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Afghan-Taj ik Basin Phase I Tender

ISLAMIC REPUBLIC OF AFGHANISTAN
MINISTRY OF MINES & PETROLEUM
THE AFGHAN-TAJIK BASIN PHASE I TENDER
EXPLORATION AND
PRODUCTION SHARING CONTRACT
FOR
HYDROCARBONS EXPLORATION,
DEVELOPMENT AND PRODUCTION
IN
SANDUQLI BLOCK

8 October 201 3

Afghan-Tajik Basin Phase I Tender



TABLE OF CONTENTS



ARTICLE I DEFINI TIONS & INTERPRETATION ..................................................................... 2

ARTIC LE II GRANT OF RIGHTS TO THE CONTRACTOR ................................................... 10

ARTICLE II I TERM .............. ...................................................................................................... 11

ARTICLE IV RELINQU ISHMEN T .................................................. ..... ...................................... 12

ARTICLE V GENERAL OBLIGATIONS OF THE CONTRACTOR ........................................ 13

ARTICLE VI EXPLORATION PHASE; WINNING BIDDER'S EXPLORATION

PROGRAM ..................... ...................... ...................................... ........................................... 21

ARTICLE VII DI SCOVERY; DEVELOPMENT AND PRODUCTION .................................... 22

ARTICLE VIII FINAN CIAL AND PERFORMANCE GUARANTEES; BONUSES ................ 30

ARTICLE IX OBLIGATI ONS OF THE MIN ISTRY .................................................................. 32

ARTICLE X ALLOCATION OF PRODUCTION ...................................................................... . 34

ARTICLE XI MEASUREMENT OF HYDROCARBONS .................... ..................................... 37

ARTICLE XII DOMESTIC REQU IREMENTS ............................ .. ...... ..................................... 38

ARTICLE XIII PAYM ENT PROCEDURE ................................... .... ..... ............................... ...... 40

ARTICLE XIV SURFACE RENTA L FEES .................................... ....... .................................... . 40

ARTICLE XV NATURAL GAS .................................................................................................. 42

ARTIC LE XVI INCOME TAX ................. ........................................ ...... ..................................... 44

ARTICLE XVII CUSTOMS DUTIES ........... .................................... ...... ..................................... 45

ARTICLE XVIII EXCHANGE AND CURRENCY CONTROLS ............................................. .46

ARTICLE XIX TREATMENT UNDER AFGHANISTAN LAW ... .... ........................................ 47

ARTICLE XX TRAI NING, EMPLOYMENT AND LOCAL CONTENT ................................. .47

ARTICLE XX I PURCHA SES IN AFGHANISTAN ................................................ .... ...............48

ARTICLE XXII JOINT DEVELOPMENT ! UNITIZATION .................................................... .48

ARTICLE XXIII HEALTH, SAFETY AND ENV IRONMENTAL PROTECTION .................. 51

ARTICLE XXIV DISPUTE SETTLEM ENT! ARBITRA TlON ........................... ........ .......... ..... 54

ARTICLE XXV TERMINATI ON AND REVOCATION ..... .. ... ................................................. 56

ARTICLE XXVI BOOKS, ACCOUN TS AND AUDITS; RECORDS, REPORTS

AND INSPECTIONS ...................... ........................................................................................ 59

ARTICLE XXV II INSURANCE AND IN DEMNIFICATION .... .... .. ..................................... .... 61

ARTICLE XXVIII ASSIGNMEN T AND SUBCONTRACTORS ..... ......................................... 62



16464&63vl



Afghan-Tajik Basin Phase I Tender

ARTICLE XXIX LAW OF THE CONTRACT ....... ................................................... ........ .......... 65

ARTICLE XXX FORCE MAJEURE .... ... .......... ........ ................................................. ................. 65

ARTICLE XXXI ENTIRE CONTRACT AND AMENDMENTS ............................................... 65

i\RTICLE XXXII WAIVERS; CUMULi\TIVE REMEDIES ................ .................................. ... 66

ARTICLE XXXIII TRANSPARENCY IN AFGHANISTAN HYDROCi\RBONS

OPERATIONS ............................................. ........................................................................... 66

ARTICLE XXXIV NOTICES ...................................................................................................... 67

ARTICLE XXXV EFFECTIVENESS AND REGISTRATION .................................................. 68

EXHIBIT A



DESCRIPTION OF CONTRACT AREA AND SUPPLEMENTAL

EXPLORi\ TION AREA



EXHIBIT B



MAP OF CONTRACT AREA AND SUPPLEMENTAL EXPLORATION i\REA



EXHIBIT C



i\CCOUNTING PROCEDURES



EXHIBIT D



FINANCIAL GUARANTEE



EXHIBIT E



GENERAL PERFORMANCE GUARANTEE



EXHIBIT F



LONG RANGE PLAN FOR THE TRAINING OF AFGHAN NATIONALS



EXHIBIT G



BIDDING FORM



EXHIBIT H



MINIMUM EXPLORATION PROGRAM



EXHIBIT I



WINNING BIDDER'S EXPLORATION PROGRAM



EXHIBIT J



ARTICLE X CALCULATION EXAMPLE



EXHIBIT K



FORM OF HYDROCARBONS LICENSE



EXHIBIT L



FORM OF PERMIT FOR DEVELOPMENT AND PRODUCTION

OPERATIONS



- 11-



Afghan-Tajik Basin Phase I Tender



EXPLORATION AND

PRODUCTION SHARING CONTRACT

THIS CONTRACT, made and entered into this 8th day of October, 2013, by and between THE

MINISTRY OF MINES & PETROLEUM OF THE GOVERNMENT OF THE ISLAMIC

REPUBLIC OF AFGHANISTAN (hereinafter referred to as the "Ministry"), acting on behalf

of the Government of the Islamic Republic of Afghanistan (hereinafter referred to as the

"Government"), Dragon Oil (Sanduqli) Limited, a corporation duly organized and existing

under the laws of Bermuda ("Dragon Oil"), TP Afghanistan Limited, a corporation duly

organized and existing under the laws of Jersey ("TPAL") and Ghazanfar Investment Ltd., a

corporation duly organized and existing under the laws of the Islamic Republic of Afghanistan

("Ghazanfar").



