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PETROLEUM AGREEMENT
BY AND AMONG
GOVERNMENT OF THE R E P U B L I C OF GHANA
GHANA NATIONAL PETROLEUM CORPORATION
GNPC EXPLORATION AND PRODUCTION COMPANY LIMITED
ENI GHANA EXPLORATION AND PRODUCTION LIMITED
VITOL UPSTREAM TANO LIMITED
WOODFIELDS UPSTREAM LIMITED
IN R E S P E C T OF
C A P E T H R E E POINTS B L O C K 4
DATED:
2015
TABLE OF CONTENTS
ARTICLE
PAGE
1.
DEFINITIONS
3
2.
S C O P E O F THE A G R E E M E N T , I N T E R E S T S
OF T H E P A R T I E S AND C O N T R A C T A R E A
12
3.
EXPLORATION PERIOD
15
4.
MINIMUM EXPLORATION PROGRAMME
18
5.
RELINQUISHMENT
22
6.
7.
JOINT MANAGEMENT COMMITTEE
RIGHTS AND OBLIGATIONS O F C O N T R A C T O R AND G N P C
23
28
8.
COMMERCIALITY
33
9.
S O L E RISK ACCOUNT
41
10.
SHARING O F C R U D E OIL
44
11.
MEASUREMENT AND PRICING O F C R U D E OIL
51
12.
TAXATION AND O T H E R IMPOSTS
54
13.
FOREIGN E X C H A N G E TRANSACTIONS
57
14.
S P E C I A L PROVISIONS F O R NATURAL G A S
59
15.
DOMESTIC S U P P L Y R E Q U I R E M E N T (CRUDE OIL)
66
16.
INFORMATION AND R E P O R T S : CONFIDENTIALITY
67
17.
INSPECTION, S A F E T Y AND
PROTECTION
72
ENVIRONMENTAL
18.
ACCOUNTING AND AUDITING
74
19.
TITLE TO AND C O N T R O L O F G O O D S AND EQUIPMENT
76
20.
PURCHASING AND P R O C U R E M E N T
78
21.
EMPLOYMENT AND TRAINING
79
ARTICLE
PAGE
22.
F O R C E MAJEURE
81
23.
TERM AND TERMINATION
83
24.
CONSULTATION, ARBITRATION AND
INDEPENDENT E X P E R T
87
25.
ASSIGNMENT
90
26.
MISCELLANEOUS
93
27.
NOTICE
98
ANNEX 1
CONTRACT A R E A
ANNEX 2
ACCOUNTING GUIDE
ANNEX 3
FORM O F CONFIDENTIALITY A G R E E M E N T
ANNEX 4
SAMPLE A O E CALCULATION
ANNEX 5
PRINCIPLES O F THE P R O J E C T OPERATINGzyxwvutsrqponmlkjihgfedcbaZYXWV
n
STRUCTURE
THIS P E T R O L E U M A G R E E M E N T
made this
day of
by and among
the Government of the Republic of Ghana (hereinafter referred to as the "State"),
represented by the Minister for Petroleum (hereinafter referred to as the
"Minister"),
the Ghana National Petroleum Corporation, a public corporation established by the
Ghana National Petroleum Corporation Act, 1983 Provisional National Defence
Council Law 64 (hereinafter referred to as "GNPC"), on the one hand, and
GNPC Exploration and Production Company Limited, a company incorporated in
Ghana and having its registered office at Petroleum House, Harbour Road, Tema
(hereinafter referred to as "Explorco"), and
Eni Ghana Exploration and Production Ltd., a company incorporated in Ghana and
having its registered office at UNA Home, 1st Floor 12 Airport By-pass Road,
Airport City Area, PMB KA 185, Accra, Ghana (hereinafter referred to as "eni
Ghana"), and
Vitol Upstream Tano Ltd., a company incorporated in Ghana and having its
registered office at 5th Floor, Grand Oyeeman, South Liberation Link Road, Accra,
Ghana (hereinafter referred to as "Vitol"), and
Woodfields Upstream Limited, a company incorporated in Ghana and having its
registered office at Y21B Agostino Neto road Airport, Accra. Box KIA 30414
Airport, Accra Ghana (hereinafter referred to as "Woodfields") on the other hand.
WITNESSES THAT;
1.
All Petroleum existing in its natural state within Ghana is the property of the
Republic of Ghana and held in trust by the State on behalf of the people of
Ghana.
2.
In accordance with the Petroleum Law, the Minister has prepared a reference
map showing areas of potential petroleum fields within the jurisdiction of
Ghana, divided into numbered areas and each of which is described as a
"Block".
3.
GNPC has by virtue of the Petroleum Law the right to undertake Exploration,
Development and Production of Petroleum over all Blocks declared by the
Minister to be open for Petroleum Operations.
4.
GNPC is further authorised to enter into association by means of a Petroleum
Agreement wdth a contractor for the purpose of Exploration, Development and
Production of Petroleum.
5.
The Contract Area that is the subject matter of this Petroleum Agreement has
been declared open for Petroleum Operations by the Minister and the State |
1
desires to encourage and promote Exploration, Development and Production
within the said area. The State assures Contractor that all of said area is within
the jurisdiction of Ghana.
6.
Contractor, having the financial ability, technical competence and professional
skills necessary for carrying out the Petroleum Operations herein described,
desires to associate with GNPC in the Exploration for, and Development and
Production of, the Petroleum resources of the said area.
7.
The Parties are committed to providing qualified Ghanaian nationals
employment at all levels in the Petroleum industry, including technical,
administrative and managerial positions, and Contractor accordingly commits
to providing and supporting a programme of training for Ghanaian nationals as
an integral part and on the terms of this Agreement.
8.
Without prejudice to the rights of the Parties under this Agreement, Contractor
is committed to supporting GNPC either directly or through Explorco to
develop its operating capacity based on the principles contained in this
Agreement.
9.
The Parties are committed to providing an armual local content plan in line
with the applicable laws of Ghana, including Local Content Regulations, for
fulfilling the applicable Ghanaian content requirements with respect to the
provision of goods and services.
NOW T H E R E F O R E , in consideration of the mutual covenants herein contained, it is
hereby agreed and declared as follows:
ARTICLE 1
DEFINITIONS
1.
In this Agreement:
1.1
"Accounting Guide" means the accounting guide which is attached hereto as
Annex 2 and made a part hereof;
1.2
"Additional Interest" means the additional interest of GNPC provided in Article
2.5;
1.3
"Affiliate" means any person, whether a natural person, corporation, partnership,
unincorporated association or other entity which directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with a Party. For this purpose control means the direct or indirect
ownership of more than fifty percent (50%) of voting capital or voting rights of
the entitlement (directly or indirectly) to appoint a majority of the directors or
equivalent management body of, or to direct the policies or operations of the
other entity;
1.4
"Agreement" means this Agreement between the State, GNPC and Contractor,
and includes the Annexes attached hereto in each case as may be amended from
time to time;
1.5
"Appraisal" means operations or activities carried out pursuant to an Appraisal
Programme following a Discovery of Petroleum for the purpose of delineating
the accumulations of Petroleum to which that Discovery relates in terms of
thickness and lateral extent and estimating the quantity of recoverable Petroleum
therein and all operations or activities, to resolve uncertainties required for
determination of a Commercial Discovery;
1.6
"Appraisal Programme" means a programme approved by the Petroleum
Commission pursuant to Article 8.5 for the conduct of Appraisal;
1.7
"Appraisal Well" means a well drilled pursuant to an Appraisal Programme;
1.8
"Associated Gas" means Natural Gas produced from a well in association with
Crude Oil;
1.9
"Barrel" means a quantity or unit of Crude Oil equal to forty-two (42) United
States gallons at a temperature of sixty (60) degrees Fahrenheit and at fourteen
and sixty-five one-hundredths per square inch at atmospheric (14.65 psia)
pressure;
1.10
"Block" means an area of approximately 1127 square kilometres depicted on the
reference map prepared by the Minister in accordance with the provisions of the
Petroleum Law;
3
(
1.11zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Business Day" means a day on which banks are open for business in London,
New York and Accra;
1.12
"Calendar Year" means the period of twelve (12) Months of the Gregorian
calendar, commencing on January 1 and ending on the succeeding December 31;
1.13
"Carried Interest" means an interest held by GNPC, pursuant to this Agreement
in respect of which Contractor pays for the conduct of Petroleum Operations as
set out in this Agreement, without any entitlement to reimbursement from GNPC;
1.14
"Commercial Discovery" means a Discovery which is determined to be
commercial in accordance with the provisions of Article 8 of this Agreement;
1.15
"Commercial Production Period" means in respect of each Development and
Production Area the period from the Date of Commencement of Commercial
Production until the termination of this Agreement or earlier relinquishment of
such Development and Production Area;
1.16
"Contract Area" means the area of approximately one-thousand one-hundred
and twenty-seven thousand kilometers squared (1127 km^) covered by this
Agreement in which Contractor is authorised in association with GNPC to
explore for, develop and produce Petroleum, which is described in Annex 1
attached hereto and made a part of this Agreement, but excluding any portions of
such area in respect of which Contractor's rights hereunder are from time to time
relinquished or surrendered pursuant to this Agreement;
1.17
"Contractor" means, collectively Explorco, Eni Ghana, Vitol and Woodfields and
their respective permitted successors and assignees and each of Explorco, Eni
Ghana, Vitol and Woodfields, individually a "Contractor Party" as the context
may require;
1.18
"Contract Year" means a period of twelve (12) calendar Months, commencing
on the Effective Date or any anniversary thereof;
1.19
"Crude Oil" means hydrocarbons which are liquid at fourteen and sixty-five onehundredths per square inch at atmospheric pressure (14.65 psia) and sixty (60)
degrees Fahrenheit and includes condensates and distillates obtained from
Natural Gas;
1.20
"Date of Commencement of Commercial Production" means, in respect of
each Development and Production Area, the date on which production of
Petroleum under a programme of regular production, lifting and sale commences
as defined in a Development Plan;
1.21
"Date of Commercial Discovery" means the date referred to in Article 8.16;
1.22
"Development" or "Development Operations" means the following activities
carried out in cormection with a Development Plan: the building and installation
of facilities for Production, including drilling of Development Wells, construction
and installation of equipment, pipelines, facilities, plants and systems, in and ^^T^
outside the Contract Area, which are required for achieving Production,
treatment, transport, storage and lifting of Petroleum, and preliminary Production
activities carried out prior to the Date of Commencement of Commercial
Production, including all related planning and administrative work, and may also
include the construction and installation of approved secondary and tertiary
recovery systems, and abandonment, decommissioning and replacement of
facilities;
1.23zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Development Costs" means allowable Petroleum Costs incurred in
Development Operations, including costs incurred in respect of lease, purchase,
or rental of fixed assets;
1.24
"Development and Production Area" means that portion of the Contract Area
reasonably determined by the JMC (or by GNPC i f of a Sole Risk Operation
pursuant to Article 9) on the basis of the available seismic and well data to cover
the areal extent of an accumulation or accumulations of Petroleum constituting a
Commercial Discovery, enlarged in area by ten percent (10%), such enlargement
to extend uniformly around the perimeter of such accumulation;
1.25
"Development Period" means in respect of each Development and Production
Area, the period from the Date of Commercial Discovery until the Date of
Commencement of Commercial Production;
1.26
"Development Plan" means the plan for development of a Commercial
Discovery prepared by Contractor in consultation with the JMC and approved by
the Minister pursuant to Article 8;
1.27
"Development Well" means a well drilled in accordance with a Development
Plan for producing Petroleum including wells for pressure maintenance or for
increasing the Production rate;
1.28
"Discovery" means finding within a well at the end of drilling under Exploration
Operations (an) accumulation(s) of Petroleum whose existence until that finding
was unproved by drilling, which is or can be recovered at the surface in a flow
measurable by conventional international petroleum industry testing methods
(and in the case of water depths greater than four hundred (400) metres, including
Modular Formation Dynamics Testing (also referred to as " M D T " by
Schlumberger));
1.29
"Discovery Area" means that portion of the Contract Area, reasonably
determined by the JMC (or by GNPC i f such area occurs as a result of a Sole
Risk Operation pursuant to Article 9) on the basis of the available seismic and
well data, that covers the areal extent of the geological structure in which a
Discovery is made. A Discovery Area may be modified at any time by the JMC
(or by GNPC to the extent permitted by Article 9, i f applicable), i f justified on the
basis of new information;
1.30
"Discovery Date" means the date on which a Discovery Notice is issued by
Contractor;
1.31
"Discovery Notice" means a written notification of Discovery to the Minister,
Petroleum Commission and GNPC pursuant to Article 8 providing information
which shall include the name and location of the well from which the
accumulation(s) have been found, the depth interval(s), estimates of gross and net
pay thickness, stratigraphy, and type of reservoir and fluids encountered;
1.32
"Effective Date" shall have the meaning ascribed to it in Article 26.12;
1.33
"Exploration" or "Exploration Operations" means the search for Petroleum by
geological, geophysical and other methods and the drilling of Exploration Well(s)
and includes any activity in connection therewith or in preparation thereof and
any relevant processing and Appraisal work, including technical and economic
feasibility studies, that may be carried out to determine whether a Discovery of
Petroleum constitutes a Commercial Discovery;
1.34
"Exploration Costs" means allowable Petroleum Costs incurred, both within and
outside Ghana, in conducting Exploration Operations hereunder determined in
accordance with the Accounting Guide attached hereto as AnnexzyxwvutsrqponmlkjihgfedcbaZYX
2;
1.35
"Exploration Period" means the period commencing on the Effective Date and
continuing during the time provided for in Article 3.1 within which Contractor is
authorised to carry out Exploration Operations and shall include any periods of
extensions provided for in this Agreement. The Exploration Period shall
terminate with respect to any Discovery Area on the Date of Commercial
Discovery in respect of such Discovery Area;
1.36
"Exploration Phase" means any one of the Initial Exploration Period, the First
Extension Period or the Second Extension Period;
1.37
"Exploration Well" means a well drilled in the course of Exploration Operations
conducted hereunder during the Exploration Period;
1.38
"Extension Period" means either of the First Extension Period or Second
Extension Period, as applicable;
1.39
"Force Majeure" means any event beyond the reasonable control of the Party
claiming to be affected by such event which has not been brought about directly
or indirectly at its own instance or which has not been brought about directly or
indirectly at the instance of an Affiliate. Force Majeure events may include, but
are not limited to, acts of God, accidents, fires, explosions, earthquake, storm,
flood, hurricanes, tidal waves, cyclones, tornados, lightning or other adverse
weather conditions or any other natural disasters, war, acts of war, acts of
terrorism, embargo, blockade, riot, civil disorder, or strikes;
1.40
"Foreign Exchange Act" means the Foreign Exchange Act, 2006 (Act 723) as
same may be amended from time to time;
1.41
"Foreign National Employee" means an expatriate employee of Contractor, its
Affiliates, or its Subcontractors who is not a citizen of Ghana;
^
6
1.42zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Ghana" means the territory of the Republic o f Ghana and includes rivers,
streams, water courses, the territorial sea, seabed and subsoil, the contiguous
zone, the exclusive economic zone, continental shelf, the airspace and all other
areas within the jurisdiction of the Republic of Ghana;
1.43
"Gross Negligence" or "Wilful Misconduct" means any act, failure to act or
failure to exercise such minimum degree of care and prudence by a Party which
was in reckless disregard of, or wanton indifference to, the harmful consequences
that the person knew, or should reasonably have known, could result;
1.44
"Gross Production" means the total amount of Petroleum produced and saved
from a Development and Production Area during Production Operations which is
not used by Contractor in Petroleum Operations and is available for distribution
to the Parties in accordance with Article 10;
1.45
Income Tax Law means the Income Tax Act, 2015 (Act 896) as same may be
amended from time to time;
1.46
"Indigenous Ghanaian company" means a company incorporated under the
Companies Act, 1963 (Act 179) of Ghana:
a)
that has at least fifty-one percent (51%) of its equity owned by a
citizen or citizens of Ghana; and
b)
that has Ghanaian citizens holding at least eighty percent (80%) of
senior management positions and one hundred percent (100%) of
non-managerial and other positions;
1.47
"Initial Interest" means the interest of GNPC in all Petroleum Operations
provided for in Article 2.4;
1.48
"Intellectual Property Rights": all patents, rights to inventions, copyright and
related rights, rights in designs, confidential information (including know-how
and trade secrets), in each case whether registered or unregistered and including
all applications and rights to apply for and be granted, renewals or extensions of
such rights, and all similar or equivalent rights of forms of protection which
subsist or will subsist now or in the future in any part of the world.
1.49
"International Best Oil Field Practice" means uses and practices that are
generally accepted in the international petroleum industry as good, safe,
economical and efficient in exploring for, developing, producing, processing and
transporting Petroleum;
1.50
"Joint Management Committee" or "JMC" means the committee established
pursuant to Article 2.2 and 6.1 hereof;
1.51
"Joint Operating Agreement" or "JOA" means an agreement or contract
among all of the Contractor Parties with respect to the Contract Area and their
respective rights or obligations under this Agreement, as such agreement or
contract may be amended or supplemented from time to time; rv^^^o*7
1.52zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"LIBOR" means the rate per annum equal to the British Bankers Assocition
Interbank Offered Rate for one (1) month U.S. dollar deposits, as published in
London by thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
Financial Times. In the event that the Financial Times is not
published, then as publishe by The Wall Street Journal;
1.53
"LNG" means liquefied Natural Gas;
1.54
"Local Content Regulations" means the Petroleum (Local Content and Local
Participation) Regulations, 2013, L.I. 2204 as the same may be amended from
time to time;
1.55
"Market Price" means the market price for Crude Oil realized by Contractor
under this Agreement as determined in accordance with Article 11.7 hereof;
1.56
"Minister" means Minister for Petroleum;
1.57
"Minimum Work Obligation" means the Contractor's obligations set forth in
Article 4,3(a) with respect to the Initial Exploration Period, Article 4.3(b) with
respect to the First Extension Period and Article 4.3(c) with respect to the Second
Extension Period, as the case may be;
1.58
"Month" means a month of the Calendar Year;
1.59
"Natural Gas" means all hydrocarbons which are gaseous at fourteen and sixtyfive one-hundredths per square inch at atmospheric pressure and sixty (60)
degrees Fahrenheit temperature and includes wet gas, dry gas and residue gas
remaining after the extraction of liquid hydrocarbons from wet gas;
1.60
"Non-Associated Gas" means Natural Gas produced from a well other than in
association with Crude Oil;
1.61
"Operator" means eni Ghana or such other Contractor Party as may be jointly
proposed by all the Parties and approved by the Minister, which approval shall
not be unreasonably withheld, to conduct Petroleum Operations hereunder on
behalf of the Parties;
1.62
"Participating Interest" means the interest held by Contractor in accordance
with the provisions of Article 2.10;
. 1.63
"Party" means each of the State, GNPC, Explorco, eni Ghana, Vitol and or
Woodfields, as the case may be;
1.64
"Paying Interest" means an interest held by GNPC in respect of which GNPC
pays for the conduct of Petroleum Operations as expressly provided for in Article
1.65
"Petroleum" means Crude Oil or Natural Gas or a combination of both;
1.66
"Petroleum Commission" means a body established by an Act of Parliament
(Petroleum Commission Act, 2011, (Act .821 for the regulation and the
management of the utilization of petroleum resources in the upstream sector;
J-
1.67zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Petroleum Costs" means all expenditures made and costs incurred in
conducting Petroleum Operations hereunder determined in accordance with the
Accounting Guide attached hereto as Annex 2;
1.68
"Petroleum Law" means the Petroleum (Exploration and Production) Law, 1984
(PNDCL 84) as the same may be amended from time to time;
1.69
"Petroleum Operations" means all activities, both in and outside Ghana,
relating to the Exploration for. Appraisal of. Development, Production, handling,
storage, processing and transportation to the Delivery Point, of Petroleum
contemplated under this Agreement and includes Exploration Operations,
Development Operations and Production Operations and all activities in
cormection therewith;
1.70
"Petroleum Product" means any product derived from Petroleum by any
refining or other process;
1.71
"Pre-Award Attachment" means any order, decree, injunction or other decision
(however designated) of any court, arbitral body or other competent authority
requested by a Party and issued prior to a final arbitral award issued pursuant to
Article 24 of this Agreement that attaches, seizes, freezes or otherwise restricts
the use or alienation of the any property (whether tangible or intangible) of the
other Party pending issuance of the final arbitral award, whether such property is
in the possession or control of a Party or of a third party;
1.72zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Production" or "Production Operations" means activities, other than
Exploration Operations or Development Operations, undertaken in order to
extract, save, treat, measure, handle, store and transport (to the Delivery Point)
Petroleum to storage and/or loading points and to carry out any type of primary,
secondary or tertiary recovery operations, including recycling, recompression,
injection for maintenance of pressure and water flooding and all related activities
such as plarming and administrative work and shall also include maintenance,
repair, and well workovers, conducted after the Date of Commencement of
Commercial Production of the respective Development and Production Area;
1.73
"Production Costs" means Petroleum Costs incurred in Production Operations;
1.74
"Proposed Appraisal Programme" means a draft of a programme for the
conduct of an Appraisal to be presented to the Petroleum Commission for
approval;
1.75
"Protected Assets" means (a) property used for diplomatic or consular missions
wherever located, (b) property of a military character and under the control of a
military authority or defence agency of the State wherever located, (c) assets of
the Petroleum Funds (as defined in the Petroleum Revenue Management Act,
2011 (Act 815) as amended by Petroleum Revenue Management (Amendment)
Act, 2015 (Act 893) and (d) property located in Ghana and dedicated to a public
or governmental use (as distinct from property dedicated to a commercial use), to
the extent such property and assets are protected under the laws of Ghana.zyxwvutsrqponmlkjihgfedcbaZ
Y\r^
M
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1.76zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Quarter" means a period of three (3) Months, commencing January 1, April 1,
July 1 or October 1 and ending March 31, June 30, September 30, or
December 31, respectively;
1.77
"Sole Expert" means the person appointed to resolve a dispute pursuant to
Article 24 hereof;
1.78
"Sole Risk" means an operation conducted at the sole cost, risk, expense and
liability of GNPC referred to in Article 9;
1.79
"Specified Rate" means LIBOR plus two percent (2%);
1.80
"Standard Cubic Foot" or "SCF" means the quantity of gas that occupies one
(1) cubic foot at 14.65 psia pressure and sixty (60) degrees Fahrenheit
temperature;
1.81
"State" means the Government of the Republic of Ghana represented by the
Minister;
1.82
"Subcontractor" means a third party with whom GNPC or the Contractor has
entered into a contract for provisions of goods or services for or in cormection
with Petroleum Operations;
1.83
"Termination" means termination of this Agreement pursuant to Article 23
hereof;
1.84
"Work Programme" means the annual plan for the conduct of Petroleum
Operations prepared pursuant to Articles 6.4 and 6.5; and
1.85
"Year" means a continuous twelve (12) Month period.
10
ARTICLE 2
SCOPE OF THE AGREEMENT. INTERESTS O F T H E PARTIES
AND C O N T R A C T A R E A
2.1
This Agreement provides for the Exploration and Development and Production of
Petroleum in the Contract Area by GNPC in association with Contractor.
2.2
Subject to the provisions of this Agreement, Contractor shall be responsible for
the execution of such Petroleum Operations as are required by the provisions of
this Agreement and, subject to Article 9, is hereby appointed the exclusive entity
to conduct Petroleum Operations in the Contract Area. In order that the Parties
may cooperate in the implementation of Petroleum Operations, GNPC and
Contractor shall establish a Joint Management Committee to conduct and manage
Petroleum Operations.
2.3
In the event that no Commercial Discovery is made in the Contract Area or that
Gross Production achieved from the Contract Area is insufficient to fully
reimburse Contractor in accordance with the terms of this Agreement, then
Contractor shall bear its own loss; GNPC and the State shall have no obligations
whatsoever to Contractor in respect of such loss.
2.4
GNPC shall have a ten percent (10%) Initial Interest in all Petroleum Operations
under this Agreement.
With respect to all Exploration Operations and
Development Operations, the Initial Interest shall be a Carried Interest. With
respect to all Production Operations GNPC's Initial Interest shall be a Paying
Interest.
2.5
In addition to the Initial Interest provided for in Article 2.4, GNPC shall have the
option in respect of each Development and Production Area to acquire an
Additional Interest of up to nine percent (9%) in the Petroleum Operations in
such Development and Production Area, by contributing the corresponding
proportionate share to all the Petroleum Costs incurred after the Date of
Commercial Discovery, in respect of such Development and Production Area (or
make arrangements satisfactory to the Contractor to that effect). With respect to
all Development Operations and Production Operations, the Additional Interest
shall be a Paying Interest. GNPC shall notify the Contractor of the exercise of its
intention to acquire the Additional Interest within ninety (90) days of the Date of
Commercial Discovery. GNPC and Contractor shall agree on the mode of
financing such Additional Interest.
2.6
I f GNPC opts to take an Additional Interest as provided for in Article 2.5 then
within six (6) Months of the date of its election, GNPC shall reimburse the
Contractor for all expenditures attributable to GNPC's Additional Interest
incurred from the Date of Commercial Discovery to the date GNPC notifies
Contractor of its election to acquire the Additional Interest.
2.7
For the avoidance of doubt GNPC shall only contribute to Petroleum Costs:zyxwvutsrqponmlkjihgfedcba
\.^.J~
11
a)
incurred in respect of Development Operations in any Development
and Production Area to the extent only of any Additional Interest
acquired in such Development and Production Area under
Article 2.5; and
b)
incurred in respect of Production Operations in any Development and
Production Area both to the extent of:
i)
its ten percent (10%) Initial Interest; and
ii)
any Additional Interest acquired under Article 2.5.
GNPC may during the Exploration Period contribute to Petroleum Operations
by providing such relevant services as may be specified by the JMC from time to
time. Prior to the provision of such services, and subject to JMC approval,
Contractor must specify in writing whether GNPC is either to (i) be paid in cash
for such services by Contractor upon receipt of invoice from GNPC, or (ii) earn
credit for the costs of providing such services against GNPC's share, i f any, of
future Development and/or Production Costs. The amount of costs to be
invoiced or credit earned by GNPC pursuant to this paragraph must be
approved by the JMC prior to provision of the relevant services, and shall be at
fair market rates at which such services could be obtained under freely
competitive conditions at the time of such approval. Likewise, i f the Contractor
provides services, it shall earn credit for the costs of providing such services In
accordance with the Accounting Guide.
Upon notifying Contractor of its decision to acquire an Additional Interest
pursuant to Article 2.5, GNPC may specify in the notification one or more of the
following:
a)
that notwithstanding the provisions in Article 2.6 GNPC elects to have
Contractor fund GNPC's total proportionate share of Development Costs
incurred in respect of the Additional Interest. Such funds shall be reimbursed
to Contractor with interest at the Specified Rate from the proceeds of the sales
of GNPC's petroleum entitlement; and
b) where during the production phase it is anticipated that GNPC's petroleum
entitlement would not be sufficient to repay Contractor for GNPC's share of
Development Costs funded by Contractor in accordance with Article 2.8 (a),
GNPC shall notify the Contractor of arrangements satisfactory to the
Contractor for the repayment of any outstanding balance.
Contractor's Participating Interest in all Petroleum Operations and in all rights
under this Agreement shall be ninety percent (90%), reduced proportionately on
each Contractor Party pro rata to its Participating Interest, at any given time and
in any given part of the Contract Area by the exercise of the option of Additional
Interest of GNPC pursuant to Article 2.5 or the exercise of the Sole Risk interest
of GNPC pursuant to Article 9.
2.10
2.11
For the avoidance of doubt, the Participating Interest shall be divided as at the
Effective Date as follows:
a)
Eni Ghana shall have a forty-two point four six nine one percent
(42.4691%) interest in all Petroleum Operations and in all rights
under this Agreement and will be required to pay for the conduct of
Petroleum Operations as set out in the Petroleum Agreement pro-rata
to its interest;
b)
Vitol shall have a thirty-three point nine seven five three percent
(33.9753%) interest in all Petroleum Operations and in all rights
under this Agreement and will be required to pay for the conduct of
Petroleum Operations as set out in this Agreement pro-rata to its'
interest;
c)
Woodfields shall have a nine point five five five six percent
(9.5556%) interest in all Petroleum Operations and in all rights under
this Agreement and will be required to pay for the conduct of
Petroleum Operations as set out in this Agreement pro-rata to its'
interest; and
d)
Explorco shall have four percent (4%) interest in all Petroleum
Operations and in all rights under this Agreement and will be
required to pay for the conduct of Petroleum Operations as set out in
this Agreement pro-rata to its' interest.
As of the Effective Date, the Contract Area shall cover a total of one-thousand
one-hundred and twenty-seven kilometers squared (1127 km^) as depicted by
Annex 1 and shall from time to time during the term of this Agreement be
reduced according to the terms herein. During the term of the Agreement,
Contractor shall pay rentals to the State for the area included within the Contract
Area at the beginning of each Contract Year according to the provisions of
Article 12.4 below.
13
ARTICLE 3
EXPLORATION PERIOD
3.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
The Exploration Period shall begin on the Effective Date and, subject to
Article 22.8, shall not extend beyond six (6) years except as provided for in
accordance with this Agreement and the Petroleum Law.
a)
The Exploration Period shall be divided into an Initial Exploration
Period of three (3) years ("Initial Exploration Period") and two (2)
extension periods, the first of two (2) years and the second of one (1)
year (respectively, "First Extension Period" and "Second
Extension Period") and where applicable the further periods for
which provision is made hereafter.
b)
Where Contractor has fulfilled its obligations set out in Article 4.3
before the end of the Initial Exploration Period or, as the case may
be, the First Extension Period, and has exercised its option by
applying to the Minister in writing for an extension, the Minister will
be deemed to have granted an extension into the First Extension
Period or, as the case may be, into the Second Extension Period.
c)
For each well drilled by Contractor or with Contractor's participation
during the Initial Exploration Period beyond those referred to in
Article 4.3, the Initial Exploration Period shall be extended by three
(3) Months and the commencement and the ending of subsequent
periods shall be postponed in their entirety accordingly.
3.1.1
3.2
Where, at the end of the Initial Exploration Period or the First
Extension Period, Contractor is drilling or testing any well.
Contractor shall be entitled to continue its drilling or testing activities
for a further period as may be reasonably required to enable
Contractor to complete such work and, in the event that Contractor
notifies the Minister that the results from any such well show a
Discovery, Contractor shall be entitled further to assess the results
and determine whether such Discovery merits Appraisal, before
having either to elect to enter into the subsequent phase, or relinquish
the Contract Area. The completion of the drilling and testing
activities and decision to elect to enter into the subsequent phase or
relinquish the Contract Area, save for the Discovery Area, as the case
may be, shall be made within ninety (90) days from the expiration of
the Initial Exploration Period or the First Extension Period as
applicable. The commencement and the ending of subsequent periods
shall be postponed in their entirety accordingly.
