Subject to the provisions of the Petroleum Act, the exploration license granted to the company shall be for an initial period of [X] (period not exceeding 4 years to be inserted) commencing from the date of signature of this contract by all the parties to same.
The government shall, subject to the provisions of section 47 of the Petroleum Act and after approval of the development plan, grant the application and issue a license for a period of [X] (insert period of not more than 25 years).
Environmental impact assessment and management plan
The company shall cause a person or persons, approved by the government on account of their special knowledge of environmental matters, to carry out two environmental impact assessment studies, in order:
(a) to determine the prevailing situation relating to the environment, human beings, wildlife or marine life in the license area and in the adjoining or neighboring areas at the time of the studies; and
(b) to establish what the effect will be on the environment, human beings, wildlife or marine life in the license area in consequence of the petroleum operations to be made under this contract, and to submit for consideration by the parties measures and methods for minimizing environmental damage and carrying out site restoration in the license area.
The first of the two studies shall be carried out in two parts. The first part of the first study shall be a baseline study of existing information on the environment, human beings, wildlife or marine life in the
license area. The company shall conclude such baseline study prior to undertaking any fieldwork for a seismographic survey. The second part of the first study shall be an environmental impact assessment study of the effects of drilling on the environment. This environmental impact assessment study is to be concluded sufficiently in advance of the commencement of drilling to enable the results of this environmental impact assessment study to be taken into account in preparing all relevant drilling management, waste management and contingency plans relating to the exploration drilling stage.
The second of the two studies shall be an environmental impact assessment study of the effects of production on the environment and shall be concluded sufficiently in advance of the commencement of production operations to enable the results of this environmental impact assessment study to be taken into account in preparing all relevant production management, waste management and contingency plans relating to production operations and shall be submitted by the company as part of its development plan.
The company shall ensure that the pertinent completed environmental impact assessment studies are made available to its employees and to its contractors to develop adequate and proper awareness of the measures and methods of environmental protection to be used in carrying out its petroleum operations.
The company shall ensure: that petroleum operations are carried out in an environmentally acceptable and safe manner consistent with good oilfield practices and that such operations are properly monitored.
Funds will be used, amongst other purposes, for: periodic monitoring of levels of pollution during production drilling and production using internationally accepted methods of monitoring.
The company shall:
(a) conduct its petroleum operations in a manner likely to conserve the natural resources of Namibia and protect the environment;
(b) employ the best available techniques in accordance with good oilfield practices for the prevention of environmental damage to which its petroleum operations might contribute and for the minimization of the effect of such operations on adjoining or neighboring lands; and
(c) implement the proposals contained in its development plan regarding the prevention of pollution, the treatment of wastes, the safeguarding of natural resources and the progressive reclamation and rehabilitation of lands disturbed by petroleum operations.
The company undertakes for purposes of this contract to take all reasonable, necessary and adequate steps in accordance with good oilfield practices to minimize environmental damage to the license area and adjoining or neighboring lands.
If the company fails to comply with the above terms or contravenes any law on the prevention of environmental damage and such failure or contravention results in any environmental damage, the company shall take all necessary and reasonable measures to remedy such failure or contravention and the effects of same.
If the government has reason to believe that any works or installations erected by the company or any operations carried out by the company are endangering or may endanger persons or any property of any other person or is causing pollution or is harming wildlife or the environment to a degree which the government deems unacceptable, the government may require the company to take reasonable remedial measures within such reasonable period as may be determined by the government and to take reasonable and appropriate steps to repair any damage to the environment. If the government deems it necessary, he may require the company to discontinue petroleum operations in whole or in part until the company has taken such remedial measures or has repaired any damage.
The company shall be responsible for maintaining at an address within Namibia accounting records of all expenditure and receipts of its petroleum operations under the contract in accordance with the accounting procedure set out in this contract.
The government shall have the right to appoint from time to time an auditor who shall have the right to audit for purposes of the application of the Taxation Act or any other law and this contract, the books and accounts of the company in respect of any year (not being a year, except in exceptional circumstances, which ended more than 2 years before the year in which the audit is to be carried out).