RECITALS

I.



WHEREAS, the entire property in, and control of, all Hydrocarbon resources in or under

the territory of Afghanistan is cxclusively vested in the State under Afghanistan Law;



2.



WHEREAS, the Ministry wishes to promote the initiation of production and processing

of the known Hydrocarbon resources to meet current and future demands for energy and

related products, services and activities and prioritize the early production of

Hydrocarbons and, in parallel with the aforementioned activities, wishes that the

Contractor use sufficient resources to thoroughly assess the Hydrocarbon potential in the

Contract Area, and the Contractor desires to join and assist the Ministry in achieving

these objectives and goals for the exploration for, and production of: the Hydrocarbon

resources within the Contract Area;



3.



WHEREAS, the Contractor represents that it has the financial resources, technical

competence and professional skills necessary to carry out the Hydrocarbons Operations

hereinafter described;



4.



WHEREAS, each Contractor Entity acknowledges that it is familiar with the laws and

regulations of Afghanistan and that it has the means to maintain such familiarity during

the term of this Contract; and



5.



WHEREAS, in accordance with the Hydrocarbons Law of Afghanistan, Exploration and

Production Sharing Contracts for Hydrocarbons may be entered into between the

Ministry and foreign or domestic contractors.



CONTRACT

NOW, THEREFORE, the Parties hereby agree as follows:



Afghan-Tajik Basin Phasc I Tcndcr



ARTICLE I

DEFINITIONS & INTERPRETATION

1.1



Definitions. In this Contract, the following terms shall have the following meanings:

"Accounting Procedures" shall mean the accounting procedures set forth in Exhibit C.

"Affiliated Entity" shall mean any entity directly or indirectly controlling, controlled by

or under common control with, a specified entity. For the purposes of this definition,

"control," when used with respect to any specified entity, means the powcr to direct,

administer and dictate the policics of such entity (it being understood and agreed that it is

not necessary to own directly or indirectly fifty percent (50%) or more of such entity's

voting securities to have control ovcr such entity, but ownership, direct or indirect, of

fifty percent (50%) or more of such cntity's voting securities shall be deemed to

constitute control).

"Afghanistan Law" shall mean any and all laws and regulations applicable in the

Islamic Rcpublic of Afghanistan, including, for the avoidance of doubt, international

conventions to which Afghanistan is a party.

"Appraisal Program" shall mean the program for appraising a Discovery established

pursuant to Section 7.1.

"Appraisal Program Budget" shall mean the estimate of the costs of all itcms included

in the corresponding Appraisal Program, including both capital and operating budgets, all

in a form acceptable to the Ministry.

"Arm's-Length Sales" shall mcan bona fide commercial sales made at arm's Icngth

between willing and unrelated buycrs and sellers in exchange for cash, excluding sales

involving barter, sales from government to government and othcr transactions motivatcd

in whole or in part by considerations other than the usual economic incentives involved in

bona fide commercial sales of Hydrocarbons in the international market, providcd that a

salc of Hydrocarbons shall not be deemed an Arm's-Length Sale unless made at (i) the

applicablc Delivery Point or (ii) another point of sale as to which thc Parties have

prcviously agreed upon a standard location differential to account for deemed

transportation costs from the applicable Dclivery Point to the point of sale.

"Associated Gas" shall mean Natural Gas that is produced in association with Liquid

Hydrocarbons that can be produced commercially.

"Barrel" shall mean a quantity or unit of Liqu id Hydrocarbons equal to 158.9874 liters

(forty-two (42) United States gallons) at a temperature of sixty (60) degrecs Fahrenheit

(15 .56 degrees Centigrade) under onc atmosphere of pressure.

"Baseline Environmental Assessment" shall mean a report containing a description of

the environment in the subject area prior to the commencement of Hydrocarbons

Operations, including the then existing flora and fauna, soil, air quality, underground and

2



Afghan-Tajik Basin Phase I Tender

surface watcr, landscape aesthetics, farming conditions, and socio-economic conditions in

loca l communities.

"Calendar Year" shall mean a period of twelve (12) consecutive Months, commencing

January I st and ending Dccember 31 st.

"Commercial Discovery" shall mean a Discovery which, as determined in accordance

with thc provisions of Section 7.1, can be produced commercially, bascd on con sideration

of all pertincnt operating and financial data, such as Hydrocarbons volumes, rccoverable

rcserves, sustainable production levels and other relevant technical and cconomic factors,

according to Good Oil Ficld Practices.

"Commercial Discovery Declaration Date" shall have the meaning set forth in Section

7.1 (k)(ii).

"Contract" shall mean this Exploration and Production Sharing Contract, including all

Exhibits hereto, as the same may be amended from time to time.

"Contract Area" shall mean the area described as such in Exhibit A and de lineated as

such in Exhibit B, as the same may be reduced by relinquishments made in accordance

with the terms of this Contract.

"Contract Year" shall mean (i) the period commencing on the date that the License for

Hydrocarbons Operations is granted to the Contractor pursuant to Section 9.2(1) and

ending on the first anniversary of the last Day of the Month in which the License for

Hydrocarbons Operations is granted to the Contractor pursuant to Section 9.2(1) and (ii)

thereafter, each period of twelve (1 2) consccutive Months, commencing on the first Day

of the Month following the end of the previous Contract Year and ending on the next

anniversary of the last Day of the Month in which the License for Hydrocarbons

Operations is granted to the Contractor pursuant to Section 9.2(f).

"Contractor" shall mean the Contractor Entities, collectively.

"Contractor Entity" shall mean cach of Dragon Oil , TPAL and Ghazanfar and any of

their rcspective successors or assigns permitted in accordance with this Contract. For the

avoidance of doubt, at any timc when there is only one entity constituting thc Contractor,

any reference made in this Contract to "the entities constituting the Contractor" or similar

reference, shall be deemcd to mean "the entity constituting the Contractor" .

"Cost Recovery Hydrocarbons" shall mcan the Hydrocarbons received by the

Contractor in recovery of Hydrocarbons Operations Expenditures in accordance with the

provisions of Section I 0.1 (b).

