTION SHARING CONTRACT

FOR THE

JOINT PETROLEUM DEVELOPMENT AREA

PRESENTED FOR THE INFORMATION OF THE COUNCIL OF MINISTERS

… July  20..

CONTENTS

Article 1……… Interpretation……………………………………………………………………………………………… 7

1.1       Definitions…………………………………………………………………………………………. 7

1.2       Headings………………………………………………………………………………………….. 11

Article 2……… Scope and Term………………………………………………………………………………………… 12

2.1       Scope………………………………………………………………………………………………. 12

2.2       Conditions Precedent…………………………………………………………………………. 13

2.3       Effective Date and Term…………………………………………………………………….. 13

2.4       Grounds for Termination……………………………………………………………………. 14

2.5       Surviving Obligations…………………………………………………………………………. 14

Article 3……… Relinquishment of Blocks…………………………………………………………………………… 15

3.1       Periodic Relinquishment of Exploration Area………………………………………… 15

Article 4……… Work Programmes and Budget………………………………………………………………….. 17

4.1       Commitment in Initial Period………………………………………………………………. 17

4.2       Commitment in Second Period…………………………………………………………….. 17

4.3       Commitment in Third Period……………………………………………………………….. 18

4.4       Performance of Exploration Work Programme and Budget……………………… 18

4.5       Consequences of Non-Performance…………………………………………………….. 19

4.6       Work Programmes and Budgets…………………………………………………………… 19

4.7       Emergency and Other Expenditures Outside Work Programmes and Budgets 19

4.8       Exploration………………………………………………………………………………………. 20

4.9       Discovery and Appraisal…………………………………………………………………….. 20

4.10     Commercial Discovery………………………………………………………………………. 20

4.11     Development Plan……………………………………………………………………………… 21

4.12     Development Work Programmes and Budgets……………………………………….. 23

4.13     Approved Contracts…………………………………………………………………………… 23

4.14     Decommissioning……………………………………………………………………………… 23

4.15     Decommissioning Security………………………………………………………………….. 24

Article 5……… Conduct of Work………………………………………………………………………………………. 24

5.1       Proper and Workmanlike Manner………………………………………………………… 24

5.2       Access to Contract Area……………………………………………………………………… 25

5.3       Health, Safety and the Environment…………………………………………………….. 26

5.4       Goods, Services, Training and Employment………………………………………….. 26

5.5       Flaring……………………………………………………………………………………………… 27

5.6       Operator and its Sub-Contractors…………………………………………………………. 27

Article 6……… Recoverable Costs……………………………………………………………………………………… 27

6.1       Generally…………………………………………………………………………………………. 27

6.2       Recoverable Costs…………………………………………………………………………….. 27

Article 7……… Sharing Of Petroleum………………………………………………………………………………… 28

7.1       Determination of Shares…………………………………………………………………….. 28

7.2       Option of Designated Authority…………………………………………………………… 28

7.3       Lifting……………………………………………………………………………………………… 28

7.4       Title and Risk……………………………………………………………………………………. 29

7.5       Payment on Account………………………………………………………………………….. 29

Article 8……… Valuation of Petroleum………………………………………………………………………………. 29

8.1       Place of Valuation…………………………………………………………………………….. 29

8.2       Crude Oil…………………………………………………………………………………………. 30

8.3       Natural Gas………………………………………………………………………………………. 30

8.4       Price Payable……………………………………………………………………………………. 30

Article 9……… Payments…………………………………………………………………………………………………… 30

9.1       Fees………………………………………………………………………………………………… 30

9.2       Payment Mechanism………………………………………………………………………….. 30

9.3       Late Payment……………………………………………………………………………………. 30

9.4       Minimum Payment…………………………………………………………………………….. 31

Article 10……. Provision of Goods and Services…………………………………………………………………. 31

10.1     Notice……………………………………………………………………………………………… 31

10.2     Contracts Not Requiring Designated Authority’s Approval………………………. 31

10.3     Tender Invitations Requiring Designated Authority’s Approval………………… 31

10.4     Emergencies……………………………………………………………………………………… 32

