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N/A text is in Arabic CONTRACT FOR THE EXPLORATION, DEVELOPMENT AND PRODUCTION OF PETROLEUM ON THE OFFSHORE BLOCK #1



between



THE GOVERNMENT OF THE SYRIAN ARAB REPUBLIC



and



GENERAL PETROLEUM CORPORATION



and



"KAPITAL" LIMITED LIABILITY COMPANY









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[signature][stamp][signature][signature]This Contract is signed on this Sunday day of 26th of April 2020 by the GOVERNMENT of the SYRIAN ARAB REPUBLIC (hereinafter referred to as the "GOVERNMENT") represented by the Minister of Petroleum and Mineral Resources. General Petroleum Corporation, a legal entity created by the legislative Decree No. 15 of 200 (hereinafter referred to as "GPC" and having its registered offices in S.A.R, Damascus, Domar, SPC building) represented by its General Manager and the "Kapital" Limited Liability Company (hereinafter referred to as the "CONTRACTOR") represented by its authorized representative Igor Viktorovich Khodyrev acting under the letter of authorization # 27/2019 of 11.06.20.19.



WITNESSETH



WHEREAS Article 1 of law No.7 of 1953 considers that all minerals in the Syrian territories on the surface, under the surface or under the waters of Syria are the property of GOVERNMENT, and WHEREAS GPC is authorised. pursuant to the Legislative Decree No 15 of 2009 to prepare and sign contracts related to Exploration. Development. and Enhancement Recovery of Oil & Gas fields, Including appraisal, development and production, and



WHEREAS the CONTRACTOR desires to undertake all operations for the offshore exploration development and production of petroleum in and throughout the area described in Annexes 1 and 2 of this Contract and fulfill all the obligations and enjoy all the rights provided for in this Contract as a contractor to GPC in accordance with the terms and conditions contained herein, and









WHEREAS the GOVERMENT agrees to this request and has authorized the Minister of Petroleum and Mineral Resources to enter into a contract with GPC and with the CONTRACTOR, for activities prescribed in this Contract.





NOW THEREFORE the parties agree as follows: ARTICLE 1

DEFINITIONS



1.1 "Affiliated Company" means a subsidiary company,

a parent company or a sister company to a party

hereto. For the purposes of the foregoing

definition:





1.1.1 A subsidiary company is a company controlled by a

company hereto.



1.1.2 A parent company is a company that controls a

party hereto;



1.1.3 A sister company is a company that is controlled

by the parent company of a party hereto



1.1.4 "Control" or "Controlled" means that a company owns

share capital either directly or through other

companies. the Ownership of shares which confer to

it a majority of the votes at the stockholders

meeting of the company which is controlled.



1.1.4 The CONTRACTOR shall consist of the company

specified in the preamble to this contract,

including the assignee(s) in accordance with

article 20 of this contract



The CONTRACTOR may be composed of companies that

form a group of companies or a holding company if

the CONTRACTOR is represented by a group of

companies or a holding company, or the CONTRACTOR

becomes a group of companies or a holding company

during the period of the contract. 1.2. "Area" means the area where CONTRACTOR and/or Operating Company may carry out activities under this Contract, as described in Annexes 1 and 2 of this Contract and as it may be changed by relinquishments by CONTRACTOR pursuant to Article 5 of this Contract.



1.3. "Average Daily Production" means that volume of Petroleum measured in BPD calculated after the end of each Calendar Year by dividing the total volume of Petroleum produced and saved from the Area at the Metering Point during the preceding Calendar Year, or by the number of Days following and inclusive of the Date of Initial Commercial Production until the Year end, as the case may be, all determined in accordance with Article 7 hereof.



1.4. "Barrel" means forty-two (42) United States gallons (equivalent to approximately 158.984 liters), liquid measure, corrected to a temperature of sixty degrees (60°) Fahrenheit.



1.5. "BOPD" means Barrels of Crude Oil Per Day.



1.6. "BPD" means Barrels Per Day, and shall include Barrels of Crude Oil per day as well as Gas converted to Barrels of Oil Equivalent ("BOE") pursuant to Article 8.



1.7. "BOE" means in respect of (i) gas, that quantity of gas delivered or deemed to have been delivered to GPC at the metering point and converted to barrels of oil equivalent with one BOE.equivalent to five million eight hundred thousand (5,800,000) British Thermal unit (ii) LPG the quantity of LPG converted to BOF at the outlet of plant on a direct volumetric basis on the ratio of twelve ans three-tenth (1.3) Barrels per metric ton for propane and ten and nine-tenth (10.9) Barrels per metric ton for butane.



1.8 "Budge" means the budget ascribed to a Work Program and prepared by the CONTRACTOR pursuant to Article 4 or by the operating company pursuant to Article 6 which is duly approved.



1.9 "Calendar Month" means a month according to the Gregorian Calendar and "Month" means a period counted from and including any Day of a Calendar Month ending at the end of the corresponding Day of the following Calendar Month or, if such a Day does not exist, on the last Day of such Calendar Month.



1.10 "Calendar Quarter" means a period of three consecutive Calendar month beginning 1st January, 1st April ,1st July or 1st October and ending 31 March, 30 June, 30 September or 31 December, respectively.



1.11 "Calendar Year" means a period of twelve (12) consecutive Calendar Months according tot the Gregorian Calendar starting on 1 January and ending on 31 December, both dates inclusive and "Year means a period of twelve consecutive Months.



1.12. "CM" means a quantity of Gas which in the dry state at a temperature of fifteen (15) degrees Celsius and an absolute pressure of one decimal Zero one three two five (1,01325) bar occupies a volume of one (1) cubic meer.



1.13 "Commercial Discovery" means either of the following:

1.13.1 "Commercial Oil Discovery" means a discovery made by CONTRACTOR which may consist of one or more Crude Oil reservoir(s) or a group of Crude Oil reservoirs in the Contract Area which is considered by CONTRACTOR worhty to be Developed commercially and in respect of which the CONTRACTOR may give Notice of Commercial Discovery to GPC in accordance with Article 3.2.6 of this Contract.



1.13.2 "Commercial Gas Discovery" means a discovery of Gas made by CONTRACTOR in the Contract Area which is considered by CONTRACTOR worthy to be Developed commercially and in respect to which the CONTRACTOR may give Notice of commercial Discovery to GPC in accordance with Article 8.1 of this Contract.



1.14. "Commercial Well" shall mean either of the following:



1.14.1 "Commercial Crude Oil Well" means the first well drilled under this Contract on any geological feature which after testing in accordance with sound and

accepted industry production practices, and verified by GPC, is found by CONTRACTOR to be capable of producing at the average rate of no less than 3,000 BOPD over a period of thirty (30) consecutive Days.



1.14.2 "Commercial Gas Well" means a well under this Contract which after testing in accordance with sound and accepted industry production practices prevalent in international petroleum industry, is found to be capable of produtcion of Gas at the average rate of not less than six thousand (6000) barrel of oil equivalent per day as determined by the CONTRACTOR.



1.15. "Contract" means this contract and its Annexes as may be amended from time to time.



1.16. "Cost Recovery Petroleum (Oil and Gas)" means petroleum allocated for recovey of all costs and expenses recoberable by CONTRACTOR in respect of all the Exploration, Development and related operations as more fully described in Articles 7.2 and 8.4 and other operations according to this Contract.



1.17. "Crude Oil" means any hydrocarbons produced from the Area which is in a liquid state at the well-head or separator or which are extracted from gas, such term includes condensate in Crude Oil after it had been treated.



1.18. "Data of Commercial Discovery" means the date on which the Minister agrees in writing on the coordinates of the Development Area relating to the applicable Notice of Commercial



[signature]



[russian translation]

[arabian translation]Discovery given by CONTRACTOR in accordance with Article 3.2.6 hereof



1.19 "Date of initial Commercial Oil Production" means the date on which the first regular shipment of oil is made from a Commercial Discovery except for any produced oil as a result of tests carried out for the purpose of determining a Commercial Discovery which is owned by the government.



1.20 "Date of Initial Commercial Gas production" means(30) days after Gas has been produced on a continuous daily basis for permanent production or treatment facilities(including those that do not belong to the CONTRACTOR), the type and location of which shall be agreed between GPC and CONTRACTOR, to the Delivery Point, and all the quantities produced before this date will be owned by the Government.



1.21 "Day" or "day" means a period commencing at 00:00(|zero)hours and ending at 24:00(twenty-four)hours, local time.



1.22 "Delivery Point" means the point at which the parties will take their respective shares of Petroleum and which may be the same point as the Metering point. It is located within the territory of the Syrian Arab Republic and shall be determined between CONTRACTOR and GPC.



1.23 ""Development" means and shall include, but not be limited to, all the operations and activities pursuant to approved WorkPrograms and Budgets under this Contract with respect to: 1.23.1 the drilling, plugging, side-tracking, and completing and equipping of wells for the purpose of Production from a Development Area and the changing of the status of any such well, and 1.23.2 the design, construction, installation, operation, servicing and maintenance of equipment, pipelines, roads and other infrastructure, water, electrical and other systems, facilities (including office-, storage- and port facilities), and plants, as needed to produce from wells, to take, save, treat, handle, store, transport and deliver Petroleum for export and for local market and to undertake injection or reinjection and other enhanced recovery projects. The use of the term Development in this Contract shall include Production as defined herein, when appropriate to the context and circumstances. The verb "Develop” means conducting Development. 1.24. "Development Area" means with respect to each Commercial Discovery the extent of the surface projection of the whole of any Petroleum reservoir or Petroleum reservoirs (the corner points of which should be, where possible, coincident with three (3) minutes latitude by three (3) minutes longitude divisions according to the International

[signature] [stamp][signature] [signature]

Grid System (or with the existing boundaries of the Area)

as mutually agreed between GPC and CONTRACTOR and approved by the Minister. in accordance with Article 3.2.5 hereof





1.25. Development Expenditures"

Shall mean all costs and expenses for Development operations in the Area with the exception of "Operating Expenses" and "Intangible Drilling Costs"



1.26. "Development Phase" means the period during which right to Develop and Produce exist with respect to a Development Areas. all as provided for in Article 3.2.5

hereof



1.27. "Development well" means any well other than an Exploration well.



1.28. "Effective Date" means the effective date of the Legislative Text ratifying this Contract after having been signed by GOVERNMENT. GPC and CONTRACTOR following its publication in the Official Gazette of S.A.R.



1.29. "Exploration" means a set of operations allowing for evaluation of commercial value of oil and gas discoveries during exploration wells. surveys necessary for estimation of reserves of the discoveries and development planning and the related activities in support of such operations.1.30. "Exploration Expenditures" shall mean all costs and expenses for Exploration operations in the Area other than Intangible Drilling Costs.

1.31. "Exploration well" means:

1) The first well drilled in any geological feature;

2) Any appraisal well drilled under Article 4 of this Contract;

3) Any well, having as its objective a formation other than any formation proved to be Petroleum bearing by a well drilled in the same geological feature;

All of the above mentioned wells should be drilled during the exploration period.

1.32. "Financial Year" means the financial year starting on 1 January and ending 31 December, both dates inclusive.

1.33. "Gas" means natural gas, both associated and non-associated, and all of its constituent elements produced from any well in the Area and all non-hydrocarbon substances therein. Said term shall include residue gas after processing.

1.34. "Gas Reserves" means the quantity of Gas which relevant data indicates is the most likely estimate of economically recoverable volume of Gas.

1.35. "Gas Sales Contract" means a document which would be used by the GPC and the CONTRACTOR as sellers of Gas containing the obligations of and undertakings by parties with regard to the sale and purchase ofGas produced and saved under the Contract.



1.36. "Initial Exploration Period" means the period of forty-eight (48) Months starting as of the Effective Date of this Contract unless otherwise stated in the Contract.



1.37. "Intangible Drilling Costs" shall mean all expenditures incurred during Exploration and Development for well drilling and completing Operations related to items which themselves do not have a salvage value, as for example, labor, geological, design, engineering and Other technical assistance supervision related to drilling activities, amounts paid to drilling and other contractors, material and equipment consumed or lost, perforating, formation testing, cementing, well logging and transportation.



1.38. "LPG" means a mixture of propane and butane (liquefied petroleum; gas) as defined according to S.A.R. standards.



1.39. "MCF" means one thousand (1,000) standard cubic feet ("SCF"). One SCF is the amount of gas necessary to fill one cubic foot of space at atmospheric pressure of 14.65 psi at a base temperature of sixty (60) degrees Fahrenheit.



1.40. "Metering Point” means the place or places in or adjacent to producing fields mutually agreed by GPC and CONTRACTOR, where appropriate equipment and facilities will be located for the





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[signature][stamp][signature][signature]purpose of performing all volumetric measurements and other determinations, temperature and other adjustments, determination of water and sediment content and other appropriate measurements, to establish for the various

purposes of this Contract, the net volumes of Petroleum (less any amounts lost, used in operations, flared or re-injected) produced and saved from Development Areas, the Metering Point may also be the Delivery Point. 1.41. "Minister" means the Minister of Petroleum and Mineral

Resources of the Syrian Arab Republic. 1.42. “Notice of Commercial Discovery" means the notice that CONTRACTOR shall give GPC upon deciding that any discovery is considered by CONTRACTOR to be worthy of commercial Development as more fully described in Article 3.2.4 and Article 8.1 hercof. 1.43. "Operator" shall mean CONTRACTOR or Operating Company, as specified in Article 6. When CONTRACTOR is Operator, Operator shall always mean all

companies comprising CONTRACTOR. 1.44. “Operating Expenses” shall mean all direct and indirect Production costs, expenses and expenditures made after the first Date of Initial Commercial Production in the Area, which costs, expenses and expenditures are not normally depreciable including operation maintenance

[signature] [stamp][signature] [signature]and servicing of all types of facilities required for Development or Production. Operating Expenses shall include workover, repair and maintenance of assets but shall not include side-tracking, redrilling and changing the status of a well, replacement of assets or part of an asset, additions, improvements, renewals or major overhauling that extend the life of the asset.

1.45. "Parties" means the GOVERNMENT, GPC and CONTRACTOR, and "Party" means any one of the Parties, including their respective successors and assignees.

1.46. "Petroleum" means liquid Petroleum of various densities, asphalt, Gas and all other hydrocarbon substances of a liquid or gaseous nature that may be found in, and produced, or otherwise obtained, and saved from the Area under this Contract and all substances that may be extracted there from.

1.47. "Production" means every type of operation to produce Petroleum and operate Development wells, and the taking, saving, treating, handling, sorting, transporting, metering, and delivering of Petroleum, injection or re-injection, lifting and every type of operation to obtain Petroleum, and transportation, storage and any other work or activities necessary or ancillary to such operations. The verb "Produce" means conducting Production.1.48. "Qualifying Sales" means the arm's length sales by GPC and/ or CONTRACTOR to non-Affiliated Companies, as more fully described in Article 7.6.1.



1.49. "Royalty" means the twelve and one-half per cent (12.5%) entitlement of the GOVERNMENT more fully described in Article 7.



1.50. "S.A.R." means the Syrian Arab Republic.



1.51. "SYRIA" or "Syrian Arab Republic" means, in accordance with international law, the territories of the Syrian Arab Republic including its internal waters, territorial sea, the subsoil thereof and the air space above them to which Syria has sovereign rights and other maritime areas to which Syria has the right to exercise sovereign rights for the purpose of exploration, exploitation and conservation of natural resources.



1.52. "Tax Year" means the period of twelve (12) months according to the Gregorian Calendar starting 1 January and ending 31 December, both dates inclusive, for which tax returns or reports are required according to any applicable income, profits or other tax law or regulations of the S.A.R.



1.53. "Work Program and Budget" means a program of work and the budget ascribed thereto and prepared by the CONTRACTOR pursuant to Article 4 or by Operating Company pursuant to





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[signature][stamp][signature][signature]completion of the well not considered a Commercial Well, GPC notifies CONTRACTOR IN writing that GPC proposes to develop an area surrounding that well (the co-ordinates of which shall he agreed between GPC and CONTRACTOR) at is sole cost, and responsibility, CONTRACTOR, shall within sixty (60) Days of receipt of such notice, either relinquish the specific area covering the geological structure in which Petroleum has been discovered but not considered a Commercial Discovery or agree to commence Development operations according to this Contract, in both cases delineating such structure as agreed upon by GPC and CONTACTOR.







In case to the approval of the Minister to the coordinates of the area capable of commercial production, which can not be unreasonably, withheld, such area shall be automatically converted into a Development Area without the issuance of any additional legal instrument or permission.

Development operations thereafter, shall be started promptly by the operating company (defined in Article 6 hereinafter) on behalf of GPC and CONTRACTOR.

Subject to the Development Work Program for any Commercial Discovery, in the event that no commercial Production of Petroleum takes place from any Development Area within six (6) Years for the Crude Oil and within eight(8) Years for the Gas from the date of the Minister's approval of that Development Area. Such area shall be surrendered, upon demand from GPC.

The Development Phase of any Development Area shall be twenty five (25)Years from the Date of Starting Initial Commercial Production from such Development Area.Subject to the approval of GPC(not to be unreasonably withheld) this period may be extended for an additional period of five (5) Years at the option of CONTRACTOR to GPC being given prior to the expiration of the Development Phase. Such extension shall be under the terms, conditions and provisions of this Contract.

ARTICLE 4

WORK PROGRAM AND EXPENDITURE DURING EXPLORATION PHASE

. CONTRACTOR shall be bound during the Initial Exploration Period of forty-eight(48) Months from the Effective Date to carry out the following minimum obligations of Exploration operations in the Contract Area:

Acquiring of 500km of 2D seismic or 200km2 of 3D seismic survey;

Drilling (1) Exploration well with depth of a least 3500m from the sea level and performing logs and tests that the CONTRACTOR deems to be necessary. During the drilling of the well CONTRACTOR may propose to stop the drilling of a well at depth less than the 3500 m, upon clear technical justifications and subject to GPC's approval, that cannot be unreasonably withheld.



Completion of integrated G&G studies (regional geology, seismic interpretation and mapping, geological interpretation, prospectivity ).



4.1.1 CONTRACTOR shall spend during the Initial Exploration Period on exploration operations and other activities related thereto a minimum of thirteen (13) million US dollars.



4.2. During the Extension of the Initial Exploration Period, which shall be thirty-six (36) Months, CONTRACTOR shall:



- Acquire a minimum of 400 km2 of 3D seismic;



- Drill (1) Exploration well. The depth of the well will be identified by a technical report submitted by the CONTRACTOR and approved by GPC.



Complete a set of integrated G&G studies (regional geology, seismic interpretation and mapping, geological interpretation, prospectivity).





CONTRACTOR shall spend during this Extension period on Exploration operations and

other activities related to such operations, a minimum of (7) million US dollars.



4.3 The CONTRACTOR has the right to execute the conditions considered in all subsequent extension periods, during the initial exploration phase or during a preceding extension period.



The CONTRACTOR shall be exempted from carrying out the same works at a later stage in case of full or partial implementation of the conditions stipulated for a specific period of extension or a preceding extension period.

4.4 In case no Commercial Discovery is established by the end of eighty-four (84) Months from the Effective Date of this Contract, unless otherwise staled in the Contract, plus such additional time as may be added under Article 3.2.1 and 3.2.2 or in case CONTRACTOR surrenders his exploration obligations under this CONTRACT prior to this date. Contract shall be terminated and GPC will not compensate any of the aforesaid expenses spent by CONTRACTOR.



CONTRACTOR shall bear and pay all the costs and expenses required in carrying out all the operations under this Contract. Such costs and expenses shall be recoverable as provided in



[signature]Articles 7 & 8 of this contract as the case may be. but shall not include the financing fees.





During the term of this contract and its extensions, the volume of petroleum produced and saved, after the deduction of the royalty and cost Recovery Petroleum and the contribution to the ABANDONMENT Fund, shall be shared

between GPC and CONTRACTOR in accordance with the provision of Articles 7 and 8 of this contract as the case may be, while any hydrocarbons produced during the testing and before the date of commercial discovery shall belong to the government in full





GOVERNMENT. as represented by the general petroleum Corporation shall as soon as possible, accept delivery at the wellhead of all petroleum produced as a result of testing and all costs and expenses associated with receipt operations shall be borne by the general petroleum Corporation.