"Customs Duties" shall mean all duties, taxes or imposts (except chargcs paid to thc

Government for actual services rcndered, such as normal handling and storage charges)

which are payable as a result of the importation or exportation of the item or itcms under

consideration.



3



Afghan-Tajik Basin Phase I Tender

"Day" shall mean a Gregorian calendar day.

"Delivery Point" shall mean a point or the points relating to a Field, at or after

extraction, specified in the approved Development Program for such Field, at which the

Hydrocarbons are measured for the purposes of Section 11.3, valued for the purposes of

Section 10.1 and ready to be taken and disposed of, consistent with Good Oil Field

Practices.

"Development and Production Operations" shall mean all Hydrocarbons Operations in

and relating to a Fie ld, including those conducted to facilitate the extraction of

Hydrocarbons.

"Development and Production Phase" shall mean the period referred to in Section 3.2.

"Development Program" shall mean the program for developing a Field established

pursuant to Section 7.1.

"Development Program Budget" shall mean the estimate of the costs of all items

included in the corresponding Development Program, including both capital investment

requirements and operating budgets, operating costs and sales revenues, and the

anticipated type and source of financing, all in a form acceptable to the Ministry.

"Discovery" shall mean a structure or accumulation or group of structures or

accumulations proved by drilling to be bearing Hydrocarbons, whether deemed to be the

subject of commercial development or not, including any extension of a previous

Discovery.

"Effect ive Date" shall mean October 8, 2013.

"EITI" shall mean the Extractive Industries Transparency Initiative and related

implementing requirements, including the EIT! Principles, EITI Criteria, and EITI

Requirements, the EIT! Articles of Association, the EITI Validation Guide and Policy

Notes issued by the EITI International Secretariat conveying decisions taken by the EITI

International Board.

"Environmental Impact Assessment" shall mean a report prepared in connection with a

Development Program submitted pursuant to Section 7.I(i)(ii) or, if required, before

commencement of certain Exploration Operations pursuant to Section 6.2, and containing

a description of the ecosystem in the subject area prior to the commencement of

Development and Production Operations or Exploration Operations, as applicable,

including the flora and fauna , soil , air quality, underground and surface water, landscape

aesthetics, and the aspects of the ecosystem which may be affected qualitatively and

quantitatively by the operations, the effect of the operations on local populations, if any,

and the soeio-economic conditions of those individuals.

"Evaluation Agreement" shall have the meaning set forth in Section 15.2(d).

"Expertise Rules" shall have the meaning set forth in Section 24.2.



4



Afghan-Tajik Basin Phase I Tender

"Exploration Operations" shall mean geological studies, geochemical studies,

geophysical studies, aerial mapping, seismic surveys, investigations relating to the

subsurface geology including structure test drilling, stratigraphic test drilling, drilling of

Exploration Wells, and other related activities such as surveying, dri ll site preparation

and all work necessarily connected therewith, that is conducted in connection with

Ilydrocarbons exploration.

"Exploration Phase" shall mean the period(s) referred to in Section 3.1.

"Exploration Well" shall mean a Well drilled in the course of Exploration Opcrations,

where the target or objective of such well is outside or at a different depth of horizon of

the known accumulations.

"Field" shall mean an area, as designated by agreemcnt between the Min istry and the

Contractor, relating to the same geological structures or accumulations, where a

Commercial Discovery of Liquid Hydrocarbons or Natural Gas has been declared.

"Financial Guarantee" shall mean a standby letter of guarantce in the amount

determined in accordance with Exhibit H, in the form attached hereto as Exhibit D or in a

reasonably sim ilar form acceptable to the Ministry, issued by a bank subjcct to the

jurisdiction of and approved by the Government.

"First Extension Period" shall have the meaning set forth in Section 3.1.

"Force Majeure" shall have the meaning set forth in Article XXX.

"General Performance Guarantee" shall mean a guarantee of the Contractor's

obligations hereunder, in the form attached hereto as Exhibit E, by the ultimate parent

entity (or entities) of each Contractor Entity in a maximum amount equal to thc product

of (i) such Contractor Entity's Participating Interest and (ii) one hundred million US

Dollars (US$ 100,000,000), to be executed and delivered to the Ministry simultaneously

with the execution of this Contract.

"Good Oil Field Practices" shall mean such practices and procedures employed in the

Ilydrocarbons industry worldwide by prudent and diligent operators under conditions and

circumstances similar to those experienced in connection with the relevant aspect or

aspects of the Hydrocarbons Operations, intended principally at guaranteeing: (i)

environmental protection, which calls for the adoption of mcthods and processes which

avoid or minimize the adverse impact of Hydrocarbons Operations on the environment,

including avoiding or minimizing damage to flora and fauna; (ii) operational safety,

which entails the use of methods and processes that promote occupational safety and the

prevention of accidents; and (iii) conservation of Hydrocarbons resources, which implies

the utilization of adequate methods and processes to maximize the recovery of

Hydrocarbons in a technically and economically sustainable manner, with a

corresponding control of reserves decline, using principles of maximum efficient

production rates and other conservation principles, and to minimize losses at the surface

and avoid waste.



5



Afghan-Tajik Basin Phase I Tender

"Gross Contractor Revennes" shall mean the value of Cost Recovery Hydrocarbons

and Net Hydrocarbons allocated to the Contractor in accordance with Section I 0.1 and

any other proceeds derived from Hydrocarbons Operations as set forth in the Accounting

Procedures.

"Hydrocarbons" shall mean Liquid Hydrocarbons and Natural Gas .

"Hydrocarbons Law" shall mean the Ilydrocarbons Law 2009 of Afghanistan.

"Hydrocarbons Operations" shall mean any operations relatcd to prospecting,

exploration, extraction, production, field scparation, storage, transportation, or sale of

Hydrocarbons, but not transportation beyond the border exit-point for exports or after

delivery into a refinery or processing plant.

"Hydrocarbons Operations Expenditures" shall mean expenditures made in

conducting Hydrocarbons Operations hereunder, as well as decommissioning and

abandonment operations, as determined in accordance with the Accounting Procedures.

"Hydrocarbons Register" shall mean the registration of documents, reports and records

of Hydrocarbons Operations establ ished in accordance with the Hydrocarbons Law.