Where at the end of the Second Extension Period Contractor
a)
is drilling or testing any well. Contractor shall be entitled to continue
its activities for a further period as may be reasonably required to
14
enable Contractor to complete such work and assess the results and,
in the event that Contractor notifies the Minister that the results from
any such well show a Discovery which merits Appraisal, Contractor
shall be entitled to retain the relevant Discovery Area for such period
as may be reasonably required to carry out an Appraisal Programme
and determine whether the Discovery constitutes a Commercial
Discovery;
b)
is engaged in the conduct of an Appraisal Programme in respect of a
Discovery which has not been completed. Contractor shall be entitled
to retain the Discovery Area for such period as may be reasonably
required to complete that Appraisal Programme and determine
whether the Discovery constitutes a Commercial Discovery;
c)
has undertaken work not falling under paragraphs (a) or (b) which is
not completed. Contractor shall be entitled to continue its activities
for such period as the Minister considers reasonable for the purpose
of enabling such work to be completed;
d)
given to the Minister a notice of Commercial Discovery pursuant to
Article 8, Contractor shall be entitled to retain the Discovery Area for
such additional period as may be required to prepare the
Development Plan in respect of the Commercial Discovery until
either:
i)
the Minister has approved the Development Plan as set out in
Article 8; or
ii)
in the event that the Development Plan is not approved by the
Minister as set out in Article 8 and the matter or matters in
issue between the Minister and Contractor have been referred
for resolution under Article 24, one (1) Month after the date
on which the final decision thereunder has been given.
3.3
Subject to Article 3.1.1, where by the end of the Initial Exploration Period or, as
the case may be, by the end of the First Extension Period, Contractor has failed to
complete its Minimum Work Obligations as specified in Article 4.3(a) or Article
4.3(b) in respect of that period (including in the circumstances contemplated in
Article 4.7(b) but has made reasonable arrangements during the Initial
Exploration Period or the First Extension Period, as applicable, to remedy its
default. Contractor shall be entitled to apply to the Minister for further extension.
The Minister may grant in his discretion an extension on the then current
applicable period subject to such reasonable terms and conditions as the Minister
may stipulate to assure performance of the work.
3.4
Save in respect of a Discovery Area:
a)
in the circumstances and subject to the limitations set forth in Section
12(3) of the Petroleum Law;
15
b)
in a case falling within the provisions of Article 3.2 (d); or
c)
in circumstances where Article 22.8 applies;
subject to Article 3.5 and Article 8, nothing in Article 3.2 shall be read or
construed as requiring the extension of the Exploration Period beyond seven (7)
years from the Effective Date.
The provisions of Articles 3.2 (a), (b) and (c) and Article 3.3 so far as they relate
to the duration of the relevant Extension Period to which Contractor will be
entitled shall be read and construed as requiring the Minister to give effect to the
provisions of Article 8 relating to the time within which Contractor must meet the'
requirements of that Article.
'
ARTICLE 4
MINIMUM E X P L O R A T I O N P R O G R A M M E
4.1
Exploration Operations shall begin as soon as practicable and in any case
not later than sixty (60) days after the Effective Date.
4.2
GNPC shall, at the request of Contractor, make available to Contractor such
records and information relating to the Contract Area as are relevant to the
performance of Exploration Operations by Contractor and are in GNPC's
possession, provided that Contractor shall reimburse GNPC for licensing the
data and for other costs reasonably incurred in procuring or otherwise
making such records and information available to Contractor.
4.3
Subject to the provisions of this Article 4, in discharge of its obligations to
carry out Exploration Operations in the Contract Area, Contractor shall
during the several phases into which the Exploration Period is divided carry
out the obligations specified hereinafter:
a)
Initial Exploration Period: Commencing on the Effective Date and
terminating three (3) years from the Effective Date.
Dy?Cnpti9P 9f C9ntR«^^pr's Minimum Wprk Qbligatipn:
(i) Acquire, process and interpret 1,000 sq. km of new 3D seismic; and
(ii) Drill one (1) Exploration Well in the Contract Area
Minimum Expenditure: Contractor's minimum expenditure for the work in
the Initial Exploration Period shall under (1) Article 4.3(a)(i) be Ten Million
United States Dollars (US$ 10,000,000) and (2) Article 4.3 (a)(ii) be ThirtyFive million United States Dollars (US$ 35,000,000) amounting to a total of
Forty-Five Million United States Dollars (US$ 45,000,000).
b)
First Extension Period: Commencing at the end of the Initial
Exploration Period and terminating two (2) years from the
expiration of the Initial Exploration Period.
Descrintion of Contractor's Minimum Work Obligation:
(i)
G&G studies; and
(ii)
Drill one (1) Exploration Well in the Contract Area.
Minimum Expenditure: Contractor's minimum expenditure for the work in
the First Extension Period shall be Forty Million United States Dollars (US$\
40,000,000).
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Second Extension Period: Commencing at the end of the First
Extension Period and terminating one (1) year from the expiration of the
First Extension Period or as may be extended under this Agreement.
Desyriptipn Qf Cpntr^ctpr's Minimum Wqrlt Qblig^t'pn:
(i)
G&G studies; and
(ii)
Drill one (1) Exploration Well in the Contract Area.
Minimum Expenditure: Contractor's minimum expenditure for the work in
the Second Extension Period shall be Forty Million United States Dollars
(US$ 40,000,000).
Work accomplished in any period in excess of the above obligations may
be applied as credit in satisfaction of work obligations called for in any
other Exploration Phase. Without prejudice to Article 23.3(e), should
Contractor fail to complete its Minimum Work Obligations for the
corresponding Exploration Phase under Article 4.3(a), (b) or (c) as
applicable. Contractor shall, without prejudice to any other obligation of
Contractor under this Agreement, pay to GNPC as a sole remedy an
amount equal to the unspent amount of the Minimum Expenditure
obligation for the relevant Exploration Phase. .
The seismic programme in Article 4.3(a), when combined with existing
data, shall be such as will enable a study of the regional geology of the
Contract Area and the preparation of a report thereon with appropriate
maps, cross sections and illustrations, as well as a geophysical survey of the
Contract Area which, when combined with existing data, shall provide:
a)
A minimum seismic grid adequate to define prospective drill sites over
prospective closures as interpreted from data available to Contractor;
and
b)
A seismic evaluation of structural and stratigraphic conditions over the
remaining portions of the Contract Area.
Each Exploration Well shall be drilled at a location and to an objective
depth determined by Contractor in consultation with GNPC. Except as
otherwise provided in Article 4.6 and 4.7 below, the minimum depth of
each obligatory Exploration Well in Articles 4.3 (b) and (c) shall be
whichever of the following is first encountered:
a)
the depth of four thousand five hundred (4,500) metres measured
from the Rotary Table Kelly Bushing (RTKB);
b)
one hundred (100) metres into the primary target; or
c)
the depth at which Contractor encounters geologic basement.
unless GNPC consents otherwise, which consent shall not be unreasonably
withheld or delayed
4.6
4.7
The minimum depth of one (1) of the obligatory Exploration Wells in
Article 4.3 shall be whichever of the following is first encountered:
a)
the depth of four thousand five hundred (4,500) metres measured
from the Rotary Table Kelly Bushing (RTKB);
b)
the depth sufficient to penetrate the shallower of (i) three hundred
fifty (350) metres into the Cenomanian or (ii) top of the Albian; and
c)
the depth at which Contractor encounters geological basement;
I f in the course of drilling an Exploration Well the Contractor concludes that
drilling to the minimum depth specified in Article 4.5 or 4.6 above is
impossible, impracticable or imprudent in accordance with International
Best Oil Field Practice, then Contractor may plug and abandon the
Exploration Well and GNPC shall have the option of either:
a)
waiving the minimum depth requirement, in which case Contractor
will be deemed to have satisfied the obligation to drill such Exploration
Well; or
b)
requiring Contractor to drill a substitute Exploration Well at a
location determined by Contractor in consultation with GNPC and to
the minimum depth set forth in Article 4.5 or 4.6 except that i f in the
course of drilling such substitute Exploration Well Contractor
establishes that drilling to the minimum depth specified in Article
4.5 or 4.6 above is impossible, impracticable or imprudent in
accordance with Intemational Best Oil Field Practice, then Contractor
may plug and abandon the substitute Exploration Well and will be
deemed to have satisfied the obligation to drill one ( I ) Exploration
Well.
The above option shall be exercised by GNPC within sixty (60) days from
the notice given by Contractor to GNPC of the completion of the plugging
and abandonment of the Exploration Well, and failure to exercise such
option shall constitute a waiver of the minimum depth requirement pursuant
to (a) above.
4.8
During the Exploration Period, Contractor shall have the right to perform
additional Exploration Operations, including without limitation performing
gravity and magnetic surveys, drilling stratigraphic wells and performing
additional geological and geophysical studies, provided the Minimum Work
Obligations are completed within the applicable period.
During the Exploration Period, Contractor shall deliver to GNPC and the
Minister reports on Exploration Operations conducted during each Quarter
within thirty(30) days following the end of that Quarter. Further requests for
information by the Minister under Section 9(1) of the Petroleum Law shall
be complied with within a reasonable time and copies of documents and
other material containing such information shall be provided to GNPC. ,
20
ARTICLE 5
RELINQUISHMENT
5.1
Except as provided in Article 5.2, 8.3, 8.6, 8.12, 8.19, 8.20, 8.21, 8.22, 8.23, 9.2,
9.10 and 14.10, Contractor shall relinquish portions of the Contract Area in the
manner provided hereafter:
a)
I f on or before the expiration of the Initial Exploration Period,
Contractor elects to enter into the First Extension Period pursuant to
Article 3.1(b) then subject to Article 5.2 at the commencement of the
First Extension Period the area retained shall not exceed seventy
percent (70%) of the Contract Area as at the Effective Date;
b)
I f on or before the expiration of the First Extension Period,
Contractor elects to enter into the Second Extension Period pursuant
to Article 3.1(b) then subject to Article 5.2 at the commencement of
the Second Extension Period the area retained shall not exceed forty
percent (40%) of the Contract Area as at the Effective Date;
c)
On the expiration of the Second Extension Period, Contractor shall
subject to Article 5.2 relinquish the remainder of the retained
Contract Area.
5.2
The provisions of Article 5.1 shall not be read or construed as requiring
Contractor to relinquish any portion of the Contract Area which constitutes or
forms part of either a Discovery Area (excluding a Discovery Area determined
by the terms of this Agreement to neither merit Appraisal nor to be a
Commercial Discovery) or a Development and Production Area; provided,
however, that i f at the end of the Initial Exploration Period or the First
Extension Period, as the case may be. Contractor elects not to enter into the First
or Second Extension Period Contractor shall relinquish the entire Contract Area,
except a Discovery Area or a Development and Production Area.
5.3
Each area to be relinquished pursuant to this Article shall be selected by
Contractor and shall be measured as far as possible in terms of continuous and
compact units of a size and shape which will permit the carrying out of
Petroleum Operations in the relinquished portions.
5.4
Contractor may voluntarily relinquish all or part of the Contract Area at any time
during the term of this Agreement on not less than ninety (90) calendar days'
notice to the State, provided Contractor has satisfied its Minimum Work
Obligations, subject to any remaining obligations with respect to abandonment,
decommissioning and replacement of facilities.
21
ARTICLE 6
JOINT MANAGEMENT C O M M I T T E E
6.1
In order that the Parties may at all times cooperate in the implementation
of Petroleum Operations, GNPC and Contractor shall not later than thirty
(30) days after the Effective Date establish a Joint Management
Committee (JMC). Without prejudice to the rights and obligations of
Contractor for day-to-day management of the operations, the JMC shall
oversee, supervise and approve the Petroleum Operations and ensure that
all approved Work Programmes and Development Plans are complied with
and also that accounting for costs and expenses and the maintenance of
records and reports concerning the Petroleum Operations are carried out in
accordance with this Agreement and the accounting principles and
procedures generally accepted as Intemational Best Oil Field Practice.
6.2
The composition of and distribution of functions within the JMC shall be
as provided hereinafter:
6.3
a)
The JMC shall be composed of two (2) representatives of GNPC and
two (2) representatives of the Contractor. Any Contractor Party not
represented on the JMC may appoint an observer to attend all JMC
meetings and shall receive copies of all notices and materials
distributed to the members of the JMC concurrently with the
distribution of such notices and materials to the JMC members.
GNPC and Contractor shall also designate a substitute or alternate for
each member. In the case of absence or incapacity of a member of the
JMC, such alternate shall automatically assume the rights and
obligations of the absent or incapacitated member;
b)
The Chairperson of the JMC shall be designated by GNPC from
amongst the members of the JMC;
c)
Contractor shall be responsible, in consultation with GNPC, for the
preparation of an agenda and supporting documents for each meeting
of the JMC and for keeping records of the meetings and decisions of
the JMC. GNPC shall have the right to inspect all records of the JMC
at any time. Contractor shall circulate the agenda and supporting
documents for each meeting to all members and the substitutes or
alternates designated pursuant to Article 6.2(a); and
d)
At any meeting of the JMC any three (3) representatives shall form a
quorum.
Meetings of the JMC shall be held and decisions taken as follows:
a)
All meetings of the JMC shall be held in Accra or such other place as"^
may be agreed upon by members of the JMC;
22
b)
The JMC shall meet at least twice per Calendar Year and at such
times as the members may agree;
c)
A meeting of the JMC may be convened by GNPC or the Contractor
giving not less than twenty (20) days' notice to the other or, in a case
requiring urgent action, notice of such lesser duration as the members
may agree upon;
d)
Decisions of the JMC shall require unanimity;
e)
Any member of the JMC may vote by written and signed proxy held
by another member;
f)
Decisions of the JMC may be made without holding a meeting i f all
representatives of GNPC and the Contractor notify their consent
thereto in the manner provided in ArticlezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPON
27;
g)
GNPC and Contractor shall have the right to bring expert advisors to
any JMC meetings to assist in the discussions of technical and other
matters requiring expert advice;
h)
The JMC may also establish such subcommittees as it deems
appropriate for carrying out its functions including:
i)
a technical subcommittee;
ii)
an audit subcommittee;
iii)
an accounting subcommittee;
iv)
a contract/procurement subcommittee; and
Subject to JMC approved compliance policies, reasonable costs and
expenses as evidenced by invoices and/or receipts related to
attendance by GNPC in or outside Accra (e.g. travel, transportation,
lodging, per diem and insurance), in accordance with applicable laws,
regulations and GNPC policies and procedures shall be borne by
Contractor and treated as Petroleum Costs.
JMC shall oversee Exploration Operations as follows:
Not later than sixty (60) days after the Effective Date and thereafter
at least ninety (90) days before the commencement of each Calendar
Year, Contractor shall prepare and submit to the JMC for its review
and approval a detailed Work Programme and budget covering all
Exploration Operations which Contractor proposes to carry out in
that Calendar Year and shall also give an indication of Contractor's
tentative preliminary exploration plans for the succeeding Calendar
Year. Where the Effective Date occurs later than June 30 in any
Calendar Year Contractor shall have the option of submitting a single
detailed Work Programme and budget covering the remaining
Months of the Calendar Year in which the Effective Date occurs and
the succeeding Calendar Year;
b)
Upon notice to GNPC, Contractor may amend any Work Programme
and budget submitted to the JMC pursuant to this Article 6.4 which
notice will state why in Contractor's opinion the amendment is
necessary or desirable. Any such amendment which increases the
total expenditure under an approved Work Programme and budget by
more than ten per cent (10%) shall require the approval of the JMC;
c)
Every Work Programme and budget submitted to the JMC pursuant
to this Article 6.4 and every revision or amendment thereof shall be
consistent with the requirements set out in Article 4.3 relating to the
minimum work and expenditure for the period of the Exploration
Period in which such Work Programme and budget fails;
d)
Contractor shall report any Discovery to GNPC promptly after such
Discovery is made and shall submit to the JMC for review its
Proposed Appraisal Programme. Within thirty (30) days of
completion of the Appraisal Programme the JMC shall meet to
discuss the results of the Appraisal Programme before submission of
the detailed Appraisal report provided for in Article 8.10;
e)
The JMC will timely review and approve Work Programmes and
budgets and, where applicable, any amendments or revisions thereto,
and Proposed Appraisal Programmes and any amendments or
revisions thereto, submitted to it by Contractor pursuant to this
Article 6, and timely give such advice as it deems appropriate which
Contractor shall consider before submitting Work Programmes and
budgets and any amendments or revisions thereto for approvals
required by law or this Agreement; and
f)
After the date of the first Commercial Discovery, Contractor shall
seek the approval of GNPC's JMC representatives, which approval
shall not be unreasonably wdthheld, on any proposal for the drilling
of any further Exploration Well or Wells not associated with the
Commercial Discovery and not otherwise required to be drilled under
Article 4.3. I f approval is not secured by Contractor, Contractor may
nevertheless elect to drill the Exploration Well or Wells at its sole
risk and the costs of such Exploration Operations shall not be
considered allowable Petroleum Costs. However, such costs shall
only be allowable Petroleum Costs for purposes of AOE i f there
arises a subsequent Commercial Discovery associated with such
additional Exploration Operations. Any such subsequent Commercial
Discovery shall be treated hereunder in the same manner as i f such
Commercial Discovery had been made in connection with operations
that were not performed as sole risk operations, including, without
limitation, participation by GNPC in such Commercial Discovery, fy^o
6.5
From the Date of Commercial Discovery, the JMC shall have supervision
of Petroleum Operations as follows:
a)
Within sixty (60) days after the Date of Commercial Discovery,
Contractor shall prepare and submit to the JMC for approval any
revisions to its aimual Work Programme and budget that may be
necessary in order to implement the Development Plan for the
remainder of that Calendar Year and, with respect to the Contract
Area (excluding the Discovery Area) for the rest of the Exploration
Period;
b)
At least ninety (90) days before the commencement of each
subsequent Calendar Year Contractor shall submit to the JMC for
review and approval a detailed Work Programme and budget setting
forth all Development and Production Operations which Contractor
proposes to carry out in that Calendar Year and the estimated cost
thereof and shall also give an indication of Contractor's plans for the
succeeding Calendar Year; and
c)
Within sixty (60) days of the Date of commencement of Commercial
Production and thereafter not later than one hundred and twenty
(120) days before the commencement of each Calendar Year
Contractor shall submit to the JMC for its approval an annual
production schedule which shall be in accordance with Intemational
Best Oil Field Practice, and shallzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIH
he designed to provide the most
efficient, beneficial and timely production of the Petroleum
resources.
6.6
Lifting schedules for Development and Production Areas and other
supplementary agreements provided for under Article 10.7 shall be subject
to JMC approval.
6.7
The JMC shall review all of Contractor's reports on the conduct of
Petroleum Operations.
6.8
Contractor's insurance programme and the programmes for training and
technology transfer submitted by Contractor and the accompanying
budgets for such schemes and programmes made for the purposes of
Article 21 shall be subject to JMC approval.
6.9
Any contract to be entered into or awarded by Contractor for the provision
of services for Petroleum Operations must comply with the provisions of
Article 20 and the JMC approved relevant tendering procedures and,
where applicable, shall be subject to approval by the JMC or its
subcommittee. At the first meeting the JMC shall approve the applicable
contract monetary value above which the award of the contracts shall be
subject to approval by the JMC or its subcommittee. Where such
applicable contract monetary value should be such as would allow the
25
operator to conduct the Petroleum Operations in a timely and efficient
manner.
6.10
I f during any meeting of the JMC the Parties are unable to reach
agreement concerning any of the matters provided for in Articles 6.4, 6.5,
6.6, 6.8 and 6.9 the matter shall be deferred for reconsideration at a further
meeting to be held not later than fifteen (15) days following the original
meeting. I f after such further meeting the Parties are still unable to reach
agreement, the matter in dispute shall be referred to the Parties' executive
management forthwith.
Failing agreement within fifteen (15) days
thereafter, the matter in dispute shall, at the request of any Party, be
referred for resolution under Article 24.
6.11
For the avoidance of doubt, the concurrence or approval of JMC
representatives shall not be unreasonably withheld or delayed with respect
to any proposal submitted to the JMC.
I
ARTICLE 7
R I G H T S AND O B L I G A T I O N S O F C O N T R A C T O R AND G N P C
7.1
Subject to the provisions of this Agreement, Contractor shall be responsible for
the conduct of Petroleum Operations and shall perform its obligations in a
workmanlike manner, with due care and expedition and in accordance with
Intemational Best Oil Field Practice, including without prejudice to the
generality of the foregoing:
a)
conduct Petroleum Operations with utmost diligence, efficiency and
economy in accordance with Intemational Best Oil Field Practice
observing sound technical and engineering practices using
appropriate advanced technology and effective equipment,
machinery, materials and methods;
b)
take all practicable steps to ensure compliance with Section 3 of the
Petroleum Law; including ensuring the recovery and prevention of
waste of Petroleum in the Contract Area in accordance with
Intemational Best Oil Field Practice;
c)
prepare and maintain in Ghana full and accurate records of all
Petroleum Operations performed under this Agreement;
d)
prepare and maintain accounts of all Petroleum Operations under this
Agreement in such a manner as to present a full and accurate record
of the costs of such Petroleum Operations, in accordance with the
Accounting Guide;
e)
disclose to GNPC and the Minister any operating or other agreement
among the Parties that constitute Contractor relating to the Petroleum
Operations hereunder, which agreement shall not be inconsistent with
the provisions of this Agreement;
f)
develop a project operating stmcture enabling GNPC either directiy
or through Explorco to develop its operating capabilities by
seconding its or Explorco's personnel to the organization of the
Operator engaged in the Petroleum Operations. Such stmcture shall
be based on the principles attached hereto as Annex 5;
g)
provide and be solely responsible for the payment of all costs related
or incidental to all services, equipment and supplies necessary for the
execution of the activities to be conducted by the Contractor under
this Agreement except as otherwise provided hereunder and the
related documents;
h)
prepare and submit in accordance with this Agreement for approval
by the JMC (i) the Development Plan and (ii) such other matters as'
are specified in tliis Agreement and tlie related documents as subject
to approval by the JMC;
i)
take all measures consistent with Intemational Best Oil Field Practice
(i) to control the flow and prevent loss or waste of Petroleum, (ii) to
prevent any injurious ingress of water and damage to Petroleum
bearing strata and (iii) to manage reservoir pressure;
j)
not to flare any Natural Gas except to the extent necessary to mitigate
or prevent an emergency for safe operations as provided in the
Development Plan, or as otherwise permitted in Article 14.2;
k)
keep the Minister, Petroleum Commission and GNPC promptly
advised in writing of all material developments which occur, or the
occurrence of which is reasonably foreseeable, affecting or highly
likely to affect Petroleum Operations;
1)
to take such steps in case of emergency, and make such immediate
expenditures as are necessary in accordance with Intemational Best
Oil Field Practice, environmental, industrial hygiene and safety
legislation and/or this Agreement and the related documents for the
protection of health, life, the envirormient and property, and to report
in reasonable detail all such steps taken and expenditures made
promptly to the Minister, Petroleum Commission and JMC;
m)
notify promptly the Minister, Petroleum Commission and GNPC i f
the Contractor becomes aware of any unustial event or circumstance
occurring in the Contract Area or such other areas where Contractor
is undertaking activities contemplated under this Agreement or the
related documents that could reasonably be expected to adversely
affect the environment;
n)
implement and administer contracts related to Petroleum Operations
entered into with Affiliates on an arm's-length basis;
o)
maintain or decommission, as appropriate, all existing facilities and
assets and all other assets used or held for use in connection with
Petroleum Operations in accordance with Intemational Best Oil Field
Practice, applicable law and this Agreement; and
p)
perform and observe each other term, covenant and agreement of the
Contractor contained in this Agreement.
In connection with its performance of Petroleum Operations, Contractor shall
have the right within the terms of and pursuant to applicable law and regulations
in effect from time to time:
a)
to establish offices in Ghana and to assign to those offices such
representatives as it shall consider necessary for the purposes of this
Agreement;
b)
to use public lands for installation and operation of shore bases, and
terminals, harbours and related facilities, petroleum storage and
processing, pipelines from fields to terminals and delivery facilities,
camps and other housing;
c)
to receive licenses and permission to install and operate such
communications. Petroleum production, processing, storage facilities,
transportation facilities (to the Delivery Point) and other facilities as
shall be necessary for the efficiency of its operations;
d)
to bring to Ghana such number of Foreign National Employees as
shall be necessary for its operations, including employees assigned
on permanent or resident status, with or without families, as well as
those assigned on temporary basis such as rotational employees and
having first given reasonable consideration to qualified Ghanaians, in
compliance with the Local Content Regulations;
e)
to provide or arrange for reasonable housing, schooling and other
amenities, permanent and temporary, for its employees and to import
personal and household effects, furniture and vehicles, for the use of
its persoimel in Ghana;
f)
to be solely responsible for provision of health, accident, pension and
life insurance benefit plans of its Foreign National Employees and
their families; and such employees shall not be required to participate
in any insurance, compensation or other employee or social benefit
programs established in Ghana;
g)
to have, together with its personnel, at all times the right of ingress to
and egress from its offices in Ghana, the Contract Area, and the
facilities associated with Petroleum Operations hereunder in Ghana
including the offshore waters, using its owned or chartered means of
land, sea and air transportation; and
h)
to engage such Subcontractors, expatriate and national, including also
consultants, and to bring such Subcontractors and their persormel to
Ghana as are necessary in order to carry out the Petroleum
Operations in a skilful, economic, safe and expeditious manner; and
said Subcontractors shall have the same rights as Contractor specified
in this Article 7.2 to the extent they are engaged by Contractor for the
Petroleum Operations hereunder.
GNPC shall use its best efforts to assist Contractor in carrying out Contractor's
obligations expeditiously and efficiently as stipulated in this Agreement, as long
as Contractor and its Subcontractors use their reasonable efforts to appropriately
complete applicable procedures and other requirements prescribed by relevant
authorities, to:
a)
establish supply bases and obtain necessary
facilities, equipment and supplies;
communications
b)
obtain necessary approvals to open bank accounts in Ghana;
c)
subject to Article 21 hereof, obtain entry visas and work permits or
any other documentation that may be required from time to time for
such number of Foreign National Employees of Contractor and its
Subcontractors engaged in Petroleum Operations and members of
their families who will be resident in Ghana, and make arrangements
for their travel, arrival, medical services and other necessary
amenities;
d)
comply with Ghana customs procedures and obtain permits for the
importation of necessary materials;
e)
obtain the necessary permits to transport documents, samples or other
forms of data to foreign countries for the purpose of analysis or
processing i f such is deemed necessary for the purposes of Petroleum
Operations;
f)
assist with the acquisition of any approvals or waivers required from
any State agencies or other ministerial or regulatory bodies under the
direct or indirect control of the State (each azyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQP
"State Agency") dealing
with
fishing,
meteorology,
navigation, environment
and
communications as required;
g)
identify through a structured and transparent process the qualified
Ghanaian personnel as candidates for employment by Contractor in
Petroleum Operations; and
h)
procure access, on competitive commercial terms to infrastructure
owned by the State, or GNPC (or its Affiliates) or any third party,
including facilities ovraed or used by contractors on oil and gas
blocks adjacent to the Contract Area.
7.4
All reasonable and documented expenses incurred by GNPC in connection with
any of the matters set out in Article 7.3 shall be borne by Contractor and be
eligible Petroleum Costs in accordance with this Agreement.
7.5
GNPC shall use its best efforts to render assistance to Contractor in emergencies
and major accidents and such other assistance as may be requested by
Contractor, provided that any reasonable expenses involved in such assistance
shall be borne by Contractor and be eligible Petroleum Costs in accordance with
this Agreement.
7.6
Subject to the provisions of this Agreement and save for Petroleum Operations
undertaken by GNPC pursuant to Article 9, Contractor shall, during the term of
this Contract, maintain and obtain insurance coverage for and in relation to
Petroleum Operations, for such amounts and against such risks as are
30
customarily or prudently insured in the intemational petroleum industry in
accordance with Intemational Best Oil Field Practice, and shall within two
months of the date of policy or renewal furnish to the Minister and the
Petroleum Commission, certificates evidencing that such coverage is in effect.
Such insurance policies shall cover the interest of GNPC as additional insured
and shall waive subrogation against GNPC. The said insurance shall, without
prejudice to the generality of the foregoing, cover:
a)
loss or damage to all installations, equipment and other assets for so
long as they are used in or in connection with Petroleum Operations;
provided, however, that i f for any reason the Contractor fails to
insure any such installation, equipment or assets, it shall replace any
loss thereof or repair any damage caused thereto;
b)
loss, damage or injury caused by pollution in the course of or as a
result of Petroleum Operations;
c)
loss of property or damage or bodily injury suffered by any third
party in the course of or as a result of Petroleum Operations for
which the Contractor may be liable;
d)
any claim for which the State may be liable relating to the loss of
property or damage or bodily injury suffered by any third party in the
course of or as a result of Petroleum Operations for which the
Contractor is liable to indemnify the State;
e)
with respect to Petroleum Operations offshore, the cost of removing
wrecks and cleaning up operations following any accident in the
course of or as a result of Petroleum Operations; and
f)
the Contractor's and/or the Operator's liability to its employees
engaged in Petroleum Operations.
7.7
The Contractor shall require its Subcontractors to obtain and maintain insurance
against the risks referred to above in Article 7.6 relating mutatis mutandis to
such Subcontractors.
7.8
Contractor shall indemnify, defend and hold the State and GNPC harmless
against all claims, losses and damages, including, without limitation, claims for
loss or damage to property or injury or death which are directly caused by or
resulting from any Petroleum Operations conducted by or on behalf of the
Contractor, derive from Contractor's Gross Negligence and Willful Misconduct,
and do not qualify as either of indirect or consequential damages, pool
formation or stmcture damage, loss of reservoir, loss of production or loss ofzyxwvutsrqponmlkji
VJ*^
profits.
ARTICLE 8
COMMERCIALITY
8zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
.1
Contractor shall submit a Discovery Notice to the Minister, the Petroleum
Commission and GNPC as soon as possible after any Discovery is made, but in
any event not later than thirty (30) days after the date any such Discovery is
made.
8.2
As soon as possible after the analysis of the test results of such Discovery is
complete and in any event not later than one hundred (100) days from the date
of such Discovery, Contractor shall by a further notice in writing to the
Minister, the Petroleum Commission and GNPC, indicate whether in the
opinion of Contractor the Discovery merits Appraisal.
8.3
Where the Contractor does not make the indication required by Article 8.2 within
the period indicated or indicates that the Discovery does not merit Appraisal,
Contractor shall, subject to Article 8.19, relinquish the Discovery Area
associated with the Discovery.
8.4
Where Contractor indicates that the Discovery merits Appraisal, Contractor shall
within one hundred and eighty (180) days from the date of such Discovery
notify the Minister and submit to the Petroleum Commission for approval and
to the Minister for information purposes a Proposed Appraisal Programme to be
carried out by Contractor in respect of such Discovery. For the avoidance of
doubt, unless otherwise instructed by the Petroleum Commission, Contractor
shall conduct a separate Appraisal for each Discovery where Contractor
indicates that such Discovery merits Appraisal.
8.5
In the absence of regulations otherwise governing the process, the Petroleum
Commission and Contractor shall adhere to the procedure set forth in this
Article 8.5 in cormection with the submission of a Proposed Appraisal
Programme. The Petroleum Commission shall within sixty (60) days of
submission of the Proposed Appraisal Programme, give the Contractor a notice
in writing stating:
a)
whether the Proposed Appraisal Programme has been approved
(outright or conditionally) or not;
b)
i f not approved, any revisions or improvements required by the
Petroleum Commission to be made to the Proposed Appraisal
Programme, and the reasons therefor; or
c)
i f conditionally approved, the conditions to the approval of the
Proposed Appraisal Programme, and the reasons therefor.
