Angola

20/12/2011

40909

The contract was prepared and signed in Portuguese, which is the only valid official version

Location coordinates detailed in Annex A and mapped in Annex B

"Cobalt, Sonangol P&P, BP, and China Sonangol will be collectively referred to in the contract as Contractor Group - Cobalt (40%), Sonangol P&P (30%)- BP(20%)- - China Sonangol (10%)   

CIE Angola Block 20 LTD (referred to as Cobalt); Sonangol Pesquisa e Producao, SA (referred to as Sonangol P&P); BP Exploration Angola (Kwanza Benguela) Limited (referred to as BP); China Sonangol International Holding Limited (referred to as China Sonangol)

Block 20/11

Cobalt, Cayman Islands; BP Exploration Angola (Kwanza Benguela) Limited, England - 07521628 (opencorporate.com); BP LEI - 549300CC4BI5U2VDJV83; China Sonangol - 0921071 (opencorporate.com); Hong Kong

Production Sharing Contract between Sociedade Nacional de Combustiveis de Angola Empresa Publica - (Sonangol, E.P.) and CIE Angola Block 20 LTD., Sonangol Pesquisa e Producao, S.A., BP Exploration Angola (Kwanza Benguela) Limited, China Sonangol International Holding Limited in the Area of Block 20/11

Hydrocarbons

Sociedade Nacional de Combustiveis de Angola, Empresa Publica (Sonangol, E.P.), (referred to as Sonangol)

If commercial discoveries are made, the production period for each development area will be 30 years for each field from the date of commercial discovery in that area

Production Sharing Contract

2011

2012

An annual audit of Contractor Group's accounting records will be conducted by an international independent auditing company selected by Sonangol. Sonangol also has the right, upon giving reasonable notice, to carry out operational inspections or audits of all facilities, records, documents or assets of any kind to verify compliance with contract provisions.

Cobalt, BP and China Sonangol are required to pay a US $7.5 million signature bonus and contribute US $200 million for social projects on the effective date of the contract. An additional contribution of US $350 million is required in five installments for the Sonangol Research and Technology Center. These bonuses and contributions are not recoverable and will be shared as follows: Cobalt 57.14%, BP 28.57% and China Sonangol 14.29%.

Sonangol will consider any amendments or revisions to this contract that will avoid the international double taxation of Contractor Group's income, so long as those revisions do not impact on Sonangol or Angola's economic benefits resulting from this contract

Sonangol has the right to buy crude oil from Contractor Group at market price in an amount equivalent in value to the income tax due by Contractor Group.

Rates are established in the 2004 Petroleum Activities Tax Law (Law No. 13/04)

Each quarter all available petroleum remaining from each development area after deducting cost recovery crude oil and crude oil used in petroleum operations is considered development area profit oil and will be shared between Sonangol and Contractor Group according to the after tax, nominal rate of return achieved at the end of the previous quarter in that development area. If the rate of return is less than 15, Sonangol receives 30%. If it is between 15 to less than 20, Sonangol receives 40%. If it is between 20 to less than 30, Sonangol receives 75%. If it is 30 to less than 40, Sonangol receives 85%. If the rate of return is 40 or more, Sonangol receives 90%. (The rate of return is determined on the basis of the accumulated compounded net cash flow for each development area using the formula outlined in Art. 12.2(C).

Contractor Group is allowed to recover all costs and expenses under this contract up to 50% per year of all crude oil produced. Allowable costs include exploration, development, production and administration and services expenditures. The recovery limit can increase to 65% per year if development expenditures are not fully recovered within the latter of : 5 years after the commencement of commercial production or 5 years after when the expenditure incurred.

In order for the services provided by affiliates of the operator or Sonangol to be eligible as expenses debited to the joint account they must meet conditions, including preapproval, detailed in Annex C

"The Contractor Group is required to comply with Decree-Law No. 17/09 from 26 June 2009 as well as applicable legislation regarding the recruitment, integration and training of Angolan personnel. However, the Operator has the right to staff the Petroleum Operations with those whom it believes are necessary for efficient administration and operation, without considering citizenship or residency.

Contractor Group must use local contractors as long as their services are similar in quality and availability to those on the international market and prices - when subjected to the same tax charges - are no more than 10% higher. Contractor Group must also purchase Angolan materials, equipment, and consumable goods so long as their quantity, quality and delivery dates are similar to those on the international market and the cost is no more than 10% higher.

Contractor Group is required to train all its Angolan personnel who are involved in petroleum operations for the purpose of gradually bringing their knowledge and qualification to that of Contractor Group's foreign workers. Training has to include petroleum technology and management, enabling Angolan personnel to use the most advanced and appropriate technology related to petroleum operations, including proprietary and patented technology to the extent permitted by applicable laws and agreements. Contractor Group is required to submit its training plans and monitor implementation. Contractor Group is also required to train Sonangol personnel in petroleum operations, the costs of which are recoverable from cost petroleum.

Contractor Group may construct and install pipelines, facilities, plants and related activities necessary to produce and operate wells and transport petroleum as approved as part of the development and production work plan. If necessary, the building and maintenance of crude oil storage tanks will be the responsibility of Contractor Group. Contractor Group is responsible for the costs of constructing gas infrastructure though those costs are recoverable. Once built, the gas infrastructure will be managed by Sonangol who will also bear the costs

At the time the oil is lifted Sonangol can require Contractor Group to purchase any part of Sonangol's share of production under normal commercial terms and at market price

In the case of emergency requiring immediate action, Contractor Group may take all actions it deems necessary for the protection of human life, property, the interests of the parties and the environment

At least 3 months prior to the beginning of each calendar year during the exploration period, Contractor Group is required to prepare an exploration work plan and budget setting forth the exploration operations which it plans to carry out during the year. Contractor Group is required to spend a minimum of US $360 million in the initial exploration phase and US $190 million in the optional additional exploration phase. If a commercial discovery is made, Contractor Group must submit a draft general development and production plan within 30 days. Following the approval of the plan, every year Contractor Group must prepare a production plan in addition to the other plans (if still applicable).

Any disputes between Contractor Group and Sonangol that cant be resolved amicably within 90 days, can be submitted to be settled by arbitration in accordance with the UNCITRAL Arbitration Rules. There will be 3 arbitrators, one appointed by each party and the third jointly appointed by the two parties. Arbitration will take place in Luanda, Angola. Both parties waive immunity against validity or enforcement of any award resulting from arbitration.

Contractor Group is required to hand over in a good state of repair and operation, all the infrastructure and equipment in the development area within 60 days of the end of the contract or following abandonment and decommissioning. If at that point Sonangol requires, Contractor Group must abandon the wells and decommission the facilities according to the Petroleum Activities Law. Following that, Contractor Group has no further responsibilities or obligations to that infrastructure except in cases of gross negligence, willful misconduct or serious fault.

This contract and, unless otherwise agreed, all technical, economic, accounting, or any other data developed through the conduct of petroleum operations is strictly confidential with the exception of affiliates, in connection with the arranging of financing, or to employees, consultants or other third parties needed to execute petroleum operations providing they agree to the confidentiality requirement. Disclosure is also allowed to the extent required by applicable law.

Angolan law will govern any dispute

In the event of changes in the provisions of any law, decree or regulation after the signing of the contract which adversely affects its obligations, rights and benefits, then both parties will agree on contract amendments to restore the contract's original rights, obligations and benefits