"Hydrocarbons Regulations" shall mean the lIydrocarbons Regulations 2009 of

Afghanistan .

"Income Tax" shall mean the tax imposed on Net Taxable Income pursuant to the

Income Tax Law.

"Income Tax Law" shall mean the Income Tax Law (2009) of Afghanistan .

"Initial Commercial Production" shall mean, with respect to any Field, the date on

which the first regular shipment of Liquid Hydrocarbons or Natural Gas, or both, is made

from such Field under a program of regular production hereunder.

"Initial Exploration Period" shall have the meaning set forth in Section 3.1.

"License" shall mean the license granted to the Contractor pursuant to Section 9.2(1), in

the form attached hereto as Exhibit K, certifying that the Contractor holds this

Exploration and Production Sharing Contract and is therefore cntitled to conduct

Hydrocarbons Operations within the Contract Area.

"Liquid Hydrocarbons" shall mean crude mineral oil, asphalt and all other kinds of

hydrocarbons and bitumen, regardless of gravity, which are produced at the wellhead in a

liquid or solid state at ambient conditions of temperature and atmospheric pressurc, or

which are extracted from Natural Gas by condensation.

"Market Price" shall mean, with respect to each type and grade of Hydrocarbons

produced from the Contract Area in a given Quarter, the weighted average net price per

unit obtained by the Contractor or any of its Affiliated Entitics at the applicable Delivery



6



Afghan-Tajik Basin Phase I Tender

Point from Arm's-Length Sales of such Hydrocarbons during the Quarter (after deduction

of a standard location ditferential agreed between the Parties to account for deemed

transportation costs from the applicable Delivery Point to the point of sale); provided that

if less than fifty percent (50%) of the total volume of sales of such Hydrocarbons during

the Quarter are Arm's-Length Sales, then the Market Price shall be the price agreed by

the Ministry and the Contractor as reflecting the market price for such Hydrocarbons at

the applicable Delivery Point for the Quarter.

"Maxim um Efficient Rate" shall mean the maximum rate of production of

Hydrocarbons in a Field, without excessive rate of decline of production or excessive loss

of reservoir pressure, and in accordance with Good Oil Field Practices and the provisions

of Section 7 .2(b).

"Minimum Exploration Program" shall mean the minimum work commitment for

Exploration Operations to be undertaken by the Contractor during the Exploration Phase

as set forth in Exhibit H and which is subject to the terms of the Financial Guarantee.

"Month" shall mean a Gregorian calendar month.

"Natural Gas" shall mean any Hydrocarbons which at ambient conditions of temperature

and pressure are found in a gaseous state, and includes dry mineral gas, including coalbased methane, wet gas and residue gas remaining after the extraction, processing or

separation of Liquid Hydrocarbons from wet gas, as well as non-Hydrocarbon gas or

gases produced in association with liquid or gaseous Ilydrocarbons, including the residue

gas remaining after the condensation of Liquid Hydrocarbons. but excluding condensed

or extracted Liqu id Hydrocarbons.

"Net Hyd rocarbons" shall mean the quantity of Hydrocarbons produced and saved and

not used in Hydrocarbons Operations or flared or re-injected into the Contract Area, after

deduction of the Royalty and the Cost Recovery Hydrocarbons .

"Net Taxable Income" shall mean net taxable income as determined in accordance with

the prov isions of the Income Tax Law .

"Non-Associated Gas" shall mean Natural Gas that is produced without association with

Liquid Hydrocarbons or in association with Liquid Hydrocarbons that cannot be

produced commercially.

"Operator" shall mean the Contractor Entity designated by the Contractor pursuant to

Section 5.2 which, in the name and on behalf of the Contractor, shall carry out

Hydrocarbons Operations in the Contract Area.

"Participating Interest" shall mean each Contractor Entity's undivided share (expressed

as a percentage of the total shares of all Contractor Entities) in the rights and interests of

the Contractor under this Contract.

"Parties" shall mean the Ministry, each Contractor Entity and their permitted successors

and assigns.



7



Afghan-Tajik Basin Phase I Tender

"Person-in-Charge" shall mean the competent Person appointed by the Operator to be in

charge of all Hydrocarbons Operations hereunder.

"Progressive Tax Rate" means, in relation to Income Tax, a tax rate that increases as

Net Taxable Income increases.

"Quadrant" shall mean the area demarcated by five (5) minutes of longitude and five (5)

minutes of latitude. Quadrants are identified in Exhibits A and B.

"Quarter" shall mean a period of three (3) consecutive Months commencing with the

first day of January, April, July or October.

"RGIlP" or "Recoverable Gas Initially in Place" means Natural Gas initially in place

and having a reasonable certainty of being recoverable under existing economic and

political conditions, us ing existing technology.

"RQIlP" or "Recoverable Oil Initially iu Place" means Liquid Ilydrocarbons initially

in place and having a reasonable certainty of being recoverable under existing economic

and political conditions, using existing technology.

"Royalty" shall mean twelve and six-tenths percent (12.6%) of the Hydrocarbons

produced and saved from the Contract Area and not used in Hydrocarbons Operations

prior to the Delivery Point, or lost, flared or re-injected into the Contract Area, which is

allocated to the Ministry before allocation to the Contractor of the Cost Recovery

Ilydrocarbons, all as set forth in Article X.

"Screeuing Report" shall mean a report prepared for review by the National

Environmental Protection Agency under its current regulations or procedures to

determine whether an Environmental Impact Assessment shall be required for any

Hydrocarbons Operations.

"Second Extensiou Period" shall have the meaning set forth in Section 3.1.

"Shareholder" means any person holding shares or other voting securities of a

Contractor Entity from time to time.

"Siguature Bonus" shall have the meaning set forth in Section 8.6(a).

"Social Impact Assessment" shall mean a social impact report prepared in connection

with Section 6.3 or Section 7.1(i)(ii), assessing the probable impacts on affected

communities of proposed Exploration Operations or Development and Production

Operations, as applicable, including mitigation strategies and plans for community

engagement and development, benefit sharing, labor welfare, resettlement and

rehabilitation, and resolution of grievances. Each Social Impact Assessment shall be in

such form and otherwise comply with any guidelines published by the Ministry or the

National Environmental Protection Agency.