I f the Petroleum Commission fails to provide such notice after such sixty (60)
day period, such Proposed Appraisal Programme shall be deemed to be approved.
v
32
If the Petroleum Commission notifies the Contractor that the Proposed Appraisal
Programme is not approved, or the Contractor notifies the Petroleum Commission
that it does not accept the revisions or conditions required for any approval
pursuant to this Article 8.5, the Petroleum Commission and the Contractor shall
consult within thirty (30) days of the earlier of the date of the notice by the
Petroleum Commission and with a view to amending the Proposed Appraisal
Programme to be acceptable to both. Should the Petroleum Commission not
agree to so consult or should the Petroleum Commission and the Contractor fail
to agree changes required for such approval within fourteen (14) days following
said consultation. Contractor may notify the Minister and request resolution. I f
the Minister is unable to resolve the matter in a manner agreeable to all relevant
Parties within thirty (30) days from the date such notification was lodged, any
Party may request the resulting dispute arising out of this Article 8.5 shall be
resolved in accordance with Article 24.
If the Petroleum Commission has given a notice in writing pursuant to this
Article, and the Parties cannot agree on the revisions or conditions, then the
arbitration panel shall determine whether the Petroleum Commission's revisions
or conditions proposed are reasonable.In each case, the arbitration panel shall
also determine the appropriate damages and/or other award flowing from any
such unreasonableness.
8.6
Where the issue in dispute referred for resolution purstiant to Article 24 is finally
decided in favour of Contractor, the Petroleum Commission shall forthwith give
the requisite approval to the Proposed Appraisal Programme submitted by
Contractor, and where the issue in dispute referred for resolution pursuant to
Article 24 is finally decided in favour of the Petroleum Commission, Contractor
shall forthwith:
a)
amend the Proposed Appraisal Programme to give effect to the final
decision rendered under Article 24, and the Petroleum Commission
shall give the requisite approval to such revised Proposed Appraisal
Programme; or
b)
relinquish the Discovery Area.
8.7
Where Contractor seeks to amend an Appraisal Programme, it shall submit such
amendment to the JMC for review pursuant to Article 6.4(e) before submission
to the Petroleum Commission for approval.
8.8
Unless Contractor and the Petroleum Commission otherwise agree in any
particular case. Contractor shall have a period of two (2) years from the date of
Discovery to complete the Appraisal Programme. In the event Contractor
requires a period of more than the two (2) years to complete the Appraisal
Programme, Contractor shall submit a request to the Petroleum Commission for
an extension with a firm programme with timelines to justify the request.
8.9
Contractor shall commence Appraisal within one hundred and fifty (150) days
from the date of approval of the Appraisal Programme. Where the Contractor is I
unable to commence or otherwise fails to commence Appraisal within one
hundred and fifty (150) days from the date of approval of the Appraisal
Programme, GNPC shall be entitled to exercise the option provided for in
Article 9.1 to enable prompt Appraisal unless Contractor has commenced
Appraisal or obtained an extension of time for such Appraisal, provided that i f
Contractor obtains an extension of time for such Appraisal and has not
commenced Appraisal prior to the end of such extension, GNPC shall be
entitled to exercise the option provided for in Article 9.1 to enable prompt
Appraisal.
8.10
Not later than one-hundred and twenty (120) days from the date on which said
Appraisal Programme relating to the Discovery is completed, Contractor will
submit to the Minister and the Petroleum Commission a report containing the
resuhs of the Appraisal Programme. Such report shall include all available
technical and economic data relevant to a determination of commerciality,
including, but not limited to, geological and geophysical conditions, such as
structural configuration, physical properties and the extent of reservoir rocks,
areas, thickness and depth of pay zones, pressure, volume and temperature
analysis of the reservoir fluids, preliminary estimates of Crude Oil and/or
Natural Gas reserves, recovery drive characteristics, anticipated production
performance per reservoir and per well, fluid characteristics, including gravity,
sulphur percentage, sediment and water percentage and refinery assay pattern.
8.11
Not later than one-hundred and twenty (120) days from the date on which said
Appraisal Programme is completed Contractor shall, by a further notice in
writing, inform the Petroleum Commission and Minister whether the Discovery
in the opinion of Contractor is or is not a Commercial Discovery.
8.12
I f Contractor fails to notify the Minister and the Petroleum Commission as
provided in Article 8.11 or informs the Minister that the Discovery is not a
Commercial Discovery, then subject to Article 8.20, Contractor shall relinquish
such Discovery Area; provided, however, that before declaring that a
Discovery is not a Commercial Discovery, Contractor may, i f it deems
appropriate, consult with the other Parties, and may propose minor changes in
the fiscal and other provisions of this Agreement which may, in the opinion of
Contractor, affect the determination of commerciality. The other Parties may,
where feasible, and in the best interests of the Parties agree to make such
changes or modifications in the existing arrangements.
8.13
If Contractor pursuant to Article 8.11 informs the Minister that the Discovery is a
Commercial Discovery, Contractor shall not later than one hundred and eighty
(180) days thereafter, prepare and submit to the JMC, and upon approval by the
JMC, the Minister, a Development Plan.
8.14
The Development Plan referred to in Article 8.13 shall be based on detailed
engineering studies and shall include:
a)
Contractor's proposals on the delineation of the proposed
Development and Production Area and for the development of any I
reservoir(s), including the method for the disposal of Associated Gas
in accordance with the provisions of Article 14 ;
the way in which the Development and Production of the reservoir is
planned to be financed;
Contractor's proposals relating to the spacing, drilling and
completion of wells, the production, storage, processing,
transportation, gas utilization, delivery facilities and necessary
infrastructure developments required for the production, storage and
transportation (to the Delivery Point) of the Petroleum, including
without limitation:
i)
the estimated number, size and production capacity of
production facilities if any;
ii)
the estimated number of Production wells;
iii)
the particulars of feasible alternatives for transportation of the
Petroleum, including pipelines;
iv)
the particulars of onshore installations required, including the
type and specifications or size thereof; and
v)
the particulars of other technical equipment required for the
operations;
the estimate of the reserves together with the estimated annual
production profiles throughout the life of the field to be developed
pursuant to the Development Plan for Crude Oil and Natural Gas
from the Petroleum reservoirs;
tie-ins with other petroleum fields where applicable;
information on operation and maintenance;
a description of technical solutions including enhanced recovery
methods;
estimates of capital and operating expenditures;
the economic feasibility studies carried out by or for Contractor in
respect of altemative methods for Development of the Discovery,
taking into account:
i)
ii)
iii)
iv)
v)
location;
water depth (where applicable);
meteorological conditions;
estimates of capital and operating expenditures; and
any other relevant data and evaluation thereof;
Y^^^^
35
j)
the safety measures to be adopted in the course of the Development
and Production Operations, including measures to deal with
emergencies;
k)
environmental health and safety considerations arising out of the plan
of development;
1)
measures to protect the envirormient and a contingency plan for
handling of emergencies (including the provision and maintenance of
equipment stockpiles to respond to an emergency);
m)
Contractor's proposals with respect to the procurement of goods and
services obtainable in Ghana;
n)
Contractor's technology transfer plan;
o)
Contractor's
nationals;
p)
the timetable for effecting Development Operations; and
q)
a preliminary plan for decommissioning and abandoimient.
plan for training and employment of Ghanaian
8.15
The Contractor shall submit the Development Plan together with a form of parent
company guarantee as security covering all Contractor's obligations under this
Agreement, as specified in Article 8.16.
8.16
The date of the Minister's approval of the Development Plan shall be the Date of
Commercial Discovery. Within sixty (60) days from the Date of Commercial
Discovery, each Contractor Party shall provide the Minister the parent company
guarantee referred to in Article 8.15, in satisfactory form mutually agreed, for
the performance of each such Contractor Party's participating interest share of
all Contractor's obligations under this Agreement.
8.17
The Minister shall within the ninety (90) days following submission of the
Development Plan give Contractor a notice in writing stating:
a)
whether or not the Development Plan as submitted has been approved
(conditional to the submission by the Contractor of a parent company
guarantee pursuant to Article 8.16); and
b)
i f not approved, any revisions proposed by the Minister to the
Development Plan as submitted, and the reasons thereof.
If the Minister fails to approve the Development Plan within the ninety (90) day
time period described above, then the Development Plan shall be deemed to be
approved.
Where the Minister notifies the Contractor that the Development Plan is not
approved the Parties shall within a period of thirty (30) days from the date of
such notice by the Minister consult (and shall include GNPC in such
36
consultations) with a view to amending the Development Plan to be acceptable to
both. Should the Minister not agree to so consult or should the Minister and the
Contractor fail to agree changes required for such approval within fourteen (14)
days following said thirty (30) day period, any Party may refer the resulting
dispute arising out of this Article 8.17 for resolution in accordance with
Article 24.
If the Minister has given a notice in writing pursuant to clause (b) above, and the
Parties cannot agree on the revisions or conditions, then the arbitration panel shall
determine whether the Minister's revisions or conditions proposed are
reasonable.
8.18
Where the issue in dispute referred for resolution pursuant to Article 24 is finally
decided in favour of Contractor, the Minister shall forthwith give the requisite
approval to the Development Plan submitted by Contractor.
8.19
Where the issue in question referred for resolution pursuant to Article 24 is
finally decided in favour of the Minister in whole or in part, Contractor shall
forthwith:
8.20
8.21
a)
amend the proposed Development Plan to give effect to the final
decision rendered under Article 24, and the Minister shall give the
requisite approval to such revised Development Plan; or
b)
subject to Article 8.21 below relinquish the Discovery Area.
Notwithstanding the relinquishment provisions of Articles 8.3 and 8.12 above, i f
Contractor indicates that a Discovery does not at the time merit Appraisal, or
after Appraisal does not appear to be a Commercial Discovery but may merit
Appraisal or potentially become a Commercial Discovery at a later date during
the Exploration Period, then Contractor need not relinquish the Discovery Area
and may continue its Exploration Operations in the Contract Area during the
Exploration Period; provided that the Contractor shall explain to the Minister
and Petroleum Commission what additional evaluations, including Exploration
work or studies, are or may be plaimed in order to determine whether
subsequent Appraisal is warranted or that the Discovery is a Commercial
Discovery and the Minister shall approve of any such non relinquishment. Such
evaluations shall be performed by Contractor according to a specific time table
(which shall not exceed the time frame specified under Article 8.21) to be
approved by the JMC and Petroleum Commission, subject to Contractor's right
of earlier relinquishment of the Discovery Area. After completion of the
evaluations. Contractor shall make the indications called for under Article 8.3 or
8.12 and either proceed with Appraisal, confirm the Discovery is a Commercial
Discovery or relinquish the Discovery Area.
In any case, i f a Discovery is made in the Initial Exploration Period or First
Extension Period, the Contractor shall by the end of the subsequent phase (that
is the First Extension Period or Second Extension Period as the case may be),
take a decision to Appraise the Discovery or relinquish such Discovery.
Likewise, i f the Contractor has completed the Appraisal of a Discovery in the
Initial Exploration Period or First Extension Period, the Contractor shall by the
end of the subsequent phase (that is, the First Extension Period or Second
Extension Period as the case may be), take a decision to determine i f such
Discovery is a Commercial Discovery or relinquish such Discovery. In any
event, i f at the end of the Exploration Period the Contractor has neither
indicated its intent to proceed with an Appraisal Programme nor declared the
Discovery to be a Commercial Discovery, then the Discovery Area shall be
relinquished.
8.22
Upon completion of an Appraisal Programme and before Contractor makes a
determination that any Discovery is not a Commercial Discovery, Contractor
may consult with the other Parties and may make appropriate representations
proposing minor changes in the fiscal and other provisions of this Agreement
which may, in the opinion of Contractor, affect the determination of a
Commercial Discovery. The other Parties may agree to make such changes or
modifications in the existing arrangements. In the event the Parties do not agree
on such changes or modifications, then subject to Articles 8.20 and 8.21,
Contractor shall relinquish the Discovery Area.
8.23
Nothing in Articles 8.3, 8.12, 8.20 or 8.21 above shall be read or construed as
requiring Contractor to relinquish:
a)
any area which constitutes or forms part of another Discovery Area
in respect of which:
i)
ii)
b)
Contractor has given the Minister, the Petroleum Commission
and GNPC a separate notice stating that such Discovery merits
Appraisal; or
Contractor has given the Minister a separate notice indicating
that such Discovery is a Commercial Discovery; or
any area which constitutes or forms part of a Development and
Production Area.
8.24
For the avoidance of doubt, where Contractor makes a Discovery in any retained
Discovery Area or Development Area after the expiration of the Exploration
Period, Contractor shall notify the Minister of such Discovery pursuant to
Article 8.1 and, subject to its rights under Article 3, transfer such Discovery to
GNPC.
8.25
In the event a field extends beyond the boundaries of the Contract Area, the
Minister may require the Contractor to exploit said field in association with the
third party holding the rights and obligations under a petroleum agreement
covering the said field (or GNPC as the case may be). The exploitation in
association with said third party or GNPC shall be pursuant to good unitization
and engineering principles and in accordance with Intemational Best Oil Field
Practice. In the event Contractor and said third party are unable to agree to the
terms of unitization. Contractor shall notify the Minister in writing and the
Minister shall give appropriate directions to Contractor and the third party or
38
GNPC to resolve the matter in accordance with Intemational Best Oil Field
Practice.
8.26
All notices required to be submitted to the Minister under this Article 8 shall be
copied to the Petroleum Commission.
ARTICLE 9
SOLE RISK ACCOUNT
9.1
Subject to Contractors rights under Article 8, GNPC may notify Contractor that it
will, at its Sole Risk, commence to appraise a Discovery pursuant to Article 8.9,
provided that within thirty (30) days of such notification from GNPC, Contractor
may elect to commence to appraise that Discovery within its own Work'
Programme.
9.2
Where an Appraisal undertaken under Article 9.1 at the Sole Risk of GNPC
results in a determination that a Discovery is a Commercial Discovery,
Contractor may develop the Commercial Discovery upon reimbursement to
GNPC of all expenses incurred in undertaking the Appraisal and after arranging
with GNPC satisfactory terms for the payment of a premium equivalent to five
hundred percent (500%) of such expenses. Such premium shall not be counted as
cost of Petroleum Operations for the purpose of the Accounting Guide. In the
event that Contractor declines to develop said Discovery, Contractor shall
relinquish the Development and Production Area established by the Appraisal
Programme conducted by GNPC under Article 9.1.
9.3
During the Exploration Period GNPC may, at its Sole Risk, require Contractor to
continue drilling to penetrate and test horizons deeper than those contained in the
Work Programme of Contractor or required under Article 4. GNPC may also at
its Sole Risk ask the Contractor to test a zone or zones which Contractor has not
included in Contractor's test programme. Notice of this shall be given to
Contractor in writing as early as possible prior to or during the drilling of the
well, but in any case not after Contractor has begun work to complete or abandon
the well. The exercise by GNPC of this right shall be in an agreed manner (such
agreement not to be unreasonably withheld or delayed by Contractor) which does
not prevent Contractor from complying with its work obligations under Article
4.3 and is subject to health, safety and environmental considerations in
accordance with Intemational Best Oil Field Practice.
9.4
At any time before commencing such deeper drilling under Article 9.3 above
Contractor may elect to incorporate the required deeper drilling in its own
Exploration Operation, in which case any resulting Discovery shall not be
affected by the provisions of this Article 9.
9.5
Where any Sole Risk deeper drilling results in a Discovery, GNPC shall have the
right, at its Sole Risk, to appraise, develop, produce and dispose of all Petroleum
resulting from such Sole Risk deeper drilling and shall conduct such Sole Risk
operations unless GNPC proposes otherwise and Contractor agrees. Provided
however that i f at the time such Petroleum is tested from the producing horizon in
a well. Contractor's Work Programme includes a well or wells to be drilled to the
same producing horizon, and provided that the well or wells drilled by Contractor
result(s) in a Petroleum producing well producing from the same horizon.
Contractor shall, after reimbursing GNPC for all costs associated with its Sole'
Risk deeper drilling and testing in said well, have the right to include production
from that well in its total production for the purposes of establishing a
Commercial Discovery, and, i f a Commercial Discovery is subsequently
established, to develop, produce and dispose of the Petroleum in accordance with
the provisions of this Agreement.
9.6
Alternatively, i f at the time such Petroleum is tested from a producing horizon in
a well pursuant to a Sole Risk operation. Contractor's Work Programme does not
include a well to be drilled to said horizon. Contractor has the option to appraise
and /or develop, as the case may be, the Discovery for its account under the terms
of this Agreement i f it so elects within a period of sixty (60) days after such
Discovery. In such case. Contractor shall reimburse GNPC for all expenses
incurred by GNPC in connection with such Sole Risk operations, and shall make
satisfactory arrangements with GNPC for the payment of a premium equivalent
to five hundred percent (500%) of such expenses. Such premium shall not be
considered as Petroleum Costs for the purposes of the Accounting Guide.
9.7
During the term of this Agreement, GNPC shall have the right to submit a Work
Programme to the JMC to drill, at its Sole Risk, a well(s) in the Contract Area
provided that the work intended to be done by GNPC had not been scheduled for
a Work Programme to be performed by Contractor and the exercise of such right
by GNPC and the arrangements made by GNPC for undertaking such drilling do
not prevent Contractor carrying out Petroleum Operations. Within thirty (30)
days after receipt of such notice. Contractor may elect to drill the proposed
well(s) as part of Contractor's Exploration Operations or may elect to participate
in the well to be drilled by GNPC.
9.8
In the event that a well drilled at the Sole Risk of GNPC in accordance with
Article 9.7 above results in a Discovery, GNPC shall notify Contractor in writing,
and GNPC shall have the right to appraise such Discovery and develop or require
Contractor to develop, after GNPC declares a Commercial Discovery, such
Discovery for a mutually agreed reasonable service fee, so long as Contractor has
an interest in the Contract Area, GNPC taking all the interest, risk and costs and
hence having the right to all Petroleum produced from the Commercial
Discovery; provided however that Contractor has the option to appraise and/or
develop, as the case may be, the Discovery for its account under the terms of this
Agreement i f it so elects within a period of sixty (60) days after receipt of
GNPC's written notice of such Discovery.
9.9
Contractor shall reimburse GNPC for all expenses incurred by GNPC in
cormection with such Sole Risk operations, and shall make satisfactory
arrangements with GNPC for the payment of a premium equivalent to five
hundred percent (500%) of such expenses before exercising the option under
Article 9.8. Such premium shall not be considered as Petroleum Costs for the
purposes of the Accounting Guide.
9.10 In the event that Contractor declines to exercise its option in Article 9.8 or no
agreement is reached on the service fee arrangement as provided for in Article
9.8, Contractor shall relinquish the Development and Production Area associated
with such Commercial Discovery.
9.11 Sole Risk operations under this Article 9 shall not extend the Exploration Period
nor the term of this Agreement and Contractor shall complete any agreed
programme of work commenced by it under this Article at GNPC's Sole Risk,
and subject to such provisions hereof as the Parties shall then agree, even though
the Exploration Period as defined in Article 3 or the term of this Agreement may
have expired.
9.12 GNPC shall indemnify and hold harmless Contractor against all damages, losses,
actions, claims, demands and proceedings whatsoever, including, but not limited
to, actions, claims, demands and proceedings brought by any third party or the
State against the Contractor, and arising out of or in connection with Sole Risk
operations under this Article 9 unless such damages, losses, actions, claims,
demands and proceedings are directly caused by Contractor's Gross Negligence
or Wilful Misconduct.
A R T I C L E 10
SHARING O F CRUDE O I L
10.1
10.2
Gross Production of Crude Oil from each Development and Production Area
shall (subject to a Calendar Year adjustment developed under the provisions of
Article 10.7) be distributed amongst the Parties in the following sequence and
proportions:
a)
ten percent (10%) of the Gross Production of Crude Oil shall be
delivered to the State as R O Y A L T Y , pursuant to the provisions of
the Petroleum Law. Upon notice to Contractor, the State shall have
the right to elect to receive cash in lieu of its royalty share of such
Crude Oil. The State's notice shall be given to Contractor at least
ninety (90) days in advance of each lifting period, such periods to be
established pursuant to the provisions of Article 10.7. In such case,
said share of Crude Oil shall be delivered to Contractor and it shall
pay to the State the value of said share in cash at the relevant
weighted average Market Price for the relevant period as determined
in accordance with Article 11.7;
b)
After distribution of such amounts of Crude Oil as are required
pursuant to Article 10.1(a), the amount of Crude Oil, i f any, shall be
delivered to GNPC to the extent it is entitled for Sole Risk operations
under Article 9;
c)
After distribution of such amounts of Petroleum as are required
pursuant to Articles 10.1(a) and 10.1(b), the remaining Crude Oil
produced from each Development and Production Area shall be
distributed to Contractor and, subject to Article 10, to GNPC on the
basis of their respective interests pursuant to Article 2;
d)
The State's AOE (as defined under Article 10.2), i f any, shall be
distributed to the State out of the Contractor's share of Crude Oil
determined under Article 10.1(c). The State shall also have the right
to elect to receive cash in lieu of the AOE share of Crude Oil
accorded to it pursuant to Article 10.2. Notification of said election
shall be given in the same notice in which the State notifies
Contractor of its election to receive cash in lieu of Crude Oil under
Article 10.1(a). In such case, said share shall be delivered to
Contractor and it shall pay to the State the value of said share in cash
at the relevant weighted average Market Price for the relevant period
as determined in accordance with Article 11.7;
At any time the State shall be entitled to a portion of Contractor's share of Crude
Oil then being produced from each separate Development and Production Area
(hereinafter referred to as "Additional Oil Entitlements" or "AOE") on the
basis of the after-tax post-inflation-adjusted rate of return ("ROR") which
Contractor has achieved with respect to such Development and Production Area
as of that time. Contractor's ROR shall be calculated on its NCF and shall be
determined separately for each Development and Production Area at the end of
each Month in accordance with the following computation:
a)
Definitions:
"NCF" means Contractor's net cash flow for the Month for which the
calculation is being made, and shall be computed in accordance with the
following formula:
NCF = X - y - z
where
"x"
equals all revenues received during such Month by Contractor from
the Development and Production Area, including an amount computed by
multiplying the amount of Crude Oil taken by Contractor during such
Month in accordance with Articles 10,1(c), excluding such Crude Oil
taken by Contractor for payment of interest in respect of Petroleum Costs
incurred by Contractor on GNPC's behalf, by the Market Price applicable
to such Crude Oil during the Month when lifted, plus any other proceeds
specified in the Accounting Guide received by Contractor, including,
without limitation, the proceeds from the sale of any assets to which
Contractor continues to have title. For the avoidance of doubt, "x" shall
not include revenues from Crude Oil lifted by Contractor which is part of
another Party's entitlement (e.g. Royalty, Crude Oil relating to the State's
AOE delivered to Contractor because the State has elected to receive cash
in lieu of Crude Oil, Crude Oil purchased by Contractor from GNPC or
the State) but shall include revenues from Crude Oil owned by Contractor
but lifted by another Party (e.g. Crude Oil purchased by GNPC or the State
from Contractor).
"y" equals one-twelfth (V12) of the income tax paid by the Contractor to
the State with respect to the Calendar Year in respect of the Development
and Production Area. I f there are two (2) or more Development and
Production Areas, the total income tax paid by
Contractor in accordance with the Income Tax Law shall for purposes of
this calculation be allocated to the Development and Production Area on
the basis of hypothetical tax calculations for the separate Development and
Production Areas. The hypothetical tax calculation for each Development
and Production Area shall be determined by allocating the total amount of
tax incurred for each Calendar Year by Contractor under the Income Tax
Law to each Development and Production Area based on the ratio that the
chargeable income from a given Development and Production Area bears
to the total chargeable income of Contractor. The chargeable income of
Contractor is determined under the Income Tax Law and the chargeable
income of a Development and Production Area shall be calculated by
deducting from the gross income derived from or allocated to that Area
those expenses deductible under the Income Tax Law which are
reasonably allocable to that Area and with respect to the Development and
Production Area with the earliest date of Commercial Production, those
expenses deductible under section 3 of the Income Tax Law which are not
attributable to any Development and Production Area. A negative
chargeable income for an Area shall be treated as zero for purposes of this
allocation and not more (or less) than the total income tax paid by
Contractor shall be allocated between the Areas.
"z" equals all Petroleum Costs specified in the Accounting Guide and
expended by Contractor during such Month or with respect to
abandonment costs, those calculated in accordance with Article 12.11 or
actually incurred, as the case may be, with respect to the Development and
Production Area, including any Petroleum Costs paid by Contractor on
GNPC's behalf, and not reimbursed by GNPC within the Month, provided
that all Petroleum Costs for Exploration Operations not directly
attributable to a specific Development and Production Area shall for
purposes of this calculation be allocated to the Development and
Production Area having the earliest date of Commencement of
Commercial Production.
Where Petroleum Costs for Exploration
Operations are not directly attributable to a specific Development and
Production Area during a Month, but are directly attributable to a
subsequently delineated Development and Production Area, then
Contractor may elect either to maintain the original allocation or reallocate
such Petroleum Costs to the newly delineated Development and
Production Area to which they are directly attributable and provided
further that for the purpose of the ROR calculation Petroleum Costs shall
not include any amounts in respect of interest on loans obtained for the
purposes of carrying out Petroleum Operations.
"FA„", "SA„", "TA„", "YA„" and "ZA„" means First Account, Second
Account, Third Account, Fourth Account and Fifth Account, respectively,
and represent amounts as of the last day of the Month in question as
determined by the formulae in (b) below.
"FA„.i", "SA„.i", "TA„.r', "YA„.i", and "ZA„.i", respectively, mean the
lesser of (i) the FAn, SAn, TAn, YAn or ZAn, as the case may be, as of the
last day of the Month immediately preceding the Month in question, or (ii)
zero. Stated otherwise, FAn.i shall equal FAn as of the last day of the
Month immediately preceding the Month in question i f such FAn was a
negative number, but shall equal zero i f such FAn was a positive number.
Likewise, SAn-i shall equal SAn as of the last day of the Month
immediately preceding the Month in question i f such SAn was a negative
number, but shall equal zero i f such SAn was a positive number. Likewise
TAn-i shall equal TAn as of the last day of the Month immediately
preceding the Month in question i f such TAn was a negative number, but
shall equal zero i f such TAn was a positive number. Likewise YAn.i shall
equal YAn as of the last day of the Month immediately preceding the
Month in question i f such YAp was a negative number but shall equal zero
if such TAn was a positive number. Likewise, ZAn.i shall equal ZAn as of
the last day of the Month immediately preceding the Month in question i f
such ZAn was a negative number, but shall equal zero i f such ZAn was a
positive number. In the ROR calculation for the first Month of Petroleum
Operations, FAn.i, SAn-i, TAn-i, YAn-i and ZAn-i shall be zero.
"i" for the Month in question equals one (1) subtracted from the quotient
of the United States Industrial Goods Wholesale Price Index
("USIGWPI") for the second Month preceding the Month in question
(e.g. use August data for October's computation) as first reported in the
Intemational Financial statistics of the Intemational Monetary Fund,
divided by the USIGWPI for the same second preceding Month of the
immediately preceding Calendar Year as first reported in the International
Financial Statistics of the Intemational Monetary Fund. I f the USIGWPI
ceases to be published, a substitute U.S. Dollar-based price index shall be
used.
"n" refers to the nth Month in question.
"n-1" refers to the Month immediately preceding the nth Month
b)
Formulae:
FA
FA _ f i , ( 0 . 1 2 5 . O i l ' , „ C F
12
SA
SA
\5 + i
1 +
)
12
+ NCF
In the calculation of SAn an amount shall be subtracted from NCF
identical to the value of any AOE which would be due to the State i f
reference were made hereunder only to the FAn.
TA
TA
1+
(0.225 +
12
+ NCF
In the calculation of TAn an amount shall be subtracted from NCF
identical to the value of any AOE which would be due to the State i f
reference were made hereunder only to the FAn and SAn.
YA „ =
YA
1+
(0.275 + / )
12
+ NCF
46
In the calculation of YA^ an amount shall be subtracted from NCF
identical to the value of any AOE which would be due to the State i f
reference were made hereunder only to the FAn, SAn and TAn
TA
^ (0.275 + / ) ^
12
+ NCF
In the calculation of ZAn an amount shall be subtracted from NCF
identical to the value of any AOE which would be due to the State i f
reference were made hereunder only to the FAn, SAn, TAn and YAn.
c)
Prospective Application:
The State's AOE measured in Barrels of oil will be as follows:
i)
I f FAn, SAn, TAn, YAn and ZAn are all negative, the State's
AOE for the Month in question shall be zero;
ii)
I f FAn is positive and SAn, TAn, YAn and ZAn are all negative,
the State's AOE for the Month in question shall be equal to
the absolute amount resulting from the following monetary
calculation:
ten (10%) of the FAn for that Month divided by the weighted
average Market Price as determined in accordance with Article
11.7.
iii)
I f both FAn and SAn are positive, but TAn, YAn and ZAn are
negative, the State's AOE for the Month in question shall be
equal to an absolute amount resulting from the following
monetary calculation:
the aggregate of ten (10%>) of FAn for that Month plus fifteen
percent (15%) of the SAn for that Month all divided by the
weighted average Market Price as determined in accordance with
Article 11.7.
iv)
I f FAn, SAn and TAn are all positive but YAn and ZAn is
negative, the State's AOE for the Month in question shall be
equal to the absolute amount resulting from the following
monetary calculation: the aggregate of ten (10%) percent of
the FAn for that Month plus fifteen (15%) percent of the SAn
for that Month plus twenty two point five (22.5%) percent of
the TAn for that Month all divided by the weighted average
Market Price as determined in accordance with Article 11.7.
v)
I f FAn, SAn, TAn and YAn are all positive but ZAn is negative,
the State's AOE for the Month in question shall be equal to
the absolute amount resulting from the following monetary
calculation:
the aggregate of ten (10%) percent of the FAn for that Month plus
fifteen (15%) percent of the SAn for that Month plus twenty two
point five (22.5%) percent of the TAn for that Month plus twenty
seven point five (27.5%) percent of the YAn for that Month all
divided by the weighted average Market Price as determined in
accordance with Article 11.7.
vi)
I f FAn, SAn, TAn, YAn and ZAn are all positive, the State's
AOE for the Month in question shall be equal to the absolute
amount resulting from the following monetary calculation:
the aggregate of ten (10%) percent of the FAn for that Month plus
fifteen (15%) percent of the SAn for that Month plus twenty two
point five (22.5%) percent of the TAn for that Month plus plus
twenty seven point five (27.5%) percent of the YAn for that Month,
plus plus twenty seven point five (27.5%) percentof the ZAn for that
Month all divided by the weighted average Market Price as
determined in accordance with Article 11.7.
The AOE calculations shall be made in U.S. Dollars with all nondollar expenditures converted to U.S. Dollars in accordance with
Section 1.3.5 of Annex 2. When the AOE calculation cannot be
definitively made because of disagreement on the Market Price or
any other factor in the formulae, then a provisional AOE calculation
shall be made on the basis of Contractor's good faith estimates of
such factors and such provisional calculation shall be subject to
correction and revision upon the conclusive determination of such
factors, and appropriate retroactive adjustments shall be made.
The AOE shall be calculated on a monthly basis, with the AOE to be
paid commencing with the first Month following the Month in which
the FAn, SAn, TAn, YAn or ZAn, (as applicable) becomes positive.
Because the precise amount of the AOE for a Calendar Year czinnot
be determined with certainty until after the end of that Calendar Year,
deliveries (or payments in lieu) of the AOE with respect to a Month
shall be made during such Calendar Year based upon the
Contractor's good faith estimates of the amounts owing, with any
adjustments foUovsdng the end of the Calendar Year to be settled
pursuant to the procedures agreed to pursuant to Article 10.7. Final
calculations of the AOE shall be made within thirty (30) days
following the filing by the Contractor of the armual tax return for
such Calendar Year pursuant to the Petroleum Income Tax Law and
this Agreement, and the amount of the AOE shall be appropriately
adjusted in the event of a subsequent adjustment of the amount of tax
owing on such term.
