Environmental impact assessment and management plan
Saba Jatiluhur Limited and Pertamina, through the joint operating body (JOB), shall conduct an environmental baseline assessment at the beginning of activities, in stages coincident with the agreed work program.
Saba Jatiluhur Limited and Pertamina, through the joint operating body (JOB), shall take the necessary precautions for protection of ecological systems, navigation and fishing and shall prevent extensive pollution of the area, sea or rivers and other as the result of operations undertaken under the work program.
After the contract expiration or termination, or relinquishment of part of the contract area, or abandonment of any field, remove all equipment and installations from the area in a manner acceptable to Pertamina, and perform all necessary site restoration activities in accordance with the applicable government regulations to prevent hazards to human life and property of others or environment.
Saba Jatiluhur Limited shall comply with the requirements of the tax law in particular with respect to filing of returns, assessment of tax and keeping and showing of books and records.
Saba Jatiluhur Limited shall have the right to inspect and audit Pertamina's and the joint operating body's books and accounts relating to this contract, as the case may be, for any calendar year within 1 year following the end of such calendar year. Any such audit will be satisfied within 12 months after its commencement. Any exception must be made in writing within 60 days following the end of such audit and failure to give such written exception within such time shall establish the correctness of Pertamina's and the joint operating body's books and accounts.
Pertamina and the government shall have the right to inspect and audit the joint operating body's books and accounts relating to this contract for any calendar year covered by this contract. Any exception must be made in writing 60 days following the completion of such audit.
In addition, Pertamina and the government may require the joint operating body to engage independent accountants to examine, in accordance with generally accepted auditing standards, its books and accounts relating to this contract for any calendar year or perform such auditing procedures as deemed appropriate by Pertamina. A copy of the independent accountant's report or any exceptions shall be forwarded to Pertamina and Saba Jatiluhur Limited within 60 days following the completion of such audit. The cost related to the engagement of the independent accountants shall be included in the operating costs.
Saba Jatiluhur Limited shall pay to Pertamina:
- US$ 1,000,000 within 30 days after cumulative petroleum production from the contract area has reached 15 million barrels of oil equivalent; and
- US$ 1,000,000 within 30 days after cumulative petroleum production from the contract area has reached 20 million barrels of oil equivalent; and
- US$ 1,000,000 within 30 days after cumulative petroleum production from the contract area has reached 25 million barrels of oil equivalent.
Such compensation and production bonus payments shall be solely borne by Saba Jatiluhur Limited and not included in the operating costs.
Pertamina shall not be obliged to pay Saba Jatiluhur Limited's income tax and the final tax on profits after tax deduction, nor taxes on tobaccos, liquor and personnel income tax, and income tax and other taxes, not listed above of contractors and sub contractors.
Saba Jatiluhur Limited shall pay to the government the income tax and the final tax on profit after tax deduction imposed on it pursuant to the Indonesian Income Tax Law and its implementing regulations
Saba Jatiluhur Limited may recover an investment credit amounting to 15.7800% of the capital investment cost directly required for developing crude oil production facilities, of a new field producing from tertiary reservoir rock out of deduction from gross production before recovering operating costs, commencing in the earliest production year or years before tax deduction (to be paid in advance in such production year when taken).
Saba Jatiluhur Limited may recover an investment credit amounting to 102.1400% of the capital investment cost directly required for developing crude oil production facilities, of a new field producing from pre-tertiary reservoir rock out of deduction from gross production before recovering operating costs, commencing in the earliest production year or years before tax deduction (to be paid in advance in such production year when taken).
Saba Jatiluhur Limited may recover an investment credit amounting to 102.1400% of the capital investment cost directly required for developing natural gas production facilities of a new field producing from pre-tertiary reservoir rocks out of deduction from gross production before recovering operating costs, commencing in the earliest production year or years before tax deduction (to be paid in advance in such production year when taken).
Saba Jatiluhur Limited shall pay to Pertamina as compensation for information now held by Pertamina the sum of US$ 1,000,000, after approval of this contract by the government in accordance with the provisions of applicable law. Such payment shall be made within 30 days after the effective date.
Saba Jatiluhur Limited shall within 30 days after Pertamina's request during the first contract year provide Pertamina with equipment or services in an amount not exceeding US$ 275,000 for exploration and production activities in Indonesia's petroleum industry.