As soon as practicable after the Effective Date, unless otherwise started in the Contract, CONTRACTOR shall prepare an Exploration Work Program and Budget for the Area setting forth the Exploration Which CONTRACTOR Proposes to carry out during the remainder of the then correct Calendar year. At least three(3)months prior to the beginning of each Calendar Year thereafter or at such times as otherwise mutually agreed in by GPC and CONTRACTOR.

CONTRACTOR shall prepare an Exploration Work Program and Budget for the Area setting forth the Exploration operations which CONTRACTOR proposes to carry out during the ensuing Calendar Year.



The Exploration Work Program and Budget shall be reviewed by a joint technical committee to be established by GPC and CONTRACTOR after the Effective Date of this Contract. This committee shall consist of six (6) members. three (3) of whom shall be appointed by GPC and three (3) by CONTRACTOR. The Chairman of the Committee shall be designated by GPC from among the members appointed by it. The Committee shall review and give such advice as it deems appropriate with respect to the proposed Work Program and Budget.

Following review by the Committee, CONTRACTOR shall make such revisions as appropriate and submit the Exploration Work Program and Budget to GPC for its approval which shall be given within thirty (30) days, GPC cannot unreasonably withhold the approval. Following such approval, it is further agreed that.



4.6.1. CONTRACTOR may revise or modify said Work Program and Budget after consultation with GPC as may be required for operational reasons or as a result of Exploration activities.



4.6.2 In the event of emergencies involving danger to, or potential or actual loss of, lives or property, CONTRACTOR may expend such additional unbudgeted amounts as may be required to prevent or alleviate such danger or loss. Such expenditures shall be considered in all respects as deemed approved Exploration expenditures and shall be recovered pursuant to the provisions of Articles 7 and 8 of this Contract as the case may be.



4.7. CONTRACTOR shall advance all necessary funds for all materials, equipment, supplies, personnel and operations as required for Exploration and related operations pursuant to the Exploration Work Program and Budget.



4.8. CONTRACTOR shall be responsible for the preparation and performance of the Exploration Work Program, which shall be implemented in an efficient manner consistent with internationally recognized good oil field practices.

CONTRACTOR shall entrust the management of Exploration operations in the S.A.R. to a General Manager and one or two Deputy General Managers, at least one of either the General Manager or the Deputy General Managers, shall be competent technically, and shall, upon appointment, notify GOVERNMENT and GPC of the names of the General Manager and his Deputy or Deputies.



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[signature] [signature] [signature]The General Manager and, in his absence, a Deputy General Manager shall be entrusted by CONTRACTOR with sufficient powers to be subject to all lawful written directions of local application given to them by the GOVERNMENT or its representative under the terms of this Contract or any lawful regulations issued or hereafter to be issued which are applicable hereunder and not inconsistent with the provisions of this Contract. 4.9. CONTRACTOR shall supply GPC within sixty (60) Days from the end of each Calendar Quarter a statement of Exploration activity showing costs incurred by CONTRACTOR during such quarter. CONTRACTOR's records and necessary supporting documents shall be available for inspection by GPC at any time during regular working hours for three (3) Months from the date of receiving each statement. Such documents may be available for review in the CONTRACTOR's and/or the Operating company's offices in hard or digital copies. Subject to the Pre-auditing and Approval Requirements contained in Article 6 of Annex 4, GPC shall, within three (3) Months from the date of receiving such statement, advise CONTRACTOR in

[signature] [stamp][signature] [signature]writing with necessary supporting reasons. if it considers that one or more of the following may apply to a cost item in the above mentioned statement:

4.9.1.The recorded expenses were not in fact borne by the CONTRACTOR (AN ERRONEOUS RECORD) or

4.9.2.costs of goods or services supplied are not in line with the international market prices for goods or services of similar quality supplied on similar terms prevailing at the time such goods or services were ordered. (provide. however that purchase made and services performed within the S.A.R. shall be subject to Article 17 hereof) other than those in respect of a contract entered into in accordance with Article 4.6.2 hereof;or

4.9.3.condition of the materials furnished by CONTRACTOR does not tally with their prices; or

4.9.4.costs incurred are not reasonably required for operations and other activities related thereto (other than those in respect of a contract entered into in accordance with Article 4.6.2 hereof);or

4.9.5.Invoices issued to CONTRACTOR and supporting documents are incomplete, or unavailable .or, with respect to invoices rendered by subcontractors are not original. 4.9.6. The cost is not properly classified in accordance with the expenditure classified more particularly described in Article 7 or Article 8.



4.10. CONTRACTOR shall confer with GPC in connection with any audit problems thus presented, and these two parties shall attempt to reach a settlement which is mutually satisfactory. If CONTRACTOR and GPC fail to reach such a settlement the issue shall be referred to an expert appointed by mutual consent, such expert being an internationally recognized firm of accountants/auditors, whose opinion shall be binding upon both Parties.



4.11. All costs provided by the CONTRACTOR shall be considered correct, unless GPC can provide documentary proof of the contrary during the auditing.



4.12. If within the time limit of a three (3) Months provided for in this Article, GPC has not advised CONTRACTOR of its objection on the above grounds to any cost item of any statement; such statement shall be considered as approved.



4.13. CONTRACTOR shall supply all funds necessary for its operations in the S.A.R. under this Contract during and after the Exploration Period, in convertible currency from abroad. CONTRACTOR may buy Syrian currency whenever



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[signature] [signature][stamp] [signature]required for its operations in the S.A.R and the conversation shall be made at the Central bank of syria. Commercial bank of syria or any other Licensed bank in the S.A.R. according to the most favorable rate of exchange available for any commercial activity as published by the Central Bank of Syria on the date of conversion.



4.14. within sixty(60) Days after the end of Financial Year, CONTRACTOR shall submit to the appropriate exchange control authorities in the S.A.R. a statement July certified by a recognized firm of independent auditors, agreed by GPC and CONTRACTOR, Showing the funds credited to its accounts opened with licensed Syrian banks, the dishursements made out of the account and the balance outstanding at the end of such Financial Year.

4.15 within thirty(30

)Days after the Effective Date GPC shall provide to CONTRACTOR copies of all geological, geophysical or other available data. including well and seismic data, within the Area and well reports and well logs in respect of other adjacent wells outside the area belonging to the GPC, according to a list agreed between GPC And CONTRACTOR, and shall give CONTRACTOR access to rock and other samples in its possession.ARTICLE 5

RELINQUISHMENT



5.1. Mandatory Relinquishment

- If CONTRACTOR elects to enter into the Extension of the Initial Exploration period, it shall relinquish to GOVERNMENT on the effective date of such extension thirty percent (30 %) of the original Area. Such

relinquishment shall not include any Area(s) converted to a Development Area.



- Unless otherwise agreed by GPC such mandatory relinquishment shall consist of not more than two parcels and shall not include any areas converted into Development Areas.



- Subject to Article 3.2.2, at the end of the Initial Exploration Period plus any extensions thereof (at the end of the Exploration Period) CONTRACTOR shall relinquish the remainder of the Area not then converted to a Development Area(s).



5.2, Voluntary Relinquishments

CONTRACTOR may voluntarily at any time relinquish all the Area provided that at the time of such voluntary relinquishment its Contractual obligations for Exploration Period under Article 4 had been fulfilled.



CONTRACTOR may at any time relinquish a part of the Area notwithstanding whether the obligations for the current exploration period have been fulfilled.



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[signature][stamp][signature][signature] ARTICLE 6

OPERATIONS AFTER

COMMERICAL

DISCOVERY



Following the first Date of Commercial Discovery, GPC and CONTRACTOR shall form in the S.A.R. an Operating Company, which shall be called <> Petroleum Company (referred to herein as "Operating Company")which shall conduct the operations necessary for Development and Production under this Contract. The Operating Company shall also execute on behalf of the CONTRACTOR the exploration operations that the CONTRACTOR has charged them with in accordance with approved Work Programs and Budgets.



Operating Company and the CONTRACTOR shall be subject to the laws and regulations in force in the S.A.R. to the extent that such laws and regulations are not inconsistent with the provisions of this Contract or the Charter of the Operating Company;



however, Operating Company and the CONTRACTOR shall for the purposes of this Contract, be exempted from the following laws and regulations as now or hereafter amended or substituted





Presidential Decree no. 11 of 1961 embodying Exchange Control and its executive regulations and its amendments;



Law No. 33 of 2007 including law of Commerce and effected









Companies Law legalized by Legislative Deeree No.29 of 2011 in respect of certain provisions related to Joint Stock Companies.Limited Liabilities only;

Law No.114 of 1961 embodying the formation of Boards of Directors in Companies and Establishments and its amendments:

Law No2 of 2005 related to Public Companies, Establishment and Institutions, as amended.

Legislative Deeree No 29 of 2011

62. The Charter of the Operating Company is hereto attached as Annex 3 and within thirty (30) Days after the effect, and Operating Company shall be created without any further procedure or act hereunder for and on behalf of GPC and CONTRACTOR.

63. Not later the twentieth (20th) Day of each Calendar Month.Operating Company shall furnish CONTRACTOR with a written estimate of its total cash requirements for the succeeding Calendar Month expressed in US. DOllars, in accordance with the approved Budget Such estimate shall take into consideration any cash expected to be on hand at Calendar Month's end.

Contractor had the right to finance and fund the Operating Company through bank transfers or any legal method considered as appropriate.6.4 Operating Company is authorized to keep at its own disposal abroad, in an account opened with a

correspondent bank to a Commercial Bank of Syria or any other, the foreign funds advanced by CONTRACTOR. Interest or similar income generated by the account shall be credited to the account. Withdrawals from said account shall be used for payment of goods and services abroad and

for transferring to a Commercial Bank of Syria or any other, the required amounts to meet expenditures in Syrian Pounds for Operating Company in connection with its activities under this Contract, converted at

the most favorable rate of exchange available for any commercial activity as published by the Central Bank of Syria on the date of conversion

Within sixty (60) Days after the end of each Financial Year. Operating Company shall submit to the appropriate exchange control authorities in the S.A.R. a statement, duly certified by a recognized firm of independent auditors, agreed by GPC and CONTRACTOR, showing the funds credited to that account, the disbursements made out of the account the balance outstanding at the end of such Financial Year.

6.5. CONTRACTOR and/or Operating Company shall prepare a Development Work Program and Budget for the remainder of the Calendar Year in which the

Commercial Discovery is made and not later than sixty (60) Days





Block/Page/176after the Commercial Discovery, unless otherwise agreed. On the fifteenth (15th) day of October in each Calendar Year thereafter, Operating Company shall prepare an annual Production schedule and a Development Work Program and Budget for the next Calendar Year to be submitted to GPC and CONTRACTOR for their comments.



6.6. Operating Company shall then make such revisions as it deems appropriate in the light of any such comments, and no later than the fifteenth (15th) November of each Calendar Year shall submit the said Production schedule, and said Work Program and Budget, to the Board of Directors of Operating Company for its approval which shall be given within thirty (30) days. Following such approval, Operating Company shall carry out the Work Program, and observe the schedules, in accordance with the agreed Budget and with this Contract. Operating Company cannot deviate from the Budget and/or the Work Program and schedules unless it is necessary and approved by the CONTRACTOR and GPC.



Operating Company shall implement its work and conduct its activities, in an efficient manner consistent with internationally recognized good oil field practices.



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[signature] [signature] [signature]6.7. After Operating Company comes into existence, CONTRACTOR shall continue to prepare, and obtain GPC's approval to an annual Exploration Work Program and Budget in accordance with Article 4 of this Contract.



6.8. The Operating Company shall within ten (10) Days after the end of each Calendar Month after the Date of Initial Commercial Production prepare and submit to the Parties a detailed statement for the prior Calendar Month, setting forth the quantity of Average Daily Production. The Operating Company will deliver to each Party and each Party will take possession of its share of Petroleum, in accordance with Articles 7 and 8 hereof at the Delivery Point, from which point each Party will bear the costs, risks and expenses pertaining to their Petroleum. The Royalty Cost Recovery Petroleum and the shares of Production Sharing Petroleum and the contribution to the Abandonment Fund, shall be composed of equal grades and quality of Petroleum produced from operations hereunder.



ARTICLE 7

ROYALTY, RECOVERY OF COSTS AND EXPENSES AND PRODUCTION SHARING



7.1. Royalty

The GOVERNMENT shall own and be entitled as hereinafter provided, to a Royalty in kind of twelve and one-half percent



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[signature][stamp][signature][signature](12.5%) of all Petroleum produced and saved from the Area during the Development Period including any extension period (the "Royalty"). The remaining eighty-seven and one-half percent (87.5%) net of contribution to the abandonment fund as specified in article 30, shall be divided between GPC and CONTRACTOR as provided in Article 7.2. through 7.5 (in the case of Oil) or Article 8 (in the case of Gas).



Royalty taken in kind shall be delivered by Operating Company to the GOVERNMENT, net of shrinkage pipeline fill volumes and transportation losses at the Delivery Point or any other point mutually agreed upon.



The Government may may give written notice to the Operating Company at least six (6) Months prior to cither the first day of January or the first day of July in each Calendar Year that it wishes to take the Royalıy in cash, during the next succeeding six (6)

Calendar Months. In such case the Operating Company shall forthwith advise CONTRACTOR, which shall take in kind the full quantity of Petroleum due to the GOVERNMENT as the Royalty and pay in cash the value of this Royalty within thirty (30) days upon the cnd of each calendar month by transferring the cash received from selling such Royalty Petroleum to the Operating Company.



Block/Page/44 of 176Marketing, sales, transportation and related costs in connection with the disposal of said Royalty Petroleum shall be recoverable in full as Operating Expenses hereunder.



The CONTRACTOR is free to make any decisions related to selling the Royalty Petroleum taken in kind and independently determines the terms and procedures for such sales, way's of delivery and other conditions of the deal.



Cost Recovery Crude Oil

Subject to the auditing provisions under this Contracts CONTRACTOR shall recover all costs and expenses in respect of all the Exploration, Development and related operations under this

Contract to the extent and out of (40 %) of actual amount of all crude oil produced and saved from the Area during each month after deducting the Royalty due to the GOVERNMENT and the contribution to the Abandonment Fund. CONTRACTOR shall take Cost Recovery Crude Oil in kind as provided in Article 7.3 below:



Any and all such costs and expenses shall be recovered from



Block/Page/44 of 176Cost Recovery Crude Oil in the following manner: 7.2.1. Exploration Expenditures, including those incurred prior to the first Date of Initial Commercial Production, shall be fully recoverable in the amount of one hundred percent (100%) commencing in the Calendar Quarter following the Calendar Quarter in which such Exploration Expenditures had been incurred. The Exploration expenditures recoverable in a Calendar Quarter shall be those set forth in the Statement of exploration Activity for said Quarter. 7.2.2. Development Expenditures, including those incurred prior to the first Date of Initial Commercial Production shall be recoverable in full, but shall be evenly amortized at the rate of twenty percent (20%) per annum, commencing in the Calendar Month in which such Development expenditures are incurred or the Calendar Month in which the Date of Initial Commercial production occurs, whichever Month comes later. Except that for Development Expenditures made during the last four (4) Calendar Years of the last Development Phase in respect of a DCA under this Contract rate of recovery shall be increased to allow for one hundred percent (100%) amortization of such costs by the end of the Contract. Therefore the applicable amortization rate for the first Calendar Year of that four (4) Calendar Year period shall be 25%, for the second Calendar

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Year 33 1/3%, for the third Calendar Year 50% and for the last Calendar Year 100%.



It is understood and agreed that solely with regard to the recovery of those costs and expenditures which may be amortized at the rates specified herein, such costs and expenditures may only be recovered pro rata on a Calendar Quarterly basis in any Calendar Year.



Any costs and expenditures not recovered pro rata as aforesaid in a Calendar Year shall be carried forward and fully recovered in the first Calendar Quarter of the next Calendar Year.



All Intangible Drilling Costs including those incurred prior to the first Date of Initial Commercial Production and all Operating Expenses, incurred after the first Date of Initial Commercial Production shall be recoverable in full commencing in the Calendar Month in which they are incurred or the Calendar Month in which the Date of Initial Commercial production occurs, whichever Month comes later.



Costs incurred in the purchase of land shall be recoverable in the Calendar Year in which such expenses are incurred.



To the extent that in a Calendar Year, costs, expenses, and expenditures recoverable per Article 7.2.1 to 7.2.4 inclusive above exceed the value of all Cost Recovery Crude Oil for such Calendar Year, the excess shall be carried forward for recovery in the next succeeding Calendar Year or Calendar Years until fully recovered, but in no case after the termination of the Contract as to CONTRACTOR.



7.3. Excess Cost Recovery Crude Oil



7.3.1. CONTRACTOR shall for each Calendar Year take in kind and separately, at its own expense, dispose of all Cost Recovery Crude Oil produced, and its share of the balance of Crude Oil, as stipulated in Article 7.5 and 8.4.2 below.



7.4. The amount by which the value of Cost Recovery Crude Oil in any Calendar Year exceeds the sum of all recoverable costs and expenditures under Article 7.2 (including any costs and expenditures carried forward under Article 7.2.5) shall be called "Excess Cost Recovery Crude Oil" and shall be shared as the following:



- 75% of the excess share to the GPC;

- 25% of the excess share of the CONTRACTOR.



7.5. Production sharing Crude Oil

With respect to each Calendar Year, the remaining Crude Oil produced and saved from the Area, after deduction of shrinkage, pipeline fill volumes and transportation losses, Royalty and the contribution to the



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[signature] [signature] [signature]Abandonment Fund and the volume of Cost Recovery Crude Oil taken by CONTRACTOR and any Excess Cost Recovery Crude Oil taken by GPC and CONTRACTOR shall be taken in kind, unless otherwise stated in the present Contract, and disposed of separately and at their respective expenses. The remaining amount of Production sharing Crude Oil shall be shared as follows (GPC / CONTRACTOR):

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| | Price of oil per /barrel |

| |----------------------------------------------------------------------------

| Annual Average Daily Production | | more than $70 and less | |

| | less or equal $70 | than or equal to $120 | more than $120 |

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| | GPC | CONI. | GPC | CONI. | GPC | CONT. |

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| 25000 less or equal bpd | 58 | 42 | 61 | 39 | 69 | 31 |

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| more than 25,000 and less than or equal to 50,000 bpd | 59 | 41 | 63 | 37 | 70 | 30 |

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| more than 50.000 and less than or equal to 75,000 bpd | 41 | 59 | 65 | 35 | 71 | 29 |

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| More than 75,000 bpd | 60 | 40 | 65 | 35 | 72 | 28 |

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According to the article 18.2.3 9f this Contract all taxes and other burdens subject to the joint work of the parties or the CONTRACTORS operations according to this Contract in the S.A.R will be assumed by GPC alone and will be paid from the

GPC share

Should Parties agree that calculation on a Monthly or Quarterly basis be required or agree that Monthly determination of Annual Average Daily Production Tranches should otherwise be necessary, such calculation is effected for matters of convenience only and without prejudice to the principle that the Royalty, the contribution to the Abandonment Fund, Cost Recovery and Production sharing is to be determined on the basis or a Calendar Year only.



7.6 Crude Oil Valuation

The value of the crude oil produced and saved from the Area and disposed of by CONTRACTOR shall for the purpose of determining the value of its portion of (1) Cost Recovery crude oil, and (2) Excess Cost Recovery Crude Oil, and (3) Production Sharing Crude Oil, and the value of the Royalty, and for the calculation of CONTRACTOR'S income and the payment of CONTRACTOR's income tax, always reflect the market value of such crude oil.



Block/Page/50 of 176For the purpose of determining the market value of such crude oil the following shall be applied: 7.6.1. The value of the crude oil lifted and sold to non-Afilliated Companies shall be determined at the official selling price applied on companies that purchase the Syrian light/ heavy crude oil in any Calendar Month in freely convertible currency on F.0.B. Delivery Point sales under this Contract by GPC and CONTRACTOR whichever is the higher under arm's length conditions, provided that these sales shall not include any special arrangement such as barter or involving or related to barter (such sales hereinafter referred to as "Qualifying Sales"). In the case of C.I.F., or C.F.R. sales or other sales not made on F.O.B. basis, appropriate deductions shall be made for transportation, insurance and further charges including transportation charges within Syria according to documents approve that, to calculate the"F.0.B. Delivery Point price”. It is understood that this paragraph 7.6.1 in no way prevents the GPC from selling its crude oil to an Affiliated Company to the CONTRACTOR. 7.6.2. In the event CONTRACTOR and GPC have no Qualifying Saies of

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crude oil. The value of CONTRACTOR'S entitlement to crude oil shall be determined by applying a crude oil valuation method acknowledged in the international oil market. This valuation method shall mutually be agreed upon by GPC and CONTRACTOR.