"State" shall mean the Islam ic Republic of Afghanistan .



8



Afghan-Tajik Basin Phase I Tender

"Supplemental Exploration Area" shall have the meaning set forth in Section 22.3, as

further described and delineated in Exhibit A and Exhibit B, and shall be subject to

relinquishments made in accordance with the terms of this Contract.

"U.S. Dollars" or "US$" shall mean the lawful currency of the Un ited States of America.

"Well" shall mean any opening in the ground made or being made by drilling or boring,

or in any other manner, for the purpose of exploring for and/or producing Hydrocarbons,

or for the injection of any gas or fluid into an underground deposit, other than a seismic

hole or a stratigraphic test hole .



"Winning Bidder" shall mean the consortium that submitted the bid in the Afghan-Taj ik

Basin Phase [ Tender that was awarded this Contract, as such consortium may have been

changed prior to the date hereof with the approval of the Ministry.

"Winning Bidder's Exploration Program" shall mean the work commitment

Exploration Operations undertaken by the Contractor as set forth in Exhibit I. For

avoidance of doubt, the Financial Guarantee shall not apply to such portion of

Winning Bidder's Exploration Program which is in excess of the requirements of

Minimum Exploration Program.



for

the

the

the



"Work Program" shall mean, as applicable, (i) the initial work program prepared by the

Contractor pursuant to Section 5.3(a) itemizing the Hydrocarbons Operations to be

carried out in the Contract Area during the period from the Effective Date until December

31, 2013 and (ii) for each subsequent Calendar Year, the annual work program prepared

by the Contractor pursuant to Section 5.3(b) itemizing the Hydrocarbons Operations to be

carried out in the Contract Area during such Calendar Year.

"Work Program Budget" shall mean the estimate of the cost of all items included in the

corresponding Work Program, including both capital and opcrating budgets, all in a form

acceptable to the Ministry.

1.2



Interpretation, Unless the context otherwise requires:

(a)



the word "including" means including, without limitation; words in the singular

include the plural and words in the plural include the singular; and the words

"hereof," "herein" and "hereunder" refer to this Contract as a whole;



(b)



references herein to Articles, Sections and Exh ibits are to the Articles, Sections

and Exhibits ofthis Contract;



(c)



the headings of this Contract are included for purposes of convcnience only and

are not to be uscd in the interpretation of this Contract;



(d)



references herein to each of the Parties shall include their respective successors

and permitted assigns; and



9



Afghan-Tajik Basin Phase I Tender

(e)



any agreement, instrument or statute defined or referred to herein or in any

instrument or certificate delivered in connection herewith means such agreement,

instrument or statute as from time to time amended, modified, supplemented or

replaced.



ARTICLE II

GRANT OF RIGHTS TO THE CONTRACTOR

2. 1



Exclusive R ights. Subject to the terms and conditions set forth in this Contract, the

Ministry grants to the Contractor the exclusive right to conduct Hydrocarbons Operations

within (i) the Contract Area for the duration of this Contract and (i i) the Supplemental

Exploration Area in accordance with Section 22.3. The Contractor shall acquire a share

of extracted Hydrocarbons as set out herein and shall, except as provided in Sections

12. 1, 12.3 and 12.4, have the right, during the term of this Contract, to freely take, sell

and export such share. For the avoidance of doubt, titlc and risk of loss of the

Contractor's share of extracted Hydrocarbons shall pass from the State to the Contractor

at the applicable Delivery Point.



2.2



Sole R isk, Cost and Expense. Exccpt as otherwise expressly provided in this Contract,

the Contractor shall conduct all Hydrocarbons Operations hereunder at its so le risk, cost

and expense and shall look only to the Hydrocarbons to which it is cntitled under this

Contract to recover such costs and expenses, and such Hydrocarbons shall be the

Contractor's sole source of compensation hereunder.



2.3



Independent Contractor. The Contractor shall be responsible to the Ministry for the

execution of all Hydrocarbons Operations in accordance with the provisions of this

Contract. Without prejudice to the Contractor' s position as an independent contractor

hereunder, the extent and character of such work to be done by the Contractor shall be

subject to the general supervision, review and approval of the Ministry, to which the

Contractor shall report and be responsible as set forth herein and in the applicablc

legislation and regulations.



2.4



Pa rticipat ing Interests.

Contractor Entities are:



As of the Effective Date, the Participating Interests of the



Dragon Oil: 40%

Ghazanfar: 20%

TPAL: 40%

If a Contractor Entity transfers or assigns all or part of its Participating Interest under the

provisions of this Contract, the Participating Interests of the Contractor Entities shall be

revised accordingly.



10



Afghan-Tajik Basin Phase I Tender



ARTICLE III

TERM

3.1



Exploration Phase. The Contractor is authorized to conduct Exploration Operations

within the Contract Area and the Supplemental Exploration Area (subject to Section

22.3) during the Exploration Phase, which shall be comprised of (i) an initial exploration

period of four (4) Contract Years ("Initial Exploration Period") commencing on the date

that the License for Hydrocarbons Operations is granted to the Contractor pursuant to

Section 9.2(f), and (ii) subject to the conditions hereinafter provided, two (2) successive

extension periods ("First Extension Period" and "Second Extension Period") of two (2)

Contract Years each. Such extension periods shall be granted to the Contractor upon the

Contractor's request delivered to the Ministry not later than ninety (90) Days prior to the

expiration of the then current period, subject to the Contractor having fulfilled its

obligations under this Contract for the then current period, including the relinquishment

provisions of Article IV, and having submitted with such request a Work Program and

Work Program Budget, as well as a Financial Guarantee for an amount equal to the

estimated expenditures associated with the Minimum Exploration Program for the period

of extension, all of which is to be consistent with the undertakings set forth in Article VI.



3,2



Development and Production Phase. If a Commercial Discovery is declared, the

Contractor shall commence Development and Production Operations (the "Development

and Production Phase") in respect of the Field where such Commercial Discovery has

been declared, subject to the Ministry's approval of a Development Program and

Development Program Budget submitted pursuant to Section 7.1 (i)(ii).