Auditors shall have the right to audit the company's records in accordance with the relevant terms of this contract.
The company shall make available to the auditor, all such books, records, accounts and other documents and information as may be reasonably required from the company by him or her.
Nothing in this clause shall be construed as prohibiting or limiting the government or any officer in the public service to audit or cause to be audited the books of the company by virtue of any power conferred upon the government or such officer by or under any law.
The company shall pay annually, for the benefit of the state revenue fund, a petroleum income tax referred to in section 5 of the Taxation Act and an additional profits tax referred to in section 19 of that Act to be determined in accordance with the provisions of that Act.
The rate at which additional profits tax shall be levied on the company under section 21(b)(ii) of the Taxation Act in relation to the second accumulated net cash position shall be [X]%.
The rate at which additional profits tax shall be levied on the company under section 21 (c)(ii) of the Taxation Act in relation to the third accumulated net cash position shall be [X]%.
Restrictions on transactions with affiliated parties
Material purchased from or sold to affiliated companies of the company or transferred to or from activities of the company other than petroleum operations under the contract:
(a) in the case of new material, shall be valued at the current international price which shall not exceed the price prevailing in normal arms length transactions on the open market;
(b) in the case of used material which is in sound and serviceable condition and is suitable for re-use without reconditioning, shall be priced at not more than 74% of the current price of the abovementioned new materials;
(c) in the case of used material which cannot be classified as those described under (b), but which, after reconditioning, will be further serviceable for original function as good second hand condition (b) material or is serviceable for original function, but substantially not suitable for reconditioning, shall be priced at not more than 50% of the current price of the new material referred to above as condition (a).
Subject to the provisions of the Petroleum Act, the company shall pay quarterly on or before the last day of each calendar month following each quarter, for the benefit of the state revenue fund, a royalty of 5% on the market value of petroleum produced and saved in the production area during each quarter.
In the event that the parties agree on participation by National Petroleum Corporation of Namibia in the petroleum operations, the terms of such participation shall be set out here.
Subject to the provisions of the petroleum act, the company shall pay on the date of the issue of the exploration license or production license, and thereafter annually for the benefit of the state revenue fund, an annual charge, equal to the figure expressed in Namibian dollars, calculated by multiplying the number of square kilometers included in the block(s) to which the license relates (i) in the case of an exploration license:
(a) by 60 during the period of the license determined or extended in terms of paragraph (a) of subsection (1) or paragraph (a) of subsection (2A) of section 30 of the Petroleum Act;
(b) by 90 during the period of the license determined or extended in terms of paragraph (b) of subsection (1) or paragraph (b) of subsection (2A) of section 30 of the Act in respect of the first renewal of the license;
(c) by 120 during the period or periods of the license determined or extended in terms of paragraph (b) of subsection (1) or paragraph (b) of subsection (2A) of section 30 of the Act in respect of the second renewal of the license;
(d) by 150 during the subsequent period or periods of the license determined or extended in terms of paragraph (b) of subsection (1), read with paragraph (b) of subsection (2) or paragraph (b) or subsection (2A) of section 30 of the Act in respect of the third renewal of the license.
(ii) in the case of a production license, by 1500.
In carrying out petroleum operations the company shall, to the maximum extent possible, employ Namibian citizens having appropriate qualifications.
The company may employ a person who is not a Namibian citizen in a post only if the skills required in such post are not obtainable by recruitment of a Namibian citizen and the company may at any time be called upon by the government to give satisfactory reasons for the continued employment of a non-citizen in any post.