10.3
GNPC shall act as agent for the State in the collection of all Petroleum accruing
to the State under this Article 10 and delivery to GNPC by Contractor shall
discharge Contractor's liability to deliver the share of the State.
10.4
The State or GNPC, having met the requirements of Article 15.1, may elect, in
accordance with terms and conditions to be mutually agreed by the Parties, that
all or part of the Crude Oil to be distributed to the State or to GNPC pursuant to
this Article shall be sold and delivered by the State or GNPC to Contractor or its
Affiliate for use and disposal and in such case Contractor or its Affiliate shall pay
to the State or to GNPC, as the case may be, the Market Price for any Crude Oil
so sold and delivered. Market Price for purposes of this Article 10.4 shall be the
amounts actually realized by Contractor or said Affiliate on hs resales of said
Crude Oil in arm's length commercial transactions, or for its other resales or
dispositions of said Crude Oil, based upon Market Price determined in the
manner specified in Article 11.7(b).
10.5
Ownership and risk of loss of all Crude Oil produced from the Contract Area
which is purchased, and all of its percentage Participating Interest or other Crude
Oil lifted, by Contractor shall pass to Contractor at the outlet flange the zyxwvutsrqponml
("Delivery Point") of the marine terminal or other storage facility for loading
into tankers or other transportation equipment referred to in Article 11.1.
10.6
Subject to the provisions of Article 15 hereof. Contractor shall have the right
freely to export and dispose of all the Petroleum allocated and/or delivered to it
pursuant to this Article.
10.7
The Parties shall through consultation enter into supplementary agreements
concerning Crude Oil lifting procedures, lifting and tanker schedules, loading
conditions. Crude Oil metering, and the settlement of lifting imbalances, i f any,
among the Parties at the end of each Calendar Year. The Crude Oil to be
distributed or otherwise made available to the Parties in each Calendar Year in ,
accordance with the preceding provisions of this Article shall insofar as possible
be in reasonably equal monthly quantities.
10.8
To assist in the making of the AOE calculation in accordance with Article 10.2,
there is attached as Annex 4 to this Agreement a worked example of the
calculation using hypothetical figures, rates and thresholds, for the purpose of |)^
illustration only.
49
r
A R T I C L E 11
M E A S U R E M E N T AND P R I C I N G O F C R U D E O I L
11.1
Crude Oil shall be delivered by Contractor to storage tanks or other suitable
holding facility constructed, maintained and operated in accordance with
applicable laws and Intemational Best Oil Field Practice. Cmde Oil shall be
metered or otherwise measured for quantity and tested for quality in such storage
tanks for all purposes of this Agreement. Any Party may request that
measurements and tests be done by an internationally recognized inspection
company. Contractor shall arrange and pay for the conduct of any measurement
or test so requested provided, however, that in the case of (1) a test requested for
quality purposes and/or (2) a test requested on metering (or measurement)
devices, or where the test results demonstrate that such devices are accurate
within acceptable tolerances agreed to by the Parties or i f not established by the
Parties, then in accordance with Intemational Best Oil Field Practice, the Party
requesting the test shall reimburse Contractor for the costs associated with the
test or tests.
11.2
GNPC or its authorized agents shall have the right:
a)
to be present at and to observe such measurement of Crude Oil;
b)
to examine and test whatever appliances are used by Contractor
therefore; and
c)
to install a device or equipment, at GNPC's sole risk, expense and
liability, for the purpose of determining the quantity and quality of
Cmde Oil.
11.3
In the event that GNPC considers Contractor's methods of measurement to be ,
inaccurate, GNPC shall notify Contractor to this effect and the Parties shall meet
within ten (10) days of such notification to discuss the matter. Where after thirty
(30) days the Parties cannot agree over the issue, they shall refer for resolution
under Article 24 the sole question of whether Contractor's method of measuring
Cmde Oil is accurate and reasonable.
Retrospective adjustments to
measurements shall be made where necessary to give effect to the decision
rendered under Article 24.
11.4
I f upon the examination or testing of appliances provided for in Article 11.2 any
such appliances shall be discovered to be defective:
a)
Contractor shall take immediate steps to repair or replace such
appliance; and
b)
subject to the establishment of the contrary, such error shall be
deemed to have existed for three (3) Months or since the date of the
last examination and testing, whichever occurred more recently.
11.5
In the event that Contractor desires to adjust, repair or replace any measuring
appliance, it shall give GNPC reasonable notice to enable GNPC or its authorized
agent to be present.
11.6
Contractor shall keep full and accurate accounts concerning all Petroleum
measured as aforesaid and provide GNPC with copies thereof on a monthly basis,
not later than ten (10) days after the end of each Month.
11.7
The Market Price for Crude Oil delivered to Contractor hereunder shall be
established with respect to each lifting or other period as provided elsewhere in
this Agreement as follows:
a)
on Crude Oil sold by Contractor in arm's length commercial
transactions (defined in Article 11.7(c) below), the Market Price shall
be the price actually realized by Contractor on such sales;
b)
on sales of Crude Oil by Contractor not in an "arm's length
commercial transaction" (defined by Article 11.7(c) below), on
exports by Contractor without sale or on sales under Article 15.2, the
Market Price shall be the price determined by reference to world
market prices of comparable Crude Oils sold in arm's length
transactions for export in the major world petroleum markets, and
adjusted for oil quality, location, timing and conditions of pricing,
delivery and payment provided that in the case of sales under Article
15.2 where such sales relate to part only of Contractor's entitlement,
prices actually realized by Contractor in sales of the balance of its
proportionate share falling within Article 11.7(a) above shall be taken
into account in determining Market Price. For purposes of this
Article 11.7(b), "comparable Crude Oils" shall mean Crude Oils of
similar API gravity, sulphur content, and acidity, and i f Contractor
carmot identify comparable Crude Oils for the purposes of this
Article, the Parties may agree on an altemative method for
establishing a comparable Crude Oil;
c)
sales in "arm's length commercial transactions" shall mean sales
to purchasers independent of the seller, which do not involve Crude
Oil exchange or barter transactions, government to govenmient
transaction, sales directly or indirectly to Affiliates, or sales
involving consideration other than payment in U.S. Dollars or
currencies convertible thereto, or affected in whole or in part by
considerations other than the usual economic incentives for
commercial arm's length Crude Oil sales;
d)
the price of Crude Oil shall be expressed in U.S. Dollars per Barrel,
F.O.B. the point of delivery by Contractor; and
e)
i f Cmde Oils of various qualities are produced from the Contract
Area, the Market Price shall be determined separately for each type
sold and/or exported by Contractor, only to the extent that the^
51
different quality grades remain segregated through to the point where
they are sold, and i f grades of different quality are commingled into a
common stream. Contractor and GNPC shall agree on an equitable
methodology for assessing relative value for each grade of Crude Oil
comprising the blend and shall implement the agreed methodology
for having the producer(s) of higher quality Crude Oil(s) be
reimbursed by the producer(s) of lower quality Crude Oil(s).
11.8
Contractor shall provide to GNPC information in accordance with Section 7 of
the Accounting Guide on each lifting which shall include the buyer of the cargo,
sales basis with respect to benchmark Crude Oil, the pricing basis, the
differential, any deductions and the Market Price determined by it for each lifting
not later than thirty five (35) days after the end of such lifting. For the purposes
of this Article 11.8 the obligations of Parties comprising Contractor shall be
several.
11.9
If GNPC considers that the Market Price notified by Contractor was not correctly
determined in accordance with the provisions of Article 11.7, it shall so notify
Contractor not later than thirty (30) days after notification by Contractor of such
price, and GNPC and Contractor shall meet not later than twenty (20) days
thereafter to agree on the correct Market Price.
11.10 In the event that GNPC and Contractor fail to agree upon the commencement of
meetings for the purpose described in Article 11.9 above, the Market Price shall
be referred for determination in accordance with Article 24 of this Agreement.
11.11 Pending a determination under Article 11.10, the Market Price will be deemed to
be the last Market Price agreed or determined, as the case may be, or if there has
been no such previous agreement or determination, the price notified by
Contractor for the lifting in question under Article 11.7. Should the determined
price be different from that used in accordance with the foregoing then the
difference plus interest at the Specified Rate shall be paid in cash by or to
Contractor, as the case may be, within thirty (30) days of such determination. >
52
A R T I C L E 12
T A X A T I O N AND O T H E R I M P O S T S
12.1
Subject to applicable laws and regulations in effect from time to time, the taxes, duties,
fees and other imposts that shall be imposed by the State or any political subdivision or
any entity on Contractor, its Subcontractors, Affiliates and Shareholders in respect of
Petroleum Operations as of the Effective Date shall be the following:
(i)
Royalty as provided for in Article 10 and 14.16 (a)
(ii)
Petroleum income tax in accordance with the provisions of the
Income Tax Law and shall be levied at the rate of thirty five
percent (35%);
(iii)
Additional Oil Entitlement as provided for in Article 10
(iv)
Withholding tax at a rate of fifteen per cent (15%) shall be
deducted from payments by Contractor to a Subcontractor or
Affiliate in respect of works and services for or in connection
with this Agreement;
(v)
Withholding tax at a rate of 8% shall be deducted from
dividends paid to Shareholders;
(vi)
Gain/profit arising from the sale, transfer, disposal or
assignment of any interest in this Agreement and sale of assets
shall be subject to tax in accordance with the provisions of the
Income Tax Law;
12.2
The Ghana income tax law applicable generally to individuals who are not
employed in the petroleum industry shall apply in the same fashion and at the
same rates to employees of Contractor, its Affiliates, and its Subcontractors;
provided, however, that Foreign National Employees of Contractor, its
Affiliates, and its Subcontractors, shall be exempted from income tax and
withholding tax liabilities unless they are resident in Ghana for more than thirty
(30) continuous days or sixty (60) days in aggregate in any Calendar Year.
12.3
Payments for rental of State property, public lands, or for the provisions of
specific services requested by Contractor from public enterprises; provided,
however, that the rates charged Contractor for such rentals or services shall not
exceed the prevailing rates charged to other members of the public who receive
similar services or rentals;
12.4
Surface rentals payable to the State pursuant to Section 18 of the Petroleum Law
per square kilometre of the area remaining at the beginning of each Contract
Year as part of the Contract Area, in the amounts as set forth below.
Phase of Operation
Surface Rentals Per Annum
Initial Exploration Period
US $50 per sq. km.
First Extension Period
US$100 persq.km.
Second Extension Period
US$100 persq.km.
Development & Production Area
US $200 per sq. km.
These rentals shall be pro-rated where the beginning of a period and the end of a
period, or the creation of a Development and Production Area occurs during the
course of a Calendar Year.
12.5
Taxes, duties, fees or other imposts of a minor nature.
12.6
Contractor shall not be liable for any export tax on Petroleum exported from
Ghana, and no duty or other charge shall be levied on such exports. Vessels or
other means of transport used in the export of Contractor's Petroleum from
Ghana shall not be liable for any tax, duty, or other charge by reason of their use
for that purpose.
12.7
Subject to the local purchase obligations hereunder. Contractor and
Subcontractors may import into Ghana all plant, equipment and materials to be
used solely and exclusively in the conduct of Petroleum Operations without
payment of customs and other duties and taxes on imports save minor
administrative charges;
PROVIDED THAT:
a)
GNPC shall have the right of first refusal for any item imported duty
free under this Article which is later sold in Ghana; and
b)
where GNPC does not exercise its right of purchase. Contractor,
Affiliates, and Subcontractors may sell to any other person subject to
the relevant law in effect and as amended from time to time;
12.8
Contractor shall not be liable to pay VAT in respect of plant, equipment, and
materials, and related services supplied in Ghana, to be used solely and
exclusively in the conduct of Petroleum Operations;
12.9
Foreign National Employees of Contractor or its Affiliates, and of its
Subcontractors, shall be permitted to import into Ghana fi-ee of import duty,
their personal and household effects in accordance with Section 22.7 of the
Ghana National Petroleum Corporation Law 1983 (PNDCL 64); provided,
however, that no property imported by such employee shall be resold by such
employee in Ghana except in accordance with Article 12.7;
12.10 Subject to GNPC's rights under Article 19, Contractor, Subcontractors, and
Foreign National Employees shall have the right to export fi-om Ghana all items
54
imported duty free. Such exports shall be exempt from all customs and other
duties, taxes, fees, and charges on exports save minor administrative charges;
12.11 Subject to guidelines to be issued by the Minister, the Contractor shall make
contributions to a decommission fund based on the estimated costs of
abandormient in proportion to its Participating Interest. Such contribution shall
be allowed as deduction from assessable income from the year of assessment the
contributions commenced. In the year of assessment in respect of which
decommission has been completed in accordance with an approved
decommission plan, the surplus fund shall be treated as chargeable income and
subject to tax. The amount left after tax shall be subject to Additional Oil
Entitlement (AOE) at the highest rate at which the Contractor paid AOE during
the period of contributions to the relevant decommission fund. Any surplus after
payment of the tax and AOE shall revert to the Contractor;
12.12 It is the intent of the Parties that payments by Contractor of tax levied by the
Income Tax Law or any other tax imposed on Contractor qualify as creditable
against the income tax liability of each company comprising Contractor in its
jurisdiction. Should the fiscal authority involved determine that the Income Tax
Law does not impose a creditable tax, the Parties agree to negotiate in good faith
with a view to establishing a creditable tax on the precondition that no adverse
effect should occur to the economic rights of GNPC or the State.
12.13 All tax returns prepared and payments made by Contractor and its Affiliates or
Subconuactors, and Foreign National Employees thereof, shall be in United
States Dollars.
A R T I C L E 13
FOREIGN EXCHANGE TRANSACTIONS
13.1
Foreign currency obtained from or relating to any transaction in Petroleum
under this Agreement shall be governed by the Foreign Exchange Act.
13.2
Contractor shall, for the purpose of this Agreement, be entitled to receive, remit
with notice to the Bank of Ghana, keep and utilise freely abroad all the foreign
currency obtained from the sales of the Petroleum assigned to it by this
own
Agreement or purchased hereunder, or from transfers, as well as itszyxwvutsrqponmlkjihgfedcbaZ
capital, receipts from loans and in general all assets thereby acquired abroad.
Upon making adequate arrangements with regard to its commitment to conduct
Petroleum Operations, Contractor shall be free to dispose of this foreign
currency or assets as it deems fit.
13.3
Contractor shall have the right to open and maintain in Ghana, bank accounts in
foreign currency and Ghanaian currency. No restriction shall be made on the
import by Contractor in an authorised manner of funds assigned to the
performance of the Petroleum Operations and Contractor shall be entitled to
purchase Ghanaian currency, US dollars or other foreign currencies, through
authorised means, without discrimination, at the prevailing rate of exchange.
13.4
Contractor shall be entitled to convert into foreign currencies of its choice
funds imported by Contractor for the Petroleum Operations and held in Ghana
which exceeds its local requirements at the prevailing rate of exchange referred
to in Article 13.3 and remit and retain such foreign currencies outside Ghana.
13.5
In the event of resale by Contractor or its Affiliate of Crude Oil purchased from
the State or GNPC, the State or GNPC shall have the right to request payment
for such sales of its share of production to Contractor or its Affiliate to be held
in the foreign currency in which the resale transaction took place or in United
States Dollars.
13.6
Contractor shall have the right to make direct payments outside of Ghana from
its home offices abroad, and elsewhere, to its Foreign National Employees, and
to those of its Subcontractors and suppliers 'not resident in Ghana' (as defined
in the Income Tax Law) for wages, salaries, purchases of goods and
performance of services, whether imported into Ghana or supplied or
performed therein for Petroleum Operations carried out hereunder, in
accordance with the provisions of this Agreement, in respect of services
performed within the framework of this Agreement, and such payments shall
be considered as part of the costs incurred in Petroleum Operations. In the
event of any changes in the location of Contractor's home or other offices.
Contractor shall so notify GNPC and the State.
r
13.7
All payments which this Agreement obligates Contractor to make to GNPC or
the State, including income taxes, shall be made in United States Dollars,
except as requested otherwise pursuant to Article 13.5 above. A l l payments
shall be made by appropriate means of wire transfer in immediately available
funds to a bank account in Ghana open in the name and to the benefit of GNPC
or the Stateand reasonably accessible to Contractor by way of it being able to
receive payments made by Contractor and give a confirmation of receipt
thereof, or in such other manner as may be mutually agreed.
13.8
All payments which this Agreement obligates GNPC or the State to make to
Contractor shall be made in United States Dollars. All payments shall be made
by electronic transfer (or in such other maimer as may be mutually agreed) in
immediately available funds to a bank to be designated by Contractor, and
GNPC or the State and give confirmation of receipt
reasonably accessible tozyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
thereof.
r
A R T I C L E 14
S P E C I A L PROVISIONS F O R NATURAL GAS
PART I - G E N E R A L
All Natural Gas produced by Contractor in association with GNPC under this
Agreement shall be subject to the terms of Article 14 of this Agreement.
14.1 Contractor shall have the right to use Natural Gas produced from any
Development and Production Area for Petroleum Operations within the
Contract Area such as reinjection for pressure maintenance and/or power
generation at no cost.
14.2 Contractor shall not flare nor vent Natural Gas except:
a)
to the extent provided for in an approved Development Plan;
b)
during production testing operations;
c)
when required for operational safety and the safety of persons
engaged in Petroleum Operations in accordance with Intemational
Best Oil Field Practice; or
d)
as otherwise authorised by the Minister.
14.3 Contractor shall have the right to extract and dispose of liquid hydrocarbons
pursuant to the provisions of this Agreement relating to Crude Oil. Residual
Natural Gas remaining after the extraction of liquid hydrocarbons is subject to
the provisions of this Article 14.
PART II - ASSOCIATED GAS
14.4 The Development Plan of each Development and Production Area shall include
a plan of utilization for Associated Gas.
14.5 I f Contractor considers that production, processing and utilisation of
Associated Gas from any Development and Production Area is not required for
Petroleum Operations and/or non-economic for sale, GNPC or any State
appointed agency, body or Subcontractor shall have the option to offtake
Contractor's share of such Associated Gas at the outlet flange of the gas-oil
separator on the Crude Oil production facility, at its sole risk and expense for
its own use by paying to Contractor a nominal price of US$0.0001 per MMbtu.
GNPC and Contractor shall work together to develop the appropriate interface
between Gas infrastructure owned by the State and/or GNPC and Contractor's .
proposed Development Plan and to that end shall include:
( r ^
58
< ^
a)
a statement of the facilities necessary for the delivery to GNPC (or
any State appointed agency, body, or Subcontractor) of such
Associated Gas;
b)
a plan for the reinjection of Associated Gas into the reservoir i f
needed for pressure support;
c)
a plan for any other utilization; and
d)
a plan for power-generation.
14.6
The decision of GNPC as to whether or not to exercise the option provided for
in Article 14.5 shall be made in a timely maimer. In making such decision
and in its subsequent conduct, GNPC shall avoid the prevention of or delay to
the orderly start up or continuation of the production of Crude Oil as
envisaged in the approved Development Plan.
14.7
[NOT USED]
14.8
I f GNPC (or any State appointed agency, body, or Subcontractor) elects to
offtake Associated Gas under Article 14.5 above, GNPC shall be responsible
for any additional facilities needed for the delivery of the Associated Gas to
GNPC, provided that:
a)
i f Contractor subsequently wishes to participate in GNPC's gas
utilisation programme, it shall reimburse GNPC for the costs of such
facilities plus a premium of three hundred percent (300%) of costs; or
b)
i f Contractor subsequently develops a gas utilisation programme and
requires the use of GNPC's gas facilities, Contractor shall pay GNPC
an agreed fee for such use.
I f Contractor considers that it may be economic to produce Associated Gas for
sale, the provision of Article 14.14, and Part IV below shall apply as to such
Associated Gas.
PART III - NON-ASSOCIATED GAS
14.9 Contractor shall have the right to commercialize a Discovery of NonAssociated Gas in the Contract Area in accordance with the provisions of this
Agreement. Except as otherwise provided in this Agreement, the terms
applicable to a Discovery as provided under Article 8 of this Agreement shall
apply to a Discovery of Non-Associated Gas.
14.10 Where Contractor submits notice pursuant to Article 8.2 or Article 8.20
indicating that the Discovery does not at that time merit Appraisal but may
merit Appraisal or additional evaluation at a later date during the Exploration
Period or during the initial period under a new Agreement made pursuant to
Article 14.17 below, then Contractor need not submit a Proposed Appraisal
Programme at that time but instead shall indicate to the Petroleum Commission
what other studies or evaluations (in accordance with a definite time-table) may
be warranted before an Appraisal Programme is undertaken.
Where
Contractor's Notice indicates that the Discovery will not merit Appraisal at any
time during the Exploration Period or during the initial period under a new
Agreement made pursuant to Article 14.17, then Contractor shall relinquish the
rights to the Non-Associated Gas within that Discovery Area.
14.11 Not later than one hundred twenty (120) days from the date on which the
Appraisal Programme relating to a Discovery is concluded. Contractor shall
submit to the Minister and Petroleum Commission a report containing the
results of the Appraisal Programme (the ("Appraisal Report"). The Appraisal
Report may conclude that the Discovery merits commercial assessment. I f the
Appraisal Report concludes that the Discovery merits commercial assessment.
Contractor shall submit to the Minister and Petroleum Commission within
thirty (30) days from the date of submission of the Appraisal Report, a
programme incorporating a specific timetable for conducting such commercial
assessment for approval by the Minister for a period of up to three (3) years, as
the Contractor deems appropriate. I f the Minister approves this programme,
such commercial assessment shall be conducted within the Exploration Period
and, i f applicable, during the initial period under a new petroleum agreement
made pursuant to Article 14.17 on terms not less favourable to Contractor than
this Agreement. Notwithstanding the above, the Minister may approve the
conduct of other studies or evaluation, in accordance with a specific timetable,
which may be warranted before a commercial assessment is undertaken.
Notwithstanding the above. Contractor may also notify the Minister that
commercial assessment of the Discovery is not warranted at that time but the
Discovery may merit such assessment at a later date during the Exploration
Period or during the initial period under a new petroleum agreement made
pursuant to Article 14.17 as referred to herein.
14.12 The purpose of the commercial assessment shall be to study the uses to which
production fi-om the Discovery Area separately can be devoted and to what
extent such uses involve exports or domestic utilization. As part of the
assessment, the Parties shall also pursue discussions on the required contractual
arrangements for marketing and sale of the Natural Gas to potential purchasers,
consumers, infrastructure owners and GNPC. Contactor may undertake the Gas
commercialization project at a level that will facilitate the achievement of the
Contractor's rate of return, and shall use the State's gas infi-astructure i f
available.
14.13 Contractor may consult with the Minister and GNPC and may make
appropriate representations proposing changes in the fiscal and other provisions
of this Agreement which may, in the opinion of Contractor, affect the above
determinations made pursuant to Articles 14.10 and 8.3. The Minister and
GNPC may, where feasible and in the best interests of the Parties, agree to
make such changes or modifications in the existing arrangements.
PART IV-NATURAL GAS PROJECTS
14.14 I f at any time during the commercial assessment Contractor informs the
Minister in writing that the Discovery can be produced commercially, it shall
within one hundred eighty (180) days submit to the Minister and to GNPC its
proposals for an agreement relating to the Development of the Discovery on
the principles set forth in this Part IV of Article 14. The State and GNPC
undertake on receipt of such notice to negotiate in good faith with Contractor
with a view to reaching agreement on terms for such production. Any such
agreement will be based on terms and fiscal requirements which shall be no
less favourable to Contractor than those provided for in Article 10 and
Article 11 and which take full account of the legitimate interest of the State as
the resource owner.
14.15 I f at any time during the commercial assessment Contractor has identified a
domestic market for the reserves of Non-Associated Gas or any part thereof,
the Parties shall proceed in good faith to negotiate the appropriate contractual
arrangements for the sale of the Natural Gas.
14.16 In the event of a Discovery of Natural Gas in the Contract Area which is to be
developed and commercially produced, the provisions of this Agreement in
respect to interests, rights and obligations of the Parties regarding Crude Oil
shall apply to Natural Gas, with the necessary changes in points of detail,
except with respect to specific provisions in this Agreement concerning
Natural Gas and different or additional provisions concerning Natural Gas
which may be agreed by the Parties in the future.
a)
The system for the allocation of Natural Gas among the Parties
shall follow the same general format as Article 10.1 provides for
Crude Oil, with the exception that the royalty to be delivered to the
State on Natural Gas shall be at the rate of seven point five percent
(7.5%) of the annual Gross Production of Natural Gas.
b)
The Parties recognise that projects for the Development and
Production of Natural Gas are generally long-term in nature for
both the project developers and the customers who purchase the
Natural Gas. Substantial investments and dedication of facilities
require long-term commitments on both sides. This Agreement,
being for a specific term of years, may not cover the length of time
for which customers in given cases will require commitments on
the part of the Parties to this Agreement to deliver their respective
shares of the output. Accordingly the Parties agree to consider
undertaking such commitments where reasonably required for the
efficient and viable development of a Natural Gas project. It is
recognised that, unless otherwise agreed by the Parties hereto.
Contractor will have no right or interest in the project or the
Natural Gas produced and delivered after the term of this
Agreement has expired.
In the event that Contractor or an Affiliate, by mutual agreement
with GNPC and the State, constructs facilities to receive Natural
Gas fi-om the Development and Production Area for further
processing or for use as a feedstock or fiiel in order to convert such
a Natural Gas into one or more commercially marketable products,
the Contractor shall be entitled to pay GNPC or the State for such
gas the price, i f any, paid by the State or GNPC under Article
14.15
The Parties will consider collaboration in obtaining any common
external financing available for Natural Gas production
possibilities, including project financing; however, each Party shall
remain free to finance externally its share of such facilities to the
extent it prefers to do so.
Where Contractor has, during the continuance of the Exploration
DiKcovery of Non-Associated Gas but has not,
Period, made azyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
before the end of the Exploration Period, declared that Discovery
to be a Commercial Discovery, the State and GNPC will, i f
Contractor so requests, enter into a new petroleum agreement with
Contractor in respect of the Discovery Area to which that
Discovery relates.
The State and GNPC shall not be under any obligation to enter into
an a new petroleum agreement pursuant to Article 14.17(a) unless
before the end of the Exploration Period, Contractor has carried out
an Appraisal Programme in respect of that Discovery pursuant to
Article 14.9 and submitted to the Petroleum Commission a report
thereon pursuant to Article 14.11, or has commenced an Appraisal
Programme and has notified the Petroleum Commission of
reasonable arrangements to undertake and complete such an
Appraisal Programme during the period provided for in 14.17(c)(i)
below:
A new petroleum agreement entered into pursuant to Article
14.17(a):
i)
shall, unless the Discovery in respect of which the
Agreement has been made is declared by Contractor to be a
Commercial Discovery, continue in force for an initial
period not exceeding three (3) years;
ii)
shall in the event that the Discovery is declared by
Contractor to be a Commercial Discovery:
1.
continue in force for an aggregate period not
exceeding twenty-five (25) years;
2.
include, or be deemed to include, all the provisions
which, mutatis mutandis, would have applied to a
Commercial Discovery of Non-Associated Gas
pursuant to Article 14.16 i f Contractor had declared
such Discovery to be a Commercial Discovery under
this Agreement;
iii)
shall contain in respect of the initial period
renewal period, details of the evaluations or
accordance with a specific timetable) which
proposes to undertake in order to determine or
review the commerciality of the Discovery.
or of any
studies (in
Contractor
keep under
iv)
Shall confer on GNPC pre-emptive rights in respect of the
Gas contained in the reservoir to which the Discovery
relates substantially in the form of the provisions hereinafter
set out in Article 14.17(e).
Where Contractor has not, before the end of the Initial Exploration
Period declared the Discovery to be commercial and the Minister
has, in his discretion, determined that further evaluation or studies
may be required before the Discovery can be declared a
Commercial Discovery, the right of Contractor to retain the
Discovery Area shall continue for a further period not exceeding,
in the aggregate, three (3) years. The right of Contractor to retain
the Discovery Area aforesaid shall be secured by the renewal of the
new petroleum agreement referred to in Article 14.17(a) or where
necessary by a new Agreement entered into by the Parties for that
purpose.
Where Contractor has not declared the Discovery to be a
Commercial Discovery, i f GNPC has identified a market for the
Gas contained in the reservoir to which the Discovery relates, or
any part thereof, it may at any time during the initial period or the
aggregate period referred to in 14.17(d) above, serve on Contractor
a notice giving particulars of the quantities of Gas required to serve
that market and the price offered; and on the basis of the procedure
detailed in Article 9, exercise the right referred to in Article
14.17(c)(iv) above.
i)
Within three (3) Months from the receipt of a notice as
aforesaid, Contractor may declare the Discovery to be a
Commercial Discovery and in accordance with the
Agreement and the Petroleum Law prepare and submit to
the Minister a Development Plan for the production of the
Gas in association with GNPC.
ii)
I f Contractor has not, within the period of three (3) Months
aforesaid, declared the Discovery to be a Commercial
Discovery, GNPC may at its sole risk and expense, develop
the Discovery and in that event the Contractor shall cease to
have any rights in respect of the Gas in the reservoir
required for that purpose.
14.18 For the purpose of calculating the State's seven point five percent (7.5%)
royalty share on Natural Gas, i f the State elects to take its royalty on Natural
Gas in cash, the value of such Natural Gas shall be the actual realized price
received by the Contractor, less transportation, compression, and marketing
costs which shall be in accordance with the principles indicated in Article 11. \
64
A R T I C L E 15
DOMESTIC SUPPLY R E Q U I R E M E N T S (CRUDE OIL)
15.1
Crude Oil for Consumption (as defined in Article 15.4) in Ghana called the
"Domestic Supply Requirement" shall be supplied, to the extent possible, by
the State and GNPC from their respective entitlements under this Agreement
and under any other contract for the production of Crude Oil in Ghana.
15.2
Contractor shall be obliged together with any third parties which produce
Crude Oil in Ghana, to supply a volume of Crude Oil to be used for Domestic
Supply Requirements, calculated on the basis of the ratio of Contractor's
entitlement to Crude Oil tmder Article 10.1(c) to the sum of the similar
entitlements of all such third parties. For the purposes of meeting this
obligation, the State shall provide three (3) Months'notice to the Contractor,
except that where Contractor has entered into pre-existing contractual
obligations the State shall provide twelve (12) Months' notice. The Domestic
Supply Requirement shall not exceed the total of Contractor's said entitlement
under this Agreement.
15.3
The State shall purchase any Crude Oil supplied by Contractor pursuant to this
Article 15 at the Market Price determined under Article 11.7 for the Month of
delivery, and the State shall pay such prices in accordance with Article 13.18
within thirty (30) days after receipt of invoice, failing which Contractor's
obligations in respect of the Domestic Supply Requirement under this
Article 15 shall be suspended until payment is made good, at which time
deliveries shall be resumed subject to (i) any altemative commitments that
may have been reasonably entered into by Contractor to dispose of the
Domestic Supply Requirement Crude Oil during the period of default in
payment, and (ii) the provision by GNPC of such security as may be
reasonably acceptable to the Contractor in order to cover GNPC's payment
obligations under this Article 15.3 as well as any already existing outstanding
balance.
15.4
The calculation of the Domestic Supply Requirement shall be done on a
Calendar Year basis, broken down by Month. The calculation shall begin
with the determination of the quantities of Cmde Oil required for
Consumption in Ghana in each relevant Month (the "Monthly Domestic
Consumption") during the applicable Calendar Year. "Consumption" shall
consist of the total Cmde Oil consumed in Ghana, Cmde Oil processed in
Ghana, and the Cmde Oil equivalent of Cmde Oil derived Products imported
for consumption in Ghana.