10.5     Other Information to be Provided………………………………………………………… 32

Article 11……. Title to Equipment…………………………………………………………………………………….. 32

11.1     Property…………………………………………………………………………………………… 32

11.2     Retention…………………………………………………………………………………………. 32

Article 12……. Consultation and Arbitration……………………………………………………………………… 33

12.1     Arbitration……………………………………………………………………………………….. 33

12.2     Procedure…………………………………………………………………………………………. 33

12.3     Location…………………………………………………………………………………………… 33

12.4     Commercial Arrangement: Waiver of Sovereign Immunity………………………. 33

12.5     Obligations Continue During Arbitration……………………………………………….. 33

Article 13……. Financial and Technical Data, Records And Reports………………………………….. 34

13.1     Ownership……………………………………………………………………………………….. 34

13.2     Records, Storage, Retrieval and Submission………………………………………….. 34

13.3     Reports……………………………………………………………………………………………. 35

13.4     Export of Data and Information…………………………………………………………… 35

13.5     Use of Data and Information………………………………………………………………. 35

13.6     Confidentiality of Data and Information……………………………………………….. 35

13.7     Trade Secrets……………………………………………………………………………………. 36

13.8     Designated Authority’s Rights in respect of Interim Petroleum Mining Code. 36

13.9     Public Announcement………………………………………………………………………… 36

Article 14……. Management of Operations………………………………………………………………………… 36

14.1     Constitution of Committee………………………………………………………………….. 36

14.2     Meetings………………………………………………………………………………………….. 36

Article 15……. Third Party Access…………………………………………………………………………………….. 37

15.1     Third Party Access…………………………………………………………………………….. 37

Article 16……. Audit…………………………………………………………………………………………………………. 37

16.1     Independent Audit…………………………………………………………………………….. 37

16.2     Designated Authority Audit………………………………………………………………… 37

16.3     Exceptions……………………………………………………………………………………….. 37

16.4     Operator to Assist……………………………………………………………………………… 37

16.5     Affiliates………………………………………………………………………………………….. 38

Article 17……. Indemnity and Insurance…………………………………………………………………………… 38

17.1     Indemnity………………………………………………………………………………………… 38

17.2     Insurance…………………………………………………………………………………………. 38

Article 18……. Force Majeure…………………………………………………………………………………………… 38

18.1     Force Majeure Relief…………………………………………………………………………. 38

18.2     Procedure…………………………………………………………………………………………. 39

18.3     Consultation……………………………………………………………………………………… 39

18.4     Third Parties……………………………………………………………………………………… 39

18.5     Extension of Time…………………………………………………………………………….. 39

Article 19……. Restrictions on Assignment and Change in Control…………………………………….. 39

19.1     Assignment………………………………………………………………………………………. 39

19.2     Change in Control……………………………………………………………………………… 40

Article 20……. Other Provisions………………………………………………………………………………………… 41

20.1     Notices…………………………………………………………………………………………….. 41

20.2     Applicable Law…………………………………………………………………………………. 41

20.3     Third Party Rights……………………………………………………………………………… 41

20.4     Amendments/Modification…………………………………………………………………. 41

20.5     Entire Agreement………………………………………………………………………………. 41

Annex A – Contract Area Description……………………………………………………………………………… 43

Annex B – Map of The Contract Area…………………………………………………………………………….. 44

Annex C – Accounting Procedure……………………………………………………………………………………. 45

Clause 1 – General Provisions………………………………………………………………………………………….. 45

Clause 2 – Classification and Allocation…………………………………………………………………………… 45

Clause 3 – Costs, Expenses and Credits……………………………………………………………………………. 49

Clause 4 – Inventories……………………………………………………………………………………………………… 54

Clause 5 – Production Statement……………………………………………………………………………………… 54

Clause 6 – Value of Production And Pricing Statement…………………………………………………….. 55

Clause 7 – Cost Recovery Statement………………………………………………………………………………… 56

Clause 8 – Statements Of Expenditure And Receipt…………………………………………………………. 56

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