3.3



Absence of Commercial Discovery; Termination and Extension. If at the end of the

Exploration Phase, no Commercial Discovery has been made in any part of the Contract

Area, this Contract shall terminate in its entirety, except that the Ministry shall grant an

extension for such period, and for such area as may be necessary (i) for the Contractor to

complete the drilling, testing, appraisal or plugging of any Well actually being drilled,

tested, appraised or plugged at the end of the Exploration Phase and (ii) for the Ministry

and the Contractor to determine that a Discovery is a Commercial Discovery pursuant to

Section 7. 1.



3.4



Term of Development and Production Phase. In the event of a Commercial

Discovery, the extent of the area capable of production of Hydrocarbons from the

formation or formations so identified shall be determined in accordance with the

provisions oil Section 7.1 or Article XV. The area so determined shall thereupon be

converted automatically into a Field, with effect from the Commercial Discovery

Declaration Date. The term of the Development and Production Phase for each Field

shall extend for a maximum of twenty-five (25) years from the date on which a permit to

conduct Development and Production Operations in respect of such Field has been

granted pursuant to Section 7.1 (k)(iv).



3.5



Extension of Development and Production Phase. In the event that the Contractor has

fulfilled all its obligations for the specified term of the Contract, the Contractor may

11



Afghan-Tajik Basin Phase I Tender

request an extension of the Development and Production Phase for a further period not

exceeding ten (10) years. The Ministry shall approve any such request, unless the

Contractor has failed to establish an economic basis for such extension, subject to the

provisions of the Hydrocarbons Law.



ARTICLE IV

RELINQUISHMENT

4. 1



4.2



Exploration Phase. Without prejudice to Section 7.1 , during the Exploration Phase, the

Contractor shall relinquish to the Ministry parts of the original Contract Area as follows:

(a)



on or before the end of the Initial Exploration Period, the Contractor shall

relinquish at least twenty-five percent (25%) of the original Contract Area that has

not been converted into a Field;



(b)



on or before the end of the First Extension Period, the Contractor shall relinquish

at least an additional area equal to twenty-five percent (25%) of the remaining

Contract Area that has not been converted into a Field; and



(c)



at the end of the Exploration Phase, the Contractor shall relinquish the remainder

of the Contract Area that has not been converted into a Field or has not had a

Discovery which is under evaluation for development or is otherwise subject to an

Evaluation Agreement.



Size and Shape of Relinqnished Areas . The size and shape of the part or parts of the

Contract Area to be relinquished shall be determined by the Contractor; provided,

however, that:

(a)



the Contractor shall advise the Ministry at least ninety (90) Days prior to the date

of relinquishment which parts of the Contract Area the Contractor wishes to

relinquish;



(b)



the Contractor shall consult with the Ministry regarding the shape and size of each

individual portion of the areas being relinquished; and



(c)



un less the Ministry expressly allows otherwise, the area being relinquished shall

not be divided into more than two (2) portions, each of which shall comprise, and

be defined by reference to, graticular sections as described in Exhibit B, provided,

however, that the Ministry shall permit the area being relinquished to be divided

into more than two (2) portions if necessary to avoid including within the area

part or all of a Field or area in which a Discovery has been made which the

Contractor is not otherwise required to relinquish hereunder. To the extent that the

boundaries of the original Contract Area permit, each individual portion being

relinquished shall:



12



Afghan-Tajik Basin Phase I Tender

(i)



be not less than twenty percent (20%) of the area being relinquished at

such time;



(ii)



be not less than fifty percent (50%) of the largest ind ividual portion being

relinquished at such time;



(iii)



have a longest side not more than three times as long as the shortest side;

and



(iv)



have sides parallel to the boundaries of the original Contract Area.



4.3



Voluntary Relinquishment. The Contractor shall have the right to relinquish all or any

part of the Contract Area upon at least ninety (90) Days' written notice to the Ministry.

In the event of partial relinquishment pursuant to this Section 4.3, the area relinquished

shall be credited against that portion of the Contract Area which the Contractor is next

required to relinquish pursuant to Section 4.1.



4.4



Compliance with Obligations. No rel inquishment made in accordance with this Article

IV shall relieve the Contractor of: (a) its obligation to make payments due as a result of

surface rental fees incurred prior to the date of any such relinquishment; (b) its obligation

to comply with the Winning Bidder's Exploration Program; or (e) any other obligation

that may have accrued prior to the date of relinquishment.



4.5



Clean-up and Restoration . Upon relinquishment of any area, the Contractor shall

perform all necessary clean-up activities and undertake all necessary restoration measures

in accordance with Good Oil Field Practices and Afghanistan Law, and shall take all

action neeessary in accordance with Good Oil fie ld Practices to prevent hazards to the

environment, flora and fauna, the local community, human health and life or third-party

property, provided that the Contractor shall have no obligation to restore any area to a

condition better than that established in the Baseline Env ironmental Assessment.



ARTICLE V

GENERAL OBLIGATIONS OF THE CONTRACTOR

5.1



Conduct of Hydrocarbons Operations. The Contractor shall be responsible for

conducting all Hydrocarbons Operations within the Contract Area diligently,

expeditiously and efficiently in accordance with Good Oil Field Practices and the

prevailing legislation and pursuant to Work Programs and Work Program Budgets

approved in accordance with Section 5.3. Without limiting the generality of the

foregoing, the Contractor shall:

(a)



expend all necessary funds and purchase or lease all technology, equipment,

maehinery, materials and supplies required to be purchased or leased in

connection with Hydrocarbons Operations and furnish all other funds for the

performance of Hydrocarbons Operations as may be required, including payment



13



Afghan-Tajik Basin Phase I Tender

to third parties that perform servIces as contractors or subcontractors to the

Contractor;

(b)



provide all technical expertise and assistance, including foreign personnel,

required for the conduct of Hydrocarbons Operations;



(c)



ensure that all equipment, materials, supplies, plant and installations used by the

Contractor, its contractors and subcontractors comply with Good Oil Field

Practi,ces and are of proper construction and kept in good working order;



(d)



ensure that Exploration Wells with shows of Ilydrocarbons sufficient to warrant

testing under Good Oil Field Practices are properly tested;