This valuation method shall be mutually agreed upon by GPC and CONTRACTOR prior to the commencement of Initial Commercial Production of each crude oil grade, and shall be used for at least one (1) Calendar Year. Thereafter it shall be reviewed upon the written request of GPC or CONTRACTOR when in the opinion of either of them, changes in the international oil market so require. Any revised valuation method shall be used for at least one (1) Calendar Year. Prices of reference for crude oil and/or hydrocarbon products used in a valuation method shall be the arithmetic monthly average of the daily quotations as published in any agreed upon publication of international standard in the oil market for crude oil similar in quality to the Petroleum in the same market to be valued hereunder, or as published for the hydrocarbon products included in the valuation method.



Should Qualifying Sales be available to either party (GPC or CONTRACTOR), then the Qualifying Sales of such party shall be adopted in determining the price of crude oil of this Contract.



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[signature][stamp][signature][signature]7.6.3. It is understood and agreed that each lifting and/or sale of CONTRACTOR's Crude Oil and gas for purposes of Cost Recovery and for tax purposes shall be considered as consisting of a share of Cost Recovery Petroleum and Production Sharing Petroleum according to CONTRACTOR's shares under this Contract.



7.6.4 Unless otherwise agreed upon between GOVERNMENT, GPC and CONTRACTOR, the value of Petroleum subjected to requisition as provided for in Article 19 hereof or subject to pre-emption as provided for in Article 25 hereof, shall be determined in accordance with Article 7 herein.



Operating Company shall prepare not less than ninety (90) Days prior to the first day of January and the first day of July in each Calendar Year following the Date of Initial Commercial Production, and provide in writing to CONTRACTOR and GPC a report about forecast setting out the total quantity of Petroleum that Operating Company estimates can be produced, saved and transported hereunder during the succeeding half of the Calendar Year.



Petroleum shall be run to storage tanks (if any) constructed, maintained and operated according to Government specifications by Operating Company in which said Crude Oil shall be metered or otherwisemeasured according to good international oil industry practice



7.7. CONTRACTOR shall have the right and shall be bound to separately take in kind at the Delivery point and export or otherwise dispose of all Crude Oil to which it is entitled in accordance with the provisions of Articles 7.7 and 7.5. Subject to payment of sums or crude oil due to GPC under Article 7.4. CONTRACTOR shall have the right to remit and retain abroad all funds acquired by it including the proceeds from the sale of its share of Petroleum hereunder.



7.8. At a reasonable time, prior to the Date of initial Commercial Production, and from time to time thereafter GPC and CONTRACTOR shall meet and agree upon a procedure for scheduling lifting of Petroleum from the Delivery Point in accordance with good international petroleum industry practices.



ARTICLE 8

THE GAS



8.1. Commercial Discovery of Gas

If CONTRACTOR makes a commercial discovery of Gas the provisions of Article 3 shall apply. However, if after evaluating the Gas Reserves and other relevant technical and economic factors, ascontemplated by Article 3.2.4, CONTRACTOR and GPC agree (and such agreement shall not be unreasonably withheld by GPC) that such discovery is worthy to be Developed commercially, CONTRACTOR will give GPC a Notice of Commercial Discovery in accordance with Article 3.2.6.

Failing agreement by GPC to the existence of a Commercial Gas Discovery, Contractor is entitled to refer the issue to arbitration in accordance with Article 23 hereof.



8.1.1. In case that associated gas is being produced in the Development Area, such gas may be freely utilized by the Operator for development (i.e. to be re-injected into the formation).

In the event that the quantities of associated gas are significantly more than the amount required for the Contractor in carrying out its operations, GPC and/or CONTRACTOR shall initiate to agree on an arrangements for the use of surplus associated gas.



8.2. Development Area

Following the Date of Commercial Discovery of Gas, the following shall apply:



8.2.1 The Development Area for the Commercial Discovery shall be established.



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[signature] [signature] [stamp] [signature]8.2.2. If additional Commercial Discoveries of Gas that are not in continuous hydrocarbon communication with the original Commercial Discovery are made in a Development Area and such additional Commercial Discoveries extend beyond the boundaries of the Development Area or the original Commercial Discovery, the Development Period specified in Article 3.2.9 for only that portion of the Development Area that is applicable to such additional Commercial Discoveries of Gas shall be extended by the time between the first Date of Commercial Discovery of Gas and said date for each additional Commercial Discovery, provided that such additional Commercial Discovery is made within the Exploration phase. 8.2.3. Subject to potential economic benefits, the GOVERNMENT and the GPC shall coordinate with the CONTRACTOR the efforts for providing the production capacity for the entire amount of gas produced under this Contract, regardless of the conditions, including potential establishment of new processing facilitics and/or redistribution of production capacities managed by the GOVERNMENT and/or GPC for operations under the present Contract by the CONTRACTOR or the Operating Company. 8.3. Gas Market 8.3.1. Domestic Gas Market :

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[signature] [signature][stamp] [signature]If CONTRACTOR gives Notice of a Commercial Discovery of Gas pursuant to Anicle 3.2.6, CONTRACTOR shall at the same time request Govermeni to confirm to CONTRACTOR, within one

hundred and twenty (120) days after the Date of Commercial Discovery of Gas whether or not it wishes to require that all or any portion of Gas Reserves should be utilized within the S.A.R.



If Goverment elects to require Gas to be utilized within the S.A.R. within the one hundred and twenty

(120) calendar day period, GPC and CONTRACTOR shall negotiate a long-term Gas Sales. Contract for the purpose designated by the GOVERNMENT and on the terms described in Article 8.3.1.1 below, and GPC and CONTRACTOR shall allow their respective percentage shares of Gas produced and saved to meet in the requirements of S.A.R.



The possible uses for Gas in the S.A.R. shall include all economic alternatives as well as downstream projects which may be carried out by the GPC, CONTRACTOR, and/or a third party including (but not limited to) electrical power generation facilities, installations for liquefaction, feed stocks supply, for the manufacture of methanol, urea, ammonia, fertilizer and any other sales to installations whose operation relics on a supply of Gas.



Block/Page/70 of 1768.3.11 Gas Sales Contracts

Any Gas Sales Contract for the sale of Gas within the S.A.R. shall be subject to the approval of the GOVERNMENT. and shall contain provisions generally used in the international Petroleum industry, including long-term purchase and delivery of a minimum agreed daily volume in accordance with technical constraints (take or pay provisions) as well as Gas make-up provisions. The price that shall be paid to CONTRACTOR for its share of such Gas to be used in the S.A.R. under the Gas Sales Contract, shall be paid each Calendar Month in United States Dollars or in crude oil (valued in accordance with this Contract).



8.3.1.2 Gas Price

The Gas will be priced as follows :

[Formula]

where: P: Is the price of million British thermal units ("MMBTU) in . United States Dollars (USD/MMBTU):

F: Constant Equal to 0.60;

Brent: The arithmetic average of the monthly prices expressed in US$ per metric tonne for the BRENT quoted in Platt's Crude



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Oil Market wire" for the last three (3) Months:



43: The calorific Value Of Brent Crude Oil (MMBTU per metric ton of Brent crude Oil);



G.O.: The arithmetic average of the monthly prices expressed in US$ per metric tonne for Gas Oil 0.1. quoted in "Platts European Market Scan" for cargoes FOB Basis, Italy. for the last three (3) Months:



42.23: The calorific value of Gas Oil (0.1 (MMBTU per metric ton gas oil):



LSFO: The arithmetic average of the monthly prices expressed in US$ per metric tonne for 1% Fuel Oil quoted in "Platts European Market Scan" for cargoes FOR Med Basis, Italy, for the last three (3) Months;



41.23: The gross healing value in millions of British thermal units for one (1) metric tonne of LSFO

The Gas price shall be limited to a maximum 7 USD/MMBTU in the internal SAR (domestic) market.

There shall be no price restrictions on the external market.



8.3.1.3. L.P.G. pricing; L.P.G. price shall be calculated in United States Dollars. according to the average

price to the metric tonne of propane and butane separately. for that Calendar Month. as it occurred in Platts leaflet for the liquefied petroleum gas price.

F.O.B. west of the


Block/Page8.3.1.4. Condensate pricing: Equal to the Syrian light Petroleum price. SLCO shall be priced according to the Syrian Petroleum Marketing Department prices in United States Dollars per Barrel.



8.3.1.5. Where payment for Gas is to be made in the form of Petroleum the volume in Barrels of such Petroleum shall be calculated by dividing the amount of payment due to CONTRACTOR in United States Dollars by the average international price in United States Dollars per Barrel received for Qualified Sales of the Petroleum, to be given in payment during the Month preceding the Month when payment is due. Where there are no Qualified Sales for the Petroleum to be giving in payment under this Article 8.3.1.5 the Petroleum valuation shall be calculated in accordance with the provisions of Articles 7.6.2 and 7.6.3.



8.3.2. Gas Export



8.3.2.1 A decision by GOVERNMENT not to require Gas to be utilized within S.A.R. as stated under Article 8.3.1 or a failure by GOVERNMENT to give such notice shall constitute its decision not to require such Gas Reserves to be utilized within the S.A.R., and CONTRACTOR and GPC together shall agree on the disposition of the Gas by export sales.



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[signature] [signature][stamp] [signature]If either GPC or CONTRACTOR



objects, in good faith, to any Gas export plan, Parties shall take into consideration and accommodate the views of the objecting Party and attempt to put forward an acceptable alternate plan for the commercial exploitations of the subject Gas Reserves.



Notwithstanding the provisions of Article 8.3.2.1, GOVERNMENT may exercise its right under Article 8.3.1 during the period in which CONTRACTOR and GPC have not reached agreement with a buyer for the export sale of Gas, and GPC and CONTRACTOR shall have the right to enter into a Gas Sales Contract with a buyer in S.A.R. subject to the prior approval of the GOVERNMENT.



If the CONTRACTOR and GPC together decide to export the Gas, the GOVERNMENT shall support such decision and shall in every way support the CONTRACTOR and GPC during the establishment of the Gas export infrastructure.

The CONTRACTOR or GPC shall not be required to obtain any licenses, approvals, or permits etc.



8.4. Cost Recovery and Production Sharing



8.4.1. CONTRACTOR shall recover all costs and expenses in respect of all the Explorations, Development andrelated operations under this Contract to the extent and out of sixty percent (60%) for daily average production of all Gas, LPG and Condensates produced and saved from the Area after deducting the Royalty due to the GOVERNMENT and the contribution to the Abandonment Fund (hereinafter referred to as "Cost Recovery Gas"). CONTRACTOR shall have the right to receive the Cost Recovery Gas in kind.



8.4.2. All and any Costs and expenses incurred in the production, gathering, processing and transportation of associated and non-associated Gas shall recovered from the cost of Cost Recovery Gas as provided in Articles 7.2.1, 7.2.2, 7.2.3, 7.2.4, 7.2.5 and 7.4. The Royalty principles also as provided in Article 7.1 shall apply to the Gas that was transported to the processing location.



The Royalty principles also as provided in Article 7.1 shall apply to the Gas produced and saved and not used in operations, flared or reinjected.



All costs associated with the installation of gas pipelines which are required to transport the gas sold up to the consumer intake point or up to the tie-in point with existing gas transportation network, as the case may be, shall be paid by CONTRACTOR and recovered as Development Expenditures.8.4.3 Gas that is produced from the Area (sales Gas and LPG) is measured at the Metering Point for the purposes of sales and shall be converted to BOE in accordance with Article 1.7 ‘and shall be shared, after deduction of shrinkage, pipeline fill volumes and transportation losses, Royalty, Contribution to the Abandonment Fund, Gas Cost Recovery, and any Excess Cost Recovery according to article 8.4.5 of the Contract. 8.4.4. LPG as a product of produced gas shall be calculated in tons during transportation and shall be shared after the deduction of Royalty, Contribution to the Abandonment Fund. Gas Cost Recovery and any Excess Cost Recovery according to the article 8.4.5. 8.4.5. Gas produced and LPG, shall be shared, according to article 8.4.3 and article 8.4.4 of this Contract in the following proportions:

Cumulative total production of Gas and LPG, MMBOE | GPC Share | Contractor Share

Less than or equal to 100 | 40% | 60%

More than 100 but less than or equal to 250 | 45% | 55%

More than 250 but less than or equal to 400 | 50% | 50%

More than 400 | 60% | 44%

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In the meantime in accordance with article 18.2.3 of this Contract all taxes, fees or other burdens resulting from the joint work of the parties or the CONTRACTOR'S work under this Contract are included in the share of GPC and paid by GPC independently.



8.5. LPG



8.5.1. GPC and CONTRACTOR shall consult together to determine whether it is feasible to build a petroleum gas liquefaction unit. The consideration to build such unit shall be by GPC and CONTRACTOR, not only in respect of an independent LPG project, but also in regard to meeting the Pipeline Specifications Gas. Delivery of LPG for Royalty and other purposes required by this Contract shall be at outlet of the LPG unit.

The cost of any such LPG unit shall be recoverable by CONTRACTOR in accordance with the provisions of this Contract unless the Parties agree to mutually acceptable modifications so as to result, in the opinion of CONTRACTOR and GPC, an LPG unit would be economically and commercially viable, considering the investment required, markets for the LPG and prices to be obtained therefore.



8.5.2. Royalty, Cost Recovery and Production Sharing shares of LPG disposed of by CONTRACTOR



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[signature][stamp][signature][signature]and/or GPC shall be valued according to actual sold volumes.



The price of every single tort of LPG is determined according to the following formula. after deducting the actual cost to transport one metric ton of LPG from the metering points to sales point in Syrian Arab Republic, and the actual cost of normal insurance against the loss of accident during the transportation of LPG from the loading point to the sales points in the S.A.R:



P: The price of LPG in USD for one single metric ton:



Qp. the percentage of Butane in one single metric ton:



Pp. The price of Propane globaly during the sales month as deteremined in the platesPlatts LPGaswire (European LPG ($/mt) EOB Ex-Ref/Storage)



Ninety (90) days prior to the beginning of each half Calendar Year, the GOVERNMENT shall inform CONTRACTOR whether it wishes to pay for LPG in cash or oil equivalent for the next succceeding half Calendar Year.

The provisions contained in Article 7.6 of this Contract related to delivery, evaluation, profits and obligations of the Contractor and the Government shall with corresponding changes apply to the oil equivalent.



LPG shall be converted to BOE on the direct volumetric basis in the ratio of twelve and three-tenths (12.3) Barrels per metric ton for propane and ten and nine-tenths (10.9) Barrels per metric ton for butane, subject to adjustment for the actual specifications of the LPG.



8.5.4. Ninety (90) days prior to the beginning of each half Calendar Year, the GOVERNMENT shall inform CONTRACTOR whether it wishes to pay for LPG in United States Dollars or in an alternative Petroleum on an equivalent monetary value basis for the next succeeding half Calendar Year The provisions contained in Article 7 hereof concerning the delivery, valuation, pricing, recovery of proceed and obligations of CONTRACTOR and GOVERNMENT shall apply mutatis mutandis with respect to alternative Petroleum.



8.6 Should the price publications referred to in this Article 8 fail to publish or fail to reflect the actual market conditions and/or priced in the opinion of either Party. Petroleum and products quotations will be taken from those tables published in another publication that continues to be published.adjusted as the Parties agree, so as to most nearly approximate to the results which would have been used if such failure had not occurred. If such publications cease publication, the Parties will agree on other price reference sources.



Should any price reference source referred to either in Article 7 or in this Article 8 publish a retroactive change, either upwards or downwards, for any Petroleum or product price that is referred to either in Article 7 or in this Article 8 the effect of such change in calculating prices for any Calendar Quarter will be limited to the Month prior to the Month of publication of such retroactive change.



8.7. The GPC and CONTRACTOR agree to take the full stream of Petroleum if any associated with Gas Production and such stream shall be valued in accordance with Article 7 of this Contract. However, CONTRACTOR may advise GPC that in its opinion the amount of such Petroleum is too small to justify the construciton of facilities to lift its share of such Petroleum. The GPC shall make all reasonable, good faith efforts to take the full stream of Petroleum for GPC's sole benefit, but if it is not practicable for GPC to take such Petroleum, or if the taking of such Petroleum would unreasonably interfere with operations for the recovery of Gas, CONTRACTOR and GPC shall co-operate to establish the best operational and economic way to dispose of such Petroleum.







[signature] Block/ Page / 176 [photo]

[signature] [signature]8.8 GPC and GOVERNMENT irrevocably guarantee payment for Petroleum in United States Dollars or alternative Petroleum in any circumstances under this Contract in which such payments are to be made by GPC and/or GOVERNMENT to CONTRACTOR hereunder, and GOVERNMENT shall make sufficient United States Dollars or alternative Petroleum for that purpose as well as for any purchases by GOVERNMENT of Petroleum under this Contract.



8.9. Gas Suspension

8.9.1. If there is a discovery of Gas which GPC and CONTRACTOR agree could be a Commercial Discovery, but there is a lack of or inadequacy of an available commercially viable market for the Gas Reserves, this Contract shall be suspended insofar as it applies to the area of such discovery (the "Gas Suspension Area") for a period of seven (7) Years after the date of such above agreement or until such time as GPC and CONTRACTOR secure a buyer of the Gas or any portion thereof, whichever first occurs ("Gas Suspension Period"). If no Sales Gas Contract is executed within the seven (7) Year period as aforesaid, the CONTRACTOR shall relinquish the Gas Suspension Area.



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[signature][stamp][signature][signature]During the Gas Suspension Period the Parties shall use their reasonable . good faith efforts to investigate and consider the markets which could be developed commercially for such Gas Reserves, either for export. or for domestic use in the S.A.R., and also consider whether mutually agreeable modifications to this Agreement or actions could be taken to result to this Agreement or actions could be taken to result in it being a commercial Discovery.

If the CONTRACTOR and GPC identify commercially viable marketing possibilities for such Gas Reserves during any Gas suspension Period, or there are other mutually agreed modifications to this Agreement or actions to be taken so as to result, in the opinion of both CONTRACTOR and GPC, in the discovery, CONTRACTOR will give GPC Notice of Commercial Discovery in accordance with Article 3.2.6 and 3.2.7.

The Gas Suspension Area shall be determined pursant to Article 5 hereof.

8.9.2.During any Gas Suspension Period GPC may propose to CONTRACTOR as permitted by Article 3.2.4. that GPC will Develop the discovery which is the subject of the Gas Suspension Period at GPC's sole Cost risk and expense,and provided that the question of it being a CommercialDiscovery has not been referred to arbitration under Article 23 nor is it under current discussion by GPC and CONTRACTOR.



Any such Development proposal by GPC to CONTRACTOR shall contain full and complete technical and economics factors considered by GPC in determining that the discovery appears worthy of being commercially Developed. Upon receipt of such information. CONTRACTOR may, within ninety (90) days of receipt of such notice, either



8.9.2.1. Give notice that it does not wish to participate in the Development and relinquish the Gas Suspension Area, or



8.9.2.2. Accept the Development proposal or recommend additions and/or modifications to the Development proposed by the GPC and, if agreed with GPC, in either case proceed with the Development pursuant to this Contract, or



8.9.2.3. Disagree with the contents of the Development proposal, its practical possibility or financial feasibility of implementing the proposal before the end of the Gas Suspension period for the particular discovery and do not interrupt the Gas suspension period.



If CONTRACTOR agrees to proceed with the Development, the date of this agreement shall be deemed to be, the Date of Commercial Discovery for the subject Gas discovery. If CONTRACTOR does not elect to participate in the development and relinquishes the Gas Suspension Area. GPC may then Develop the Gas at its sole cost, risk and expense.