Production Share - "Profit Oil features (triggers for variations in split - IRR, factor, production, etc .)
Each year, Saba Jatiluhur Limited and Pertamina shall be entitled to take the following out of Saba Jatiluhur Limited’s participating interest share of crude oil that remains after deducting operating costs:
(a) If the first crude oil of this contract area is from a marginal field the parties shall be entitled to take and receive the following each year: 64.2857% for Pertamina and 35.7143% for Saba Jatiluhur Limited over the life of such field. A marginal field is the first field of the contract area proposed by Saba Jatiluhur Limited for development and approved by Pertamina, capable of crude oil production not exceeding 10,000 barrels daily average projected for the initial 2 production years.
(b) For crude oil production as a result of tertiary recovery of enhanced oil recovery (EOR) projects, the parties shall be entitled to take and receive the following each year: 64.2857% for Pertamina and 35.7143% for Saba Jatiluhur Limited.
(c) For crude oil production from pre-tertiary reservoir rocks, the parties shall be entitled to take and receive the following each year:
(i) 64.2857% for Pertamina and 35.7143% for Saba Jatiluhur Limited for the segment of 0-50,000 barrels daily average of all of such pre-tertiary production of the contract area for the calendar year;
(ii) 73.2143% for Pertamina and 26.7857% for Saba Jatiluhur Limited for the segment of 50,001 barrels to 150,000 barrels daily average of all of such pre-tertiary production of the contract area for the calendar year;
(iii) 82.1429% for Pertamina and 17.8571% for Saba Jatiluhur Limited for the segment of more than 150,000 barrels daily average of all of such pre-tertiary production of the contract area for the calendar year. Pre-Tertiary reservoir rocks mean petroleum reservoir rocks deposited or formed in pre-Tertiary times;
(d) 73.2143% for Pertamina and 26.7857% for Saba Jatiluhur Limited for crude oil production of the contract area other than those under paragraphs (a), (b), and (c).
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Saba Jatiluhur Limited will recover its participating interest share of all operating costs out of the sale proceeds or other disposition of the required quantity of its participating interest share of crude oil equal in value to the operating costs which is produced and saved and not used in petroleum operations. If, in any calendar year Saba Jatiluhur Limited's participating interest share of operating costs exceeds the value of its participating interest share of crude oil produced and saved and not used in petroleum operations, then the unrecovered excess shall be recovered in the succeeding years.
Saba Jatiluhur Limited and Pertamina shall be entitled to first take and receive each year a quantity of petroleum of 20% of Saba Jatiluhur Limited's participating interest share of the petroleum production for each such year (called "the first tranche petroleum") before any deduction for investment credit and recovery of operating costs and handling of production.
Pertamina shall have the right to demand from Saba Jatiluhur Limited that a 7.5% undivided interest in the total rights and obligations under this contract be offered to either itself or a limited liability company to be designated by Pertamina the shareholders of which shall be Indonesian nationals (both Pertamina and the limited liability company are referred to as "the Indonesian participant"). The offer by Saba Jatiluhur Limited to the Indonesian participant shall be effective for a period of six months. If the Indonesian participant has not accepted this offer within that period, Saba Jatiluhur Limited shall be released from the obligation.
In the event of acceptance by the Indonesian participant of Saba Jatiluhur Limited's offer the Indonesian participant shall be deemed to have acquired the undivided interest. The Indonesian participant shall bear and pay its proportionate share of all operating costs.
For the acquisition of a 7.5% undivided interest in the total of the rights and obligations arising out of this contract, the Indonesian participant shall reimburse Saba Jatiluhur Limited an amount equal to 7.5% of the sum of operating costs and 7.5% of the compensation paid to Pertamina for information and signature bonus to the extent such expenditures have been incurred by Saba Jatiluhur Limited for and on behalf of its activities in the contract area up to the date of Saba Jatiluhur Limited's notification to Pertamina.
Saba Jatiluhur Limited and Pertamina, through the joint operating body (JOB), shall give preference to such goods and services which are produced in Indonesia or rendered by Indonesian nationals, provided such goods and services are offered at equally advantageous conditions with regard to quality, price, availability at the time and in the quantities required.
Saba Jatiluhur Limited and Pertamina, through the joint operating body (JOB), shall prepare and carry out plans and programs for industrial training and education of Indonesians for all job classifications with respect to these operations.