A R T I C L E 16
INFORMATION AND R E P O R T S : C O N F I D E N T I A L I T Y
16.1
Contractor shall keep the Petroleum Commission and GNPC regularly and
fully informed of operations being carried out by Contractor under this
Agreement and provide the Petroleum Commission and GNPC with all
information, data (film, paper and digital forms), samples, interpretations and
reports (including progress and completion reports) including but not limited
to the following:
a)
processed seismic data and interpretations thereof;
b)
well data, including but not limited to electric logs and other
wireline surveys, and mud logging reports and logs, oil or
hydrocarbon samples, samples of cuttings and cores and analyses
made therefrom;
c)
any reports prepared from drilling data or geological or
geophysical data, including maps or illustrations derived
therefrom;
d)
well testing and well completion reports;
e)
reports dealing with location surveys, seabed conditions and
seafloor hazards and any other reports dealing with well, platform
or pipeline locations;
f)
reservoir investigations and estimates regarding reserves, field
limits and economic evaluations relating to future operations;
g)
daily, weekly, monthly and other regular reports on Petroleum
Operations;
h)
comprehensive final reports upon the completion of each specific
project or operation;
i)
contingency programmes and reports on safety and accidents;
j)
procurement plans, subcontracts and contracts for the provision of
services to Contractor; and
k)
for such subcontracts and contracts for the provision of services to
Contractor:
i)
bid documents and their evaluation reports; and
ii)
a statement showing the values, executing companies, award
and completion dates.
Data shall be provided on film, paper and in digital format as available in an
acceptable format to the Petroleum Commission and GNPC. In respect of the
reports, including text and graphics, paper and digital copies shall be submitted.
16.2
Contractor shall have the right to retain for its own use in connection with the
conduct of Petroleum Operations under this Agreement copies of data, well
logs, maps, magnetic tapes, other geological and geophysical information,
portions of core samples and copies of reports, studies and analyses, referred
to in Article 16.1.
16.3
Not later than ninety (90) days following the end of each Calendar Year,
Contractor shall submit to the Petroleum Commission and GNPC a report
covering Petroleum Operations performed in the Contract Area during such
Calendar Year. Such report shall include, but not be limited to:
a)
a statement of the number of Exploration Wells, Appraisal Wells
and Development Wells drilled, the depth of each such well, and a
map on which drilling locations are indicated;
b)
a statement of any Petroleum encountered during Petroleum
Operations, as well as a statement of any fresh water layers
encountered and of any other minerals discovered;
c)
a statement of the quantity of Petroleum produced and of all other
minerals produced therewith from the same reservoir or deposit;
d)
a summary of the nature and extent of all Exploration activities in
the Contract Area;
e)
a general summary of all Petroleum Operations in the Contract
Area; and
f)
a statement of the number of employees engaged in Petroleum
Operations in Ghana, identified as Ghanaian or non-Ghanaian.
Contractor will inform the latter that details as to nationality are
required by GNPC and that Contractor is available to assist them to
supply that information.
16.4
All data, information and reports including interpretation and analysis supplied
by Contractor pursuant to this Agreement ("Data") shall be treated as
confidential by the Parties and shall not be disclosed by Contractor to any
other person without the express written consent of GNPC, such consent not
to be unreasonably withheld. However, subject to Article 16.6 and prior
written notice to Contractor, GNPC may disclose Data to any other person
16.5
Data may be disclosed by :
a)
the State:
i)
to any agency of the State or to any advisor or consultant to
GNPC or the State;
ii)
to applicants seeking to obtain a petroleum agreement in
respect of any open acreage adjacent to the Contract Area;
provided, in each case. Contractor receives reasonable prior
notice of such disclosure;
Contractor:
i)
to its Affiliates, advisers or consultants;
ii)
to a bona fide potential assignee of all or part of
Contractor's interest provided that with respect to a bona
fide assignee of Contractor's interest, GNPC is given prior
notice of such potential assignee, and subject to approval of
the State and GNPC for the disclosure (not to be
unreasonably denied or delayed);
iii)
to banks or other lending institutions for the purpose of
seeking external financing of costs of the Petroleum
Operations;
iv)
to non-Affiliates who shall provide services for the
Petroleum Operations, including Subcontractors, vendors
and other service contractors, where this is essential for their
provision of such services, and provided GNPC is notified
about such disclosure;
v)
to governmental agencies for obtaining necessary rulings,
permits, licenses and approvals, or as may be required by
applicable law or stock exchange, accounting or reporting
practices, and provided GNPC is given prior notice of such
disclosure;
any Party:
i)
to the extent necessary in any Arbitration Proceedings or
proceedings before a Sole Expert or in proceedings before
any court;
ii)
with respect to Data, which already through, no fault of the.
disclosing Party is in the public domain.
16.6
Any Party disclosing information or providing Data to any third party under
this Article shall require such persons to observe the confidentiality of such
Data by executing a confidentiality agreement in the form attached hereto as
Annex 3.
16.7
Public statements and press releases regarding the Petroleum Operations
undertaken under this Agreement ("Releases") shall be issued jointly by the
Contractor and GNPC, and the Parties shall agree on the timing and wording
of such Releases to the public, except where a Party is required to make a
Release under the applicable laws, rules or regulations of any government,
legal proceedings or a stock exchange having jurisdiction over such Party or
any of its Affiliates; in which event, such Party shall inform the other Party
with a reasonably prior notice of such requirement and submit the text of the
proposed Release for comments to be agreed by the Contractor and GNPC
within timeframe allowing to make a Release as may be required.
16.8
Subject in all cases to the terms of any technical services agreements, all
Intellectual Property Rights made, developed or conceived directly in
a Contractor
connection with conducting Petroleum Operations either throughzyxwvutsrqponmlkjihgfedcbaZYX
Party's employees, contractors (including the Contractor Parties),
Subcontractors, secondees, GNPC's employees or otherwise to which such
Contractor Party or GNPC, as the case may be, would otherwise have
ownership rights and entitlements, shall be jointly owned in equal and
undivided shares by GNPC and Contractor ("Joint Intellectual Property
Rights").
16.9
GNPC grants to the Contractor a sole, irrevocable, royalty-free, worldwide
licence (including the right to sub-licence) in any Joint Intellectual Property
Rights, including the right to use and exploit such Joint Intellectual Property
Rights for the purposes of the exploration and production of petroleum,
including for fulfilling the terms of this Agreement.
16.10 Contractor grants to the GNPC a sole, irrevocable, royalty-free, worldwide
licence (including the right to sub-licence) in any Joint Intellectual Property
Rights, including the right to use and exploit such Joint Intellectual Property
Rights for the purposes of exploration and production of petroleum, including
for fulfilling the terms of this Agreement.
16.11 Any revenue generated from the sub-licensing of Joint Intellectual Property
Rights by either GNPC or Contractor to a third party (non-Affiliate) under this
Article 16.8 shall be shared equally between GNPC and Contractor.
16.12 Notwithstanding any provision to the contrary in this Agreement, i f a
Contractor Party or an Affiliate of a Contractor Party has used its own
confidential information, proprietary intellectual property or technology in
Petroleum Operations then, subject to GNPC (or its successors or permitted
assignees) entering into a usual and customary non-disclosure and licensing
agreement (which such agreement shall be on terms that are commercially
reasonable under the circumstances), such Contractor Party or its Affiliate
shall provide GNPC (or its successors or permitted assignees) with rights to
use such confidential information, proprietary intellectual property or
technology in other operations of GNPC (or its successors or permitted
assignees) in Ghana; provided that GNPC's use of such confidential
information, proprietary intellectual property or technology (a) within the
Contract Area shall be free of charge, and (b) outside of the Contract Area
shall be subject to a licensing fee in an amount mutually agreed between
GNPC and such Contractor Party. The terms and conditions of the foregoing
rights will be provided for in separate agreements to be agreed between
GNPC (or its successors or permitted assignees) and such Contractor Party or
its relevant Affiliate.
Further, GNPC (or its successors or permitted
assignees) and such Contractor Party or its relevant Affiliate will enter into a
ustial and customary confidentiality agreement relating to confidential
information disclosed to GNPC (or its successors or permitted assignees)
pursuant to any such licensing agreements, which confidentiality agreement
shall restrict, inter alia, GNPC (or its successors or permitted assignees) from
making disclosure of such information to such Contractor Party's oil and g
industry competitors.
r
A R T I C L E 17
I N S P E C T I O N , S A F E T Y AND E N V I R O N M E N T A L P R O T E C T I O N
17.1
GNPC shall have the right of access to all sites and offices of Contractor and
the right to inspect all buildings and installations used by Contractor relating
to Petroleum Operations. Such inspections and audits shall take place in
consultation with Contractor and at such times and in such maimer as to not
unduly interfere with the normal operations of Contractor.
17.2
Contractor shall take all necessary steps, in accordance with Intemational Best
Oil Field Practice, to perform activities pursuant to the Agreement in a safe
manner and shall comply with all requirements of applicable law, including
labour, health, safety and environmental laws and regulations issued by the
Environmental Protection Agency of Ghana and other relevant State agencies.
17.3
Contractor shall provide an effective and safe system for disposal of water and
waste oil, oil based mud and cuttings in accordance with applicable laws and
Intemational Best Oil Field Practice, and shall provide for the safe completion
or abandonment of all boreholes and wells.
17.4
Contractor shall exercise its rights and carry out its responsibilities under this
Agreement in accordance Intemational Best Oil Field Practice, and shall take
steps in such maimer as to:
17.5
a)
result in minimum ecological damage or destruction;
b)
control the flow and prevent the escape or the avoidable waste of
Petroleum discovered in or produced from the Contract Area;
c)
prevent damage to Petroleum-bearing strata;
d)
prevent the entrance of water through boreholes and wells to
Petroleum-bearing strata, except for the purpose of secondary
recovery;
e)
prevent damage to onshore lands and to trees, crops, buildings or
other structures; and
f)
avoid any actions which would endanger the health or safety of
persons.
In the event of a release of Petroleum or other materials on the seabed, in the
sea, on land or in fresh water, or i f Contractor's operations result in any other
form of pollution or otherwise cause harm to fresh water, marine, plant or
animal life. Contractor shall, in accordance with applicable laws and
Intemational Best Oil Field Practice, promptly take all necessary measures, in
accordance with Intemational Best Oil Field Practice to control the pollution.
to clean up Petroleum or other released material, or to repair, to the maximum
extent feasible, damage resulting from any such circumstances. If such release
or pollution results from the Gross Negligence of: (i) Contractor; (ii) any of
Contractor's Affiliates; or (iii) a Subcontractor, the cost of subcontract cleanup and repair activities shall be borne by Contractor and shall not be included
as Petroleum Cost under this Agreement.
17.6
Contractor shall notify GNPC immediately in the event of any emergency or
major accident or major release of materials into the environment (and
promptly in the event of any other accident or release of materials into the
envirormient) and shall take such action as may be prescribed by GNPC's
emergency procedures and by Intemational Best Oil Field Practice.
17.7
If Contractor does not act promptly so as to control, clean up or repair any
pollution or damage, GNPC may, after giving Contractor reasonable notice in
the circumstances, take any actions which are necessary, in accordance with
applicable laws and Intemational Best Oil Field Practice and the reasonable
costs and expenses of such actions shall be borne by Contractor and shall,
subject to Article 17.5 be included as Petroleum Costs.
A R T I C L E 18
A C C O U N T I N G AND A U D I T I N G
18.1
Contractor shall maintain, at its office in Ghana, books of account and
supporting records in the manner required by applicable law and accepted
accounting principles generally used in the intemational petroleum industry
and shall file reports, tax retums and any other documents and any other
financial retums which are required by applicable law.
18.2
In addition to the books and reports required by Article 18.1 Contractor shall
maintain, at its office in Ghana, a set of accounts and records relating to
Petroleum Operations under this Agreement. Such accounts shall be kept in
accordance with the requirements of the applicable law and accepted
accounting principles generally used in the intemational Petroleum industry.
18.3
The accounts required by Articles 18.1 and 18.2 shall be kept in United States
Dollars or such other currency as GNPC and Contractor may agree.
18.4
Contractor will provide GNPC with quarterly and annual financial statements
and summaries of the Petroleum Costs incurred under this Agreement.
18.5
GNPC shall review all financial statements submitted by the Contractor as
required by this Agreement, and shall signify its provisional approval or
disapproval of such statements in writing within a hundred and twenty (120)
days of receipt, failing which the financial statements as submitted by
Contractor shall be deemed approved by GNPC; in the event that GNPC
indicates disapproval of any such statement, the Parties shall meet within
fifteen (15) days of Contractor's receipt of the notice of disapproval to review
the matter.
18.6
Notwithstanding any provisional approval pursuant to Article 18.5, GNPC shall
have the right and upon giving reasonable notice in writing to Contractor to
audit, at its sole expense the books and accounts of Contractor relating to
Petroleum Operations. GNPC shall not, in carrying out such audit, interfere
unreasonably with the conduct of Petroleum Operations. Any such audit shall
be undertaken by an independent auditing firm and shall be completed not
later than nine (9) Months after commencement, provided that GNPC shall
submit the final audit report (and relevant exceptions) to Contractor not later
than 30 days following the completion of the audit. Contractor shall provide
all necessary facilities for auditors appointed hereunder by GNPC including
working space and timely access to all relevant personnel, records, files and
other materials.
I f GNPC desires verification of charges from an Affiliate, Contractor shall, at
GNPC's sole expense, obtain for GNPC or its representatives, an audit
certificate for this purpose from the statutory auditors of the Affiliate >
concerned. Copies of audit reports shall be provided to the Contractor and
GNPC. Any unresolved audit claim resulting from such audit, upon which
Contractor and GNPC are unable to agree shall be submitted to the JMC for
decision which must be unanimous. In the event that a unanimous decision is
not reached in respect of any audit claim, then such unresolved audit claim
shall be submitted for resolution in accordance with Article 24. Subject to
any adjustments resulting from such audits. Contractor's accounts and
financial statements shall be considered to be correct on expiry of a period of
two (2) years from the date of their submission unless before the expiry of
such two (2) year period GNPC has notified Contractor of any exceptions to
such accounts and statements.
18.7
Nothing in this Article shall be read or construed as placing a limit on GNPC's
access to Contractor's books and accounts in respect of matters arising under
Article 23.3(a).
18.8
In the event of any changes in location of Operator's home office, Operator
shall so notify GNPC and the State.
18.9
Petroleum Costs incurred with respect to the Contract Area shall have no
bearing on allowable or non-allowable costs under any other confract area or
Contractor's eligibility or otherwise for deductions in computing Contractor's
net income from Petroleum Operations for income tax purposes in any other
contract area. Similarly, Petroleum Costs incurred in any other contract area
shall have no bearing on allowable Of non-allowable costs in respect of the
Contract Area or Contractor's eligibility or otherwise for deductions in
computing Contractor's net income from Petroleum Operations for income
tax purposes in respect of the Contract Area.
A R T I C L E 19
T I T L E T O AND C O N T R O L O F G O O D S AND E Q U I P M E N T
19.1
GNPC shall be the sole and unconditional owner of:
a)
Petroleum produced and recovered as a result of Petroleum
Operations, except for such Petroleum as is distributed to the State
and to Contractor pursuant to Article 10 or Article 14 hereof;
b)
all physical assets other than those to which Article 19.3 or 19.4
apply, which are purchased, installed, constructed or used by
Contractor in Petroleum Operations as from the time that:
i)
the full cost thereof has been depreciated and/or recovered
in accordance with the provisions of the Accounting Guide
in Annex 2; or
ii)
this Agreement is terminated and Contractor has not
disposed of such assets prior to such termination, whichever
occurs first.
19.2
Contractor shall have the use of the assets referred to in Article 19.1(b) for
purposes of its operations under this Agreement without payment provided that
Contractor shall remain liable for maintenance, insurance and other costs
associated with such use. The Contractor shall use its best efforts to keep any
such asset in good working condition (subject to normal wear and tear.
Contractor shall indemnify GNPC against all losses, damages, claims or legal
action directly resulting from Contractor's use of such assets, if and in as far as
such losses, damages, claims or legal actions were directly caused by
Contractor's Gross Negligence or Wilful Misconduct.
19.3
Equipment or any other assets rented or leased by Contractor which is imported
into Ghana for use in Petroleum Operations and subsequently re-exported
therefrom, which is of the type customarily leased for such use in accordance
with Intemational Best Oil Field Practice or which is otherwise not owned by
Contractor shall not be transferred to GNPC. No equipment or assets owned or
leased by a Subcontractor shall by reason of the provisions of this Article 19 be
deemed to be transferred to GNPC.
19.4
All assets acquired by Contractor which are not affected by the provisions of
Article 19.1(b) above may, where required for further Petroleum Operations, be
retained by GNPC for such operations provided that GNPC shall thereby be
liable to pay a reasonable and mutually agreed fee for such use, and shall bear
the cost of repair or replacement upon failure to keep such assets in good'
working condition (normal wear and tear excepted), and further provided that
Contractor does not require such assets for its Petroleum Operations.
19.5
Subject to Article 19.3, upon the termination of Petroleum Operations in any
area. Contractor shall give GNPC the option to acquire any movable and
immovable assets used for such Petroleum Operations and not affected by the
provisions of Article 19.1(b) at a reasonable and mutually agreed price, always
provided that Contractor does not require such assets for Contractor's
Petroleum Operations in the Contract Area.
19.6
All assets which are not affected by Article 19.1(b) nor subject to Article 19.4
or 19.5 above, and all Subcontractor equipment, may be freely exported by
Contractor or its Subcontractor, respectively, at its discretion.
76
A R T I C L E 20
PURCHASING AND P R O C U R E M E N T
20.1
20.2
Subject to all applicable laws, the Contractor, its Sub contractors or other
entities which cooperate with them shall:
a)
acquire materials, equipment, machinery and consumer goods
produced or provided in Ghana by an Indigenous Ghanaian
company satisfying agreed criteria and requirements, and at
prices which are no more than ten percent (10%) higher than
the imported items including transportation and insurance
costs and customs charges due;
b)
contract local services provided by Indigenous Ghanaian
company satisfying agreed criteria and requirements, and
their prices, when subject to the same tax charges, are no
more than ten percent (10%) higher than the prices charged
by foreign contractors for similar services.
For the purposes of Article 20.1, price comparisons shall be made on a c.i.f v
Accra delivered basis.
'
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A R T I C L E 21
E M P L O Y M E N T AND T R A I N I N G
21.1
In order to contribute to State programmes to train Ghanaian persoimel for
work in Petroleum Operations and to promote the development of local
management and technical skills in the petroleum sector Contractor shall pay
to Petroleum Commission:
a)
an amount of US$ two Million United States Dollars
(US$2,000,000) per Calendar Year from the Effective Date to be
used for training programmes. The amounts shall be payable within
thirty (30) days after the beginning of each Calendar Year,
provided that the sum payable shall be pro rata for any period of
less than a full Calendar Year; and
b)
an amount of US$ five Million United States Dollars (US$
5,000,000) to be used for technology support payable once within
thirty (30) days of the Effective Date.
All payments made pursuant to Article 21.1 (a) and (b) abov
Contractor by wire transfer to a designated Petroleum ComnnssitHTaccbunt iwaccordance with this Agreement.
21.2
All payments tmder Article 21.1 above, shall be considered Petroleum Costs.
21.3
Where qualified Ghanaian personnel are available for employment in the
conduct of Petroleum Operations, Contractor shall ensure that in the
engagement of personnel it shall as far as reasonably possible provide
opportunities for the employment of such personnel. For this purpose,
Contractor shall from time to time submit to GNPC an employment plan
stating the reasonably foreseeable number of persons and the required
professions and technical capabilities prior to and during the conduct of
Petroleum Operations. GNPC shall be given the opportunity to provide the
qualified personnel for engagement according to the said plan for
Contractor's consideration and approval.
21.4
Contractor shall, if so requested by GNPC, provide opportunities for a mutually
agreed number of personnel nominated by GNPC to be seconded for on-thejob training or attachment in all phases of its Petroleum Operations under a
secondment contract to be mutually agreed prior to such secondment. Such
secondment contract shall include continuing education and short industry
courses mutually identified as beneficial to the secondee. Costs and other
expenses connected with such assignment of GNPC personnel shall be borne
by the Contractor and considered Petroleum Costs.
21.5
Contractor shall regularly provide to GNPC information and data relating to
worldwide Petroleum science and technology, Petroleum economics and
engineering information available to Contractor regarding Petroleum
Operations, other than Contractor's proprietary or trade secrets or information,
data or technology subject to third party license, and shall assist GNPC
personnel to acquire knowledge and skills in all aspects of the Petroleum
industry.
21.6
Except as otherwise provided in Articles 21.5 and subject in all respects to
Articles 16.4 - 16.6, it is agreed that there will be no disclosure or transfer of
any documents, data, know-how, technology or other information owned or
supplied by Contractor, its Affiliates, or non-Affiliates, to third parties
without Contractor's prior written consent (such consent not to be
unreasonably withheld), and then only upon written agreement substantiallyTv^
in the form attached hereto as Annex 3.
\
79
A R T I C L E 22
FORCE MAJEURE
22.1
The failure of GNPC or a Contractor Party to fulfil any term or condition of
this Agreement, except for the payment of monies, shall be excused i f and to
the extent that such failure arises from Force Majeure, provided that, i f the
event is reasonably foreseeable such Party shall have prior thereto taken all
reasonably appropriate precautions and all reasonable altemative measures with
the objective of carrying out the terms and conditions of this Agreement. Such
Party affected by an event of Force Majeure shall promptly give the other
Parties notice of such event and also of the restoration of normal conditions.
22.2
In the event that GNPC or a Contractor Party is unable wholly or in part to
perform its obligations provided for in the Agreement as a result of such event
of Force Majeure, the Party whose performance of obligations are prevented by
the event of Force Majeure shall immediately but not later than fourteen (14)
days from when such an occurrence becomes evident give written notice to the
other Parties, including details of such event of Force Majeure and such Party's
best estimate of the duration of the event of Force Majeure.
22.3
Throughout the duration of the event of Force Majeure, the affected Party shall
report to the other Parties any changes to its best estimate of the duration of the
delay and any significant developments with respect to the event of Force
Majeure.
22.4
A Party unable by an event of Force Majeure to perform any obligation
hereunder shall take all reasonable measures to remove its inability to fulfill the
terms and conditions of this Agreement with a minimum of delay, and the
Parties shall take all reasonable measures to minimise the consequences of any
event of Force Majeure.
22.5
During the duration of an event of Force Majeure, each Party shall bear its own
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implementation of the recovery plan described in Article 22.6 below, all such
reasonably incurred costs as wall have been previously approved by the JMC as
are required in order to maintain safe and necessary Petroleum Operations shall
be considered Petroleum Costs.
22.6
Should the event of Force Majeure continue or once it has occurred be
reasonably expected to last longer than six (6) Months, the Parties agree to
enter into discussion to review and assess the situation with the aim to identify
a proper recovery plan for the future implementation of this Agreement,
including an extension in accordance with Article 22.8 or a modification of the
applicable contractual terms. When a recovery plan is identified and agreed,
any affected Party's commitment schedule will be considered revised
accordingly.
22.7
The affected Party shall notify the other Parties of the termination of an event
of Force Majeure in writing within seven (7) days of such termination.
22.8
Any period set herein for the completion by a Party of any act required or
permitted to be done or rights or benefits to be enjoyed under the terms of this
Agreement, shall be extended for a period of time equal to that during which
such Party was unable to perform such actions or enjoy such rights or benefits
as a result of Force Majeure, together with such time as may be required for the
resumption of Petroleum Operations.
22.9
Unless otherwise specified herein, GNPC may not claim Force Majeure in
respect of any action or provision of the State or any agency of the State, other
than a law, decree or similar act either of a general application or made to
address a specific emergency. In the case that Contractor declares Force
Majeure in respect of an action, omission or provision of the State,zyxwvutsrqponmlkjihgfedcbaZY
GNPC shall
be entitled to elect for the duration of such declaration by Contractor to also be
relieved of substantially the same obligations that Contractor has been relieved
of by its declaration of Force Majeure in respect of such State action, omission
or provision (but only to the extent that GNPC is unable to perform such
obligations as a result of such Force Majeure in respect of such State action'
omission or provision).
A R T I C L E 23
T E R M AND T E R M I N A T I O N
23.1
Subject to this Article 23, the term of this Agreement shall be twenty five (25)
years commencing from the Effective Date.
23.2
Subject to Article 22, Termination of this Agreement shall result upon the
occurrence of any of the following:
a)
23.3
the relinquishment or surrender by Contractor of the entire
Contract Area;
b)
the termination of the Exploration Period including extensions
pursuant to Article 3 without notification by Contractor of a
Commercial Discovery pursuant to Article 8 or Article 14, Part III
in respect of a Discovery of Petroleum in the Contract Area,
provided however Termination shall not occur while Contractor
has the right to complete the drilling of the well, and, in case of a
Discovery, evaluate such Discovery for Appraisal or determination
of a Commercial Discovery and/or propose a Development Plan
pursuant to Articles 3.2(a), 3.2(b) 3.2(c) 3.2(d), Article 8 or
Article 14, or once a Development Plan has been approved, nor
when the provisions of Articles 8.11 through 8.22 are applicable;
c)
if, following a notice that a Discovery is a Commercial Discovery
the Exploration Period terminates under Article 3 without a
Development Plan being approved, provided however that
Termination shall not occur when the provisions of Articles 8.11
through 8.22 are applicable; or
d)
the failure of Contractor through any cause other than Force
Majeure, to commence preparations with respect to Development
Operations pursuant to Article 8.13.
Subject to Article 22 and pursuant to procedures described in Article 23.4
below, GNPC and/or the State may terminate this Agreement (where
applicable with respect to a specific Contractor Party only) upon the
uncorrected occurrence of any of the events (or failures to act listed) below:
a)
the submission by a Contractor, to GNPC of a written statement
which Contractor knows or reasonably should have known to be
false in a material particular, or the release by a Contractor to any
print or electronic media or to a stock exchange of a written
statement regarding the Petroleum Operations in Ghana in breach
of Article 16.7 and in a form which Contractor knows or should
reasonably have knovra to be false in a material particular,
provided that in the event of intent on the part of such Contractor^
to cause serious damage to GNPC or the State, a period for remedy
of such false statement shall not be given;
b)
the assignment or purported assignment by Contractor of this
Agreement contrary to the provisions of Article 25 hereof;
c)
the insolvency or bankruptcy of a Contractor Party, the entry by a
Contractor Party into any agreements or composition with its
creditors, taking advantage of any law for the benefit of debtors or
a Contractor Party's entry into liquidation, or receivership, whether
compulsory or voluntary, which in itself provides evidence that the
obligations of such Contractor Party hereunder will not be
performed. Provided that the insolvency or bankruptcy of one
Contractor Party shall not lead to a termination of the Agreement i f
the other Contractor Parties will assume all of the rights and
obligations of the defauUing Contractor Party under this Petroleum
Agreement. In such a case, GNPC shall have the right to acquire a
share of the interest of the defaulting Contractor Party
proportionate to the total of GNPC's Initial Interest and Additional
Interest. GNPC may exercise this right by notice to all Contractor
Parties within thirty (30) days following notification of the
insolvency or bankruptcy of the defaulting Contractor Party.
GNPC's written notice shall state the percentage share of the
interest of the defaulting Contractor Party which GNPC proposes
to acquire. Upon exercise by GNPC of its rights pursuant to this
Article 23.3(c), GNPC or its representative entity shall execute all
appropriate transfers, assignments, novations and joint operating
agreements which were in place as between or among the Parties,
provided further that, i f the other Contractor Parties in assuming
the interest of the defaulting Contractor Party elects to assign, the
whole or part of the assumed interest to a third party such
assignment shall be subject to GNPC's pre-emptive right under
Article 25.5. For clarity, the interest so acquired by GNPC pursuant
to this Article 23.3(c) shall be a Paying Interest and not receive the
benefits of a GNPC Carried Interest or Additional Interest.
d)
the intentional extraction by Contractor of any material of potential
economic value other than as authorised under this Agreement, or
any applicable law. Where, however, in the course of Petroleum
Operations conducted in accordance with Intemational Best Oil
Field Practice, Contractor unavoidably extracts any mineral,
Contractor shall immediately notify the Minister and surrender!'
such mineral to the State;
e)
failure by the Contractor:
r
83
i)
to fulfil the Minimum Work Obligations pursuant to Article
4.3; save where the Minister has waived the default;
ii)
to carry out an Appraisal Programme undertaken by
Contractor pursuant to Article 8, unless the Contractor
notifies GNPC and the Petroleum Commission that the
Appraisal Programme should be amended and submit said
amendment to the Petroleum Commission for its approval;
or
iii)
to carry out the terms of an approved Development Plan;
f)
failure by Contractor to comply with any of its obligations pursuant
to Articles 7.1(a) - (p) inclusive;
g)
failure by Contractor Party to make any payment of any sum due to
GNPC or the State pursuant to this Agreement within thirty (30)
days after receiving notice that such payment is due;
h)
failure by Contractor to comply with any decisions reached as a
result of any arbitration proceedings conducted pursuant to
Article 24 hereof;
i)
failure by Contractor to comply with any applicable regulation
and/or the laws of the Republic of Ghana.
23.4
I f GNPC and/or the State believe an event or failure to act as described in
Article 23.3 above has occurred, a written notice shall be given to Contractor
describing the event or failure. Contractor shall have thirty (30) days from
receipt of said notice to commence and pursue remedy of the event or failure
cited in the notice. I f after said thirty (30) days Contractor has failed to
commence appropriate remedial action or to take other appropriate action
where such breach is technically not capable of remedy, GNPC and/or the State
may then issue a written Notice of Termination to Contractor which shall
become effective thirty (30) days from receipt of said Notice by Contractor
unless Contractor has referred the matter to arbitration in accordance wdth
Article 24. In the event that Contractor disputes whether an event specified in
Article 23.2 or Article 23.3 has occurred or been remedied. Contractor may,
any time up to the effective date of any Notice of Termination, refer the dispute
to arbitration pursuant to Article 24 hereof. I f so referred, GNPC and/or the
State may not terminate this Agreement in respect of such event except in
accordance with the terms of any resulting arbitration award as provided for in
Article 24.
23.5
Upon Termination of this Agreement, all rights and obligations of Contractor
hereunder shall cease, except for such rights as may at such time have accrued
and without prejudice to any obligation or liability imposed or incurred under
this Agreement prior to Termination and to such rights and obligations as the
Parties may have under applicable law.
23.6
Notwithstanding Termination of this Agreement, Article 1, Article 2,
Article 12, Article 16, Article 18, Article 24 and Article 26.1 to 26.5 and
Article 26.9 |(i) shall survive such Termination. Moreover, any such
Termination shall be without prejudice to rights, duties and obligations of any
Party that have accrued prior to Termination and notwithstanding such
Termination, such provisions of this Agreement as are reasonably necessary for
the full enjoyment and enforcement of such accrued rights, duties and
obligations shall survive such Termination for the period necessary.
23.7
Upon Termination of this Agreement or in the event of an assignment of all the
rights of Contractor, all wells and associated facilities shall be left in a state of
good repair in accordance with applicable laws and International Best Oil Field
Practice.