CONTRACTOR shall not be obligated to relinquish a Gas Suspension Area as aforesaid if a Commercial Discovery of Crude Oil has been made therein and CONTRACTOR has made Development Expenditure in respect thereof. In such case, the Development of each may proceed independently, subject to Article 8.4 hereof



8.10. Relinquishment if no Development of Gas commences within eight (8) from the Date of Commercial Gas Discovery Area without any compensation or other.



Article 9 Office And Service Of Notice



9.1 Any notice or other Communication to be given or made to any Party hereunder shall be writing and in Arabic and English (Russian language may be additional) and delivered

personally by hand, or sent by registered mail or by facsimile, to the office of such Party located in Damascus or to the office of the Operating Company, as the case may be.9.2 Notwithstanding the provisions of Article 9.1, notices given or made under Articles 3.2.6, 7.6 2, 8.3.1, 19.2, 20.2, 20.3, 21.2, 22.4, and 23.1.3, and under the Letter of Guarantee shall not be served other than personally by hand, including registered mail, and any other purported means of service shall not be effective.



9.3 The effective date of any communication under this Article 9 shall be the date upon which it is received at the address of the Party to whom it is addressed as evidenced in the case of hand delivery, including registered mail, by a signed receipt or in the case of facsimile.



ARTICLE 10

SAVING OF PETROLEUM AND PREVENTION OF LOSS



10.1 Operator shall take all proper measures, according to generally accepted methods in use in the international oil industry to prevent loss or waste of Petroleum above or under the ground in any form during drilling, producing, gathering and distributing or storage operations. The GOVERNMENT has the right to demand suspension of any operation on any well that it might reasonably expect would result in loss or damage to the well or the Petroleum field by sending a written notice to the Operator with relevant objections.



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[signature][stamp][signature][signature]10.2. Upon completion of the drilling of an oil or gas well in which Petroleum is encountered the Operator shall inform the GOVERNMENT or GPC or CONTRACTOR, when it is not the Operator, or their representatives, of the time if and when the well will be tested and of the production rate when and if ascertained.

10.3. Except in instances where multiple producing formations in the same well can only be produced economically through a single tubing string, Petroleum shall not be produced from multiple Petroleum bearing zones through one string of tubing at the same time, except with the prior approval of the GPC or its representative, which approval shall not be unreasonably withheld.

10.4. Operating Company shall record data regarding the quantity of Petroleum and water produced from each Development Area. Such data shall be sent to the GOVERNMENT or its representative on the special forms provided for that purpose within (30) Days after it is obtained. Daily or weekly statistics regarding the production from the Development Area or Areas shall be available at all reasonable times for examination by authorized representatives of the GOVERNMENT.

10.5. Daily drilling records must show the quantity and type of cement and the amount of any other materials used in the well for thepurposes of protecting Petroleum bearing or fresh water strata. Any substantial change of mechanical conditions of the completed condition of a well should be subject to GPC authorization, which shall not be unreasonably withheld. 10.6. In the performance of the operations hereunder Operator shall be subject to the laws, decrees and regulations on health and safety of the personnel involved in operations or exposed to it and on environmental protection prevalent in the S.A.R. unless otherwise stated by the present Contract. Operator shall give due regard to the protection of the environment which may be affected by the development of its activities and aim at progressive reduction over time of emissions, effluents and discharges of waste materials from its operations which are known to have a negative impact on the environment, according to the Appendix 6 of this Contract. ARTICLE 11 CUSTOMS EXEMPTIONS 11.1. CONTRACTOR. Operating Company and their contractors and their non-Syrian subcontractors engaged in

carrying out operations under this Contract shall be exempted from Customs Duties, and import license fees with

respect to the importation of such goods, materials, machinery and equipment of whatsoever nature as may be

required to be used by CONTRACTOR or its

[signature] [signature] [stamp] [signature]subcontractors and the Operating Company, including but not limited to following waivers, exemptions and privileges:

- exempted from customs duties and all additiona fees;

- exempted from the requirement for import lisenses and therefore from import license fees;

- exempted from any requirements for country of origin certificate that might be enforced at the time of importation, usage or re-exportation;

- exempted from any regulations of external trade related to import and export, foreign transactions in payment for goods, also exempted from embargo, limitations and restrictions of import, including, but not limited to those related to manufacturing date and country of origin;

- exempted from fines for not legalizing the documents of foreign origin;

- exempted from technical control of the vehicle and car

for the registration and the technical control for its yearly renewal of mechanical card, instead they are allowed to provide extension papers from the customs to the transportation department.

Waivers, exemptions and privileges are provided in this Anticle 11 for goods, materials, machinery and equipment of whatsoever nature as may be required to be used by CONTRACTOR. Operating Company and their contractors

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and their non-syrian subcontractors including, but not limited to, oil platforms. offshore drilling rigs, means of transportation of all kinds including but not limited to vehicles, field cars, buses, new or used, marine vessels, boats, ships and motorboats, to be used within the syrian territorial waters and intended for serving the platform, working on petrol or diesel fuel, without regard (or limitations) for manufacturing date; import (by temporary admission or ultimate import with intent of consumption) during fullfillment of the contract. including, but not limited to, radio equipment, wireless devices, computers, accesories and

software, air conditioners, furniture, field equipment arrangements, electric appliances, chemicals for drilling rigs, aircrafts and helicopters, consumables, food and drinks for foreigners and their family members, consumer goods, other movable assets and spare parts for any of the aforementioned, and also cash.





for all of the aforementioned the CONTRACTOR, Operating company and their contractors and non-syrian subcontractors, participating in operations performed under the present contractor, shall have the right for direct importation including cars, machinery, trucks and buses that shall be delivered to the work site and shall only be registered in thetransportation departments in the city of Damascus on the basis of a customs certificate issued by any customs secretariate with the addition of an invoice specifying the technical description of a vehicle, car or a bas, such as its engine capacity, usable fuel, manufacturing date, model, color and additional technical characteristics, without providing a technical bulletin of the vehicle and technical protocol of the vehicle. 11.2. Such machinery as excavators, bulldozers, rollers, offshore and mobile drilling rigs and their modules, operating exclusively on sea and land are also exempted from registration over at the transportation departments. Each expatriate employee of CONTRACTOR and Operating Company and their contractors and non-Syrian subcontractors shall be permitted to import and shall be exempted from all Customs Duties with respect to the reasonable importation of household goods, items and personal effects including one automobile which can be

imported directly by the expatriate employee himself or imported by CONTRACTOR for his benefit; provided, however that such properties are imported for the personal use of the employee and his family and provided that no such property imported by the employee shall be resold by

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him in the S.A.R. except subject to GOVERNMENT regulations and if resold to another entity which is also enjoying similar exemptions.



11.3 GPC shall make its best endevours to provide the required facilities for the CONTRACTOR to obtain the necessary permits from the competent authorities to secure the arrival of imports. related to the implementation of the operation of this Contract, to the work site via the Syrian ports as soon as possible to ensure proper functioning and implementation, including but not limited to providing certification by a responsible representative of GPC to be used solely in carrying out or supporting operations under this Contract.



11.4 The exemptions provide in Article 11.1 shall not apply to any imported items, when GPC and CONTRACTOR agree that items of substantially the same kind and quality are available for immediate purchase and timely delivery in the S.A.R. under substantially the same terms and conditions and at a price not higher than fifteen percent (15%) more than the cost of the imported items before Customs Duties, but after transportation and insurance costs have been added.



11.5. Any of the items imported into the S.A.R. exempt from Customs Duties, taxes or imposts under this Article may be exported by the importingparty at any time without the payment of any export duty, taxes, fees or impost.



New or used but serviceable, material, equipment and goods imported for, in support of or residual from operations hereunder may be sold within the S.A.R. provided that the purchasers pay the applicable Customs Duties, taxes or imposts, if any.



11.6 Material, equipment and goods imported under the Contract and sold within the S.A.R. shall be exempted from Customs Duties, taxes or imposts if:



11.6.1. Sold to GPC or its affiliated companies or the Ministry of Petroleum and Mineral Resources or its affiliated companies.



11.6.2. CONTRACTOR assigns such material, equipment and goods to GPC.



11.6.3. Sold to any entity which is enjoying similar exemption.



11.7. Material, equipment and goods so damaged or used as to be unserviceable and which are classified by Operating Company and/or CONTRACTOR as scrap or as junk (any assessment of this kind if made by CONTRACTOR shall be subject to the agreement of GPC and shall be subject to the agreement of GPC and CONTRACTOR if made by Operating Company without the need to the approval of any other direction) may be sold as



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[signature][stamp][signature][signature]scrap or junked without payment of Customs Duties, taxes or imposts by CONTRACTOR. Operating Company, their contractors or subcontractors.



11.8 In the event of a sale under Articles 11.5 through 11.7 inclusive above, the proceds from such sales shall be divided in the following manner. If the cost of the sold item had been recovered in full by the CONTRACTOR as part of cost recovery, then the entire preceeds of such sale, if any, shall be paid to GPC; If the cost of the sold item had not been recovered in full by the CONTRACTOR as part of cost recovery, the CONTRACTOR shall be entitled to receive the proceeds in amount that had not been recovered.



11.9 "Custom Duties" as used herein, shall include all duties, taxes, tax fees or any other financial imposts of whatsoever nature which may be due as a result of the importation of the above mentioned item or items, except charges to be paid to GOVERNMENT for actual services rendered.



11.10 CONTRACTOR and GPC shall not require any license or other consent whatoever for any activities under this Contract including Petroleum sales on domestic and external markets, and shall be exempted from any duty, tax, fee or any other financial impost in respect of the export ofPetroleum from the S.A.R. or its sales on the domestic market hereunder.

ARTICLE12

BOOKS OF ACCOUNT:ACCOUNTING AND PAYMENT

GPC, CONTRACTOR and Operating Company shall each maintain at their business offices in the S.A.R. books of account, in accordance with the Accounting procedure in Annex 4 and accepted accounting practices generally used in the international petroleum industry, and such other books and records as may be necessary to show the work performed under this Contract, including the amount and value of all Petroleum produced and saved hereunder.Such statements shall be prepared in the forms required by the GOVERNMENT or its representative and shall be signed by the Chairman and General Manager or by a Deputy General Manager or their duly authorized representatives and delivered to the GOVERNMENT or its representative within thirty (30) days after end of the Month covered in the statements.The aforesaid books of account and other books and records referred to above shall be kept in the English language (or in the Russian or Arabic languages if it is reasonably required) and shall be available at all reasonable times and upon notice for inspection by duly authorized representatives of the GOVERNMENT. This notice of audit shall be submitted by authorized representatives of the GOVERNMENT to the Contractor and/or the Operating Company no later than ten (10) calendar days prior to the audit.



12.3. CONTRACTOR shall submit to GPC a profit and loss statement for each Calendar Year not later than March 15 of the following Calendar Year to show its net profit or loss from the Petroleum operations under this Contract for such Calendar Year.

CONTRACTOR shall at the same time submit a Calendar Year end balance sheet for the same Calendar Year to the GPC.



ARTICLE 13 RECORDS, REPORTS AND INSPECTION



13.1. Operator shall prepare and at all times while this Contract is in force, maintain accurate and current records of its operations in the Area hereunder. Operator shall furnish the GOVERNMENT or its representative, subject to applicable regulations of local application or such as the GOVERNMENT or its representative may reasonably require information and data concerning its operations in the S.A.R. under this Contract.



13.2. Operator shall save and keep for a reasonable period, but for no less than 1 (one) Calendar year, representative samples of cores and cuttings taken from drilling wells to be disposed of with the GOVERNMENT'S knowledge or forwarded to the GOVERNMENT or its representative in the manner directed by the GOVERNMENT. All samples acquired by Operator for its own purpose shall be considered available for inspection at any reasonable time, by the GOVERNMENT or its representative. Any : such samples which Operator has kept for a period of twelve (12) Months without receipt of

instructions to forward them to the GOVERNMENT or its representative or elsewhere may be disposed of by Operator at its discretion. Operator shall submit to GOVERNMENT or its

representative accurate copies of test results of samples whenever available.



13.3. Unless otherwise agreed to by GPC, in case of exporting any rock samples outside S.A.R. samples equivalent in size and quality, shall before such exportation be delivered to GPC as representative of GOVERNMENT.



13.4. Originals of technical data records can only be exported with the pemiission of the GPC, provided, however, that magnetic tapes and any, other data which must be processed or analyzed outside the S.A.R. may be exported if a monitor or a comparable record is maintained in the S.A.R, and provided that



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[signature][stamp][signature][signature] such exports shall be repatriated to the S.A.R on the understanding that they belong to GPC.



13.5 Operator shall permit GPC at GPC's sole risk through GPC's duty authorized representatives or employees to have full and complete access to the whole Area at all reasonable time with the right to observe the Operations being conducted and to inspect all assets, records and data kept by Operator. The Operator shall be informed of the upcoming inspection no later than fourteen (14) calendar days prior to the inspection. GPC's representative in exercising this right under this Article shall take care that the operations are not hindered or delayed. Operations shall formally advise GPC representatives about safety rules and regulations applicable in the field, and also shall advice them of any dangerous or hazardous conditions that are not apparent, and which are known to Operator. The GPC representatives shall acknowledge in writing that they have been advised as aforesaid, as a condition to admittance to the field operations. Operator shall offer such representatives all privileges and facilities accorded to its own employees in the field.





13.6. Operator shall supply GPC with copies of all technical data (geological and geophysical reports, logs and well surveys, sample tests, and all information and interpretation related thereto) obtained from the Area. When Operating Company is Operator, CONTRACTOR shallhave the same rights as GPC under this Article.

13.7 All such data and information shall be deemed to be strictly confidential and shall not be divolged by GPC without the consent of CONTRACTOR.The Ministry of petroleum and Mineral Resources shall not divulge such data and information, without the consent of CONTRACTOR, nor the such data without the consent of the COVERMENT except to its Affiliated Companies or an intended assignee(s) professional consultants, banks or financial institutions from whom the obtaining finace (provide always that such Affiliated Companies intended assignee(s), consultants banks and financial institutions are bound by a strict undertaking of confidentiality), or to the extent required by any stock exchange on which the shares of any company comprising CONTRACTOR or an Affiliated company of any compnay comprising CONTRACTOR, are, or are intended to be quoted without the consent of GOVERNMENT, while this contract remians in force.

13.8 Notwithstandng the foregoing for the purposes of obtaining new offers for exploration rights from thirs parties in respect of areas adjoining but wholly outside the Area,GOVERNMENT may show any other party geophysical and geological data(but well legsand other well data only by mutual agreemeent) with respect to the Area adjacent to the area of such new offer. Should this Contract be terminated in the Initial Exploration Period or any extension thereof. CONTRACTOR shall be bound not to divulge, execept to Affiliated Companies, the data and information obtained by him and not to disclose them in any manner whatsoever during at

least five (5) Years from the termination of the contract.

ARTICLE 14 RESPONSIBILITY FOR DAMAGES AND INSURANCE

14.1. CONTRACTOR shall be entirely and solely responsible in accordance with the law towards third parties for any damage caused solely by Exploration operations performed by CONTRACTOR and shall indemnify the GOVERNMENT and the GPC or any of them against all damages for which it may be held liable on account of any such operations. 14.2. CONTRACTOR shall exercise reasonable skill, care and diligence in the discharge of its obligations under this Contract, but its liability to GPC or Operating Company for any damage or loss of whatsoever nature sustained by GPC or Operating Company arising out of the performance or non-performance by CONTRACTOR shall be limited to cases of gross negligence on the part of the CONTRACTOR and shall extend solely to the proper re-performance of the obligation in question.

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14.3. For the avoidance of doubt, CONTRACTOR shall in no event be liable for indirect or consequential damages.



14.4. Operator shall establish an insurance plan for its operations hereunder and obtain the insurance contracts in accordance therewith. Such insurances shall cover the types of exposure that are normally covered in the international oil industry, including but not limited to damages to equipment, installations, third party liabilities, costs of blow outs and removal of debris and the like. Operator shall endeavor to ensure that its subcontractors adequately insure their risks under the relevant subcontracts.



ARTICLE 15

PRIVILEGES OF OFFICIAL REPRESENTATIVES



15.1. Duly authorized representatives of the GOVERNMENT shall have access to the Area covered by this Contract and to the operations conducted therein, taking into account the restrictions mentioned in Article 15.3. Such representatives may examine the books, registers and records of GPC. CONTRACTOR and Operating Company and make a reasonable number of surveys and drawings for the purpose of enforcing this Contract. They shall for such purposes, be entitled to make reasonable use of the machinery



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[signature][stamp][signature][signature]and instruments of CONTRACTOR and Operating Company on the condition that no danger or impediment to the operations hereunder shall arise directly or indirectly from such use. The GOVERNMENT indemnifies and shall reimburse CONTRACTOR or Operating Company for any loss or damage which may in fact result from any such use of said machinery and instruments. Such representatives shall be given reasonable assistance by the agents and employees of CONTRACTOR or Operating Company so that none of their activities shall endanger or hinder the safety or efficiency of the operations. Operator shall formally advise representatives of the GOVERNMENT about safety rules and regulations applicable in the field, and also shall advise them of any dangerous or hazardous conditions that are not apparent, and which are known to CONTRACTOR or Operating Company



15.2 GOVERNMENT

Representatives shall acknowledge in writing that they have been advised as aforesaid. as a condition to admittance to the field operations.

Operator shall offer such representatives all privileges and facilities accorded to its own employees in the field and shall provide them, free of charge, the use of reasonable office space and of adequately furnished housing while they are in the field for the purpose of facilitating the objectives of this



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Article, Any and all information obtained by the GOVERNMENT or its representatives hereunder shall be kept confidential with respect to the Area and shall not be disclosed during the term, of this Contract without the prior written consent of GPC and CONTRACTOR.



15.3. Duly authorized representatives of the Government shall conduct no more than two (2) visits or inspections allowed under the present Contract within one calendar year, while the duration for each of such visits or inspections shall not exceed ten (10) calendar days.



15.4. The Government and GPC shall, pursuant to this Article, notify the Contractor and / or the Operator of the intention of Government representatives to visit or inspect at least fourteen (14) calendar days prior to such visit or before the beginning of an inspection.



ARTICLE 16

EMPLOYMENT RIGHTS AND TRAINING OF SYRIAN PERSONNEL



16.1. The Parties shall ensure that operations hereunder be conducted in an efficient and business like manner, therefore, GOVERNMENT agrees that:



16 1.1. Expatriate administrative professional and technical personnel employed by



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[signature][stamp][signature][signature]CONTRACTOR and employed by or assigned to Operating Company in accordance with Article 16.2 below and the expatriate personnel of its contractors and subcontractors for the conduct of the operations hereunder, on application shall be granted residency in accordance with rules and amendments of Law No. 2 of 2014 and shall be granted the work permit for aliens under the Ministry of Interior's Decision No. 159 of 1970 in accordance with the rules and amendments of the Ministry. GPC undertakes to provide such work permits and/or residency within three (3) Months from the date of application and shall prolongate them throughout the period of each expatriate's employment or assignment in the S.A.R.



16.2. CONTRACTOR and Operating Company shall each, for their respective operations, select the employees and determine the reasonable number thereof, to be used for all operations hereunder, including operations during and after the Exploration Periods for CONTRACTOR.



16.3. CONTRACTOR shall, after consultation with GPC, prepare and carry out specialized training programs for all of its S.A.R. employees engaged in operations hereunder with respect to applicable aspects of the petroleum industry. CONTRACTOR and Operating Company shall undertake to replace gradually their expatriate personnel, particularly administrative staff



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[signature] [signature] [signature]and technicians by qualified S.A.R. citizens with the required qualifications, experience and personal qualities whenever available.



16.3.1. CONTRACTOR and Operating Company, according to agreed program and budget, shall train national seconded personnel for working in the Operating Company, until their portion reaches minimum of (90%) in the end of the first four (4) years from the date of the Operating Company establishment, and in a percentage not less than not (95%) in the first six (6) years from the date of Operating Company establishment. Conditions in this Article do not extend to the administrative personnel and management that will be hired according to the hiring practices established in the internal documents of the Operating Company.



16.4. CONTRACTOR shall dedicate an annual amount not less than one hundred thousand ($ 100,000) US Dollars as "Training Budget" for the purpose of internal and external training of GPC's employees during the Contract Period, commencing from the first Calendar Year after the Effective Date.