Saba Jatiluhur Limited and Pertamina, through the joint operating body (JOB), shall employ qualified Indonesian personnel in its operations and after commercial production commences will under-take the schooling and training of Indonesian personnel for labor and staff positions including administrative and executive management positions of the joint operating body. At such time Saba Jatiluhur Limited shall also consider with Pertamina a program of assistance for training of Pertamina's personnel.
Costs and expenses of training Indonesian personnel for operations shall be included in operating costs. Costs and expenses for a program of training for Pertamina's personnel shall be borne on a basis to be agreed by Pertamina and Saba Jatiluhur Limited.
Saba Jatiluhur Limited shall after commercial production commences, fulfill its obligations towards the supply of the domestic market in Indonesia.
Any natural gas produced from the contract area to the extent not used in petroleum operation, may be flared if the processing or utilization thereof is not economical. Such flaring shall be permitted to the extent that gas is not required to effectuate the maximum economic recovery of petroleum by secondary recovery operations, including repressuring and recycling.
Saba Jatiluhur Limited shall be willing to consider to come to another contract or loan agreement for the processing of products derived from the petroleum operations, on mutually agreeable terms. Within the framework of the preceding principles Saba Jatiluhur Limited would agree, subject to the conditions stated below, to have refined in Indonesia 28.57% of the share of crude oil to which it is entitled, and should no refining capacity be available to set up a corresponding refining capacity for that purpose. The conditions referred to above are that:
(a) Pertamina has first requested Saba Jatiluhur Limited thereto;
(b) Saba Jatiluhur Limited's share of crude oil hereof be not less than 100,000 barrels per day, and;
(c) if refining capacity has to be erected that setting up and use of such refining capacity be economical in the judgment of the parties.
Saba Jatiluhur Limited may, in lieu of setting up such refining capacity but subject to the same conditions, make an equivalent investment in another project related to petroleum or petrochemical industries.
Petroleum to be delivered to such facilities would be sold by Saba Jailuhur Limited at the net realized price F.O.B Indonesia received by Saba Jatiluhur Limited or at another mutually agreed price.
The amount to be spent and the program to be carried out in conducting petroleum operations during the first 6 contract years and in conducting petroleum operations during the next 4 contract years following the effective date shall in the aggregate be not less than specified for each of the contract year as follows:
- First Contract Year: Geological & geophysical study and 300 kilometer seismic (US$ 2,650,000);
- Second Contract Year: 2200 kilometer seismic/CSMAT (US$ 7,200,000);
- Third Contract Year: Drilling 2 wells (US$ 7,250,000);
- Fourth Contract Year: Geological & geophysical work (US$ 2,100,000);
- Fifth Contract Year: Seismic survey & G&G (US$ 6,800,000);
- Sixth Contract Year: Drilling 2 wells (US$ 7,300,000);
- Seventh Contract Year: Geological & geophysical work (US$ 4,300,000);
- Eighth Contract Year: Seismic survey and drilling 1 well (US$ 7,800,000);
- Ninth Contract Year: Drilling 1 well (US$ 5,800,000);
- Tenth Contract Year: Drilling 2 wells (US$ 9,300,000).
During the first 3 contract years Saba Jatiluhur Limited shall provide at least US$ 17,100,000 for all expenditures for operations, or up to the approval of the plan of development by Pertamina.
Disputes, if any, arising between Pertamina and Saba Jatiluhur Limited relating to this contract or the interpretation and performance of any of the clauses of this contract, and which cannot be settled amicably, shall be submitted to the decision of arbitration. The decision of a majority of the arbitrators shall be final and binding upon the parties. Arbitration shall be conducted at a place to be agreed upon by both parties and in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce.
Saba Jatiluhur Limited shall not disclose geological, geophysical, petrophysical, engineering, well logs and completion, status reports and any other data as Saba Jatiluhur Limited may compile during the term hereof to third parties without Pertamina's written consent. This clause shall survive after the termination of this contract.
Pertamina shall have title to all original data resulting from the petroleum operations Saba Jatiluhur Limited may compile, provided however, that all such data shall not be disclosed to third parties without informing Saba Jatiluhur Limited and giving it the opportunity to discuss the disclosure of such data.
The laws of the Republic of Indonesia shall apply to this contract. No term or provision of this contract, including the agreement of the parties to submit to arbitration, shall prevent or limit the Government of the Republic of Indonesia from exercising its inalienable rights.