(e)



use tl;1e resources in the Contract Area as productively as practicable, prevent

damage to producing formations, and ensure that Hydrocarbons discovered,

drilling fluids, mud or any other waste (solid or fluid) do not escape and are not

wasted;



(f)



act in accordance with Good Oil Field Practices to prevent damage to

Hydrocarbon and water bearing strata that are adjacent to a producing formation,

and prevent water from entering any strata bearing Hydrocarbons, except where

water injection methods arc used for enhanced recovery operations or are

intended otherwise in accordance with Good Oil Field Practices;



(g)



act in accordance with Good Oil Field Practices to (i) protect the environment

such as to avoid any damage to flora and fauna and any other pollution of the

environment and (ii) subject to Section 9.3, secure the safety, health and welfare

of persons engaged in Hydrocarbons Operations and the public;



(h)



to the extent possible, prevent and mitigate any risks arising from Hydrocarbons

Operations, and compensate third parties to the extent required by Afghanistan

Law in respect of any actual injury, damage or loss resulting from an act or

omission of thc Contractor, its subcontractors or its agents, employees or

rcpresentatives in the course of the conduct of Hydrocarbons Operations, and

ensure prompt, fair and full compensation to such parties to the extent rcqu ircd by

applicable law and thc decisions of authorized dispute settlement bodies;



(i)



comply with applicable laws relating to employment when employing domestic or

foreign staff, provide acceptable working conditions and living accommodations,

and access to medical attention and nursing care, for all personnel employed by it,

its contractors and its subcontractors in Hydrocarbons Operations, and otherwise

ensure that international norms related to labor, social protection and human

rights are respected and that no child labor or forced labor is used in connection

with Hydrocarbons Operations; and



(j)



comply with the applicable environmental laws and regulations of Afghanistan.



14



Afghan-Tajik Basin Phase I Tender

5.2



Operator.



(a)



The Contractor hereby appoints Dragon Oil to act as the Operator responsible for

carrying out Hydrocarbons Operations in the Contract Area for and on behalf of

the Contractor. Each Contractor Entity hereby authorizes the Operator to take

such actions as agent on behalf of the Contractor and to exercise such rights,

privileges and powers and to comply with such obligations under this Contract as

arc attributed to or imposed on Contractor herein or under Afghanistan Law.



(b)



The Operator shall, subject to the terms and conditions of this Contract, have all

the rights, privi leges, powers and responsibilities of the Contractor set forth herein

and under Afghanistan Law. The Ministry shall be entitled to deal exclusively

with the Operator in respect of all matters relating to this Contract and the

Contractor's performance of Hydrocarbons Operations.



(c)



The Contractor shall notify the Ministry in writing of any proposed change in the

Operator or the Operator's responsibilities and any change in the Operator or the

Operator's responsibilities shall require the prior written consent of the Ministry

(not to be unreasonably withheld).



(d)



All acts and omissions of the Operator under this Contract shall be binding upon

and deemed to constitute acts and omissions of the Contractor. Each Contractor

Entity shall be jointly and severally liable for all duties and obligations of the

Contractor and each Contractor Entity hcreunder except (i) those relating to

payment of Income Tax pursuant to Article XVI and (ii) for the accuracy of

information provided to the Ministry under this Contract in connection with its

own affairs (including but not limited to information provided in connection with

a proposed transfer or assignment pursuant to Article XXVIII), which shall be the

separate obligation of each Contractor Entity.



(e)



Within thirty (30) Days after the Effective Date, (i) the Operator and each

Contractor Entity shall rcgister to do business in Afghanistan and (i i) the Operator

shall appoint and notify the Ministry of the name of a competent Person (the

"Person-in-Charge") to be in charge of all Hydrocarbons Operations in the

Contract Area. The Person-in-Charge shall ensure to the best of his ability that he

and all workers in his charge know and comply with all relevant laws and

regulations , and with any safety manual that is applicable to the operations under

his control. The Person-in-Charge shall ensure that the Contractor's operating

procedures and working conditions provide for the safety of the personnel

engaged in Hydrocarbons Operations, the protection of the equipment used in

Ilydrocarbons Operations, the protection of the environment and the conservation

of resources. The Person-in-Charge shall be responsible for preparing and

submitting to the Ministry on a timely basis all programs, budgets, manuals,

reports, documents and other communications required from the Contractor

pursuant to this Contract or Afghanistan Law.



15



Afghan-Tajik Basin Phase I Tender

(f)



5.3



The Person-in-Charge shall serve as the legal representative in Afghanistan for

the Contractor and each Contractor Entity. The Person-in-Charge shall have an

office in an adequate location in Afghanistan for exercising the tasks of such

representative, bc a rcsident in Afghanistan with legal address and have authority

to represent the Contractor and each Contractor Entity in all matters relating to

this Contract. In the event of replacement of thc Person-in-Charge, such

replaoement shall be similarly notified to the Ministry upon the effective date of

the replacement.



Work Programs and Budgets.

(a)



The Contractor shall prepare and submit to the Ministry for approval a Work

Program and Work Program Budget for Hydrocarbons Operations and

Hydrocarbons Operations Expenditures (i) for the period from the Effective Date

until December 31, 2013 within sixty (60) Days after the Effective Date and (ii)

for the period from January I, 2014 until December 31, 20 14 on or before

November 1,2013. Notwithstanding any other provision of this Contract, the

Work Programs and Work Program Budgets shall include the annual training

programs described in Sections 20.1 and 20.2. The Ministry and the Contractor

shall promptly agree on the Work Programs and Work Program Budgets

submitted pursuant to this Section 5.3(a).



(b)



At least ninety (90) Days prior to the beginning of each Calendar Year

commencing on or after January I, 2015 , the Contractor shall prepare and submit

to the Ministry for approval a Work Program and Work Program Budget for

Hydrocarbons Operations and Hydrocarbons Operations Expenditures by Quarter,

setting forth the Hydrocarbons Operations the Contractor proposes to carry out

during the ensuing Calendar Year.



(c)



To the maximum extent practicable, the Contractor shall involve representatives

of the Ministry in the preparation of the Work Programs and Work Program

Budgets.