The CONTRACTOR shall be spending the Training Budget by providing a possibility for the qualified GPC employees to attend and participate in training programs in Exploration, Development, and technical, financial and legal fields related to Petroleum offered by



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[signature] [signature] [signature]CONTRACTOR or Affiliated Companies of CONTRACTOR or third parties, which are acceptable to both CONTRACTORS and GPC.



16.5 CONTRACTOR shall not be obliged to expend more than the Training Budget on such programs, but based on the actual amount of expenses in any Calendar Year the Training Budget for the next Calendar Year only might be increased by the amount of the under expenditure in the preceding year.



Except as otherwise provided herein, Training Budget costs and expenditures shall not be cost recoverable. Any under expenditure carried forward to the succeeding Calendar Year as provided for herein shall not be cost recoverable, however, any Training Budget expenditures in excess of one hundred thousand (100 000) US Dollars shall be cost recoverable by CONTRACTOR under the provisions of Article 7.



ARTICLE 17

LOCAL CONTRACTORS AND LOCALLY MANUFACTURED MATERIAL

17.1. Contractor or the Operating Company shall, as the case may be, consider the following:





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[signature][stamp][signature][signature]17.1.1. Give priority to local contractors and joint companies to carry out: oil services as long as their prices and performances comparable with international prices and performances for the type of work to be performed. The overrun for prices offered by joint companies for works that are to be performed should not be higher than 10%.

17.1.2. Give preference to locally manufactured materials equipment, machinery and consumables so long as their technical specifications, quality and time of delivery and service facilities (including service and spare parts supply) comparable to internationally available materials, equipment, machinery and consumables

However, such materials, equipment. machinery

and consumables may in any event be imported for operations conducted hereunder if the local price of such of such items at CONTRACTOR's or Operating

Company's operating base in the SAR is more than fifteen percent (15%) higher than the price of such imported items before Customs Duties, but after transportation and insurance costs have been added.



ARTICLE 18 LAWS AND REGULATIONS

18.1. CONTRACTOR shall pay to the GOVERNMENT a fee for occupancy the Development Area under the Contract, starting from the first year



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a) For the first year, the Area fee shall be only four hundred (400) United States dollars per km.



b) For the second and the following years the Area fee shall be only five hundred (500) United States dollars per Km2. When calculating the Area fee, the acreage comprised shall be rounded off to the nearest km2.





Area fees are paid to the public treasury of the State in advance for each year after the expiry of the Exploration Stage specified in the Contract, and as of the date of the day following the approval of the commercial discovery for the approved area. The Area fee is due for payment before the end of the current Calendar Year.

CONTRACTOR shall be responsible for calculating and duly payment of the Area Fee. Official receipts that prove the payment of these fees shall be delivered to the GPC, and these fees are of the non-recoverable expenses.





18.2. CONTRACTOR and Operating Company shall be subject to all laws and regulations of local application in force in the S.A.R. provided that CONTRACTOR and Operating Company shall not be subject to any laws, regulations or modifications thereof which are contrary to or inconsistent with the provisions of this Contract or with the purposes for which this contract is concluded.18.2.1 CONTRACTOR shall be subject to the laws in force in the S.A.R. and the administrative sub-divisions thereof which impose taxes, duties, levies and other financial charges on or measured by income or profits (hereinafter referred to as S.A.R. Income Taxes). For these purposes, any S.A.R. Income Taxes shall be assessed at the rates applicable on the Effective Date of this Contract. No taxes, fees, fines or other payments may decrease the cost recovery amounts and production share due to the CONTRACTOR in accordance with the terms of this contract.



Notwithstanding any provision of this Contract to the Contrary, CONTRACTOR shall be entitled to deduct for the purposes of S.A.R Income Taxes all its costs and expenses with respect to the Area and without regard to (40 %) per annum specified in Article 7.2 and (60 %) per annum specified in Article 8.4 hereof. To the extent that in a Tax Year Costs and expenses described in Article 7.2.1 to 7.2.4 inclusive exceed the value of all Petroleum accruing to CONTRACTOR for such Tax Year, the excess shall be carried forward for recovery in the next succeeding Tax Year or Years until fully recovered, but in no case after the termination of the Contract as to CONTRACTOR. GPC's share of Petroleum determined under Article 7 & 8 includes an amount equal in value to all of CONTRACTOR’S S.A.R. Income Taxes.



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[signature][signature][stamp][signature]18.2.2. CONTRACTOR shall deliver to GPC a copy o its tax returns at least thirty (30)Days prior to the official date of filing with the tax authorities or GPC's review. GPC will have twenty (20) Days to give comments to CONTRACTOR who should deliver these tax returns to the tax authorities.

18.2.3. GPC shall assume, pay and discharge on behalf o CONTRACTOR and shall indemnify CONTRACTOR against the imposition of all S.A.R. Income Taxes and any additional amounts payable under S.A.R. law (including penalties for reasons not caused by CONTRACTOR).

18.2.4.GPC shall deliver to CONTRACTOR the proper official receipts evidencing the payment of CONTRACTOR'S S.A.R. Income Taxes, within thirty (30) Days o payment of taxes. Such receipts shall be issued by the proper Tax Authorities and shall state the amount and other particulars customary for them. A copy of either the Collection Order or such other document(s) that will officially evidence the basis for payment shall be provided to CONTRACTOR by GPC when available to GPC.

18.2.5.In calculating its S.A.R.Income taxes,GPc shall be entitled to deduct the S.A.R.Income Taxes of CONTRACTOR paid by GPC on CONTRACTOR's behalf from its taxable income.

8.2.6.Each of the companies comprising CONTRACTOR shall be separately subject toS.A.R. Income Taxes with respect to the income derived by such company from Petroleum operations in the S.A.R. 18.3.1. Non-Syrian subcontractors, with whom CONTRACTOR entered into contracts shall be exempted from S.A.R. income taxes, duties, and Stamp Duty during the Exploration period(s) of this Contract. CONTRACTOR shall, in addition to the exemptions contained in Article 18.3.2 below, be exempted from duties and Stamp Duty during the Exploration periods of this Contract. 18.3.2. GPC and each company comprising CONTRACTOR shall be exempted from all taxes, except as provided in Article 18.2.1 for S.A.R. income taxes, with respect to the extracting, producing, exporting or transporting of Petroleum hereunder. Each company comprising CONTRACTOR shall also be exempted from any tax on capital, if any. CONTRACTOR and the shareholders of CONTRACTOR shall also be exempted from all taxes, fees and charges with respect to interest, dividends and other distributions paid to them in connection with activities under this Contract. Moreover, no tax fee or charge shall be payable by any company comprising CONTRACTOR with respect to interest, fees, charges or other payments made in connection with borrowings, services performed or property sold to CONTRACTOR outside the S.A.R., or for purposes of registration taxes, fees, or.. Block [numeral] Page 97 of 176 [signature] [stamp] [signature]charges, documents executed outside of the S.A.R. in connection with activities covered by this contract.

18.4 The rights of the GOVERNMENT and the right and obligations of GPC and CONTRACTOR under, and for the duration of this contract. shall be governed by and in accordance with the provisions of this Contract and additional agreements to it. and can only be altered or amended by the mutual agreement by the mutual agreement of the Parties.

18.5 The contractors and subcontractors of CONTRACTOR and Operating Company shall be subject to the provisions of this contract applicable to them. and they shall be also subject to all laws and regulation of local application and their amendments but without any disadvantage to the CONTRACTOR and/or the Operating Company or any prejudice to the provisions of this Contract or it purposes.

18.6 €the principles of national sovereignty and security of the S.A.R as established by laws.rules and regulaions of local application shall apply to the performance of the CONTRACTOR's operations in the S.A.R.

ARTICLE 19

RIGHT OF REQUISITION

19.1 In case of national emergency due to war or imminentexpectation of war or internal causes, the GOVERNMENT may requisition all or a part of Petroleum produced hereunder in the Area and requires GPC and CONTRACTOR to increase such production to the maximum possible level. The GOVERNMENT may also requisition the oil field itself and, if necessary, related facilities.



19.2. In all cases, such requisition shall not be effected except after inviting GPC and CONTRACTOR or their representatives by registered letter, with acknowledgment of receipt, to express their view with respect to such requisition.



19.3. The requisition of the production shall be effected by a Ministerial order. Any requisition of the oil field itself, or any related facilities, shall be effected by a Presidential Decree duty notified to GPC and CONTRACTOR.



19.4. In the event of any requisition as provided above, the GOVERNMENT shall indemnify GPC and CONTRACTOR in full, for the period during which the requisition is maintained, including:



19.4.l. all losses, costs and damages which result front such requisition.



19.4.2. full payment each Calendar Month for all Petroleum extracted by the GOVERNMENT including the cost recovery of the CONTRACTOR and shares of the Parties less the Royalty share



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[signature][stamp][signature][signature]

and contribution to the Abandonment Fund of such

Petroleum.



19.5 Payment hereunder shall be made to CONTRACTOR in US Dollars remitted abroad to a bank account nominated by CONTRACTOR (which shall be with a correspondent bank to a Syrian bank), not later than twenty (20) Days after delivery OF CONTRACTOR's invoice, or paid to the CONTRACTOR in another way. The price paid to CONTRACTOR for such Petroleum taken shall be calculated in accordance with Articles (7.6) and (8.3.1.2) as the case requires.



ARTICLE 20

ASSIGNMENT



20.1. Neither GPC nor CONTRACTOR may assign to a person, firm or corporation which is not a Party hereto, in whole or in part, any of its rights, privileges, duties er obligations under this Contract without the written and previous consent of the GOVERNMENT. However, either GPC or any company comprising CONTRACTOR shall be free without the written consent of the GOVERNMENT to assign its rights, privileges, duties and obligations under this Contract to each other or to an Affiliated Company which shall be as qualified as the assignor with respect to its technical and financial competences.



Block/Page/109 of20.2. In the event that GPC or any company comprising CONTRACTOR wishes to assign in whole or in part, any of its rights, privileges, duties or obligations hereunder as aforesaid, the written consent thereto of the GOVERNMENT. If required under this Article, shall not be unreasonably withheld. To enable Consideration to be given to any request for such consent, the following conditions must be fulfilled:



20.2.1. CONTRACTOR must not be in breach of any of its obligations deriving from this Contract as of the date such request is made.



20.2.2. The proposed assignee or assignees must produce reasonable evidence to the GOVERNMENT of its or of their financial and technical competence.



20.2.3. The document Of assignment must include provisions stating precisely that the assignee is bound by all covenants contained in this Contract and any modifications or additions in writing that up to such time may have been made. A draft of such document of assignment shall be submitted to the GOVERNMENT, for review and approval before being formally executed.



Block 1 101 176



[signature][stamp][signature][signature]20.3. Every executed authenticated and delivered document of assignment assigning any of the rights privileges, duties or obligations hereunder of GPC or

CONTRACTOR shall be submitted to the GOVERNMENT, within thirty (30) Days after the

GOVERNMENT approves the assignment, or should said approval not be required, within thirty (30) Days after execution of the instrument of assignment.



20.4 Any assignment made pursuant to the provisions of this Article shall be free of any transfer or other taxes, duties, charges or fees of any kind.



20.5. Any assignment pursuant to this article might be subject to the assignment bonuses as stated in

article 29 of this Contract, as the case may be.



20.6. Any sale or merger in regards of a company representing the CONTRACTOR under this Contract, shall be subject to the provisions of articte (20) hereof.



ARTICLE 21

BREACH OF AGREEMENT AND POWER TO CANCEL



21.1. Subject to Article 21.2 hereof,GOVERNMENT shall have the right to terminate this Contract by a Presidential Decree with respect to CONTRACTOR in the following instances:

20.1.1If the CONTRACTOR has knowingly submitted false statements to GOVERNMENT which had



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been of a significant material consideration for the execution of this Contract which is confirmed by a court decision that has come into effect and has been obtained in accordance with Article 23 of this Contract;



21.1.2. assigns any interest hereunder contrary to the provisions of Article 20 hereof;



21.1.3. if the sole company comprising CONTRACTOR is adjudicated bankrupt by a court of Competent jurisdiction;



21.1.4 if the CONTRACTOR does not comply with any final decision that has come into effect and was carried out in accordance with Article 23.1.1;



21.1.5. if the CONTRACTOR intentionally extracts any mineral other than Petroleum that is not authorized by this Contract or without the consent of the GOVERNMENT except such extraction as may be unavoidable as the result of operations conducted hereunder in accordance with accepted Petroleum industry practice and which the GOVERNMENT or its representatives shall be notified of as soon as possible; and



Such termination shall take place without prejudice to any rights of the CONTRACTOR under this Contract and in case of termination the CONTRACTOR shall have the right, to transport all of the private possessions out of the Area and receive compensation of expenses and/or a share of the product and any other payments or product in kind due to the



Block 1 Page 103 176



[signature][stamp][signature][signature]CONTRACTOR at the moment of Contract termination.



21.2. If the GOVERNMENT deems that a cause (other than a force majeure cause referred to in Article 22 hereunder) exists to terminate this Contract, the GOVERNMENT shall give the CONTRACTOR a written notice, to be personally served to the CONTRACTOR'S General Manager in, the legally official manner and receipt of which shall be acknowledged by him or by his representatives to remedy and remove such cause within ninety (90) days, unless the process of remedying the cause does not reasonably require a longer period of time.



21.3. If at the end of said ninety (90) Days notice period, such cause has not been eliminated or the situation remedied, this Contract may be terminated forthwith by a Presidential Decree as stated above. However, if this cause or failure to remedy the situation, ensues from carrying out of any work or withholding from carrying out of any work by the CONTRACTOR or any company comprising the CONTRACTOR, the termination of this Contract shall be applicable to that party only and not to the other parties to the Contract.



ARTICLE 22

FORCE MAJEURE

22.1. The non-performance or delay in performance by GPC and CONTRACTOR or either of them, of any obligation under this Contract shall be excused if and to



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[signature][stamp][signature][signature]the extent that such non-performance or delay is caused by force majeure. The period of any such non-performance or delay, together with such period as may be necessary for the restoration of any damage done during such delay, shall be added to the time given in the contract for the performance of such obligations dependent thereon and to the term of this Contract but only with respect to the part of the Area affected.



22.2 "Force Majeure" within the meaning of this Article means any factual circumstances that lead to inability of the CONTRACTOR and/or GPC to be able to meet the obligations under this Contract in a timely manner, including but not limited to Governmental orders, regulations or directions published in the form of a law or otherwise, or any acts of God, emergencies, accidents, insurrection, riot, war (whether declared or undeclared), strike and other labor disturbances, fires, floods, or any other causes, provided that any such cause is beyond the reasonable control of GPC or CONTRACTOR.

Confirmations of such circumstances might include official reports, orders and regulations or the GOVERNMENT and SAR authorities, as well as reports and materials of registered mass media.22.3 Without prejudice to the above and except as may be otherwise provided for herein, the GOVERNMENT shall incur no responsibility whatsoever to GPC and CONTRACTOR or either of them for any damages, restrictions or loss arising in consequence of such case of force majeure, except a force majeure caused by order regulation or direction of the GOVERNMENT whether published in the form of a law or otherwise.

22.4 If the force majeure even occurs during the Initial Exploration Period or any extension thereof and continues in effect for a period of one (1) Year, CONTRACTOR shall have the option upon ninety (90) Days prior written notice to GPC to terminate its obligations hereunder, without further liability of any kind, and if the Guarantee contained in Annex /5/ hereto is still in force, it shall be automatically cancelled as of the date of receipt of the notice by GPC and GPC shall notify the Bank to release said Guarantee as of that date.

22.5 Subject to Article 22.4 above if notice of an event of Force Majeure is given under this Article 22, the Letter of Guarantee contained in Annex /5/ hereto shall not be called off during such period of Force Majeure and CONTRACTOR shall extend theTerm of the Letter of Guarantee to cover the additional time.



ARTICLE 23 DISPUTES AND ARBITRATION



23.1. The parties base their relations with respect to this Contract on the principles of goodwill and good faith. Taking into account their different nationalities, this Contract shall for the purpose of arbitration be given effect and be interpreted and applied in conformity with the principles of law normally recognized by civilized nations in general including those which have been applied by the international Tribunals.



23.1.1. Any dispute, controversy of claim arising between GOVERNMENT and CONTRACTOR or Operating Company with respect to the interpretation or application of or performance under this Contract, if not resolved amicably, shall be referred to the jurisdiction of the appropriate S.A.R. courts.



Any other dispute between CONTRACTOR and GPC (other than with the GOVERNMENT) shall be resolved, if not resolved amicably, in accordance with the international arbitration standards and practices in internal SAR arbitration Tribunal and conducted in accordance with UNCITRAL Rules.



23.1.2. Expect to those matters which are expressly agreed hereunder to be settled by an expert, any dispute, controversy or claim arising between CONTRACTOR and GPC related to interpretation or execution of this Contract (hereinafter referred to as "Dispute") between the CONTRACTOR, and/or GPC and/or the Operating Company, the party initiating such Dispute shall notify the other Parties to the Dispute.



23.1.3 Any dispute, controversy or claim being resolved in accordance with Article 23.12 of this Contract shall be definitively settled in arbitration by three (3) arbitrators. Decision by arbitration shall be final for the Parties. The language of the arbitration shall be English.



23.1.4. The arbitration shall be initiated by one of the Parties by giving notice to the other Parties that it elects to refer the Dispute to arbitration and that such Party (hereinafter referred to as the First Party) has chosen an arbitrator and reserve arbitrator (if applicable) who shall be identified in said notice. Then the Second Party within thirty (30) days from receiving notice shall notify the First Party in writing, identifying the second arbitrator and reserve arbitrator(if applicable) that it has selected.



23.1.5. If the Second Party does not appoint its

arbitrator as aforesaid, the First Party shall

have the right to apply to the civil Court of

Appeal in the city of Damascus to appoint a

second arbitrator.



23.1.6. The two arbitrators shall, with in thirty (30)

Days, elect a third arbitrator. Failing this,

the third arbitrator shall be assigned by the

civil Court of Appeal in the city of Damascus

, at the request of either party.



23.1.6. The third arbitrator must preferably be a

citizen of a country, other than the SYRIAN

ARAB REPUBLIC, or the country of incorporation

of any company comprising CONTRACTOR but must

be a citizen of a country which has diplomatic

relations with the SYRIAN ARAB REPUBLIC and

the countries of incorporation of each company

comprising CONTRACTOR, and shall have no

economic interesting in the petroleum business

of either the SYRIAN ARAB REPUBLIC, or the

Parties hereto their successors or their

assigns.



23.1.8. The Parties shall extend to the arbitration panel all facilities







Page 109 of 176 (including access to the Petroleum operations), to obtain any information requested for the proper determination requested for the proper determination of the dispute. The absence or default of any Party to the arbitration shall not be permitted to prevent or hinder the arbitration procedure in any or all of its stages.



23.1.9. During the arbitration period and pending the decision the operations or activities which have given rise to the arbitration need not be discontinued. In the event the decision recognizes that the complaint was justified, provision may be made therein for such reparation as may appropriately be made in favor of the complainant.



23.1.10. The Parties to the arbitral dispute agree that for matters submitted to arbitration, the decision, determination or award of the tribunal will be the sole and exclusive remedy between them regarding any and all claims and counterclaim presented to the tribunal0. Judgment on the award rendered may be entered in any court having jurisdiction or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.



23.1.11 The Parties to the arbitral dispute desire that, wherever appropriate, decisions and awards shall specify a time for compliance therewith.

23.1.12. The provisions of this Contract relating to arbitration shall continue in force notwithstanding the termination of this Contract or it being deemed void.



ARTICLE 24

LEGAL STATUS OF PARTIES



24.1 The right, duties, obligations and liabilities in respect of GPC and CONTRACTOR hereunder shall be several and not joint or collective, it being understood that this Contract shall not be construed as constituting an association, corporation, or partnership.



24.2 Each company comprising CONTRACTOR shall be subject to the laws of the incorporation, regarding its legal status or creation, organization, charter and by-laws, share holdings and ownership. The shares of capital of each company comprising CONTRACTOR, which are entirely held outside the S.A.R. shall not be offeredfor public subscription in the S.A.R.



24.3 All companies comprising CONTRACTOR shall be jointly

and separately performing the CONTRACTOR's obligations under this Contract.