A R T I C L E 24
CONSULTATION, A R B I T R A T I O N AND INDEPENDENT E X P E R T
24.1
Subject to the prior fulfillment of any procedures specified in this Agreement to
resolve disputes arising hereunder, any dispute arising between the State and
GNPC or either of them on one hand and Contractor on the other hand in
• relation to or in connection with or arising out of this Agreement, shall be
resolved by consultation and negotiation among senior personnel authorized by
each. In the event that no agreement is reached within thirty (30) days after the
date when the State and/or GNPC on the one hand and the Contractor on the
other hand notifies the other that a dispute exists within the meaning of this
Article or such longer period specifically agreed to by the Parties or provided
elsewhere in this Agreement, any Party shall have the right subject to Article
24.10 to have such dispute settled exclusively through international arbitration
under the auspices of the International Chamber of Commerce (the "ICC") and
adopting the Rules of Arbitration of the Intemational Chamber of Commerce
(the "ICC Rules") in force on the date on which the proceedings are instituted,
which ICC Rules are deemed incorporated by reference into this Article 24,
save as otherwise provided herein.
24.2
The failure or refusal to submit to arbitration in accordance with this Article 24
and/or the seeking of any Pre-Award Attachment by any Party shall be deemed
a breach of this Agreement by such Party. In the event of a breach under this
Article by a Party (the "Breaching Party"), each non-breaching Party shall,
without prejudice to any other remedies, be entitled to recover fi"om each
Breaching Party all costs and expenses, including reasonable attomeys' fees,
that such non-breaching Party was thereby required to incur
24.3
The tribunal shall consist of three (3) arbitrators. The State and/or GNPC on
the one hand and the Contractor on the other hand shall each be entitled to
appoint one (1) arbitrator and those so appointed shall designate a chairman
arbitrator. I f a Party's arbitrator and/or the chairman arbitrator is/are not
appointed within the periods provided in the mies referred to in Article 24.1
above, such Party's arbitrator and/or the chairman arbitrator shall at the request
of any Party to the dispute be appointed by the ICC Intemational Court of
Arbitration in accordance with the ICC Rules.
24.4
No arbitrator shall be a citizen of the home country of any Party hereto, and
shall have no economic interest in or relationship with any Party hereto or any
such Party's ultimate parent company.
24.5
The seat of the arbitration proceedings shall be in London, England or at such
other location as the Parties may agree in writing. The proceedings shall be
conducted in the English language.
24.6zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
I f the opinions of the arbitrators are divided on issues put before the tribunal,
the decision of the majority of the arbitrators shall be determinative. The
award of the tribunal shall be final and binding upon the Parties. The Parties
undertake to carry out any award without delay and waive their right to any
form of recourse based on grounds other than those contained in the United
Nations Convention on the Recognition and Enforcement or Arbitral Awards of
1958 insofar as such waiver can be validly made. Judgement upon the award
may be entered by any court having jurisdiction thereof or having jurisdiction
over the relevant Party or its assets.
24.7
The right to arbitrate disputes arising out of this Agreement shall survive the
termination of this Agreement.
24.8
Each of the State, GNPC and Contractor agree that, to the extent such party has
any right of state sovereign or similar immunity from legal proceedings in
Ghana, London or elsewhere arising firom the terms and conditions of this
Agreement, including immunity from service of process documents, immunity
from the jurisdiction, suit, judgment or award of any arbitral tribunal, or
immunity from execution of judgment, to the extent that in any jurisdiction
there may be attributed to it or to any of its properties or assets such immunity
(whether or not claimed),such Party hereby expressly and irrevocably waives
any such immunity to the ftillest extent permitted by law and agrees not to
claim, assert or invoke any such rights or claims in any proceeding provided,
however, that the provisions hereof shall not constitute a waiver by any Party
of any right that it now or hereafter has under applicable law to claim state
sovereign immunity or any other immunity over Protected Assets .
24.9
Notwithstanding any provision on the contrary the Parties hereby agree that the
Protected Assets shall not be subject to any proceedings in connection wdth this
Agreement or any transaction contemplated by this Agreement.
24.10 The Parties to a dispute arising under this Agreement, including the Accounting
Guide, may in lieu of arbitration, mutually agree in writing to refer the dispute
for determination by a sole expert to be appointed by agreement of the Parties
who is a recognised specialist with respect to the subject matter of the dispute
(a "Sole Expert"). In such case, the Parties shall agree on the terms of
reference for such proceeding, the schedule of presentation of evidence and
testimony of witnesses, and other procedural matters. The decision of the Sole
Expert shall be final and binding upon the Parties. The Sole Expert shall have
ninety (90) days after his appointment to decide the case, subject to any
extensions mutually agreed to by the Parties to the dispute. Upon failure of the
Sole Expert to decide the matter within such time, any Party shall have the
right to have such dispute or difference settled through arbitration under the
foregoing provisions of this Article 24.
24.11 Each Party to a dispute shall pay its own counsel and other costs; however,
costs of the arbitration tribunal shall be allocated in accordance with the
decision of tlie tribunal. The costs and fees of the Sole Expert shall be borne
equally by the Parties to the dispute.
24.12 In the event of a matter being referred for resolution under this Article 24, any
obligations of the Parties relating specifically and directly to such matter,
including a dispute relating to Termination, shall (unless otherwise provided by
this Agreement) be suspended without liability to any Party, until said matter
has been resolved pursuant to this Article 24 and a final arbitration award is
made by the arbitral tribunal. All time periods applicable to such obligations in
the Agreement shall be extended by the period of the arbitration proceedings;
provided that any Petroleum Operations not specifically and directly related to
any obligations referred to above shall not be suspended unless the Parties
mutually agree otherwise.
24.13 Neither the State and/or GNPC, on the one hand, and Contractor, on the other
hand, shall be held liable to the other for any consequential, special, indirect,
punitive or exemplary damages (including loss of profit or loss of production)
arising directly or indirectly out of or in relation or in cormection to this
Agreement, regardless of cause or fault. However, this Article 24.13 shall not
be construed as a waiver of a Party's right and remedies under Article 26.2. v»
88
A R T I C L E 25
ASSIGNMENT
25.1
This Agreement shall not be assigned by Contractor directly or indirectly, in
whole or in part, without the prior written consent of GNPC and the Minister.
GNPC and/or the Minister may impose reasonable conditions upon the giving
of consent under this Article, other than any condition imposing any burden in
cash or in kind as a condition to approve the assignment, except as provided
for in Article 12.1(vi) or any applicable law.
25.2
Any assignment of this Agreement shall bind the assignee as a Party to this
Agreement to all the terms and conditions hereof unless otherwise agreed by
the non-assigning Parties and as a condition to any assignment. Contractor
shall provide an unconditional undertaking by the assignee to assume all
obligations assigned by Contractor under this Agreement.
25.3
Where in consequence of an assignment hereunder Contractor is more than one
person:
a)
any operating or other agreement made between the persons who
constitute Contractor and relating to the Petroleum Operations
hereunder shall be disclosed to GNPC and the Minister and shall
not be inconsistent with the provisions of this Agreement;
b)
an operating agreement shall be established by the JMC to regulate
the conduct of Petroleum Operations thereafter, including cashcalls and the limits of authority; and
c)
no change in the scope of the operations may take place without the
prior approval in writing of GNPC which approval shall not be
unreasonably delayed or withheld;
d)
the duties and obligations of the Contractor hereunder shall be joint
and several except those relating to the payment of income tax
levied on each such person individually pursuant to Article 12
which shall be the several obligation of each such person.
25.4
GNPC's acquisition of Additional Interest under Article 2.5 or a Sole Risk
interest pursuant to Article 9 shall not be deemed to be an assigiunent within
the meaning of this Article 25.
25.5
For as long as GNPC remains to be wholly owned by the State, the transfer or
disposal by a Contractor Party (the "Selling Party") of all or part of its
Participating Interest, whether directly or indirectly by assigrmient, merger,
consolidation or sale of stock or other conveyance, other than (a) with or to
a wholly-owned Affiliate of such Contractor Party's ultimate parent entity or
(b) upon a transfer of shares by the ultimate parent entity of a Contractor
Peirty, including in connection with a takeover of such ultimate parent, or (c)
to the other Contractor Parties as the result of the insolvency or bankruptcy of
a Contractor Party leading to other Contractor Parties assuming all of the
rights and obligations of the insolvent or bankrupt Contractor Party as
specified in Article 23.3 c) of this Agreement, shall be subject to the
following procedure:
a)
Once the Selling Party and a proposed transferee have fully negotiated
the final terms and conditions of a transfer, such final terms and
conditions shall be promptly disclosed in full detail to GNPC and
the State in a notice from the Selling Party. GNPC shall have the
right to nominate its wholly owned affiliate acquire the Participating
Interest from the Selling Party on the same terms and conditions
agreed to by the proposed transferee if, within thirty (30) Days of
Selling Party's notice, GNPC delivers to the Selling Party a counternotice that it accepts the agreed terms and conditions of the transfer
without reservations or conditions. I f GNPC does not deliver such
counter-notice, the transfer to the proposed transferee may be
made, subject to the other provisions of this Agreement, the laws
and regulations, under terms and conditions no more favourable to the
transferee than those set forth in the notice to GNPC and the State,
provided that the transfer shall be concluded within one hundred and
eighty (180) Days from the date of the notice plus such reasonable
additional period as may be required to secure requisite approvals.
An entity nominated by GNPC shall not have any right to acquire,
and the Selling Party shall not have any right to transfer, the relevant
Participating Interest under the terms of this Article 25.3, unless such
entity demonstrates to the reasonable satisfaction of the Contractor:
its financial capability to perform its obligations under the Agreement
and the joint operating agreement between the Contractor Parties,
including to fund its interest share.
b)
25.6
In the event that a Selling Party's proposed transfer of all or part of
its Participating Interest involves consideration other than cash or
involves other properties included in a wider transaction, then the
Participating Interest (or part thereof) shall be allocated a reasonable
and justifiable cash value by the transferor in any notification to
GNPC and the State. GNPC may satisfy the requirements of this
Article 25.5 by agreeing to pay such cash value in lieu of the
consideration payable in the said proposed transfer.
Subject to applicable law in effect from time to time, GNPC may assign all or
any undivided part of its rights and obligations under this Agreement to any
governmental agency or instrumentality of the State, or to any corporate entity
controlled by the State that has been duly authorized by appropriate^
governmental action to hold such right or perform such obligation; provided
that such assignment shall not affect any of the rights of the Contractor under
this Agreement; provided, further, that any such assignment shall bind the
assignee as a Party to this Agreement to all the terms and conditions hereof
unless otherwise agreed by Contractor, GNPC shall provide an unconditional
undertaking by the assignee to assume all obligations assigned by GNPC
under this Agreement.
25.7
Nothing contained in this Article 25 shall prevent a Party from assigning,
mortgaging, pledging, charging or otherwise encumbering all or part of its
interest in the Contract Area and in and under this Agreement for the purpose
of security relating to finance provided that:
(a)
(b)
(c)
such Party shall remain liable for all obligations relating to such
interest;
the encumbrance shall be subject to any necessary approval of the
State and/or GNPCand be without prejudice to the rights of the other
Parties under this Agreement; and
such Party shall ensure that any such assigimient, mortgage, pledge,
charge or encumbrance shall be expressed to be without prejudice to \
the provisions of this Agreement.
r
91
A R T I C L E 26
MISCELLANEOUS
26.1
This Agreement shall be governed by and construed in accordance with the
laws of the Republic of Ghana in effect from time to time unless this
Agreement provides otherwise.
26.2
In the event that after the Effective Date any applicable law, rule, decree, or
regulation of Ghana is made or amended (or there are changes in interpretation
or application of any applicable law, rule, decree, or regulation effective as of
the Effective Date) that makes further observance of the original terms and
conditions of this Agreement impossible or has a material adverse effect on
the rights, obligations, and benefits of Contractor under this Agreement, or
otherwise materially affects the economic, fiscal, and financial balance of this
Agreement, the Parties shall, i f Contractor so requests, meet as soon as
possible to negotiate, in good faith, possible modifications to the Agreement
as may be appropriate to restore the economic, fiscal, and financial balance of
this Agreement; provided that, at a minimum, to the extent Contractor's rights,
obligations, or benefits (including the economic, fiscal, and financial balance)
which existed at the time the Agreement was executed by all Parties, cannot be
restored, even though the Parties have agreed to modify the Agreement, the
State shall indemnify Contractor for the adverse effect on Contractor's rights,
obligations, or benefits (including the economic, fiscal, and financial balance)
through financial compensation or other means acceptable to Contractor.
26.3
In the event Contractor considers that the economic, fiscal, and financial balance
of the Agreement is affected by a significant change in circumstances prevailing
on or after the Effective Date, the Parties shall, i f Contractor so requests,
promptly meet to negotiate, in good faith, such changes to the Agreement as may
be appropriate to restore the economic, fiscal, and financial balance of the
Agreement.
26.4
Should the Parties be unable to agree on a mechanism to restore the economic,
fiscal, and financial balance of this Agreement pursuant to Articles 26.2 or
26.3 within thirty (30) days from the date on which the notice above was
received (or such longer period as may be agreed by the Parties), then any
Party may refer the matter to arbitration pursuant to Article 24 of this
Agreement. The arbitration panel shall determine (a) whether the claimed
change or material adverse effect has occurred and (b) i f so, what remedy, i f
any, is appropriate to restore the economic, fiscal and financial balance of this^
Agreement as at the date of execution.
I
92
Notwithstanding Articles 26.2 and 26.3, Contractor shall not be entitled to
claim stabilisation protection in respect of changes to the Agreement which
are mutually agreed.
26.5
This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by
the Parties. No waiver by any Party of any of its rights hereunder shall be
construed or implied, but shall be binding on such Party only i f made
specifically, expressly and in writing.
26.6
Except for payment obligations arising under the Income Tax Law, any Party
failing to pay any amounts payable by it under this Agreement (including the
provisions of Annex 2) on the respective dates on which such amounts are
payable by such Party hereunder shall be obligated to pay interest on such
unpaid amoimts to the Party to which such amounts are payable. The rate of
such interest with respect to each day of delay during the period of such nonpayment shall be LIBOR plus four percent (4%). Such interest shall accrue
from the respective dates such amounts are payable until the amounts are duly
paid. The Party to whom any such amount is payable may give notice of nonpayment to the Party in defauh and i f such amount is not paid within fifteen
(15) days after such notice, the Party to which the amount is owed may, in
addition to the interest referred to above, seek remedies available pursuant to
Article 24.
26.7
a)
The rights and obligations under this Agreement of the State and GNPC
on the one hand and Contractor on the other shall be separate and
proportional and not joint. This Agreement shall not be construed as
creating a partnership or joint venture, nor an association or trust (under
any law other than the Petroleum Law), or as authorising any Party to
act as agent, servant or employee for any other Party for any purpose
whatsoever except as provided in Article 10.3.
b)
The duties and obligations of each Party constituting Contractor
hereunder shall be joint and several and it is recognised that each such
Party shall own and be responsible for its undivided Participating
Interest in the rights and obligations of Contractor hereunder; provided,
however, that the following payments shall be the separate obligation of
and shall be made by each Party which constitutes the Contractor:
iii)
i)
Payments under the Income Tax Law pursuant to Article 12;
ii)
Payments of royalty taken in cash under the provisions of Article
10.1(a); and
AOE share under the provisions of Article 10.1(d).
V.^^
26.8
Each Party agrees and warrants that, in relation to this Agreement and the
subject matter hereof, neither: (a) it or any of its Affiliates or employees; nor
(b) to the best of its knowledge or belief, any of its consultants, agents,
representatives or other persons retained or otherwise engaged by it, has made,
offered or authorized and will make, offer, or authorize any payment, gift,
promise, benefit, advantage or anything of value whether directly or indirectly
to, or for the use or benefit of, (a) any public official (i.e. any person holding a
legislative, administrative or judicial office, including any person employed by
or acting on behalf of a public agency, a public enterprise or a public
international organization), or any, political party or political official or
candidate for political office (or to any member of their respective families) Or
(b) any private individual, where such payment, gift, promise, benefit,
advantage or anything of value would violate the applicable laws of Ghana or
the principles of the United Nations Convention against Corruption.
If a Party is investigated pursuant to any relevant legislation, guidelines or
regulations of any other government having jurisdiction over a Party hereto,
which are designed and implemented to deter, prevent and combat bribery or
corruption in relation to international business transactions, the other Parties
agree in good faith to give all reasonable assistance to the Party being
investigated in relation to any reasonable requests (whether general or specific)
for information or documentation regarding the subject transaction(s).
Each Party shall defend, indemnify and hold the other Parties harmless from
and against any and all claims, damages, losses, liabilities, penalties, fines,
costs and other expenses (including legal costs and expenses) resulting from
any breach of its foregoing warranty. Each Party agrees that it shall
incorporate terms similar to those set out above into all or any contract entered
into pursuant to this Agreement and the subject matter thereof.
26.9
In construing this Agreement:
a)
no consideration shall be given to the captions of the Articles, Sections,
or Subsections which are inserted for convenience in locating the
provisions of this Agreement and not as an aid in its construction;
b)
the word "includes" and its derivatives means "includes, but is not
limited to" and corresponding derivative expressions;
c)
a defined term has its defined meaning throughout this Agreement and
each annex, and attachment to this Agreement, regardless of whether it
appears before or after the place where it is defined;
d)
the plural shall be deemed to include the singular, and vice versa;
e)
each gender shall be deemed to include the other genders;
each annex and attachment to this Agreement is a part of this
Agreement, but i f there is any conflict or inconsistency between the
main body of this Agreement and any annex or attachment, the
provisions of the main body of this Agreement shall prevail;
g)
i f any term is held by a court of competent jurisdiction to be invalid or
unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as i f such invalid or
unenforceable term had never been included;
h)
each reference to an Article, Section or Subsection refers to an Article,
Section or Subsection of this Agreement unless expressly otherwise
provided; and
i)
no reference herein to any law, rule, decree or regulation that
contemplates that such law, rule, decree or regulation may be amended,
from time to time, shall be construed so as to derogate from the rights of
any Party pursuant to Articles 26.2 and 26.3.
26.10
This Agreement comprises the full and complete agreement of the Parties
hereto with respect to the subject matter hereof and supersedes and cancels all
prior communications, understandings and agreements between the Parties
hereto, whether written or oral, expressed or implied.
26.11
Without prejudice to the rights, benefits, liabilities and obligations of the
Parties in Articles 26.2, 26.3, 26.5 and 26.6, Contractor shall at all times
comply, and shall ensure that its agents. Subcontractors and Affiliates while in
Ghana carrying out activities contemplated by this Agreement and related
documents comply, with the laws of the Republic of Ghana during the term of
this Agreement to the extent that the Contractor has notice of or, with the
exercise of reasonable inquiry, would have knowledge of, such laws. Nothing
in this Agreement or any related document shall require the Contractor or any
of its agents. Subcontractors or Affiliates to violate the laws of the Republic
of Ghana. To the extent any conflict exists between the terms of this
Agreement and the laws of the Republic of Ghana, the Contractor shall not be
found to be in breach of this Agreement to the extent the Contractor complies
with the terms of this Agreement.
26.12
This Agreement shall not take effect unless and until the date on which (a) it
has been ratified by the Parliament of Ghana and (b) each Contractor Party
providing the GNPC with a parent company guarantee to the reasonable
satisfaction of GNPC to cover its obligations for each Contractor Party's
interest share of the minimum expenditure obligations imder Article 4.3 of
this Agreement (thezyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
"Effective Date"). Provided that i f Contractor fails to
provide such parent company guarantee within three (3) months after the
Agreement is ratified by Parliament the Minister may declare the Contract
Area open.
A R T I C L E 27
NOTICE
Any Notice, application, request, agreement, consent, approval, instruction,
delegation, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed to have been properly given when
delivered in person to an authorised representative of the Party to whom such notice
is directed or when actually received l5y such Party through registered mail, fax or
commercial courier at the following address or at such other address as the Party
shall specify in writing fifteen (15) days in advance:
FOR THE STATE:
MINISTER FOR
PETROLEUM
MINISTRY OF
PETROLEUM
PRIVATE MAIL BAG
MINISTRY POST
OFFICE
ACCRA, GHANA
Telephone:
Telex:
Facsimile:
233 (0)302 667I5I - 3
2436 ENERGY GH
233 (0)302 668262
FOR GHANA NATIONAL PETROLEUM
THE CHIEF
EXECUTIVE
GHANA NATIONAL PETROLEUM
PETROLEUM
HOUSE
HARBOUR ROAD
PRIVATE MAIL BAG
TEMA
GHANA
Telephone:
Facsimile:
CORPORATION:
CORPORATION
233-(0)303-204726
233-(0)303-202854
FOR CONTRACTOR:
GNPC EXPLORATION
HOUSE NO.
AND PRODUCTION
73,NMELANE
KA PMB 15
AIRPORT RESIDENTIAL
AREA
-ACCRA
COMPANY
LIMITED
Attention: Michael Aryeetey
Telephone : +233 244825604
Facsimile :+2323 303 -202854
ENLGHANA
EXPLORATION
1st FLOOR UNA HOME
12 AIRPORT
BYPASS
AND PRODUCTION
LIMITED.
BUILDING
ROAD
AIRPORT CITY - PMB KA 185 - ACCRA
Attention: Managing Director
Telephone: 233 (0) 302761882
Facsimile: 233 (0) 302761786
VrrOL UPSTREAM
5th FLOOR, GRAND
TANO LIMITED
OYEEMAN
SOUTH LIBERA TION LINK, =
AIRPORT-
P.O. BOXKA
9448 - ACCRA
Attention: Vitol Country Manager
Telephone:
233 24 111 1118
WOODFIELDS
UPSTREAM
LIMITED
21 A VIATION ROAD AIRPORT RESIDENTIAL
P. O. Box KA304I4
KIA-ACCRA
Attention: Joseph Mbrokoh-Ewoal
Telephone: 233 302781124 /5
Facsimile:
233 302781126
AREA
IN WITNESS WHEREOF the parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first written above.
F O R THE GOVERNMENT OJ
R E P U B L I C S GHANA
Witnessed:
By
Its
fzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
-TT?! ^. I^?^.. . T ^ f r . .zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
[ {^.'tf^^^ Its
Mh^i
.
r^TVr.. .'V'riV^ '^'^^
F O R GHANA NATIONAL
Witnessed:
F O R GNPC E X P L O R A T I O N AND
PRODUCTION COMPANY
Witnessed:
ilS:^.^.!?^.
It,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
Its ^ ^ ^ ^
oPe^z^KiGr Officef^
98
FOR ENI GHANA EXPLORATION
AND PRODUCTION L I M I T E D
Witnessed:
Its
Its
FOR V I T O L UPSTREAM TANO
LIMITED
Witnessed:
Its ...^Wif^{i^...<
Its
FOR WOODFIELDS UPSTREAM
LIMITED
Witnessed:
By .^S^feuCi,.^.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSR
.US.^
Its
99
ANNEX 1
CONTRACT A R E A
COORDINATES F O R T H E CONTRACT A R E A
Block_naine Id
ET_X
ET_Y
A 541383.69770 518111.44620
B 583298.50950 518111.44620
C 583212.40588 488226.02617
Block 4
D 573966.15675 488217.22287
E
573968.05672 486092.30103
F
541606.38506 486069.74449
MAP OF CONTRACT A R E A AS D E P I C T E D (shaded green)
From the above Contract Area the OCTP Development Areas (1 NAG and 2 Oil) must
be deducted and as follows:
1) OCTP Non Associated Gas Development and Production Areas (Sankofa
Main/East and Gye Nyame) XY Coordinates
X
1
2
3
4
5
6
7
8
9
542180
542180
542750
542750
543780
543780
544210
544210
544750
10 544750
11 545495
12 545495
13 545925
14 545925
15 547245
16 547245
17 548210
18 548210
19 549280
20 549280
21 549995
22 549995
23 551780
24 551780
25 552705
26 552705
27 553275
28 553275
29 553810
30 553810
31 553310
32 553310
33 552240
34 552240
35 551740
36 551740
37 550815
38 550815
39 550350
Sankofa M ain-East Gas
Lat
486150
487260
487260
488290
488290
491330
491330
492250
492250
494075
494075
496790
496790
497320
497320
500855
500855
501855
501855
502460
502460
500820
500820
499390
499390
498355
498355
495360
495360
492860
492860
491825
491825
491395
491395
490400
490400
23
53
24
30
24
30
25
26
26
53
42
42
27
12
27
28
28
12
11
11
29
29
29
29
31
31
40
40
57
57
52
52
44 548315
45 547280
4S 547280
47 546280
48 546280
49 545280
50 545280
487900
4879X
487365
487365
486900
486900
486150
36
36
36
36
53
53
19
19
5
36
35
35
5
48
48
W
W
W
35
24
W
35
35
35
24
7
7
W
W
34
27
27
33
56
33
33
55
21
32
44
31
31
51
31
60
31
51
31
31
31
31
30
30
11
11
30
54
30
31
31
31
31
54
10
10
45
45
30
28
28
31
S3
53
27
27
32
32
21
58
57
60
VI
58
58
26
26
44
44
26
12
32
31
26
12
32
46
W
32
46
W
25 21
24 SO
24
24
50
33
24
33
24
24
18
18
23
53
31
33
33
33
33
20
20
52
52
W
W
W
W
34
34
34
26
26
58
W
W
W
34
35
35
c
I
B
k
i
J
k
I
m
n
o
55843S
Ssn40
S58W
SS»S
55964S
S601S0
560150
SKITO
491580
491580
492360
492360
492765
492765
493115
493115
sem
5611S0
561180
561985
561985
562415
562415
493870
493870
494400
494400
Ljit
26 50
26 50
27 15
27 15
27 28
27 28
27 40
27 40
27 55
27 55
28 4
28 4
28 22
28 22
2
2
2
2
W
26
26
32
a
b
c
d
long
28 24
28 7
28 7
27 45
27 45
27 28
27 28
27 10
27 10
26 55
26 55
26 29
26 29
26 15
26 15
25 59
25 59
25 42
25 42
25 33
25 33
17
17
3
3
37
37
U
12
48
23 48
23 25
23 25
23 0
23 0
Y
W
w
W
W
W
W
W
w
W
w
W
W
W
W
W
W
W
W
W
W
W
w
W
W
W
w
W
W
W
W
W
W
W
.W
W
bf
bj
bh
bi
bj
bk
bl
bm
bn
bo
bp
bq
br
b!
bt
bu
bv
b»
bi
by
bl
ta
cb
cd
ce
d
573470
573470
572715
572715
572210
572210
571580
571680
571225
571225
570675
570675
569995
569995
569465
569465
568935
568935
568485
568485
567930
567930
567475
567475
566920
566920
Cf 566495
ch 566495
ci 565460
cj 565460
ck 564730
d 564730
cm 564200
cn 564200
to 563700
CP 563700
cq 563195
a 563195
cs 562715
ct 562715
cu 562215
cv 562215
cw 561685
a 561685
cy 561180
a 561180
da 560730
db 560730
dc 559950
dd 559950
de 559470
dl 559470
dj 558965
dh 558965
dl 558690
dj 558690
dk 558435
Lonj
Lat
499385
4
31
4
N
2
20
438880
4
30
47
N
2
20
16
W
498880
4
30
47
H
2
20
40
w
498125
4
30
23
H
2
20
40
w
498125
4
30
23
H
2
20
57
w
497900
4
30
15
N
2
20
57
w
497900
4
30
15
N
2
21
14
w
497370
4
29
58
H
2
21
14
497370
4
29
58
2
21
29
w
497120
4
29
50
N
N
2
21
29
w
497120
A
29
SO
H
2
21
47
w
49Gg7D
4
29
42
H
2
21
47
w
496870
4
29
42
H
2
22
9
w
16
W
w
zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
44
31
W
W
W
36
32
30
W
W
W
W
33
32
32
40 550350
41 549315
42 549315
43 548315
Gye Nyame Gas
Long
37 11
37 11
58
31
31
W
W
W
r
s
t
n
V
w
X
<
1
"
ab
ac
ad
K
af
IC
ah
ai
Ij
ak
al
am
an
ao
ap
aq
•r
as
at
au
av
a«
a«
av
ai
bi
bb
be
bd
be
5634»
563420
56370)
563700
564175
564175
564630
564630
565435
565435
566190
566190
566920
56G920
567650
567E50
568405
568405
568910
568910
569715
569715
569970
569970
570625
570625
571405
571405
571930
571990
572210
572210
572990
572990
573215
573215
573445
573445
573745
573745
495155
495155
495385
495385
495635
497370
497370
497900
497900
498630
498630
499385
499385
499640
499640
499890
499890
500115
500115
500345
S0Q345
500645
500645
501150
501150
500920
SXB70
500370
29
29
29
29
29
29
29
29
29
30
30
30
30
30
30
31
31
3]
31
31
31
31
31
31
31
2
12
12
26
26
44
44
58
58
16
15
31
31
39
39
4
4
12
12
20
20
28
28
35
35
N
N
N
N
N
N
N
N
21
21
21
21
21
20
20
20
20
20
20
20
20
20
20
48
23
23
6
6
57
57
31
31
24
24
17
17
7
W
W
W
W
W
w
W
W
W
W
W
W
W
w
W
496365
4
29
25
N
2
22
9
w
4963S
4
29
25
N
2
22
26
w
496115
4
29
17
N
2
22
26
496115
4
29
17
H
2
22
43
w
4956BS
4
29
3
H
2
22
43
w
495685
4
29
3
N
2
22
58
w
495130
4
2S
45
H
2
22
58
w
495130
4
28
45
H
2
23
16
w
494625
4
28
29
N
2
23
16
w
494625
4
28
29
H
2
23
30
w
494125
4
28
13
H
2
23
30
w
494125
4
28
13
H
2
23
48
w
493895
4
28
5
H
2
23
48
w
493S95
w
4
28
5
H
2
24
2
w
493670
4
27
58
H
2
24
2
w
493670
4
27
58
H
2
24
36
w
493140
4
27
41
H
2
24
36
w
493140
4
27
41
24
60
w
4
27
32
2
24
60
w
492865
4
27
32
N
N
N
2
492865
2
25
17
w
492435
4
27
18
N
2
25
17
w
49243S
4
27
18
N
2
25
33
w
4918SS
4
26
GO
N
2
25
33
w
491885
4
26
60
H
2
25
49
w
491655
4
26
52
H
2
25
49
w
491655
4
26
52
N
2
26
5
w
491405
4
26
44
N
2
26
5
w
491405
4
26
44
2
26
21
w
491205
4
26
38
2
26
21
w
491205
4
26
38
N
N
N
2
26
38
w
490625
4
26
19
H
2
26
38
w
490625
4
26
19
H
2
26
55
w
49CS95
4
26
11
H
3
26
55
w
491895
4
26
11
H
2
27
9
w
490145
4
26
3
N
2
27
9
w
490145
4
26
3
H
2
27
35
w
489640
4
25
47
H
2
27
35
w
4S9640
4
25
47
H
2
27
50
w
489895
4
25
55
H
2
27
50
w
489895
4
25
55
H
2
28
7
w
490425
4
26
9
H
2
28
7
w
490425
4
26
12
N
2
28
16
w
490900
4
26
28
N
2
28
15
w
490900
4
26
28
N
2
28
24
w
102
2) OCTP Oil (Cenomanian & Campanian) Development & Production Area XY
Coordinates
X
A 541610
B 541610
C 542250
D 542250
E 542890
F S42890
G 543960
H 543960
1 544430
J 544430
K S44E80
L 544680
M 545210
N 545210
O 546030
P 546030
Q 547820
R 547820
S 551030
T 551030
U 551960
V 551960
W SS2740
X 5S2740
Y 5S3780
Z 553780
AA 555200
AB 555200
AC 556740
AD 556740
AE 558270
AF 558270
AG 556810
AH 556810
AI 555350
AJ 555350
AK 552850
AL 552850
AM 551850
AN 551850
AO 550815
AP 550815
AQ 550280
AR 550280
AS 549280
AT 549280
AU 546745
AV 546745
AW 545925
AX 545925
AY 545925
AZ 544850
BA 544850
BB 544320
BC 544320
BD 543780
BE 543780
BF 543210
BG 543210
Y
496640
4S8S6S
488865
487860
487860
487040
487040
488290
488290
489930
489930
491330
491330
490900
490900
490360
490360
489790
489790
490255
490255
491330
491330
492250
492250
494360
494360
493860
493860
493290
493290
496360
496360
496820
496820
497390
497390
496360
496360
495360
495360
494895
494895
494395
494395
493540
493540
494075
494075
496750
499890
499890
499390
499390
498430
498430
497360
497360
496640
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
Lat
29 35
25 22
25 22
24 49
24 49
24 22
24 22
25
3
25
3
25 56
25 56
26 42
26 42
26 28
26 28
26 10
26 10
25 52
25 52
7
26
26
7
26 42
26 42
27 12
27 12
28 21
28 21
28
4
4
28
27 46
27 46
29 26
29 26
29 41
29 41
29 59
29 59
29 26
29 26
28 53
28 53
28 38
28 38
28 22
28 22
27 54
27 54
28 11
28 11
29 39
31
21
31 21
31
5
31
5
30 33
30 33
29 58
29 58
29 35
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
N
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
Long
37 30 W
37 30
W
37
9
W
37
9
W
36 48
W
36 48
W
36 14
W
36 14
W
35 58
W
35 58
W
35 50 W
35 50 W
35 33
W
35 33
W
35
6
W
35
6
W
34
8
w
34
8
w
32 24
w
32 24
w
31 54 w
31 54
w
31 29 w
31 29
w
30 55 w
30 55
w
w
30
9
30
9
w
29 19
w
29 19 w
28 29
w
28 29
w
29 16 w
16 w
29
30
4
w
4
30
w
31 25
w
31 25 w
31 57 w
31 57 w
32 31
w
w
32 31
w
32 48
32 48
w
33 21
w
33 21
w
34 43
w
34 43
w
35
10 w
35 10 w
35 10 w
35 45
w
35 45
w
36
2
w
36
2
w
36 19
w
36 19 w
36 38
w
36 38
w
ANNEX 2
ACCOUNTING GUIDE
The purpose of this Accounting Guide is to establish equitable methods as between
the Parties for determining charges and credits applicable to operations under the
Agreement. Principles established by this Accounting Guide shall truly reflect the
Contractor's actual cost.