The company shall:
(a) use and purchase goods supplied, produced and manufactured in Namibia whenever such goods can be obtained at prices in Namibia which are competitive in international terms and are, in all substantive respects, of a quality comparable with the quality of goods from outside Namibia. The company shall give preference to such supplier, producer or manufacturer, unless it is able to show good cause to the satisfaction of the government why such preference should not be given;
(b) make maximum use of contractors in Namibia where services of comparable standards with those obtained elsewhere are available from such contractors at competitive prices and on competitive terms;
(c) when it is necessary to import vehicles, machinery, plant or equipment and any such vehicles, machinery, plant or equipment are not purchased directly from a manufacturer, effect the purchase of the items through traders operating in Namibia at competitive prices;
(d) co-operate with companies in Namibia to enable them to develop skills and technology to service the petroleum industry.
The company shall ensure that a term similar to this clause is contained in its contracts with contractors.
The company to purchase Namibian goods and services the company shall prepare in respect of each calendar year a local procurement statement, containing the following information:
(a) The amount of expenditure incurred by the company directly, or indirectly through its sub contractors, on goods supplied, produced or manufactured in Namibia;
(b) the amount of expenditure incurred by the company directly, or indirectly through its sub contractors, on services provided by Namibian entities;
(c) the respective percentages that the expenditures recorded under items (a) and (b) above represent of the company's total expenditures;
(d) a detailed description of the procedures adopted during the year to identify and purchase goods and services from Namibian suppliers; and
(e) a detailed exposition of how the local purchases for the year as recorded under items (a) and (b) above compared with the projected purchases included in the budget statement for that year, with explanations for any significant variations;
The local procurement statement shall be submitted to the government within 60 days after the end of each calendar year.
Social/human rights impact assessment and management plan
The company shall cause a person or persons, approved by the government on account of their special knowledge of environmental matters, to carry out two environmental impact assessment studies, in order:
(a) to determine the prevailing situation relating to the environment, human beings, wildlife or marine life in the license area and in the adjoining or neighboring areas at the time of the studies; and
(b) to establish what the effect will be on the environment, human beings, wildlife or marine life in the license area in consequence of the petroleum operations to be made under this contract, and to submit for consideration by the parties measures and methods for minimizing environmental damage and carrying out site restoration in the license area.
During each year of the exploration license or any renewal of same, the company shall spend a sum which is not less than a sum equal to US$ [X] for the purpose of the training and education of Namibians.
(b) Of the said sum, 70% shall be paid on the date of signature and thereafter on each anniversary of such date into the petroleum training and education fund.
(c) Of the said sum, 30% shall be expended by the company on attachments and in-house training of Namibian citizens in the field of natural science, engineering, technology, accounting, economics and law as related to oil and gas exploration and production to expose them to petroleum industry practice and operations.
The sum shall be adjusted annually by dividing the sum by the inflation factor.
The company shall ensure that all equipment, materials, supplies, plant and installations used by the company, its contractors and subcontractors comply with generally accepted standards in the international petroleum industry and are of proper construction and kept in good working order.
The company may, at the government's choice, be required to sell crude oil in Namibia in order to satisfy Namibia's domestic market requirements on a pro rata basis with other producers in Namibia according to the quantity of crude oil produced by each producer.
The company shall, during each of the periods referred to in paragraphs (a), (b) and (c) below into which its exploration work program is divided for purposes of this contract, carry out the work specified in such paragraphs, and shall spend not less than the amounts so specified in relation to such work.
(a) Initial exploration period:
(i) Minimum exploration work: [To be specified in detail];
(ii) Minimum exploration expenditure:
The amount to be specified here should:
(a) reflect the minimum amount to be spent in completing the minimum exploration work in (i) above but excluding the cost of residential and office accommodation, annual charges payable and the annual sum to be spent; and
(b) be an amount expressed in constant price terms at price levels pertaining on the date of signature.
(b) First renewal exploration period:
(i) Minimum exploration work: [To be specified in detail];
(ii) Minimum exploration expenditure: [To be specified as in (a)(ii) above];
(c) Second renewal exploration period:
(i) Minimum exploration work: [To be specified in detail];
(ii) Minimum exploration expenditure: [To be specified as in (a)(ii) above].