Article 25 General



25.1 Notwithstanding any provision to the contrary the GOVERNMENT shall have the right to pre-empt all or part of the Petroleum to which GPC and CONTRACTOR are entitled. In

this case the GOVERNMENT shall pay to GPC and CONTRACTOR in full for the period during which preemption is exercised each Calendar Month to GPC and CONTRACTOR the value of all preempted Petroleum.



In such case an agreement will be concluded between GOVERNMENT. GPC and CONTRACTOR determining the procedure for estimating the cost of the preempted Petroleum that the CONTRACTOR is entitled to.



Payment shall be made on a monthly basis to CONTRACTOR in US Dollars remitted abroad not later than twenty (20) Days after delivery of CONTRACTOR's invoice. The price paid to CONTRACTOR for such preempted Petroleum shall be calculated in accordance with Article 7.6 or 8 hereof.25.2 The headings or titles to each of the Articles to this Contract are solely for convenience of the Parties hereto and shall not be used with respect to the interpretation or construction of said Articles.

25.3 If any accumulation of Petroleum extends beyond the Area into one or more adjacent areas held by GPC or CONTRACTOR or one or more parties to this Contract, or is otherwise "open acreage" the parties concerned shall meet and endeavor to agree on the most efficient method of, under the supervision of GPC, appraising the accumulation and on possible joint development, production storage, and if appropriate, transportation of Petroleum from such accumulation and on the manner in which the costs and proceeds deriving therefrom shall be equitably apportioned. Any agreement entered into between such parties shall be subject to the approval of the Minister.

25.4 In the cases when in this Contract, its Annexes and additional agreements to it the prices are stated in US Dollars, the Parties agree that such prices shall also mean prices in Euros or other convertible currencies, to which the Parties must agree in advance.

25.5 Any payments due to be made in Euro may be made by the CONTRACTOR in US Dollars according to the exchange rate on the day of such payment.256. CONTRACTOR shall not commence the operations within the area until sufficient measures are taken to ensure safety of the area and the results of such measures are recognized in the minutes of a joint meeting between GPC And CONTRACTOR



275. CONTRACTOR, to fulfill the obligations under this contract has the right to engage third parties to provide maintenance of security across the entire territory of the area. CONTRACTOR AND GPC Shall determine their respective obligations towards other parties operating within the teritary.

In accordance with agreed procedures CONTRACTOR and GPC Shall determine a third party that will be providing services of security maintenance approximate amount of such services and approximate amount of such services and approximate cost of the contract to be signed between the COONTRACTOR and the chosen third party. the CONTRACTOR'S expenses on security maintenance shall be recovered in full according to the cost recovery procedure in this contract unless otherwise agreed by CONTRACTOR And GPC.



25.8 turning the rights granted to the CONTRACTOR and / or operator under this contract shall not limit the ability of the GOVERNMENT to grant rights to parties other than the Contractor and / or the operator to carry out activities related to natural resources or any activities other than petroleumrelated activities, provided they do not affect the ongoing activities or existing facilities, and the same is for the scientific research. At the same time, any operations in the Area, the rights to which might be granted according to this article, shall only be performed with an obligatory preliminary notification of the CONTRACTOR, including the type of such operations, their area and duration. GOVERNMENT and GPC shall notify any and all third parties that might in future obtain permits and Licenses for works, studies and other activities in the Area and adjacent territories. 25.9. Boats and ships used or involved in the events and activities of the Contract belonging to the Operator should adhere to the relevant international and Syrian applicable laws and regulations. 25.10. The activities of the Contract must be executed in a rational manner under applicable laws, and they shouldn't impede the operations and activities carried out or prevent activities in an unjustified manner such as boats or other ships navigation, or fishing or aviation or other legal activities, and they shouldn't represent a danger or cause damage to installations or pressure of pipes or cables or equipment in the bottom of the sea or those which are used for purposes other than the activities of the Contract.

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[signature] [signature][stamp] [signature]25.11. During the planning and implementation of activities of the Contract all reasonable precaution procedures, must be taken to prevent damage to properties and the marine fauna and flora, and previously determined objects of cultural and historical value placed under the GOVERNMENT's protection, and the same procedures shall be applied in regards to avoid pollution and the dumping of waste at sea (water or sediments in the bottom) or in the air or on land.



25.1.2, CONTRACTOR and CPC shall, depending on the status and type of ingoing operations, independently determine the requirements to the contents, as well as to the preparation and approval procedure for work programs, reports on operations and studies, as well as the procedures for preparation and approval of other kinds of technical, financial and legal documents in case that becomes necessary.



ARTICLE 26

TITLE TO ASSETS



26.1. GPC shall become the owner of all assets purchased and Owned by CONTRACTOR in connection with the operations carried out by CONTRACTOR or Operating Company for and on behalf of GPC and CONTRACTOR in accordance with the following:



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[signature][stamp][signature][signature]Land shall become the property of GPC as soon as it is purchased. The cost of this land will be recovered by the CONTRACTOR in accordance with Article 7 of this Contract.

Title to other fixed and moveable assets shall be transferred automatically and gradually from CONTRACTOR to GPC, as their cost become subject to recovery in accordance with the provision of Articles 7 and 8. However, the full title to each fixed and moveable asset shall be transferred automatically from CONTRACTOR to GPC only at the end of the Year when their total cost has been recovered by CONTRACTOR in accordance with the provisions of Article 7, or at the time of termination of this Contract, Whichever first occurs.



The Book value of the assets created during each Calendar Quarter shall be communicated by CONTRACTOR to GPC or by Operating Company to GPC and CONTRACTOR with thirty (30) Days of the end of each Calendar Quarter.



During the term of this Contract and any extension period thereof CONTRACTOR and Operating company are entitled to the full use in the Contract Area, or any other area of all fixed and moveable assets, CONTRACTOR and Operating Company should notify GPC of such use of the assets. ARTICLE 27

PIPELINES AND FACILITIES





27.1. During the term of this Contract and any extension period thereof CONTRACTOR and Operating Company shall be entitled, for the purpose of transporting Petroleum from any Development Area o the Delivery Point to make use of spare capacity of any Production facility, pipeline or terminal which is at the disposal of GPC any other such facilities, pipelines or terminals which are at the disposal of the Ministry of Petroleum and Mineral Resources or the companies supervised by said Ministry or GPC and not firmly committed for other Petroleum operations.





The GOVERNMENT and GPC provide the CONTRACTOR with the capacities sufficient for transporting, storing, processing and performing other operation with produced Petroleum, if it is financially feasible.





27.2. If CONTRACTOR wishes that use shall be made of pipelines, facilities or terminal capacity which are at the disposal of the GPC, such use will be maintained on the basis of the minimal tariffs set for the government companies and agencies that in any case can not be above the market prices. The use of third party pipelines, facilities or terminal capacity by CONTRACTOR shall be on fair



commercial terms, including tariff.If reasonable commercial terms cannot be mutually agreed between all concerned parties, the issue shall be referred to an expert. 27.3. Any payment made by CONTRACTOR for the use of pipelines facilities or terminal capacity shall be recoverable as Operating Expenses under Article 7.2. 27.4. CONTRACTOR and Operating Company may continue using those operating facilities they have constructed or that which are under construction for the purpose of this Contract in areas that CONTRACTOR may have relinquished or that may be

outside a Development Area. CONTRACTOR or Operating Company may also construct and operate any facility required for the operations hereunder, including pipelines, inside or outside the Area. The costs incurred in this regard shall be recoverable in accordance with the general rules of this Contract. GOVERNMENT and GPC shall

be obliged to provide the rights to dispose of the land required by the CONTRACTOR and/or the Operating Company for the establishment of such facilities free of charge, or to compensate the expenses related to obtaining such rights.

[signature] [signature][stamp] [signature]27.5 In case any surplus production capacities are determined during the Exploration and Development stages in the form of facilities and facilities previously established by the Operating Company and used for operations in the Area but not currently required or operated, the GPC can use such these production capacities if necessary.

In this case, GPC and the CONTRACTOR together determine the necessary arrangement for the use of these facilities. Only GPC assumed the costs associated with its use.

To avoid any confusion, at the first request of the Operating Company the facilities that had previously been deemed as not currently required or as surplus production capacities, including any equipment and infrastructure should be promptly returned by GPC to the Operating Company to conduct activities under this Contract. The Operating Company shall not bear any expenses related to the transfer of such capacities to GPC or to their return.

Article 28

Additional Rights

28.1 After termination of Exploration phase and during the Development phase under this Contract, if available data indicated a Petroleum possibility in a strata other than those in production according to the previous commercial discovery and inside the Development Area, the CONTRACTOR may explore and develop such aformations upon notifying the GOVERNMENT. An agreement annexed to the Contract should be signed by GOVERNMENT, GPC and CONTRACTOR defining provisions and conditions of Exploration, Development, and Production of Petroleum from strata or stratum. ARTICLE 29 BONUSES CONTRACTOR shall pay to GPC the following bonuses according to this contract: 29.1. Technical Assistance: 29.1.1. CONTRACTOR shall pay to GPC a total amount of two (2) million US Dollars to support and develop centers of scientific studies and researches, and to establish and invest laboratories and training centers undertaken by GPC. 29.1.2. The amount is to be paid in 4 (four) separate payments with the first payment of 0.5 (zero point five) million US Dollars paid during the first year following the Effective Date of the Contract and the three remaining payments of 0.5 (zero point five) million US Dollars paid during the 3 (three) Calendar Years following the year when the Initial Commercial Production begins. GPC will provide the CONTRACTOR with the payment's method and update such method and payment Block [numeral] Page 121 of 176 [signature] [stamp] [signature]Schedule after the Initial Commercial Production date.

29.2 Production Bonuses

29.2.1. Gas Production Bonuses

CONTRACTOR shall pay to GPC a one-time bonus when the following conditions are met for the first time:

-(2)three million us dollars within thirty (30)Days after the cumulative BOE'S production reaches two hundred and fifty (250) MMBOL.

-(5)five million US Dollars within thirty (30) days after the cumulative BOE's Days after the cumulative BOE's production reaches four hundred(400)MMBOE.

29.3Assignment Bonus:

CONTRACTOR shall pay to GPC upon the GOVERNMENT's approval date of each assignment and upon GPD notification to the Contractor the following Assignment Bonuses:

29.31. The Assignment Bonus is case of an assignment to a nonaffiliated company:

29.3.1.1 During Exploration Phase shall be (10%) of The Performance Guarantee or (10%)of the accumulated expenditures paid by the CONTRACTOR upon the date of the GOVERNMENT approval for this assignment.whichever is higher, multiplied by the assigned percentage.29.3.1.2. During Development Phase, it shall be two percent (2%) of the financial value paid by the assignee to the assignor, but no more than three (3) million US Dollars. 29.3.2. The Assignment Bonus in case of an assignment to an affiliated company(ies) of the CONTRACTOR or of any company of those comprising the CONTRACTOR shall be the sum of two hundred thousand (200000) US Dollars. 29.4. Merger Bonus In case the CONTRACTOR, shall merge with another company, CONTRACTOR shall pay to GPC a merger bonus of an amount of one and a half (1.5) million US Dollars. 29.5. None of the bonuses in this article shall be cost recoverable. ARTICLE 30 ABANDONMENT AND PRE-EXISTING ASSETS 30.1. CONTRACTOR shall establish a trust fund to be used to abandon any facilities or assets constructed under this Contract ("Abandonment Fund") and shall make payments of the proceeds of sale of (0,3 %) zero point three percent of Petroleum produced and saved in the Area net of Royalty into said trust fund. The costs of setting up and administering the trust shall be included in such zero point three percent. Contributions to the trust fund shall cease when the trust fund reaches an amount

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[signature] [stamp][signature] [signature]





agreed by GPC and CONTRACTOR



30.2. In the event of agreement to cease contributions to the Abandonment Fund, production sharing of Petroleum produced saved and delivered from the Contract Area shall continue according to Articles 7 and 8 of the Contract.



30.3. The GPC and CONTRACTOR shall only be required to contribute to the Abandonment Fund after the first Date of Commercial Discovery.



30.4. GPC and CONTRACTOR shall jointly appoint the trustee and shall specify the terms of the trust under which the Abandonment Fund shall be held and used.



30.5. The trustee shall be an organisation with both experience of acting in such capacity as trustee of abandonment funds in the international oil and gas business and a long term credit rating reasonably acceptable to GPC and CONTRACTOR and shall have no direct or indirect material interest in or with GPC or CONTRACTOR or any of their respective Affiliates.



30.6. The terms of the trust deed upon which the Abandonment Fund is held shall contain such provisions as are usual and customary in abandonment trust deeds commonly used in the international oil and gas business.



30.7. The trust deed shall contain provisions to the effect that during the Second Period the Operating Company shall effect any abandonment and GPC and



CONTRACTOR shall discuss and agree in good faith any changes in contributions to the Abandonment fund which may be necessary during such period to ensure that abandonment shall be carried out in accordance with Good Petroleum Practice, Costs incurred in respect of abandonment operations conducted during the Initial Period shall be accrued and then reimbursed to CONTRACTOR from the Abandonment Fund.



30.8. In the event that all abandonment required to comply with Good Petroleum Practice and CONTRACTOR'S ethical business principles as a prudent and responsible international oil and gas operator is completed and any surplus remains in the fund, subject to the terms of the trust such remaining funds shall become to the property of GPC.



30.9. If GPC should so request, CONTRACTOR. At the termination of the Contract, shall hand over to GPC. all of the wells together with all the related pipes, equipment and facilities acquired or constructed by CONTRACTOR for operations. On completion of the hand over CONTRACTOR shall be released and discharged from any responsibility or liability for abandonment of such wells and decommissioning of such pipes, equipment and facilities. GPC shall be responsible for, and



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CONTRACTOR shall have no liability for any environment issues including but not limited to Environment Impact Assessments, site restoration and decommission all rciated pipes. equipment and facilities in such Development Area and on termination of the Contract.GPC shall have the full use of the proceeds in the Abandonment fund for such usage.

30.10 The Operator will apply Good petroleum practice in the abandonment process of well(s) where it is technically and commercially demonstrated that the petroleum reservoirs are depleted (this is subject to the agreement of both GPC and CONTRACTOR). The Operator shall have access to the Abandonment Fund for this purpose.

ARTICLE 31

ARABIC,RUSSIAN AND ENGLISH TEXT

31.1 The Arabic version of this contract shall, before the courts of the S.A.R., be referred to in construing or interpreting thid Contract ; in case, however, of any arbitration pursuant to Article 23 hereof and for day-to-day administration and other general purposes between GPC and CONTRACTOR. the Arabic. Russuian and English versionsshall each be used to construe or interpret the Contract and shall have equal weight and validity.



ARTICLE 32

APPROVAL OF THE GOVERNMENT

32.1 This Contract shall not be binding upon any of the Parties hereto unless and until a Legislative Text is published in the Official Gazette of the S.A.R. approving and ratifying the Contract and giving it full force and effect of law notwithstanding any countervailing governmental enactment in the S,A.R.



32.2. In witness whereof this Contract has been duly signed by the respective Parties hereto on the date set out above.



GOVERNMENT OF THE SYRtAN ARAB REPUBLIC



By

Minister of Petroleum & Mineral Resources



GENERAL PETROLEUM CORPORATION



By: General Manager



"KAPITAL" LIMITED LIABILITY COMPANY

By: Authorized Representative

Igor Viktorovich Hodyrev



[stamp][stamp][stamp][signature][signature][signature]



Block 1 Page 27 176 ANNEX 1

DESCRIPTION OF THE AREA



Ofthore Block # l is located in the southern part of the territorial waters and of the exclusive economic zone of the Syrian Arab Republic in the Mediterranean Sea near the shores of the Tartous province, with the southern border of the block matching the Syrian southern sea border. The eastern border of the block is approximately 5 kilometers away from the coast line. Total Area covered by the Contract is 2250 km.

The Area is mapped in Annex 2 and recognized within the contour connecting locations with the following coordinates:



Block 1 Total Area

Point No Easting Northing

1 685660 3870

2 730350 3870480

3 730350 3861020

4 758680 3861020

5 766090 3837290

6 685230 3837290



The area in which the CONTRACTOR is entitled to prospecting and exploration is for the whole sedimentary section.

The CONTRACTOR is entitled to prospecting and exploration in the whole sedimentary section without any restriction or exceptions.

The CONTRACTOR shall abide by any international agreements entered into by the GOVERNMENT and the Lebanese Republic regarding the coordinates of the southern border of the block.ANNEX 2[map]



Block Area = 2250 km2



point no | X | Y

1 | 885660 | 3870480

2 | 730350 | 3870480

3 | 730350 | 3861020

4 | 758680 | 3861020

5 | 766090 | 3837290

6 | 686230 | 3837290





[stamp]

ANNEX 3

OPERATING COMPANY

CHARTER

Article 1

A joint stock company having the nationality of the SYRIAN ARAB REPUBLIC shall be formed with the authorisation of GOVERNMENT in accordance with the provisions of the Contract referred to below and of this Charter.

The company shall be subject to all laws and regulations in force in the S.A.R. to the extent that such laws and regulations are not inconsistent with the provisions of the Charter and the Contract.

Article 2

The name of the Company is "Arwad" Petroleum Company, abbreviated as (Arwad PC), and hereinafter referred to as "Operating Company".

Article 3

The Head Office of Operating Company shall me in Damascus. Operating Company might open and close additional offices, branches and subdivisions in other locations.

Article 4

The object of Operating Company is to act for and on behalf of the GENERAL PETROLEUM CORPORATION on the one hand, and CONTRACTOR on the other, carrying out and conducting the Development operations required in accordance with the provisions of the Contract signed on 26.04.2020 (hereinafter called "Contract") by and between the SYRIAN ARAB REPUBLIC, the GENERAL PETROLEUM CORPORATION ("GPC"), and CONTRACTOR, coveringPetroleum operations in the Area described therein. Words used in this Charter shall have the same meaning as ascribed thereto in the Contract.



Operating Company shall also act for and on behalf of CONTRACTOR in carrying out and conducting Exploration operations after the first Date of Commercial Discovery pursuant to the Work Program and Budget of CONTRACTOR, approved in accordance with the Contract. Operating Company shall keep account of all costs, expenses and expenditures for such operations under the terms of the Contract and Annex 4 thereto. Operating Company shall not engage in any business or undertake any activity beyond those conducted for and on behalf of CONTRACTOR and/ or GPC, unless otherwise agreed by GPC and CONTRACTOR.



Operating Company shall, in view of the differing nationalities of its stockholders, record its business operations (and conduct its routine business correspondence where appropriate) in Russian, Arabic and English languages.



Operating Company shall be organised, staffed and managed in accordance with internationally recognised standards in the oil industry.



At the time that Operating Company is formed, CONTRACTOR and CPC shall agree its organisational structure and those managerial and senior staff positions to which each shall have the right to assign its staff. Operating Company may request CONTRACTOR and GPC to assign to it additional expert staff as it may require.



Block 1 Page 132 176



[signature][stamp][signature][signature]Article 5

The authorized capital of Operating Company is 200 000 Syrian Pounds divided into 4 000 shares of common stock with a value of 50 Syrian Pounds per share having equal voting rights, fully paid up and non-assessable. GPC and CONTRACTOR shall each pay for, hold and own throughout the life of Operating Company referred to above one half (1/2) of the capital stock of Operating Company.

No Party may relinquish all or part of Operating Company's shares except if either Party assigns under Article 20 of the Contract all or any of its rights and interests arising from the Contract. In this event, the assigning Party and its successors shall assign a share of its capital stock of the Operating Company equal to the assigned percentage of its rights and interests arising from the Contract.

Article 6

Operating Company shall not own any right, title, interest or estate in or under the Contract or in any of the Petroleum produced from any Development Area thereunder or in any of the assets, equipment or other property obtained or used in connection therewith, and shall not be obligated as a principal for the financing or performance of any of the duties or obligations of either GPC or CONTRACTOR under the Contract. Operating Company shall not make any profit from any source whatsoever.Costs, expenses and expenditures incurred by Operating Company are recoverable by the CONTRACTOR in accordance with the Article 7 of the Contract.

Article 7

Subject to Article 4 hereof Operating Company shall act for and on behalf of GPC and CONTRACTOR. Whenever it is indicted herein that Operating Company shall decide, take action or make a proposal and the like, it is understood that such decision or judgement had been made by CONTRACTOR or by GPC and Contractor, as may be required by the contract and Operating Company is merely implementing such direction.