SECTION 1.
1.1
G E N E R A L PROVISIONS
1.1.1 Words and terms appearing in this Annex shall have the same meaning
as in the Agreement and to that end shall be defined in accordance with
Article 1 of the Agreement.
1.1.2 This Annex may be amended by unanimous decision of the JMC.
1.1.3
1.2
In the event of a conflict between the provisions of the Accounting
Guide and the provisions of the Agreement, the provisions of the
Agreement shall prevail.
STATEMENTS R E Q U I R E D TO B E SUBMITTED B Y C O N T R A C T O R
1.2.1 Within sixty (60) days fi-om the Effective Date, Contractor shall propose
to GNPC an outline of the chart of accounts, operating records and
reports to be prepared and maintained, which shall describe the basis of
the accounting principles and procedures to be used during the term of
the Agreement, and shall be consistent with applicable law as in effect
and with accepted accounting principles generally used in the
international petroleum industry.
1.2.2 Within sixty (60) days of the receipt of such proposal GNPC shall either
accept it or request such revisions as GNPC deems necessary. Failure to
notify Contractor of any requested revisions within a sixty (60) day
period shall be deemed acceptance of such proposal.
1.2.3
Within one hundred and eighty (180) days from the Effective Date, the
Parties shall either agree on such outline or submit any outstanding issue
for determination by a Sole Expert pursuant to the provisions of
Article 24 of the Agreement.
1.2.4 Following agreement over the outline. Contractor shall, within sixty (60)
days thereafter, submit to GNPC formal copies of the accounting
systems and procedures manual to be followed for the Petroleum
Operations. This manual shall detail the accounting, recording, and
reporting functions listed in the agreed outline. GNPC shall be
104
permitted to propose modifications to such manual. GNPC shall be
permitted to audit on site Contractor's records that evidence any of the
reports issued by Contractor under the Agreement in accordance with
the procedures set forth in Article 18 of the Agreement.
1.2.5
Without prejudice to the generality of the foregoing, Contractor shall
make separate statements relating to Petroleum Operations for each
Development and Production Area as follows:
(a)
Cash Call Statement (see Section 5)
(b)
Production Statement (see Section 6)
(c)
Value of Production Statement (see Section 7)
(d)
Allowable Cost Statement (see Section 8)
(e)
Statement of Expenditures and Receipts (see Section 9)
(f)
Final End-of-Year Statement (see Section 10)
(g)
Budget Statement (see Section 11)
(h)
Long Range Plan and Forecast (see Section 12)
LANGUAGE, MEASUREMENT, AND UNITS OF ACCOUNTS
1.3.1 The U.S. Dollar being the currency unit for investments and
compensation hereunder shall therefore be the unit of currency for all
bookkeeping and reporting under the Agreement. When transactions for
an asset or liability are in Ghana Cedis or currency other than the U.S.
Dollar, the respective accounts shall be kept in such other currency as
well as the U.S. Dollar.
1.3.2 Measurement required under this Annex shall be in the metric system
£ind Barrels.
1.3.3
The English language shall be employed.
1.3.4 Where necessary for purposes of clarification. Contractor may also
prepare financial reports in other languages, units of measurement and
currencies.
1.3.5
It is the intent of the Parties that no Party shall experience any gain or
loss at the expense of or to the benefit of the other as a result of
exchange of currency. Where any such gain or loss arises it shall be
charged or credited to the accounts under the Agreement.
105
1.3.6 The rate of exchange for the conversion of currency shall be the rate
actually incurred (which shall be at the prevailing rate at the date of
acquisition). Where actual rates are not known, the arithmetic average
of buying and selling rates quoted by the Bank of Ghana at a close of
business on the date of such currency conversion shall be used.
1.3.7 Current Assets and Liabilities shall be converted at the rate prevailing
on the date of settlement of the account.
1.3.8 To translate transactions in Ghana cedis into dollars or vice versa at the
year-end for revenue and expenditure the rates of the transactions or
average monthly rates where reasonable will be used.
1.3.9 To translate transactions in Ghana cedis into dollars or vice versa at the
year-end for assets, liabilities and capital items the year end rate will be
used.
SECTION 2.
2.1
CLASSIFICATION AND A L L O C A T I O N OF COSTS AND
EXPENDITURE
2.1.1 All expenditure relating to Petroleum Operations shall be classified, as
follows:
(a)
Exploration Expenditure;
(b)
Development Expenditure;
(c)
Production Expenditure;
(d)
Service Costs; and
(e)
General and Administrative expenses
and shall be defined and allocated as herein below provided.
2.2
EXPLORATION EXPENDITURE
2.2.1 Exploration Expenditure shall consist of all direct, indirect and allocated
costs incurred in the search for Petroleum in the Contract Area,
including but not limited to expenditure on or in relation to:
(a)
aerial, geographical, geophysical, geochemical, paleontological,
geological, topographical and seismic surveys, and studies and
their interpretation, and purchased geological and geophysical
information;
(b)
borehole drilling and water drilling;
106
(c)
labour, materials and services used in drilling wells with the
objective of finding new Petroleum reservoirs or for the purpose
of appraising of Petroleum reservoirs already discovered,
provided such wells are not completed as producing wells;
(d)
facilities used solely for Exploration Operations, including access
roads, where applicable;
(e)
all service costs allocated to Exploration Operations on the basis
of procedures proposed by the Contractor on an equitable basis ;
(f)
all General and Administrative Expenses directly attributable to
Exploration Operations or allocated thereto on a consistent and
equitable basis; and
(g)
any other expenditures incurred in the search for and appraisal of
Petroleum in the Contract Area after the Effective Date and not
otherwise covered under this paragraph 2.2.1.
2.2.2 Exploration cost shall be tied to resultant commercial discoveries.
Where exploration activity is undertaken after a commercial discovery
that exploration cost shall be regarded as capital work-in-progress. I f
the exploratory activity results in commercial discovery it shall be
regarded as cost of the new discovery and resulting field. Where there is
no commercial discovery it shall be charged to the previous discovery
field.
DEVELOPMENT EXPENDITURE
2.3.1 Development Expenditure shall consist of all direct and allocated
indirect costs and expenditure incurred in Development Operations,
including but not limited to expenditure on:
(a)
drilling wells which are completed as producing wells and
drilling wells for purposes of producing a Petroleum reservoir
already discovered, whether these wells are dry or producing and
drilling wells for the injection of water or gas to enhance
recovery of Petroleum;
(b)
tangible drilling costs for completing wells by way of installation
of casing or equipment or otherwise after a well has been drilled
for the purpose of bringing such well into use as a producing well
or as a well for the injection of water or gas to enhance recovery
of Petroleum;
(c)
intangible drilling costs such as labour, consumable material and
services having no salvage value which are incurred in drilling,
and deepening of wells for producing purposes;
107
(d)
field facilities such as pipelines, flow lines, production and
treatment units, wellhead equipment, subsurface equipment,
enhanced recovery systems, offshore platforms. Petroleum
storage facilities and access roads for production activities;
(e)
engineering and design studies for the wells and field facilities;
(f)
all service costs allocated to Development Operations on
equitable basis;
(g)
all General and Administrative Expenses directly attributable to
Development Operations or allocated thereto on a consistent and
equitable basis;
2.3.2 Capital allowance for development expenses shall be granted under the
following conditions:
(a)
Development activity has been approved by the Minister;
(b)
Development activity has been completed; and
(c)
Production activity has started after the completion of the
development activity.
PRODUCTION E X P E N D I T U R E
Production Expenditure shall consist of but not limited to all direct and
allocated indirect costs and expenditure incurred in Petroleum Operations
including appropriate abandonment charges, after the Date of Commencement
of Commercial Production, such expenditure being other than Exploration
Expenditure, Development Expenditure, General and Administrative Expenses
and Service Costs. The balance of General and Administrative Expenses and
Service Costs not allocated to Exploration Operations or to Development
Operations under Section 2.2 and 2.3 shall be allocated to Production
Expenditure.
S E R V I C E COSTS
2.5.1 Service Costs shall consist of but not be limited to all direct and indirect
expenditure incurred in support of Petroleum Operations, including the
construction or installation of Warehouses, piers, marine vessels,
vehicles, motorised rolling equipment, aircraft, fire and security stations,
workshops, water and sewerage plants, power plants, housing
community and recreational facilities and furniture, tools land,
equipment used in these activities.
Service Costs in any Calendar Year shall include the total costs incurred
in such year to purchase and construct or install such facilities as well as
the annual costs of maintaining and operating such facilities.
108
2.5.2 A l l Service Costs will be regularly allocated on an equitable basis to
Exploration Expenditure, Development Expenditure and Production
Expenditure.
2.6
G E N E R A L AND ADMINISTRATIVE EXPENSES
General and Administrative Expenses shall consist of:
2.6.1 A l l main office, field and general administrative costs, in the Republic
of Ghana, including but not limited to supervisory, accounting,
procurement and employee relations services;
2.6.2 An overhead charge for the actual cost of services rendered outside the
Republic of Ghana by Contractor and its Affiliates for managing
Petroleum Operations and for staff advice and assistance, including but
not limited to financial, legal, accounting and employee relations
services in the following amounts:
(a)
For the Exploration Phase: One point two five percent (1.25%) to
a cap of US$200,000 per annum
(b)
For Development Phase: One point two five percent (1.25%) to a
cap of US$500,000 per armum per aimum
(c)
For Production Phase: One percent (1.0%) per annum to a cap of
US$200,000 per annum
2.6.3 All General and administrative Expenses will be regularly allocated as
specified in subsections 2.2.1(f), 2.3.1(g) and 2.4 to Exploration
Expenditure, Development Expenditure and Production Expenditure.
SECTION 3.
3.1
COSTS, EXPENSES, E X P E N D I T U R E S AND C R E D I T S O F
CONTRACTOR
A L L O W A B L E COSTS
3.1.1 Contractor for the purpose of this Agreement shall charge the following
allowable costs to the accounts:
(a)
costs of acquiring surface rights;
(b)
labour and associated costs;
(c)
transportation costs;
(d)
charges for services;
(c)
material and equipment costs;
109
(0
rentals, duties and other assessments;
(g)
insurance and losses (including deductibles/excesses);
(h)
legal expenses;
(i)
training expenses;
0)
general and administrative expenses;
(k)
utility costs;
(1)
office facility charges;
(m)
communication charges;
(n)
ecological and environmental charges;
(0)
abandonment and site restoration costs; and
(P)
such other costs necessary for the Petroleum Operations;
(q)
pre-Agreement costs of up to US$ 100,000.
COST OF ACQUIRING S U R F A C E RIGHTS AND RELINQUISHMENT
Cost of acquiring surface rights shall consist of all direct costs attributable to
the acquisition, renewal or relinquishment of surface rights acquired and
maintained in force over the Contract Area.
LABOUR AND ASSOCIATED LABOUR COSTS
3.3.1
Labour and associated labour costs shall include but not be limited to:
(a)
gross salaries and wages including bonuses of those employees of
Contractor and of its Affiliates engaged in Petroleum Operations
who are permanently or temporarily assigned to Ghana;
(b)
costs regarding holidays, vacation, sickness and disability
payments applicable to the salaries and wages chargeable under
(a);
(c)
expenses or contributions made pursuant to assessments or
obligations imposed under the laws of the Republic of Ghana
which are applicable to cost of salaries and wages chargeable
under (a);
(d)
cost of established plans for employees' life insurance,
hospitalisation, pensions and other benefits of a like nature
customarily granted to employees; and
110
(e)
reasonable travel and personal expenses of employees and
families, including those made for travel and relocation of the
personnel.
TRANSPORTATION COSTS
Transportation costs and other related costs of transportation of employees or
secondees of the Contractor or its affiliates, equipment, materials and supplies
necessary for the conduct of Petroleum Operations.
CHARGES F O R S E R V I C E S
3.5.1 Charges for services shall include:
(a)
the costs of third party contracts which are the actual costs of
contracts for technical and other services entered into by
Contractor or its Affiliates for Petroleum Operations made with
third parties other than Contractor or Affiliates of Contractor,
provided that the prices paid by Contractor are no higher than the
prevailing rates for such services in the regional market;
(b)
cost of technical and other services of personnel assigned by the
Contractor and its Affiliates when performing management,
engineering, geological, geophysical, administrative, legal,
accounting, treasury, tax, employee relations, computer services,
purchasing, and all other functions for the direct benefit of
Petroleum Operations. Provided that charges for such services
shall be at actual cost. All Services furnished by Contractor and
its Affiliates (other than the Operator) shall be performed based
on and pursuant to a form services agreement to be approved, a
copy of which shall be provided to the JMC after the Effective
Date.
(c)
cost of general services, including, but not without limitation,
professional consultants and others who perform services for the
direct benefits of Petroleum Operations.
(d)
costs associated with the use of equipment and facilities owned
and fiimished by the Contractor's Affiliates, at rates
commensurate with the cost of ownership and operation;
provided, however, that such rates shall not exceed those
currently prevailing for the supply of like equipment and facilities
on comparable terms in the area where the Petroleum Operations
are being conducted and shall be on an arm's length basis. On
the request of the GNPC, the Contractor shall provide the GNPC
with evidence of such rates being on an arm's length basis. ( I f
the GNPC considers that any such rate is not on an arm's length
basis, then the GNPC has the right to refer the matter to an expert
111
pursuant to Article 24.10 of the Agreement). The equipment and
facilities referred to herein shall exclude major investment items
such as (but not limited to) drilling rigs, producing platforms, oil
treating facilities, oil and gas loading and transportation systems,
storage and terminal facilities and other major facilities, rates for
which shall be subject to separate agreement with the GNPC.
3.6
RENTALS, DUTIES AND O T H E R ASSESSMENTS
All rentals, taxes, duties, levies, charges, fees, contributions and any other
assessments and charges levied by the State in connection with Petroleum
Operations or paid for the benefit of Petroleum Operations, with the exception
of the income tax specified in the Article 12 of the Agreement.
If the Contractor or any of its Affiliates is subject to income or withholding tax
as a result of services performed at cost for the Petroleum Operations under the
Agreement, its charges for such services may be increased by the amount
required to cover such taxes (grossed up) including taxes on such gross up.
3.7
3.8
INSURANCE AND LOSSES
(a)
Insurance premium and costs incurred for insurance, provided
that i f such insurance is wholly or partly placed with an Affiliate
of Contractor, such premium and costs shall be recoverable only
to the extent not in excess of those generally charged by
competitive insurance companies other than Affiliate; and;
(b)
costs and losses incurred as a consequence of events, which are,
insofar as not made good by insurance, allowable under
Article 17 of the Agreement.
(c)
Costs or expenses necessary for the repair or replacement of
property resulting fi-om damage or losses incurred.
L E G A L EXPENSES
All costs and expenses of litigation and legal or related services necessary or
expedient for the procuring, perfecting, retaining and protecting the rights
hereunder and in defending or prosecuting lawsuits involving the Contract Area
or any third party claim arising out of activities under the Agreement, or sums
paid in respect of legal services necessary or expedient for the protection of the
joint interest of GNPC and Contractor, provided that where legal services are
rendered in such matters by salaried or regularly retained lawyers of Contractor
or an Affiliate of Contractor, such compensation will be included instead under
either Section 3.3 or 3.5, as applicable. The preceding costs and expenses shall
not include costs of any nature (including attorneys' fees and the fees of the
ICC, arbitrators, the Sole Expert, other experts, professionals and translators)
incurred in connection with any consultation, arbitration or Sole Expert process
112
under Article 24 of the Agreement which shall be borne in accordance with
Article 24.11 of the Agreement.
3.9
TRAINING COSTS
All costs and expenses incurred by Contractor in training of its employees and
nominees of GNPC to the extent that such training is attributable to Petroleum
Operations under the Agreement.
3.10
G E N E R A L AND ADMINISTRATIVE EXPENSES
General and Administrative Expenses shall consist of the costs described in
Subsection 2.6.1 and the charge described in Subsection 2.6.2.
3.11
U T I L I T Y COSTS
Any water, electricity, heating, fuel or other energy and utility costs used and
consumed for the Petroleum Operations.
3.12
OFFICE FACILITY CHARGES
The cost and expenses of constructing, establishing, maintaining and operating
offices, camps, housing and any other facilities in Ghana necessary to the
conduct of Petroleum Operations. The cost of constructing or otherwise
establishing any operating facility which may be used at any time in operations
of more than one field shall be charged initially to the field or fields for which
the facility is first used. Costs incurred, thereafter shall be allocated in a
reasonable manner, consistent with international accounting practice, to the
fields for which the facility is used.
3.13
COMMUNICATION C H A R G E S
The costs of acquiring, leasing, installing, operating, repairing and maintaining
communication systems, including radio and microwave facilities.
3.14
E C O L O G I C A L AND ENVIRONMENTAL C H A R G E S
All charges for environmental protection and safety measures conducted in the
Contract Area in accordance with Article 17 of the Agreement.
3.15
ABANDONMENT COST
Cost relating to the decommissioning and abandonment of operations and
facilities, site restoration and other associated operations accrued from a
reasonable date in advance based on estimate of such cost (with subsequent
adjustments to actuals) as provided in Article 12.11 of the Agreement
^j^^
113
3.16
OTHER COSTS
Any other costs not covered or deah with in the foregoing provisions which are
incurred and not mentioned in this Section 3.16 for the necessary and proper
conduct of Petroleum Operations.
3.17
COSTS NOT A L L O W A B L E UNDER T H E A G R E E M E N T
3.17.1 The following costs shall not be allowable under the Agreement:
(a)
commission paid to intermediaries by Contractor;
(b)
charitable donations and contributions, except where prior
approval has been obtained from GNPC;
(c)
costs (including duties) arising from the marketing or processing
Petroleum or transportation of Petroleum beyond the Delivery
Point;
(d)
the costs of any Bank Guarantee under the Agreement and any
other amounts spent on indemnities with regard to non-fulfilment
of contractual obligations;
(e)
premium paid as a resuh of GNPC exercising a Sole Risk option
under Article 9 of this Agreement;
(f)
costs of any nature (including attorneys' fees and the fees of the
ICC, arbitrators, the Sole Expert, other experts, professionals and
translators) incurred in connection with any consultation,
arbitration or Sole Expert process under Article 24 of the
Agreement;
(g)
fines, penalties and interest due pursuant to any applicable law or
regulation and/or imposed by a competent administrative or
judicial body;
(h)
costs, damages and other liabilities incurred as a result of (1) a
breach of any provision of the Agreement other than a contractual
standard of care as decided by an arbitration panel or Sole Expert
or acknowledged by Contractor, (2) Gross Negligence with
respect to any contractual standard of care set forth in this
Agreement, and/or (3) wilful misconduct, in each case by the
Contractor, the Operator, their respective Affiliates and/or
subcontractors, and/or any other entities or persons for whom the
Contractor is responsible under the Agreement;
(i)
(1) income taxes (including any taxes on the net income of
permanent establishments in Ghana and any capital gains taxes or
taxes on assignment of interest), withholding taxes and/or royalty
114
shares or other Petroleum entitlements, in each case paid to
authorities in Ghana in connection with or related to the
Agreement, (2) any taxes paid to authorities outside Ghana,
except any foreign value added taxes or other foreign taxes paid
with respect to products or services imported into Ghana, (3) any
taxes subject to reimbursement or refund and; (4) any other taxes
that should be deemed non-allowable costs;
3.18
0)
costs incurred by the Contractor under contracts or amendments
thereto that were subject to approval by the JMC or GNPC and
were not so approved,
(k)
costs that are not documented in accordance with applicable law
or this Agreement; and
(1)
any bonus payments payable by the Contractor under the
Agreement to the State, any other governmental body in Ghana,
GNPC or any Affiliates of GNPC.
A L L O W A B L E AND D E D U C T I B I L I T Y
The costs and expenses set forth herein shall be for the purpose of determining
allowable or non-allowable costs and expenses only and shall have no bearing
on Contractor's eligibility or otherwise for deductions in computing
Contractor's net income from Petroleum Operations for income tax purposes
under the Agreement.
3.19
CREDITS UNDER T H E A G R E E M E N T
3.19.1 The net proceeds of the following transactions will be credited to the
accounts under the Agreement:
(a)
the net proceeds of any insurance or claim in connection with
Petroleum Operations or any assets charged to the accounts under
the Agreements when such operations or assets were insured and
the premium charged to the accounts under the Agreement;
(b)
revenue received from third parties for the use of property or
assets charged to the accounts under this Agreement;
(c)
any adjustment from the suppliers or manufacturers or their
agents in connection with a defective equipment or material the
cost of which was previously charged to the account under the
Agreement;
(d)
the proceeds received for inventory materials previously charged
to the account under the Agreement and subsequently exported
from the Republic of Ghana or transferred or sold to third parties;^
115
3.20
(e)
rentals, refunds or other credits received which apply to any
charge which has been made to the account under the Agreement
but excluding any award granted under arbitration or Sole Expert
proceedings.;
(f)
the proceeds from the sale or exchange of plant or facilities from
the Development and Production Area or plant or facilities the
acquisition costs and the cost of sale
(g)
the proceeds derived from the sale or issue of any intellectual
property the development costs of which were incurred pursuant
to this Agreement;
(h)
the proceeds from the sale of any petroleum information derived
from Petroleum Operations under this Agreement; and
(i)
any General and Administrative Expenses or Service Expenses
that benefit any operation or activity other than Petroleum
Operations.
DUPLICATION OF C H A R G E S AND C R E D I T S
Notwithstanding any provision to the contrary in this Annex, it is the intention
that there shall be no duplication of charges or credits in the accounts under the
Agreement.
SECTION 4.
4.1
V A L U E OF M A T E R I A L AND EQUIPMENT C H A R G E D T O T H E
ACCOUNTS UNDER T H E A G R E E M E N T
Material and equipment purchased, leased or rented by Contractor for use in
Petroleum Operations shall be valued at the actual net cost incurred by
Contractor. The net cost shall include invoice price less trade and cash
discounts, i f any, purchase and procurement fees plus freight and forwarding
charges between point of supply and point of shipment, freight to port of
destination, insurance, taxes, customs duties, consular fees, other items
chargeable against imported material, and any other related costs actually paid.
4.2
V A L U E OF M A T E R I A L PURCHASED F R O M AN A F F I L I A T E
4.2.1
Contractor shall notify GNPC of any goods supplied by an Affiliate of
Contractor. Materials purchased from Affiliate of Contractor shall be
charged at the prices specified in Sections 4.2.1, 4.2.2 and 4.2.3 below.
4.2.2 New Material (Condition "A") New material shall be classified as
Condition "A". Such material shall be valued at the prevailing market
price, plus expenses incurred in procuring such new materials, and in
moving such materials to the locations where the material shall be used.
116
4.2.3zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
Used Material (Condition "B") Used material shall be classified as
Condition " B " provided that it is in sound and serviceable condition and
is suitable for reuse without reconditioning. Such material shall be
valued at not more than seventy five percent (75%) of the current price
of new material valued according to Section 4.2.1 above.
4.2.4 Used Material (Condition "C") Used material which is serviceable for
original function as good second hand material after reconditioning and
cannot be classified as Condition " B " shall be classified as Condition
"C". Such material shall be valued at not more than fifty percent (50%)
of the current price of new material valued according to Section 4.2.1
above. The cost of reconditioning shall be charged to the reconditioned
material provided that that the value of such Condition "C" material plus
the cost of reconditioning does not exceed the value of Condition " B "
material.
CLASSIFICATION OF M A T E R I A L S
Material and equipment costs shall be charged to the respective Exploration
Expenditure, Development Expenditure, Operating Expenditure accounts at the
time the material and equipment is acquired and on the basis of the intended
use of the material and equipment. Should such material and equipment
subsequently be used other than as intended, the relevant charge will be
transferred to the appropriate account.
DISPOSAL OF M A T E R I A L S
Sales of property shall be recorded at the net amount collected by the
Contractor from the purchaser.
WARRANTY OF M A T E R I A L S
In the case of defective material or equipment, any adjustment received by
Contractor from the suppliers or manufacturers of such materials or their agents
will be credited to the accounts under the Agreement.
CONTROLLABLE MATERIALS
4.6.1 The Contractor shall control the acquisition, location, storage and
; disposition of materials which are subject to accounting record control,
physical inventory and adjustment for averages and shortages
(hereinafter referred to as Controllable Material).
4.6.2 Unless additional inventories are scheduled by the JMC, Contractor
shall conduct one physical inventory of the Controllable Material each
Calendar Year which shall be completed prior to the end of the year.
The Contractor shall conduct said inventory on a date to be approved by
the JMC. Failure on the part of GNPC to participate in a JMC schedule
117
or approved physical inventory shall be regarded as approval of the
results of the physical inventory as conducted by the Contractor.
4.6.3 The gain or loss resulting from the physical inventory shall be reflected
in the stock records of Controllable Materials. The Contractor shall
compile a reconciliation of the inventory with a reasonable explanation
for such gains or losses. Failure on the part of GNPC to object to
Contractor's reconciliation within thirty (30) days of compilation of said
reconciliation shall be regarded as approval by GNPC.
SECTION 5.
5.1
CASH C A L L STATEMENT
5.1.1 In respect of any Exploration Costs to which GNPC is contributing or
any Development and Production Area in which GNPC elects to take a
participating interest, and in any case where Contractor conducts Sole
Risk Operations for GNPC's account. Contractor shall at least fifteen
(15) days prior to the commencement of any Month submit a Cash Call
Statement to GNPC. Such Cash Call Statement shall include the
following information:
(a)
Due Date;
(b)
Payment Instructions;
(c)
The balance prior to the Cash Call being issued;
(d)
The cash call being issued
(e)
Amount of US Dollars due; and
(f)
An estimation of the amounts of US Dollars required from GNPC
for the following month.
5.1.2 Following a Cash Call GNPC shall make payments to the appropriate
bank account maintained by the Operator for the Joint Account as
specified on the Cash Call. A l l such payments shall be made in
sufficient time to ensure that they will each be credited to the
appropriate bank account on the due date specified in the Cash Call and
without the deduction of any bank charges.
5.2
Not later than the thirtieth (30*) day of each Month, Contractor will furnish
GNPC a statement reflecting for the previous month:
(a)
Payments;
(b)
The nature of such payments by appropriate classifications; and
118
(c)
5.3
The balance due to or from GNPC.
Contractor may in the case where a large unforeseen expenditure becomes
necessary issue a special Cash Call Statement requiring GNPC to meet such
Cash Call within ten (10) days of receipt of such Statement.
SECTION 6.
6.1
PRODUCTION STATEMENT
6.1.1 Subsequent to the Date of Commencement of Commercial Production
from the Contract Area, Contractor shall submit a monthly Production
Statement to GNPC showing the following information for each
Development and Production Area as appropriate:
6.2
(a)
the quantity of Crude Oil produced and saved;
(b)
the quantity of Natural Gas produced and saved;
(c)
the quantities of Petroleum used for the purpose of conducting
drilling and Production Operations, pumping to field storage and
re-injections;
(d)
the quantities of Natural Gas flared;
(e)
the size of Petroleum stocks held at the beginning of the Month;
and
(f)
the size of Petroleum stocks held at the end of the Month.
The Production Statement of each Calendar Month shall be submitted to GNPC
not later than ten (10) days after the end of such month.
SECTION 7.
7.1
V A L U E OF PRODUCTION STATEMENT
During each Quarter Contractor shall prepare a statement providing
calculations of the value of Crude Oil produced and saved based on the Market
Price established under Article 11 of this Agreement, the amounts of Crude Oil
allocated to each of the Parties during that Quarter, the buyer of the cargo, sales
basis with respect to Benchmark crude oil, the pricing basis, the differential,
and any deductions. Each Production Statement shall be submitted to the
Minister and GNPC not later than thirty (30) days following the determination,
notification and acceptance of the World Market Price to GNPC according to
Article 11 of this Agreement.
119
SECTION 8.
8.1
A L L O W A B L E COST STATEMENT
8.L 1 Contractor shall prepare with respect to each Quarter, an Allowable Cost
Statement containing the following information with respect to costs
that are allowable under Section 3.17 of this Accounting Guide:
(a)
Total Petroleum Costs in previous Quarters, i f any;
(b)
Petroleum Costs for the Quarter in question;
(c)
Total Petroleum Costs as of the end of the Quarter in question
(subsection 8.1.1(a) plus subsection 8.1.1(b) above);
(d)
Petroleum Costs for Development Operations advanced in the
Quarter in respect of GNPC's Participating Interest pursuant to
Article 2 of this Agreement; and
(e)
Costs as specified in (d) above which have been recovered during
the Quarter pursuant to Article 10.2(e) of the Agreement and the
balance, if any, of such costs unrecovered and carried forward for
recovery in a later period.
8.1.2 Petroleum Costs for Exploration, Development and Production
Operations as detailed above shall be separately identified for each
Development and Production Area. Petroleum Costs for Exploration
Operations not directly attributable to a specific Development Area shall
be shown separately.
8.2
The Allowable Cost Statement of each Quarter shall be submitted to GNPC no
later than forty-five (45) days after the end of such Quarter.
SECTION 9.