Any dispute arising between the parties relating to the construction, meaning or effect of this contract or the rights or liabilities of the parties in terms of this contract shall be resolved amicably by negotiations.
If the government and the company fail to resolve by way of negotiation a dispute, the government and the company agree to submit such dispute to arbitration for final settlement.
Any unresolved dispute shall be finally settled by arbitration in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law in force on the date on which this contract is signed. Such arbitration, unless the parties otherwise agree, shall take place in London, England. As far as practicable the government and the company shall continue to implement this contract during the period while the arbitration is pending and during the arbitration.
Arbitration shall be undertaken by 3 arbitrators. A decision of a majority of the arbitrators shall be final and binding upon the parties and the award rendered shall be final and conclusive. Judgment on the award rendered may be entered in any court having jurisdiction or application may be made in such court for a judicial acceptance of the award and for enforcement, as the case may be.
All petroleum data, information and reports obtained or prepared by the company in terms of this contract shall, so long as they relate to any part of the license area, be treated as confidential and each of the parties undertakes not to disclose such data, information and reports or the contents of same to any other person without the consent in writing of the other party, provided that this clause shall not:
(a) prevent disclosure by the company for the purpose of its petroleum operations to:
(i) an affiliate;
(ii) any bona fide intending assignee;
(iii) any professional adviser who needs to have access to such petroleum data, information and reports for the effective performance of his obligations under his contract with the company;
(iv) any bank or financial institution from which the company is seeking or obtaining finance or which is advising the company in connection with any issue of securities or the admission of
any securities to listing on any stock exchange;
(v) a contractor of the company;
(vi) any stock exchange in order to comply with any securities law of any country; and
(vii) any court of competent jurisdiction to comply with any order or decree of such court.
(b) prevent disclosure by the company for the purpose of trading data with third parties in accordance with normal petroleum industry practice provided the government's consent (which shall not be unreasonably withheld) has been previously applied for and obtained.
(c) prevent the disclosure by the government or any officer in his government to the National Petroleum Corporation of Namibia (Proprietary) Ltd. in terms of section 8 of the Petroleum Act; and to professional advisers of the government or the National Petroleum Corporation of Namibia (Proprietary) Ltd.; or
(d) be construed as imposing on any party any obligation in relation to any petroleum data, information or reports which are, without disclosure by such party, generally known to the public.
Any petroleum data, information or reports disclosed by the company to any other person in terms of clause 21.1 shall be disclosed on terms which will ensure that such petroleum data, information or reports are treated as confidential by the recipient.
Any petroleum data, information and reports relating to the license area which, in the opinion of the government, might have significance in connection with an exploration program to be conducted by a third party in another area may be disclosed by the government to the third party provided the
government has previously obtained approval to do so from the company.
Any petroleum data, information and reports, including interpretations and assessments, assessment studies, relating to any area which ceases to be part of the license area, whether as a result of relinquishment, surrender or termination of a license shall be treated as confidential by the company, provided however that this clause shall not:
(a) Prevent disclosure by the company for purpose of its petroleum operations to:
(i) an affiliate;
(ii) any bona fide intending assignee;
(iii) any professional adviser who needs to have access to such petroleum data, information and reports for the effective performance of his obligations under his contract with the company;
(iv) any bank or financial institution from which the company is seeking or obtaining finance or which is advising the company in connection with any issue of securities or the admission of any securities to listing on any stock exchange;
(v) a contractor of the company;
(vi) any stock exchange in order to comply with any securities law of any country;
(vii) any court of competent jurisdiction to comply with any order or decree of such court.
(b) prevent disclosure by the company for the purpose of trading data with third parties in accordance with normal petroleum industry practice provided the government's consent (which shall not be unreasonably withheld) has been previously applied for and obtained.
(c) be construed as imposing on any party any obligation in relation to any petroleum data, information or reports which are, without disclosure by such party, generally known to the public.
This contract, the interpretation of same and any dispute arising under it shall be governed by and determined in accordance with the laws of the Republic of Namibia