Article 8

Operating Company shall have a Board of Directors comprising six (6) members. three(3) of whom shall be designated by GPC and the other three designated by GPC and the other three (3) by CONTRACTOR.The chairman shall be designated by GPC and shall also be a Managing Director.Contractor shall designate the General Manager who shall also be managing Director.

The management shall have such authority as is required to conduct petroleum operations in accordance with internationally recognised standards and with good oil field practice

Article 9

Meetings of the Board of Directors shall be valid if a majority of the Directors is present and anydecision taken at such meeting must have the affirmative vote of four (4) or more of the Directors provided that any Director may be represented by a substitute according to provisions of the By-Laws.



Article 10

General Meetings of the shareholders shall be valid if a majority of the capital stock of Operating Company is represented thereat. Any decisions taken at such meetings must have the affirmative vote of shareholders owning or representing a majority of the capital stock.



Article 11

The Board of Directors shall approve the regulations covering the terms and conditions of employment of the personnel of Operating Company employed directly by Operating Company and not assigned thereto by CONTRACTOR and GPC.



The Board of Directors shall in due course, draw up the By-Laws of Operating Company which shall be in accordance with the Contract and this Charter, taking into consideration what stated in Articles 16.3 and 16.3.1, and such By-Laws shall be effective upon being approved by a General Meeting of the shareholders, in accordance with the provisions of Article 10 hereof, No provision in the By-Laws may contradict or Conflict with the provisions of this Charter.



The salaries and qualities of staff assigned to Operating Company by CONTRACTOR shall be determined by CONTRACTOR.





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[signature][stamp][signature][signature]and of staff assigned by GPC by

GPC.



Article 12

Operating Company shall come into existence within thirty (30) Days after the first date of Commercial Discovery as provided for in Article 6 of the Contract.

The Operating Company shall continue in existence for a period equal to the remaining duration of the Contract.

Operating Company shall be wound up and liquidated if the Contract is terminated for any reason as provided for therein.

GENERAL PETROLEUM CORPORATION BY: General Manager



"CAPITAL"

LIMITED LIABILITY

COMPANY



By: _________________________

_________________________________ANNEX 4 ACCOUNTING PROCEDURE Article 1 General provisions 1.1. Definitions: 1.1.1. The definitions contained in Article of the Contract shall apply to this Accounting Procedure and have the same meaning. 1.1.2. "Non-Operator" means the Parties to the Contract other than Operator and GOVERNMENT. 1.1.3. “LIBOR" means the thirty Day rate for US Dollar deposits as published by DOW JONES Telerate on behalf of the British Bankers Association for offer to prime banks in the London Interbank Market at 11:00 a.m. London time. If such rate does not appear on Telerate for a period of seven consecutive business Days, then the rate published by the Financial Times, London, shall be applied. 1.2. Statement of Activities: 1.2.1. CONTRACTOR shall pursuant to Article 4 of the Contract render to GPC within sixty (60) Days of the end of each Calendar Quarter a statement of Exploration activity reflecting all charges and credits related to the Exploration operations for that Calendar Quarter summarised by appropriate classifications, indicative of the nature thereof. 1.2.2. Operating Company shall render to GPC and

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CONTRACTOR within thirty (30) Days of the end of each Calendar Quarter a statement of Exploration activity reflecting charges and credits for Exploration operations for that Calendar Quarter, similarly summarised as for CONTRACTOR's Exploration activity statement.

1.2.3 Operating Company shall render to GPC and CONTRACTOR within thirty (30) Days of the end of each Calendar Quarter a statement of Development activity reflecting all charges and credits related to the Development operations for the Calendar Quarter summarised by appropriate classifications indicative of the nature thereof. This statement should be supported by a detailed list reflecting all debit and credit transactions. The form of the statement shall be subject to approval by GPC and CONTRACTOR.



1.3 Adjustments and Audits

1.3.1 Subject to Article 6 of this Annex 4, each cost item in a statement of Exploration activity rendered by CONTRACTOR shall be conclusively deemed to be an Approved Cost after three (3) Months following the receipt of that statement by GPC unless within the said three (3) Months GPC takes written exception thereto pursuant to Article 4.7 of the Contract. During the said three (3) Months period, supporting documents will be available for inspection by GPC during all normal working hours.Should written exceptions occur, as per Article 4.7 of the Contract, GPC and CONTRACTOR shall confer with each other in a timely manner and attempt to reach a settlement.



Subject to Article 6 of this Annex 4. all

statements of Exploration and Development activity rendered by Operating Company for any Calendar Quarter shall conclusively be deemed to be sound and correct three (3) Months following the receipt of that

statement unless GPC or CONTRACTOR objects thereto in

writing during the said three (3) Months on the

grounds set out in Article 4.7 of the Contract. During

this period GPC or CONTRACTOR or both of them shall

have the right to audit Operating Company accounts

,records and supporting documents for such Calendar Quarter in accordance with generally accepted accounting principles of the international oil industry.



Should written exceptions occur, GPC and CONTRACTOR shall confer with Operating Company in a timely manner and attempt to reach a settlement.





If within the time limit of three (3) Months period provided in Article 1,3.2 of this Annex 4. GPC or CONTRACTOR has not advised Operating Company of its objection on the grounds set out an Article 4.7 of the Contract to any cost item of any statement, such statement shall be considered as appeared 1.3.4. If CONTRACTOR, GPC and/or Operating Company fail to reach a setlement under Article 1.3.1 or 1.3.2 of this Annex 4 on any issue, the issue shall be referred to an Expert appointed by mutual consent, such Expert being an internationally recognised firm of accountants/auditors, whose opinion shall be binding upon the parties. 1.3.5. Pending completion of each audit CONTRACTOR shall be entitled to include all costs presented in each statement of Exploration, Development and Production operations (as provided by CONTRACTOR or

Operating Company for each Calendar Quarter) in the statement of recovery of costs for Gas and of Cost Recovery Crude Oil for that Calendar Quarter. All necessary adjustments that are consequent upon completion of audits and settlements (by whatever means) of audit exceptions shall be accounted for as they arise, and in accordance with the Contract, by their inclusion as debit or credit (as appropriate) in the next statement of recovery of costs of Gas and of Cost Recovery Crude Oil to be prepared; however, no costs which GPC and CONTRACTOR agree to exclude shall be included in any such statement. 1.3.6. For the avoidance of doubt, any cost that GPC and CONTRACTOR agree to approve or to reject shall not

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again be subject to audit under this Contract.



1.3.7. If after adjustment, it appears that some costs have been wrongly recovered by CONTRACTOR, such costs will be deducted from future invoices on a percentage basis agreed by CONTRACTOR and GPC (which percentage shall not, in any event, exceed ten percent (10%) of the value of a single invoice) until they are completely repaid without any accrued interest.



1.4. Currency Exchange

CONTRACTORS accounting records and Operating Company's accounting records Shall be kept in the S.A.R. in US. Dollars. All US. Dollar expenditures shall be entered in the same currency spent. Syrian Pounds expenditures shall be translated to US Dollars at the same rate as effective under Article 6.4 of the Contract, and all other non-US Dollars expenditure shall be translated to US. Dollars at the buying rate of exchange to such currency as quoted by Bank (to be agreed on by GPC and the CONTRACTOR) at the close of business on the first Working Day of the Calendar Month in which expenditures are recorded in the CONTRACTOR's or Operating Company’s accounting records. A record shall be kept of the exchange rate used in translating Syrian Pound or other non-US Dollars expenditures to US Dollars.



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[signature][stamp][signature][signature]1.5. Precedence of Documents

in the event of any inconsistency or conflict between the provisions of this Accounting Procedure and the provisions of the Contract. then the provisions of the contract shall prevail.



1.6. Revision of Accounting Procedure

By mutual agreement between GPC and CONTRACTOR this Accounting Procedure may be revised from time to time in the light of future arrangements or requirements.



1.7. No Charge for Interest on Investment

Interest on investment shall not at any time, be charged as a recoverable cost under the Contract.



Article 2 Costs, Expenses and Expenditures



2.1. Subject to the provisions of the Contract, CONTRACTOR shall alone bear and directly or through Operating Company, pay the following costs and expenses, which costs and expenses shall be, classified and treated in accordance with Article 7-8 of the Contract.



2.1.1. Surface Rights

All direct cost attributable to the acquisition, extension or relinquishment of surface right acquired and maintained in force for the Area.



2.1.2. Labour

2.1.2.1 CONTRACTOR's Expatriate staff2.1.2.11 CONTRACTOR'S Expatriate staff other than 2.1.2.1.2 below..

The salaries and benefits of CONTRACTOR'S expatriate staff working For CONTRACTOR or assigned to Operating Company, other than under 2.1.2.1.2 below, shall be cost recoverable as follows:

Contractual Salary "at cost" basis . plus;

• A percentage of the Contractual Salary in S.A.R. (to be agreed GPC and CONTRACTOR) deemed to cover the costs, allowances and benefits attached to the assignment in S.A.R. Such percentage shall be reviewed from time to time by GPC and CONTRACTOR. After such review, if GPC and CONTRACTOR mutually agree to amend the agreed percentage, then such new percentage shall become effective from the date when such request was made in writing, plus:

• Income tax due in Syria,

2.1.2.1.2 CONTRACTOR's Expatriate Field-Based Staff (Rotating Staff)

The salaries and benefits of CONTRACTOR's expatriate staff working for CONTRACTOR or assigned to Operating Company, who are field based (Rotating Staff) shall be cost recoverable as follows:

Contractual Salary “at cost" basis, plus:



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Income tax due in Syria plus: Travel Costs (which include an air ticket, hotel accommodation, meals, and local travel expenses in base country between the airport and home) plus: Education Assistance (children), plus: Pension Fund (CONTRACTOR share), plus: Medical Insurance (CONTRACTOR share), plus: Base Country Social Insurance and Social Security (CONTRACTOR shares), plus: Performance Bonus, plus: Miscellaneous (which includes work clothing allowance, and visa costs). 2.1.2.1.3 The level of Contractual Salary, benefits and other allowances of CONTRACTOR's expatriate staff determined by CONTRACTOR will be cosistent with policies and practices generally applicable to CONTRACTOR's-international expatriate staff seconded to CONTRACTOR's Affiliated Companies. 2.1.2.2. All staff other than staff provided for under 2.1.2.1 above. 2.1.2.2.1 The salaries and wages (including Syrian income tax) of CONTRACTOR's and Operating Company's staff (including staff assigned by GPC) directly engaged in the various activities under the Contract. 2.1.2.2.2 CONTRACTOR's and Operating Company's staff

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(including staff assigned by GPC) costs of holiday, vacation, sickness, disability benefit, living and housing allowance, travelling allowances, bonuses and other customary allowances applicable to the salaries and wages chargeable under paragraphs 2.1.2.2.1, 2.1.8, 2.1.10.1 and 2.1.10.3 of this Article 2.



2.1.2.2.3 Cost of expenditures or contributions made pursuant to law or assessments imposed by Governmental authority in S.A.R, which are applicable to labour cost or salaries and wages as provided under paragraphs 2.1.2.2.1, 2.1.2.2.2, 2.1.8, 2.1.10.1 and 2.1.10.3 of this Article 2.



2.1.2.2.4 CONTRACTOR's and Operating Company's cost of established plans for employees group life insurance, hospitalisation, pension, retirement and other benefits of a like nature which shall be applicable to the salaries and wages of national employees, all as chargeable under paragraphs 2.1.2.2.1, 2.1.8, 2.1.10.1 and 2.1.10.3 of this Article 2. Severance pay will be charged at a fixed rate applied to payrolls which will equal an amount equivalent to the maximum liability for severance payments as required by the obligations of the Operator under the S.A.R. Labour Law.



2.1.2.2.5 Supporting Documents Salaries, wages, allowances and benefits of all employees (expatriates and locals) and related costs as mentioned above shall be recoverable upon presenting of invoices or clearances supported by employee payroll sheets and proof of this payment.

CONTRACTOR shall make available to the accounting auditors copies of its policies and practices generally applicable to its international expatriate staff.



2.1.3 Materials



Materials equipment and supplies purchased or important as such by CONTRACTOR or operating Company





2.1.3.1 Purchase



The actual costs, as incurred, of all materials, equipment and supplies purchased by CONTRACTOR or Operating company, plus any related costs, after deduction of all discounts actually received.





2.1.3.2 Materials purchased by CONTRACTOR or Operating company.

Materials required for operations shall be purchased directly whenever practicable except that



CONTRACTOR or Operating Company may purchase such material from CONTRACTOR'S Affiliated Companies stocks outside the S.A.R under the following condition:



2.1.3.2.1 New Material (Condition "A") shall be priced at 100% of their cost.



2.1.3.2.2 Used Material (Condition B" and "C"): · Material, which is in sound and serviceable condition and is suitable for reuse without reconditioning shall be classified as Condition "B” and priced at seventy-five percent (75%) of the price of new material. · Material, which cannot be classified as Condition “B" but which is serviceable for original function but substantially not

suitable for reconditioning shall be classified as Condition “C" and priced at fifty percent (50%) of the price of new material. · Material, which cannot be classified as Condition “B" or Condition "C", shall be priced at a value commensurate with its use. · Tanks, buildings and other equipment involving erection costs shall be charged at applicable percentage of knocked-down new price. Warranty of Materials imported by CONTRACTOR: CONTRACTOR does not warrant the material imported to any extent beyond those warranties that may be given in the dealer's or manufacturer's guaranty if any; and in case of

defective material credit shall not be recorded until adjustment has been received by

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CONTRACTOR from manufacturers or their agents.



2.1.4. Transportation

Transportation of equipment, material and supplies necessary for the conduct of activities.



2.1.5.Services



2.1.5.1. Outside Services (the cost of consultants, Contract services and utilities procured from third parties)



2.1.5.2. Cost of services performed by GPC or by CONTRACTOR or their Affiliated Companies in facilities inside or outside the S.A.R.

Regular, recurring, routine services, such as interpreting magnetic tapes, and/or other analyses shall be performed and charged by GPC and/or CONTRACTOR or their Affiliated Companies under this Contract to be approved under Article 6 of this Annex 4.



Specific identifiable tasks undertaken by or for geologists, geophysicists, engineers, lawyers, accountants and others shall be charged by GPC and CONTRACTOR at the time of approval of the relevant Work Program and Budget and the total cost of such services shall not exceed the total included within such Work Program and Budget, unless otherwise agreed. Each of the above personnel shall keep time sheets recording the amount of time spent by them on the project and copies of such time sheets shall be available for inspection upon reasonable notice. Said copies, and copies of any other

documents that are normally retained by CONTRACTOR's Affiliated Companies (on the grounds that they relate also to business other than CONTRACTOR's) are deemed by the Parties to be originals when certified correct by the General Manager of CONTRACTOR. Use of GPC's and/or CONTRACTOR's or their Affiliated Companies’ wholly owned equipment shall be charged at rental rate commensurate with the cost of ownership and operation, but not in excess of competitive rates currently prevailing in the S.A.R. In respect of Exploration operations, CONTRACTOR's

and its Affiliated Companies recoverable rates agreed under this Article 2.1.5.2 shall not include administrative overhead costs that are subject to Article

2.1.10.2 of this Annex 4. 2.1.6. Damages and Losses: For all costs or expenses necessary to replace or repair damages or losses incurred by fire, flood, storms, theft,

accidents or any other cause not controllable by CONTRACTOR or Operating

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Company through the exercise of reasonable diligence CONTRACTOR or Operating Company shall furnish Non-Operators with written notice of damages or losses incurred in excess of ten thousand US. Dollars (US $10,000) per occurrence, as soon as report of the size of such damages has been estimated.



2.1.7. Insurance and Claims



The cost of any public liability, property damage and other insurance against liabilities of CONTRACTOR, Operating Company and/or the other Parties or any of them to their employees and/or outsiders as may be required by the laws, rules and regulations of GOVERNMENT or as the GPC and CONTRACTOR may agree upon. The proceeds of any such insurance of claim collected shall be credited against operations.



If no insurance is carried for a particular risk, all related actual expenditures incurred and paid by CONTRACTOR or Operating Company in settlement of any of losses, claims damages, judgements and any other expenses including legal services.



2.1.8. Indirect Expenses



Camp overhead and facilities costs such as shore base, warehouses, water systems, road systems, salaries and expenses of field supervisory personnel, field clerks, assistants and other general employees indirectly serving the Area.

2.1.9. Legal Expenses



All costs and expenses of litigation or legal services otherwise necessary or expedient for the protection of the Area, including attorney's fees and expenses as hereinafter provided, together with all judgements obtained against Operator or Non-Operator or any of them on account of the operations under the Contract and actual expenses incurred by Operator or Non-Operator hereto in securing evidence for the purpose of defending against any action or claim prosecuted or urged against the operations or the subject matter of the Contract. In the event that there are actions or claims that prejudice the interests contained in the Contract and that are handled by the legal staff of one or more of the Operator or Non-Operator, appropriate charges may be borne by the operations for rendering such services as Operating Expenses.



2.1.10. Indirect Administrative Overhead and General Expenses



2.1.10.1. While CONTRACTOR is conducting Exploration activities, the cost of staffing and maintaining CONTRACTOR's head office in the S.A.R. and /or other offices established in the S.A.R. other than field offices which will be charged as provided in Article 2.1.8 of this Annex, 4 above and



2.1.10.2. CONTRACTOR who are temporarily assigned to and directly serving on the Area, Which will be charged as



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[signature] [photo] [signature] [signature]provided in Article 2.1.2. of this Annex 4. 2.1.10.3 CONTRACTOR's administrative overhead outside the S.A.R. applicable to the S.A.R. Exploration operations which will be charged each month at the rate of four percent (4%) of total Exploration Expenditures while CONTRACTOR is conducting Exploration activities. No other direct charges as such for CONTRACTOR's administrative overhead outside the S.A.R. will be debited against the Exploration obligation. Examples of the type of costs CONTRACTOR is incurring and charging hereunder due to activities under the Contract and covered by said percentage are: a) Executive Work - Time of executive officers. b) Treasury - Financial and Currency exchange matters. c) Purchasing - Procuring materials, equipment and supplies. d) Exploration and Production - Directing, advising and controlling the entire project. e) Other departments such as legal, comptrollers and engineering, which contribute time, knowledge and experience to the operation. The foregoing does not preclude charging for direct service under Article 2.1.5.2 of this Article 2. 2.1.10.4. While Operating Company is conducting activities, Operating Company's personnel engaged Block [numeral] Page 152 of 176 [signature] [stamp] [signature]in general clerical and office work, supervisors and officers whose time is generally spent in the main office and not in the field, and all employees generally considered as general and administrative and not charged to other types of expense, will be charged in operations. Such expense shall be allocated each Calendar Month between Exploration operations and Development operations according to sound and practicable accounting methods generally applied in the international petroleum business.



2.1.11. Taxes

All taxes, customs duties, levies and other fiscal imposts of whatever nature paid in S.A.R. by CONTRACTOR or Operating Company other than those covered by Article 18.2.1 of the Contract.



2.1.12 Continuing CONTRACTOR Costs

Costs of CONTRACTOR's activities required under the Contract and incurred exclusively in the S.A.R. after Operating Company is formed.



2.1.12. Other Expenditures

Any costs, expenses or expenditures, other than those which are covered and dealt with by the foregoing provisions of this Article 2, incurred by CONTRACTOR or Operating Company under approved Work Programs and Budgets shall count to reduce the minimum expenditure amounts mentioned in Article 4 of the Contract.



2.1.14. Training Costs

Costs and expenses by CONTRACTOR and Operating Company incurred pursuant to Article 16 of the Contract, except for the Training Budget, which will be treated in accordance with Article 16.4 of the Contract.



Article 3

Inventories



3.1 Periodic Inventories, Notice and Representation

At reasonable intervals as agreed upon by GPC and CONTRACTOR inventories shall be taken by Operating Company of the operations material, which shall include all such materials, physical assets and construction projects.