9.1
STATEMENT OF EXPENDITURES AND R E C E I P T S
9.1.1 Subsequent to the Date of Commencement of Commercial Production
from the Contract Area, Contractor shall prepare with respect to each
Quarter a Statement of Expenditures and Receipts. The Statement will
distinguish between Exploration Expenditure and Development
Expenditure and Production Expenditure and will identify major items
of expenditure within these categories. The statement will show the
following:
(a)
actual expenditures and receipts for the Quarter in question;
(b)
cumulative expenditure and receipts for the budget year in
question;
120
9.2
(c)
latest forecast of cumulative expenditures at the year end;
(d)
variations between budget forecast and latest forecast and
explanations therefore;
(e)
Price per barrel of crude oil sold; and
(f)
Price per barrel of oil equivalent of Gas sold.
The Statement of Expenditures and Receipts of each Calendar Quarter shall be
submitted to GNPC not later than forty-five (45) days after the end of such
Quarter for provisional approval by GNPC.
SECTION 10.
10.1
FINAL
END-OF-YEAR
STATEMENT
STATEMENT/AUDITED
FINANCIAL
The Contractor will prepare a Final End-of-Year Statement. The Statement
will contain information as provided in the Production Statement, Value of
Production Statements, Allowable Cost Statement and Statements of
Expenditures and Receipts, as appropriate. The Final End-of-year Statement of
each Calendar Year shall be submitted to GNPC within one hundred and
twenty (120) days of the end of such Calendar Year. Any necessary
subsequent adjustments shall be reported promptly to GNPC.
In addition to the Final End-of-Year Statement, an audited financial statement
of each Contractor Party shall be submitted to GNPC and Petroleum
Commission by 30'*' April of the year following.
SECTION 11.
11.1
BUDGET STATEMENT
11.1.1 The Contractor shall prepare an annual budget statement. This will
distinguish
between
Exploration Expenditures,
Development
Expenditures and Production Expenditures and will show the following;
(a)
forecast Expenditures and Receipts for the budget year under the
Agreement;
(b)
cumulative Expenditures and Receipts to the end of said budget
year; and
(c)
the most important individual items of Exploration, Development
and Production Expenditures for said budget year.
121
11.1.2 The budget may include a budget line or lines for unforeseen
expenditures which, however, shall not exceed ten percent (10%) of the
total budgetary expenditure.
11.2
The Budget Statement shall be submitted to GNPC and JMC with respect to
each budget year no less than ninety (90) days before the start of such year
except in the case of the first year of the Agreement when the Budget
Statement shall be submitted within sixty (60) days of the Effective Date.
11.3
Where Contractor foresees that during the budget period expenditures have to
be made in excess of the ten percent (10%) pursuant to section 11.1.1 hereof,
contractor shall submit a revision of the budget to GNPC and JMC.
SECTION 12.
12.1
LONG RANGE PLAN AND F O R E C A S T
12.1.1 Contractor shall prepare and submit to GNPC the following:
(a)
During Exploration Period, an Exploration Plan for each year
commencing as of the Effective Date which shall contain the
following information:
(i)
Estimated Exploration Costs showing outlays for each of
the years or the number of years agreed and covered by the
Plan;
(ii)
Details of seismic operations for each such year;
(iii)
Details of drilling activities planned for each such year;
and
(iv)
Details of infrastructure utilisation and requirements.
The Exploration Plan shall be revised on each anniversary of the
Effiective Date. Contractor shall prepare and submit to GNPC the
first Exploration Plan for the Initial Exploration Period of three
(3) years within sixty (60) days of the Effective Date and
thereafter shall prepare and submit to GNPC no later than forty
five (45) days before each anniversary of the Effective Date a
revised Exploration Plan.
(b)
In the event of a Development Plan being approved, the
Contractor shall prepare a Development Forecast for each
calendar year of the Development Period, which shall contain the
following information:
122
(c)
(i)
forecast of capital expenditure portions of Development
and Production expenditures for each Calendar Year of the
Development Period;
(ii)
forecast of operating costs for each Calendar Year;
(iii)
forecast of Petroleum production for each Calendar year;
(iv)
forecast of number and types of personnel employed in the
Petroleum Operations in the Republic of Ghana;
(V)
description
of
arrangements;
(vi)
description of main technologies employed; and
(vii)
description of the working relationship of Contractor to
GNPC.
proposed
Petroleum
marketing
The Development forecast shall be revised at the beginning of
each Calendar Year commencing as of the second year of the first
Development forecast Contractor shall prepare and submit to
GNPC the first Development forecast within one hundred and
twenty (120) days of the date when the first Development Plan is
approved by the Minister and Contractor commences the
implementation of such plan and thereafter shall prepare and
submit a revised Development Forecast to GNPC no later than
forty five (45) days before each Calendar Year commencing as of
the second year of the first Development forecast.
CHANGES OF PLAN AND F O R E C A S T
It is recognised by Contractor and GNPC that the details of the Exploration
Plan and Development forecast may require changes in the light of existing
circumstances and nothing herein contained shall limit the flexibility to make
such changes. Consistent with the foregoing the said Plan and Forecast may be
revised annually.
123
ANNEX 3
FORM OF CONFIDENTIALITY AGREEMENT
\ Contract Area
THIS AGREEMENT is entered into this
day of
, (the "Effective
Date") by and between [
] , a company organized and existing under
] (hereinafter referred to as the "Disclosing Party"); and
the laws of [
, a company organized and existing under the laws
of.
(hereinafter referred to as the "Receiving Party").
The companies named above may collectively be referred to as the "Parties" or
individually as "Party".
WHEREAS in cormection with the Possible Transaction (as defined below) by the
Receiving Party, the Disclosing Party is willing, in accordance with the terms and
conditions of this Agreement, to disclose certain Confidential Information (as defined
below) relating to the Cape Three Points Block 4 Offshore (the "Area") shown in
Exhibits A to D attached hereto; and
WHEREAS the Petroleum Agreement covering the said Contract Area requires that
the Disclosing Party require the execution of a confidentiality agreement by Receiving
Party prior to the disclosure of Confidential Information in order to govern such
disclosure and that a copy of all such signed confidentiality agreements be provided to
GNPC.
NOW THEREFORE, in consideration for the mutual undertakings of the Disclosing
Party and the Receiving Party under this Agreement, the Parties agree as follows:
1.
Definitions
As used in this Agreement the following words and terms shall have the meaning
ascribed to them below:
1.1
1.2
"Affiliated Company" means any Person which:
^
a.
Controls directly or indirectly a Party, or
b.
Is Controlled directly or indirectly by such Party, or
c.
Is directly or indirectly Controlled by a Person which directly or
indirectly Controls such a Party.
"Confidential Information" means individually or collectively:
1.2.1
any and all data and information obtained as a result of
petroleum operations in the Area, including without limitation
well data and seismic information together with all other data
and information obtained by or on behalf of the Disclosing
Party in connection with the Disclosing Party's petroleum
operations in the Area, as well as geological and economic
reports, studies, interpretations and analyses prepared by or on
behalf of the Disclosing Party in connection with its petroleum
operations in the Area. Confidential Information includes
certain proprietary data and information that is the property of
GNPC (hereinafterzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHG
"GNPC Information") as described in
Exhibit B attached hereto.
Provided that, the following shall not constitute Confidential Information:
1.2.2
information that can be reasonably demonstrated by the
Receiving Party as being already lawfully known to Receiving
Party as of the Effective Date;
1.2.3
information that is or becomes available to the public other than
through the act or omission of Receiving Party or of any other
Person to whom Confidential Information is disclosed by the
Receiving Party pursuant to Article 4.2 unless public disclosure
was made pursuant to Article 4.1;
1.2.4
information that is acquired independently from a third party
that has a right to disseminate such information at the time it is
acquired by the Receiving Party; or
1.2.5
information that can be reasonably demonstrated Jjy the
Receiving Party to have been developed by Receiving Farty
independently of the Confidential Information received from "
Disclosing Party.
1.3
"Control" means the ownership directly or indirectly of 50% or more of
the voting rights in a Person or the ability to direct, directly or indirectly,
the management or policies of a Person, whether through the
appointment of the directors, the ownership of voting shares or other
voting rights, pursuant to written contract or otherwise. "Controls",
"Controlled by" and other derivatives shall be construed accordingly.
1.4
"Evaluation Material" means information derived in whole or in part
from Confidential Information, and generated by or on behalf of the
Receiving Party. For purposes of this Agreement, Evaluation Material
may include without limitation models, technical, financial and
economic reports, studies, interpretations, analyses, estimates of
reserves, and evaluations and notes of documents or meetings. V
125
2.
1.5
"GNPC"zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
means Ghana National Petroleum Corporation, a Statutory
Corporation established by Provisional National Defence Council Law
64 of 1984 with its Head Office at Petroleum House, Harbour Road,
Tema.
1.6
"Person" means an individual, joint venture, corporation, company,
firm, partnership, limited partnership, limited liability company, trust,
estate, government agency or any other entity, including unincorporated
business associations.
1.7
"Petroleum Agreement" means the Petroleum Agreement dated [ ]
between the Government of the Republic of Ghana, Ghana National
Petroleum Corporation, [
] in respect of the Cape Three Points
Block 4 Offshore Ghana (and all amendments and supplements thereto).
1.8
"Possible Transaction" means any possible business arrangement with
the Disclosing Party under which Receiving Party would acquire
directly or indirectly all or part of the rights and interests owned by
Disclosing Party and/or Disclosing Party Affiliates in one or more
offshore hydrocarbon exploration, development or production assets
located within the Area.
Disclosure
In connection with the Possible Transaction, Disclosing Party is willing to disclose to
Receiving Party certain Confidential Information.
The Parties agree that the
disclosure by the Disclosing Party and the receipt by the Receiving Party of the
Confidential Information is subject to the terms of this Agreement.
3.
Undertaking of Confidentiality, Restriction on Use and Damages
3.1
In consideration of the disclosure referred to in Article 2 above, the
Receiving Party agrees that the Confidential Information and the
Evaluation Material shall be held and treated strictly in confidence and
may not be disclosed, licensed, traded, published or otherwise revealed
in any manner whatsoever, without the prior written consent of the
Disclosing Party except as provided in Article 4 below.
3.2
The Receiving Party shall (and shall procure that any Affiliated
Company shall) not use or permit the use of the Confidential
Information and/or the Evaluation Material other than for the purpose of
evalviating the Area and determining whether to enter into negotiations
in connection with the Possible Transaction with the Receiving Party.
3.3
The Receiving Party shall (and shall procure that any Person that
receives Confidential Information and/or Evaluation Material pursuant
to and in accordance with Article 4.2 hereof shall) keep any Confidential
Information it receives and any copies thereof and any Evaluation^
126
Material secure and confidential (in a manner no less secure and
confidential than Receiving Party and such Persons keep their respective
confidential information) and to prevent the Confidential Information
and any Evaluation Material from being disclosed in breach of this
Agreement.
3.4
The Receiving Party agrees not to disclose to anyone, except as
provided for by Article 4 below, the fact that the Confidential
Information has been made available or that discussions or negotiations
are taking place or have taken place between Disclosing Party and
Receiving Party or any Party's Affiliated Companies.
3.5
The obligations of the Receiving Party for confidentiality and non-use as
set forth in this Agreement shall commence from receipt of the
Confidential Information by the Receiving Party. Further, the obligation
not to disclose shall not be affected by bankruptcy, receivership,
assignment, attachment or seizure procedures, whether initiated by or
against the Receiving Party, nor by the rejection of any agreement
between GNPC and Disclosing Party and/or Receiving Party, by a
trustee of Receiving Party in bankruptcy, or by the Receiving Party as a
debtor-in-possession or the equivalent of any of the foregoing.
3.6
The Receiving Party agrees to indemnify Disclosing Party against direct
damages (including, losses, damages, claims, expenses and reasonable
attorney's fees) incurred or suffered as a result of a breach of this
Agreement by Receiving Party or its Affiliated Companies. Such direct
damages shall be the sole exclusive remedy, and all other remedies or
damages at law or in equity are waived except such equitable relief as
may be granted under Article 11. In no event shall the Parties be liable
to each other for any other damages, including incidental, consequential,
special, or punitive damages, regardless of negligence or fault.
Permitted Disclosure and Obligation of Receiving Party for Permitted
Disclosures
The Receiving Party may disclose Confidential Information and/or Evaluation
Material without the prior written consent of the Disclosing Party:
4.1
To the extent the Confidential Information and/or Evaluation Material is
required to be disclosed under applicable law, order, decree, regulation
or rule of any governmental entity having jurisdiction over the
Receiving Party, or any regulatory entity, securities commission or stock
exchange on which the securities of the Receiving Party or any of its
Affiliated Companies are listed or are to be listed, provided that the
Receiving Party shall make all reasonable efforts to give written notice
to the Disclosing Party prior to such disclosure (including full details of
the circumstances of such disclosure); or
) ^
127
4.2zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
To the following persons on a need to know basis and only for the
purpose described in Article 3.2:
4.2.1
employees, officers and directors of the Receiving Party;
4.2.2
employees, officers and directors of an Affiliated Company of
the Receiving Party;
4.2.3
any professional consultant or agent retained by the Receiving
Party or its Affiliated Company; or
4.2.4
any bank, financial institution or entity financing or proposing
to finance the Possible Transaction, including any professional
consultant retained by such bank, financial institution or entity
for the purpose of evaluating the Confidential Information
and/or Evaluation Material.
Prior to making any such disclosure to Persons under Articles 4.2.3 and
4.2.4 above, however, the Receiving Party shall obtain an undertaking of
confidentiality, on terms no less stringent than contained in this
Agreement, from each such Person; provided, however, that in the case
of outside legal counsel, the Receiving Party shall only be required to
procure that such legal counsel is bound by an obligation of
confidentiality.
4.3
The Receiving Party shall be responsible to the Disclosing Party for any
act or omission of the entities and Persons described in Article 4.2 that
would constitute breach of this Agreement as i f the action or omission
had been perpetrated by the Receiving Party and shall immediately
notify the Disclosing Party upon becoming aware that Confidential
Information has been disclosed in breach of this Agreement.
Ownership of Confidential Information
5.1
Receiving Party acknowledges the Confidential Information, excluding
the GNPC Information, remains the property of the Disclosing Party and
the Disclosing Party may use such Confidential Information for any
purpose without obligation to the Receiving Party.
5.2
Receiving Party acknowledges that the GNPC Information is and
remains the property of GNPC and GNPC may use such GNPC
Information for any purpose without obligation to the Disclosing Party
or Receiving Party. In addition. Receiving Party acknowledges that in
the event that it acquires, directly or indirectly an interest in the Area,
that it may be required to enter into a data licensing agreement with
GNPC with respect to the GNPC Information on terms to be agreed
between GNPC and the Receiving Party.
128
5.3zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
The Receiving Party shall acquire no proprietary interest in or title or
right to the Confidential Information.
Return of Confidential Information
6.1
Disclosing Party may demand the return of the Confidential Information
at any time upon giving written notice to Receiving Party.
6.2
Within thirty (30) days of receipt of the notice referred to in Article 6.1
or upon completion of the Receiving Party's review and/or evaluation of
the Confidential Information, the Receiving Party shall retain no copies
of the Confidential Information, but shall:
6.3
6.2.1
Return all of the original Confidential Information to the
Disclosing Party;
6.2.2
Destroy or delete or cause to be destroyed or deleted all copies
and reproductions (both written and electronic) of Confidential
Information and any Evaluation Material in its possession
and/or in the possession of persons to whom it was disclosed by
the Receiving Party. Confidential Information or Evaluation
Material that is in electronic format (including all electronic
back-up files ± subject to Art 6.3.1) shall also be deleted; and
6.2.3
Provide a written certification, signed by an authorized officer
of the Receiving Party, that Receiving Party has fully complied
with its obligations under this Clause 6.2.
The provisions of Article 6.1 and 6.2 do not apply to the following:
6.3.1
Confidential Information or Evaluation Material that is retained
in the computer backup system of Receiving Party or a Person
to whom it was disclosed under Article 4.2 i f the Confidential
Information or Evaluation Material will be destroyed in
accordance with the regular ongoing records retention process
of Receiving Party or such Person and i f the Confidential
Information is not used prior to its destruction;
6.3.2
Confidential Information or Evaluation material that must be
retained under applicable law or regulation, including by stock
exchange regulations or by governmental order, decree,
regulation or rule; and
6.3.3
any corporate documents or reports of the Receiving Party
which contain data derived from the Confidential Information
or Evaluation Material which were presented to its executive
board (or the equivalent thereof) and are required in accordance
129
with applicable law or its document retention policy to be
retained;
provided that any Confidential Information and/or Evaluation Material
that is so retained shall remain subject to the terms of this Agreement.
Remedies
The Receiving Party understands and acknowledges that any breach of the
terms of this Agreement may cause the Disclosing Party irreparable harm, and
damages may not be an adequate remedy, and therefore agrees that the
Disclosing Party, an Affiliated Company of Disclosing Party shall have the
right to apply, ex parte without the need to post any type of bond or security, to
a court of competent jurisdiction for specific performance and/or an order
restraining and enjoining any such breach or fiirther disclosure and for such
other relief as may be deemed appropriate. Such right is to be in addition to the
remedies otherwise available to the Disclosing Party, an Affiliated Company of
Disclosing Party at law or in equity.
Term
This Agreement shall terminate on the later of five (5) years fi-om the Effective
Date or the date on which disclosure by Disclosing Party is no longer restricted
by the terms of the Petroleum Agreement(s) currently covering the Area.
Representations and Warranties
The Disclosing Party represents and warrants that it has the right and authority
to disclose the Confidential Information to the Receiving Party. However the
Disclosing Party, its Affiliated Companies and their respective principals,
officers, directors and employees make no representation or warranties, express
or implied as to the quality, accuracy and completeness of the Confidential
Information disclosed hereunder, and the Receiving Party expressly
acknowledges the inherent risk of error in the acquisition, processing, and
interpretation of geological and geophysical data. The Disclosing Party, its
Affiliated Companies and their respective principals, officers, directors and
employees shall have no liability whatsoever with respect to the use of or
reliance upon the Confidential Information by the Receiving Party or its
Affiliated Companies or Persons to whom the Receiving Party discloses
Confidential Information under Article 4.2.
Assignment
The rights and obligations of the Receiving Party under this Agreement may
not be assigned in whole or in part by the Receiving Party without the prior
written consent of the Disclosing Party. Any attempted assignment by
Receiving Party without the prior written approval of Disclosing Party shall be
void. Without limiting the prior provisions of this Article 10, this Agreement
130
shall bind and inure to the benefit of the Parties and their respective successors
and permitted assigns.
11.
Governing Law and Dispute Resolution
11.1
This Agreement shall be governed by and interpreted in accordance with
the laws of England and Wales.
11.2
Subject to Article 7 of this Agreement, any dispute arising out of,
relating to, or in connection with this Agreement, including any question
regarding its existence, validity or termination, shall be settled under the
Rules of Arbitration of the International Chamber of Commerce by three
arbitrators appointed in accordance with said rules. The place of
arbitration shall be London, England. The proceedings shall be in the
English language.
11.3
The resulting arbitral award shall be final and binding without right of
appeal, and judgment upon such award may be entered by any court
having jurisdiction thereof A dispute shall be deemed to have arisen
when either Party notifies the other Party in writing to that effect.
Receiving Party understands and acknowledges that any breach of the
terms of this Agreement may cause the Disclosing Party irreparable
harm for which damages may not be an adequate remedy. Accordingly,
the arbitrator may award both monetary and equitable relief, including
injunctive relief and specific performance or other such relief as may be
deemed appropriate. The Disclosing Party may apply to any competent
judicial authority for interim or conservatory relief; an application for
such measures or an application for the enforcement of such measures
ordered by the arbitrator shall not be deemed an infringement or waiver
of the Agreement to arbitrate and shall not affect the powers of the
arbitrator. Any monetary award issued by the arbitrator shall be payable
in U.S. dollars. Each Party waives any right to damages other than those
provided in Article 3.6.
11.4
Unless the Parties expressly agree in writing to the contrary, the Parties
undertake as a general principle to keep confidential all awards in their
arbitration, together with all materials in the proceedings created for the
purpose of the arbitration and all other documents produced by another
party in the proceedings not otherwise in the public domain - save and to
the extent that disclosure may be required of a Party by legal duty, to
protect or pursue a legal right or to enforce or challenge an award in
bona fide legal proceedings before a state court or other judicial
authority.
11.5
Any Party that now or hereafter has a right to claim immunity for itself
or any of its assets hereby waives such immunity and agrees not to claim
such immunity, in connection with this Agreement, including any
131
dispute hereunder. This waiver includes immunity from (A) legal
process of any sort whatsoever, (B) jurisdiction or judgment, award,
determination, order or decision of any court, arbitrator, tribunal or
Expert, (C) inconvenient forum, and (D) any effort to confirm, enforce,
or execute any decision, settlement, award, judgment, service of process,
execution order, attachment (including pre-judgment attachment) or
other remedy that results from an expert determination, arbitration or
any judicial or administrative proceedings commenced pursuant to this
Agreement.
12.
Non-exclusivity
The disclosure of Confidential Information to Receiving Party is non-exclusive,
and Disclosing Party may disclose the Confidential Information to others at any
time pursuant to the terms and conditions of the Petroleum Agreements.
13.
No Rights in the Area
Unless otherwise expressly stated in writing, any prior or fiiture proposals or
offers made in the course of the discussions of the Parties are subject to all
necessary management and government approvals and may be withdrawn by
either Party for any reason or for no reason at any time. Nothing contained
herein is intended to confer upon Receiving Party any right whatsoever to the
interest of Disclosing Party in the Area.
14.
No Waiver
No waiver by either Party of any one or more breaches of this Agreement by
the other Party shall operate or be construed as a waiver of any future breach or
breaches by the same or other Party, whether of like or of different character.
Except as may be expressly provided in this Agreement no Party shall be
deemed to have waived, released or modified any of its rights under this
Agreement unless such Party has expressly stated in writing, that it does waive,
release or modify such right.
15.
Modifications
No amendments, changes or modifications to this Agreement shall be valid
except i f the same are in writing and signed by a duly authorized representative
of each of the Parties hereto.
16.
Severability
If any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as i f such invalid or unenforceableterm had never been included.
132
Interpretation
17.1zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA
Headings. The topical headings used in this Agreement are for
convenience only and shall not be construed as having any substantive
significance or as indicating that all of the provisions of this Agreement
relating to any topic are to be found in any particular Article.
17.2
Singular and Plural. Reference to the singular includes a reference to
the plural and vice versa.
17.3
Include. The words "include" and "including" have an inclusive
meaning, are used in an illustrative sense and not a limiting sense, and
are not intended to limit the generality of the description preceding or
following such term.
Counterpart Execution
This Agreement may be executed in counterparts and each counterpart shall be
deemed an original Agreement for all purposes; provided that neither Party
shall be bound to this Agreement until both parties have executed a
counterpart. For purposes of assembling the counterparts into one document,
Disclosing Party is authorized to detach the signature page from one
counterpart and, after signature thereof by Receiving Party, attach each signed
signature page to a counterpart.
Entirety
This Agreement comprises the fiiU and complete agreement of the Parties
hereto with respect to the disclosure of the Confidential Information and
supersedes and cancels all prior communications, understandings and
agreements among the Parties with respect to disclosure of the Confidential
Information to the Receiving Party by the Disclosing Party, whether written or
oral, expressed or implied.
No Third Party Beneficiaries
20.1
This Agreement is made for the benefit of the Parties, any Affiliated
Company of the Disclosing Party and their respective successors and
permitted assigns.
20.2
It is the intention of the Parties that:
(a)
any person who is an Affiliated Company of the Disclosing
Party;
and
(b)
GNPC in respect of any GNPC Information,
has a right under the U.K. Contract (Rights of Third Parties) Act 1999 to
enforce or enjoy the benefit of any term of this Agreement. Except as
aforesaid, a person who is not a party to this Agreement has no right
133
under such Act to enforce or enjoy the benefit of any term of this
Agreement.
20.3
Notwithstanding any provisions of this Agreement, the Parties to this
Agreement do not require the consent of any third party to vary this
Agreement at any time provided that the consent of GNPC will be
required for any variation which relates to any provision as it applies to
GNPC Information.
21. Anti-Bribery/Anti-Corruption
The Parties hereby agree that, in relation to this Agreement and the subject
matter hereof, they shall at all times comply with all applicable law, regulations
and codes relating to anti-bribery and anti-corruption, including but not limited
to ensuring that each of the Parties and their respective representatives shall not
engage in any activity, practice or conduct which would constitute an offence
under any such laws, regulations or codes (as may be amended from time to
time).
22.
Notices
All notices authorized or required between the Parties by any of the provisions
of this Agreement shall be in writing, in English and delivered in person or by
courier service or by facsimile which provides written confirmation of
complete transmission, and properly addressed to such Parties as shown below.
Oral communication and email do not constitute notice for purposes of this
Agreement and email addresses and telephone numbers for the Parties are
listed below as a matter of convenience only. A notice given under any
provision of this Agreement shall be deemed delivered only when received by
the Party to whom such notice is directed, and the time for such Party to deliver
any notice in response to such originating notice shall run from the date the
originating notice is received. "Received" for purposes of this Article 21 shall
mean actual delivery of the notice to the address or facsimile address of the
Party specified hereunder. Each Party shall have the right to change its address
at any time and/or designate that copies of all such notices be directed to
V^^>^
another person, by giving written notice thereof to all other Parties.
Disclosing Party Name
Address:
r
Attention:
Facsimile:
Email:
Telephone
Receiving Party Name
Address:
134
Attention:
Facsimile:
Email:
Telephone:
IN WITNESS WHEREOF the duly authorized representatives of the Parties have
caused this Agreement to be executed on the date first written above.
DISCLOSING P A R T Y
Signature:
Name:
Title:
Date:
RECEIVING PARTY
Signature:
Name:
Title:
Date:
ANNEX 4
SAMPLE AOE CALCULATION
r ni
Attount F»
YCMS
I'S
y*'
y»ll
y*M
13.000]
tlO,000)
(w.oool
{i<»,ooo)
(100.000)
(Se.ooo)
100,000
MO! 000
100.000
Mcooc
mooo
300,000
300,000
350,000
soo.ooo
MO. 000
too.ooc
too. 000
M. m
y*)l
NCf
X.O0O
10.000
(S.0O0)
(10.000)
(100,000)
I.OOW
(3,000)
(ll.«M|
(• S.303
)
(1W .SM1
(300,21*)
2. aa% (J13.7S1)
(3».»«J
(2S1,717)
2. mt
(M.ilt)
2.00*
W.W3
2.00%
1O0.000
2.0OH.
MO.OOO
Z.00%
300.000
2.00%
300.000
2.00%
3M,eoo
2 00%
1.00%
»0.000
M!ODD
10.000
30.000
30.000
34,000
M,00<1
20,000
(3,000)
(10,000)
{M,O00)
(T0o,ooo)
[100.000)
(»,000)
100,000
IM,000
»o.ooo
IKI.lOl
1M.0OO
110.000
IT0.OO0
2«1,000
200%
)'.(»%
1.00%
2-00%
2-00%
loiooo
10,000
siooo
1,000
(3.000)
(11,SW)
(17*.1S0J
!3l*,0t<)
1*2S.1»)
(400.I70)
(3".»«)
(M3,TM)
(U.*V.)
iM.ooe
iTO,ooo
370.000
31S.00O
270.000
iM,ooa
W,000
to.ooo
10.000
4s!ooo
uiooo
tiooo
(S.0OO)
(10.000)
(100.000)
(s!ooo
(ii.ws)
(lH.OiO)
Foonr
NCF
iso^
i . om
IDO.OOO
100.000
w.ooo
30.000
(siooo)
(1S,JJS)
(111,005)
TKS
Account SA
10 0«
*o[soo
• C«22J%
(J.0O0)
(10.000)
(S0.0001
(1O0.OO0)
(100.000)
[».ooo)
100.000
iso.ooo
200.000
1«0,101
0.000)
(13.'«)
(«,100)
[1W,S40)
(3II,S07)
{"M,M1)
{.J1.4M)
(*»,M7)
{3M.0O0)
(2J«.17*
(133.**0)
15l!oOO
221.SOO
21J.H4
m. w
*0,S00
*o'. KO
(3.000)
(10,000)
(so.ooo)
(100,000)
(100.000)
IMOOo'
ioo^ooo
1M.IB1
tsi'eoD
Sl!t3t
»7.7S0
iM.ioo
i n , MO
7*!soo
7t,S00
7«.S00
"'soo
la^soo
«.»0
IDt27
Tiisoc
3«;2S«
(S.000
(10.000
(1«,»S
(IM,»0
Sl!«3i
17T,t»3
i7:2ia
M.IM
M.2M
M.ZM
M,**4
17,M«
\;»o*
(S',000
(10.000
(100.000
(3,000)
(13, OH)
(t7.«il)
{lf«,03S)
O41,S0*)
(4«,M0)
[S«0,ill)
(SS0.3M)
(S13,71S)
(473.l«)
[M1.0H)
(«31,1S3)
{37*,i21)
(30»,l*l)
(1M,7*4)
(7J,0U)
J3,»M
S»,1M
*l.2»«
—TJH; —
27 J*
• f tf U l IT*
(3,000)
(10.000)
(M.SOO)
(100.BOO)
(100.000)
(M.OOO)
100.000
ioo!ooo
113,000
islw
1*,30«
lt,30*
177,M3
1I1,1M
«I,N3
*2,M3
*ccauni2A
(3,000)
(13,tlS)
(S7.M1)
(lii.OJS)
(MJ.SOt)
{«*I.1«0)
(MO.Ill)
(IM.3M1
(S12.71S1
(«73,»64:
NCF
(iO,D0O)
200,000
ls3!~0
S,MS
13,S70
ij3;»*3
]C7,S0t
lotim
«.*t3
13] 470
t '. it t
(S.000
(10,000
(100.000
*,2*t
(S,000
(16,<7S
(111.335)
TOTAL
AOE Q 75Vllbl
(3,000)
(10,000)
(S0.0OO)
(100,000)
(100,000)
{«i'in
{37(.HI)
(30*,M1)
(in.7M)
(73.0*2
21. W
(IMO
^[IMTI
*0tO2»
32,5%
14^507
1.704
1,»01
(5.000
(10,000
(100,000)
4t»
llt^IT?
m.iH
112|l31
ToitM
70,*M
70.»0t
3S,4S3
31.2W
l.W*
1,*00
l,i3*
I.34«
M4
136
ANNEX 5
PRINCIPLES OF THE PROJECT OPERATING STRUCTURE
•
Eni will build a competent team that includes personnel of Explorco within eni
Ghana's established organization and in accordance with eni's defined corporate
policies, procedures and processes to operate Block 4
•
Explorco would be required to second technical and managerial personnel
within the eni Ghana organization in respect of Block 4
There shall be an agreed professional training and mentoring plan tailored to
the specific needs of Explorco secondees. However this should not exclude
Explorco personnel from partaking in training programs organized for eni
employees.
•
•
Explorco would second an agreed number of personnel from different
disciplines (technical, commercial, etc) for an agreed period of time and during
the different phases of project activities: Exploration, Development,
Construction, Production.
•
Number of secondees shall increase in accordance with associated
responsibilities in the following manner:
1. Exploration Phase: up to five (5) personnel
2. Development/Construction Phase: up to ten (10) personnel
including
Commercial,
Drilling,
Reservoir,
Facilities/Construction Engineers, legal. Project Management,
Human Resource, HSE etc., but excluding G&G personnel.
3. Production Phase: up to fifteen (15) personnel for all relevant
disciplines.
Other relevant details such as secondment period and remuneration and benefits for
such secondees will be discussed and captured in Secondment Agreements.
137