Written notice of intention to take inventory shall be given by Operating Company to GPC and CONTRACTOR at least thirty (30) Days before any inventory is to begin so that GPC and CONTRACTOR may be represented when the inventory is taken. Failure of GPC and/or CONTRACTOR to be represented at an inventory shall bind them to to accept the inventory taken by Operating Company who shall in that event furnish the Party, not represented with a copy thereof.



Block/Page/154 of 176Reconciliation and Adjustment of Inventories Reconciliation of inventory shall be made with the knowledge of CONTRACTOR and GPC and a list of shortages and surpluses shall be jointly determined by Operating Company, CONTRACTOR and GPC, and the inventory list will be adjusted by Operating Company. Article 4 Cost Recovery

Statement of Recovery of Costs and of Cost Recovery Petroleum (Crude Oil & Gas) CONTRACTOR shall, pursuant to Article 7 of the Contract, render to GPC as promptly as practicable but no later than thirty (30) Days after receipt from Operating Company of the statement for Development and Exploration activity for the last Calendar Month of each Calendar Quarter, a statement for that Calendar Quarter showing: a) Recoverable costs carried forward from the previous Calendar Quarter, if any; b) Recoverable costs incurred during the Calendar Quarter; c) Total recoverable costs for the Calendar Quarter, (a) plus (b); d) Value of Cost Recovery Petroleum taken in kind and disposed of by CONTRACTOR for the Calendar Quarter; e) Amount of costs recovered for the Calendar Quarter:

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f) Amount of recoverable costs to be carried into the succeeding Calendar Quarter, if any;

g) Excess, if any, of the value of Cost Recovery Petroleum taken in kind and disposed of by CONTRACTOR over costs recovered for the Calendar Quarter.

4.2 Payments

If such statement shows an amount due to GPC, payment of that amount shall be made in US Dollars by CONTRACTOR to GPC within thirty (30) days of presentation of that statement.

4.3 Audit Right

GPC shall have a period of three (3) Months from receipt of any statement under this Article 4 in which to audit and raise objection to any such statement. GPC and CONTRACTOR shall agree on any required adjustments as a result of such audit. Supporting documents and accounts will be available to GPC during said three (3) Months period. Upon expiry of the aforementioned period and in the absence of submitted objections by GPC, all statements are to be considered approved by GPC without any adjustments.

Article 5

Control and Major Accounts

5.1 Exploration Obligation Control Accounts

CONTRACTOR shall establish and Exploration Obligation Control Account and an off-setting contra-account to control therein the total amount of Exploration Expenditure reported in the statement of Exploration activity prepared per Article 1.2.1 of this Annex 4, less any reductions agreed to by GPC and CONTRCTOR following written exceptions taken by a Non-Operator pursuant to Article 1.3.1 of this Annex 4, in order to determine when minimum Exploration obligations have been met.



5.2 Cost Recovery Control Account

CONTRACTOR shall establish a cost recovery Control Account and an offsetting contra-account to record therein the value of Cost Recovery Crude Oil or Gas.



5.3. Major Accounts

For the purpose of classifying costs, expenses and expenditures for cost recovery as well as for the purpose of specifying a date for the fulfilment of the Exploration Obligations, costs, expenses and expenditures shall be recorded in major accounts including the following:

. Exploration Expenditure other than Intangible Drilling Costs.

. Development Expenditures other than Operating Expenses and Intangible Drilling Costs.

. Operating Expenses.

. Intangible Drilling Costs.

Necessary sub-accounts shall be use. Revenue accounts shall be maintained by CONTRACTOR to the extent necessary for the control of recovery

the treatment of Cost Recovery Petroleum.

Article 6

Pre-Auditing and Approval Requirements

6.1 All contracts for the supply of goods or services from local or international sources, to be entered into for the purpose of the Contract by CONTRACTOR or Operating Company with third parties, including Affiliated Companies, the cost of which contracts will or is like to exceed four hundred and fifty thousand US Dollars (USD 450,000) equivalent, are subject to pre-auditing by GPC. GPC may withhold its prior approval in respect of any such contract, if it reasonably considers:

6.1.1 that the costs of good or services to be supplied under the contract concerned are not in line with the international market prices for goods or services of similar quality supplied on similar terms prevailing at the time, provided however that locally manufactured purchases to be made and services to be performed by local contractors within the S.A.R. shall be subject to Article 17 of the Contract.

6.1.2. that the costs to be incurred by CONTRACTOR or by Operating Company under the contract concerned will not reasonably be required for the operations under the Contract.6.2. In the case of contracts to be entered into by the Operating Company, this pre-auditing requirement by GPC will take into consideration Operating Company's purchasing procedures, it's By-Laws and its Work Program as approved by its Board of Directors, which shall not conflict with provisions of the contract.

6.3. All contracts referred to under Article 6.1 of this Annex 4, but with costs not exceeding four hundred and fifty thousand US Dollars (US $450,000) equivalent do not require pre-auditing by GPC.

6.4. In respect of contracts subject to pre-auditing according to Article 6.1 of this Annex 4, CONTRACTOR or Operating Company, as the case may be, shall, before entering into such contracts, notify GPC to study the recommended contract. GPC shall agree the details of procedures concerning pre-auditing and relevant documentation requirements with CONTRACTOR or Operating Company as the case may be. Such procedures and documentation requirements may be reviewed and revised from time to time.

6.5. GPC shall notify CONTRACTOR and Operating Company in writing of its approval or refusal to approve such contracts within twenty (20) Days after receipt of the aforesaid notice. In case of absence of notice of approval byGPC or abesence of its notice of refusal during this period. GPC shall be deemed to have approved the contract concerned.



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6.6 If GPC shall notify CONTRACTOR or Operating Company, as the case may be, that it refuses to approve the proposed contract, it shall state in the notice the reason for its refusal in line with Article 6.1 and 6.2 of this Annex 4, and as soon as possible after having received GPC's notice, GPC and CONTRACTOR or Operating COmpany, as the case may be, shall confer with each other in connection with the problem thus presented, in order to reach a solution that is mutually satisfactory.



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6.7 For all cost and expenses related to contracts which were subject to pre-auditing and which have not been objected to by GPC under Article 6.1 and 6.2 of this Annex 4, and which have been incurred by CONTRACTOR or Operating Company, as the case may be, GPC shall advise CONTRACTOR in writing with the necessary supporting reasons and within the periods specified in the Contract, if it considers.



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6.7.1 That any particular costs and expenses recorded in the Statement concerned as having benn incurred by CONTRACTOR or Operating Company, have not actually been so incurred;



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6.7.2 That in the Statement concerned the recoring and the classification of any particular costs and expenses incurred by



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[signatures]CONTRACTOR or Operating Company, is not correct;



6.7.3 That the specification of the goods supplied and/or the executions of the services are not consistent with the provisions pf the contract which obtained prior approval.



6.7.4 Invoices issued to CONTRACTOR and supporting documents are incomplete, or unavailable or with respect to invoices rendered by subcontractors are not original.



6.8 After having received from GPC any written advice under Article 6.7 of this Annex 4. CONTRACTOR or Operating Company as the case may be shall confer with GPC in connection with any objection thus presented and both parties shall attempt to reach a settlement which is mutually satisfactory.



6.9 If GPC and CONTRACTOR or Operating Company (as the ease may be) fail to reach agreement on an issue arising under Article 6.8 of this Annex 4. such issue shall be referred to an Expert appointed by mutual consent, such Expert being an internationally recognised firm of accountants/auditors whose opinion shall be binding upon the parties.



6.10 For all costs and expenses related to contracts exceeding four hundred and fifty thousand US Dollars (US $450,000) equivalent which have not been objected to by GPC under this Article 6. GPC and CONTRACTOR shall consider



that the auditing requirements stated in Articles 1.3.1 and 1.3.2 of this Annex 4 have been satisfied. ANNEX 5

FORM OF LETTER OF

GUARANTEE

TO: THE GENERAL

PETROLEUM CORPORATION

GPC

DAMASCUS

LETTER OF GUARANTEE

NO. { }

With reference to the Contract concluded between the GOVERMENT OF THE SYRIAN ARAB REPUBLIC and the GENERAL PETROLEUM CORPORATION (the "GPC" and KAPITAL LIMITED LIABILITY COMPANY (the "CONTRACTOR") which stipulates that CONTRACTOR shall carry not Exploration, Development and Production of Petroleum in the Area described in Annexes "1" and "2" of the contract (offshore Block#1).

We hereby inform you that we guarantee in favor of the GPC the sum of the thirteen (13) million US Dollars for performance by CONTRACTOR of its obligations to spend the above mentioned amount in fulfillment of its Exploration work obligations during the forty-eight (48) month Initial Exploration Period in the Area specified and described in Annexes "1" and "2" of the Contract.



The Guarantee shall come into force as from the Effective Date of the Contract provided we are notified by you in writing that it has become effective pursuant to the provisions therein, such notification to include the number and the date of the Official Gazette in which the Legislative Text is published approving and ratifying the Contract,The value of Guarantee shall be reduced after completion of the obligations under this Contract Article 4 as follows:

- reduction by five percent (5%) upon mobilization of the vessel to perform new 2D/3D seismic works;

- reduction by twenty five percent (25%) upon completing works on acquiring new 2D/3D marine seismic lines;

- reduction by fifteen percent (15%) upon processing and interpretation of new 2D / 3D seismic exploration material and the issuance of a final hydrocarbon assessment prospectivity report;

- reduction by five percent (5%) upon mobilization of drilling rig;

- reduction by the remaining fifty percent (50%) of the total Guarantee amount upon completion of drilling of the exploration well.

The validity of this Guarantee shall automatically cease after forty-eight (48) Months (with an option to extend by one year) from the Effective Date of the Contract or if the CONTRACTOR has completed its commitments referred to in Article 4.1 hereof, or, in event CONTRACTOR should exercise its option under Article 22.4 upon termination of CONTRACTOR's obligations under the Contract, whichever date is earlier.

The reductions under the above provisions of this Guarantee shall be effected upon receipt by us of a written statement requesting such reductions, signed by you and CONTRACTOR.

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[signature] [signature] [signature]If you maintain that CONTRACTOR has not performed his obligations in accordance with Article 4 of the Contract. You should request the implementation of the Guarantee before its expiry by a letter confirming.



1 - That CONTRACTOR has failed to pay the expenditure deficiency to you.



2 - That you have given CONTRACTOR seven (7) Day's notice of your intention to claim under this Contract.

3 - That no state of Force Majeure exists under the Contract.



We hereby undertake to pay in Syrian Pounds an amount equivalent to the unspent (or unpaid if applicable) balance of the amount of the obligation upon receipt of your above mentioned request, and declare that we elect our Head Office in Damascus as our domicile for all matters concerning the execution of this Guarantee.



Words and phrases used in this Guarantee shall have the same meanings as those attributed to them in the Contract.

COMMERCIAL BANK OF SYRIA



Damascus on ................2019. ANNEX 6 PROTECTION OF THE ENVIRONMENT, HEALTH & SAFETY



1. The GOVERNMENT, GPC and the CONTRACTOR recognize that Petroleum Operations will cause some impact on the environment in the Contract Area. Accordingly, in performance of the Contract, the CONTRACTOR and Operating Company shall conduct its Petroleum Operations with due regard to protection with respect to protection of the environment and conservation of natural resources and shall in particular.



1.1 employ modern oilfield and petroleum industry practices and methods of operation for the prevention of Environmental Damage in conducting its Petroleum Operations and the environmental standards applied and adopted in the international petroleum industry:



1.2 take necessary and adequate steps to :



(a) prevent Environmental Damage and where some adverse impact on the environment is unavoidable to minimize such damage and the consequential effects thereof in property and people.



(b) ensure adequate compensation for injury to persons or damage to property caused by the effect of Petroleum Operations; and



1.3 Comply with the requirements of national and international laws in force regarding the protection of the marine environment and coastal are of the Mediterranean sea including the Barcelona Convention for the Protection of the Environment and its Protocols ratified in accordance with Legislative degree No. /375/1972 and the protocol on the protection of the Mediterranean Sea from exploitation of the Mediterranean Sea from pollution resulting from exploration and exploitation of the continental shelf and the seabed and its subsoil approved in 1994, and any subsequent laws to be issued by the concerned authorities(Ministry of Environment) regarding this matter, in addition to any following requirements issued by the concerned authorities to do so.



2. if the CONTRACTOR and/or Operating Company fail to comply with the provisions of paragraph (b) of article I or contravenes any relevant law and such failure or contravention results in any Environmental damage, the CONTRACTOR and/or Operating Company shall forthwith take all necessary and reasonable measures to remedy the failure and the effects thereof.



3. if the GOVERNMENT and/or GPC in accordance with the applicable laws has good reason to believe that any works or installations erected by the CONTRACTOR and/or Operating Company or any operations conducted by the CONTRACTOR are endangering or may endanger persons or any property of any person, or are causing or may cause pollution, and or harmingor may harm fauna or flora or the environment to a degree which the GOVERNMENT deems unacceptable according to the local and international standards, the GOVERNENT may require the CONTRACTOR and/or Operating Company to take remedial measures within such reasonable period as may be determined by the GOVERNENT and to repair any such damage.

4. The measures and methods to be used by the CONTRACTOR for the purpose of complying with the terms mentioned above shall be determined in timely consultation with the GPC upon the commencement of Petroleum Operations or whenever there is a significant change in the scope or method of conducting Petroleum Operations shall take into account the international and/or local standards applicable in similar circumstances and the relevant environmental impact study carried out in accordance with article 5 below. The Contractor and/or Operating Company shall notify the Government, in writing, of the measures and methods finally determined by the Contractor and shall cause such measures and methods to be reviewed from time to time in the light of prevailing circumstances.

5. The CONTRACTOR and/or Operating Company shall assign and authorized company specialized in environmental matters, to carry out two environmental impact studies in order:



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[signature] [signature] [signature](a) to determine at the time of the studies the prevailing situation relating to the environment human beings and local communities, the flora and fauna in the Contract Area and in the adjoining or neighboring areas; and (b) to establish the likely effect on the environment, human beings and local communities, the flora and fauna in the Contract Area and in the adjoining or neighboring areas in sequence of the relevant phase of Petroleum Operations to be conducted under this Contract, and to submit, for consideration by the Parties, required methods and measures for minimizing and mitigating Environmental Damage and carrying out all works to restore the site as it was. 5.1. The first of the aforementioned studies shall be carried out in two parts, namely, a preliminary part which must be concluded, before commencement of any field work relating to a seismographic or other survey, and a final part relating to drilling in the Exploration Period, The part of the study relating to drilling operations in the Exploration Period shall be approved by GPC before the commencement of such drilling operations, it being understood that such approval shall not be unreasonably withheld. 5.2. The second of the aforementioned studies shall be completed before commencement of Development Operations and shall be submitted by the

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CONTRACTOR and/or Operating company as part of the Development plan with specified approval of GPO being obtained before commencement of Development Operations, it being understood that such approval shall not be unreasonably withheld.

5.3. The studies mentioned in Article 5 above shall contain proposed environmental guidelines to be followed in order minimize Environmental Damage and shall include, but not be limited to, the following, to the extent appropriate to the respective study taking into account the phase of operations to which the study relates:

1. Marine life and the adjacent wildlife and habitat protection;

2. Proposed logistical support access:

3. Proposed clearing and timber salvage:

4. Fuel storage and handling

5. Use of explosive;

6. Camps;

7. Safe disposal of liquid, solid and dangerous waste;

8. Cultural and archaeological sites:

9. Selection of drilling sites:

10. Terrain stabilization;

11. Protection of freshwater horizons;

12. Blowout prevention plan:

13. Flaring during completion and testing of gas and oil Wells;

14. Abandonment of Wells;

15. Rig dismantling and site completion;



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16. Reclamation for abandonment:

17. Noise control:

18. Debris and rubbles disposal:

19. Protection of natural drainage and water flow:

20. Sewage system:

21. Waste management including hazardous:

22. Greenhouse gas emissions:

23. Policy of radioactive materials:

24. Emergency response plan in the event of spills in its three levels (Tier 1+2+3):

Tier 1:(0-5) m3 oil spill.

Tier 2:(5-50) m3 oil spill.

Tier 3:(50-100) m3 oil spill.

Subject to the provision of all applicable laws and rules issued by the Ministry of Environment, any new project or expansion or modernization projects for Petroleum operations for which a proposal is submitted by the CONTRACTOR and/or Operating Company should be submitted according to a study of the environmental impact and the provisions of the above Article 5, the GPC shall complete the assessment of the project and notify CONTRACTOR and/or Operating Company of its decision within a period of ninety (90) days from the receipt of the requisite documents an data.

6. The CONTRACTOR and/or Operating Company shall ensure that:

a. Petroleum Operation are conducted in an environmental

[signature]acceptable and safe manner consistent with modern oilfield and petroleum industry practices and that such Petroleum Operation are properly monitored.



b. The pertinent completed environmental impact studies are made available to their employees and to its contractors and Subcontractors to develop adequate and proper awareness of the measures and methods of environmental protection to be used in carrying out the Petroleum Operation; and



c. The contracts entered into between the CONTRACTOR and /or Operating Company and their contractors and subcontractors relating to their Petroleum Operation shall include the provisions stipulated herein and any established measures and methods for the implementation of the CONTRACTOR's obligations in relation to the environment under this Contract.

7. The CONTRACTOR and /or Operating Company shall prior to conducting any drilling activities, prepare and submit for review by the GPC contingency plans for workers evacuation and dealing with Oil spills in its three levels (Tier 1+2+3), fires, accidents and emergencies, designed to achieve rapid and effective emergency response. The plans referred to above shall be discussed with the GPC concerns expressed shall be taken into account. 8. In the event of an emergency, accident, Oil spill or fire arising from Petroleum Operations affecting the environment, the CONTRACTOR and /or Operating Company shall forth with notify the GPC and shall promptly implement the relevant contingency plan and perform such. Site Restoration as may be necessary in accordance with modern offshore oilfield and petroleum industry practices.



9. In the event of any other emergency or accident arising from the Petroleum Operations affecting the environment, the CONTRACTOR and /or Operating Company shall take such action as may be prudent and necessary in accordance with modern oilfield and petroleum industry practices in such circumstances.



10. In the event that the CONTRACTOR and /or Operating Company fails to comply with any of the terms contained in item 7 within a period specified by the GPC, the GPC, after giving the CONTRACTOR reasonable notice in the circumstances, may take any action which may be necessary to ensure compliance with such terms. All costs and expenditures incurred in connection with such action shall be non-recoverable ones.



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[signature][stamp][signature][signature]11. On expiry or termination of this Contract and/or relinquishment of part of the Contract Area, the CONTRACTOR and/or Operating Company shall:

a. Remove all equipinent and installations from the relinquished Area or former Contract Area in a manner agreed with the GPC pursuant to a mutual agreed abandonment plan by the parties.

b. Perform all necessary works to restore the site as it was Site in accordance with modern oilfield and petroleum industry practices and take all other action necessary to prevent hazards to human life or to the property of others or the environment.



12. The CONTRACTOR and lot Operating Company shall prepare a proposal for the restoration of site including abandonment plan and the budget allocated to that. This will be submitted along with the annual budget for the consideration and adoption.



13. Any works to restore the site as it was Site Restoration fund scheme fonyulated by GPC and subject to provisions of this Contract, any and all costs incurred by the CONTRACTOR and/or Operating Company shall be subject to the provisions for the Article 30 of this Contract. Where the Contract Area is partly located in areas forming

part of national importance, biosphere reserves and other biologically sensitive areas passage through these areas.



Block/Page/114 of 176shall generally not be permitted. However, if there is no passage, other than through these areas to reach a particular point beyond these areas, permission of the appropriate authorities shall be obtained.

15. The obligation and liability of the CONTRACTOR and /or Operating Company for the environment thereunder shall be limited to damage to the environment which:

a. Occurs after the Effective Date; and

b. Is directly caused by action or failure to act by the CONTRACTOR and / or Operating Company.

16. Established and implemented HSE MS in all activities:

Fully conscious that oil and gas activities are intrinsically risky, CONTRACTOR and /or Operating Company, is fully committed to carry out its activities while keeping those inherent risks under control.

CONTRACTOR and /or Operating Company are responsible to enforce this policy, and consequently to ensure that all activities are planned and executed to safeguard the health of personnel, minimize the impact towards the environment, and protect our assets.In order to fulfill this commitment, a Health, Safety and Environment Management System should be developed and implemented.



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