(d)



Each Work Program and Work Program Budget shall comply with the Winning

Bidder's Exploration Program (including any changes thereto adopted pursuant to

Section 6.5), as well as with Good Oil Field Practices and the prevailing

legislation and regulations.



(e)



Approval by the Ministry of the proposed Work Programs and Work Program

Budgets will not be unreasonably withheld or delayed.



Cf)



Should the Ministry wish to propose revisions to the Work Program or Work

Program Budget, it shall within thirty (30) Days after receipt thereof so notify the

Contractor, specifying in reasonable detail its reasons for doing so. Promptly

thereafter, the Parties shall meet and endcavor to agree on the revisions proposed

by thc Ministry.



16



Afghan-Taj ik Basin Phase I Tender

(g)



(h)



5.4



If the Contractor and the Ministry fail to agree upon any revisions proposed by the

Ministry within sixty (60) Days of the receipt of the Contractor' s proposals, the

points of disagreement shall be resolved as follows :

(i)



with respect to Work Programs and Work Program Budgets that relate to

Exploration Operations, the Contractor's proposals, revised in accordance

with any agreed amendments or additions thereto, shall be deemed

adopted, provided that they are in compliance with Section 5.3(d); and



(i i)



with respect to Work Programs and Work Program Budgets that relate to

Development and Production Operations, the Contractor's proposals,

revised in accordance with any agreed amendments or additions thereto,

shall be deemed adopted provided that they are consistent with the

Development Program and Development Program Budget adopted

pursuant to Section 7.1 (i)(ii) and arc in compliance with Section S.3(d).



The Parties recognize that the details of a Work Program may require changes in

light of the then prevailing circumstances. In such event, the Contractor may

introduce such changes as may be necessary, following consultation with the

Min istry, but subject to the following:

(i)



in the case of changes to a Work Program and Work Program Budget

relating to Exploration Operations, such changes may be implemented

provided that compliance with Section 5.3(d) is maintained; and



(ii)



in the case of changes to a Work Program and Work Program Budget

relating to Development and Production Operations, such changes may be

implemented to the extent that they are not inconsistent with the

applicable Development Program and Development Program Budget

adopted pursuant to Section 7.1 (i)(ii) and compliance with Section S.3(d)

is maintained.



Drilling Operations.



(a)



The Contractor is required to des ign Wells and conduct drilling operations,

including the casing, cementing and plugging of Wells, in accordance with Good

Oil Field Practices.



(b)



Every Well in the Contract Area shall be identified by name, number and

geographic coordinates, which shall be shown on maps, plans and similar records

that the Contractor shall keep and submit to the Ministry.



(c)



Prior to commencing the drilling of any Well or re-entering any Well on which

work has been discontinued for more than ninety (90) Days, the Contractor shall

give the Min istry written notice no later than seven (7) Days before such work

shall commence and submit a proposed Well program. The proposal shall include

the following information:



17



Afghan-Tajik Basin Phase I Tender

(i)



the official name and number of the Well and a description of its precise

location by reference to geographical coordinates;



(ii)



a detailed work program dcscribing the drilling technique to be employed

and all anci llary operations (including casing, cementing, mud, coring,

logging, Well control and testing), an estimate of the time to be taken and

depth objective, the estimated costs of the Well program , and the safety

measures to be employed in the drilling of the Well;



(iii)



a summary of the geological and geophysical data, and any interpretations

thereof, upon which the Contractor made the decision to drill or

commence work on the respective Well (accompanied by appropriate

maps and cross-sections);



(iv)



the name of the drilling contractor and designation of the drilling rig; and



(v)



the name of other service companies to be employed, together with a brief

description of the equipment and services to be provided.



(d)



If any work related to any Well is suspended for a period exceeding thirty (30)

Days, the Contractor shall notify the Ministry in writing to that effect and shall

provide the Ministry with reasons for suspending work related to that Well.



(e)



The Contractor shall give forty-eight (4S) hours notice in writing before

recommencing work on any Well on which work has been suspendcd for more

than thirty (30) Days but for less than ninety (90) Days.



(f)



The ()ontractor shall not, without the prior written approval of the Ministry, drill

any Well from any surface area within the Contract Area which is less than fivc

hundred (500) meters from a boundary of the Contract Area, or from within the

Contract Area through any vertical boundary of the Contract Area.



(g)



The Contractor shall securely plug and clearly mark any Well that it abandons. in

accordance with Good Oil Field Practices, to prevent pollution and damage to the

deposit and underground strata through the entry of water or otherwise. The

Contractor shall, exccpt when the Ministry otherwise directs or this Contract

otherwise provides, remove all equipment, materials and facilities relating thercto

and provide that ccmented strings or other forms of casing shall not be withdrawn

without the written approval of the Ministry.



(h)



In relation to every Well being drilled, completed, tested or abandoned, thc

Contractor shall submit to the Ministry daily Well reports during the conduct of

drilling operations describing the progress and results of the operations. In

addition, the Contractor shall submit a Well completion report accompanied by

copies of all logs obtained from the Well within two (2) Months from the datc of

rig release of a Well.



IS



Afghan-Tajik Basin Phase I Tender

(i)



The Contractor shall, within one hundred and eighty (180) Days of the completion

of any survey, test or drilling operations, or, in the case of data that cannot

reasonably be obtained or compiled in that period, as soon as possible thereafter,

submit to the Ministry copies of all geological and geophysical data obtained by

the Contractor in the course of conducting Hydrocarbons Operations, including

any interpretations thereof and logs and records of Wells .

The Contractor shall drill each Exploration Well to the depth set forth in the Well

program, unless:



(k)



(i)



formation is encountered at a lesser depth than originally anticipated;



(ii)



basement is encountered at a lesser depth than originally anticipated;



(i ii)



in the Contractor' s reasonable opinion, continued drilling of the

Exploration Well is too hazardous because of abnormal or unforeseen

conditions;



(iv)



Good Oi l Field Practices require the suspension or tcrmination of drilling

operations due to insurmountable, abnormal or unforeseen technical or

operational conditions; or



(v)



the Parties agree in writing to terminate the drilling operations in respect

of the Exploration Well.



If the Contractor determines it is reasonable to stop drilling pursuant to Section

5.4(j), it will notify the Ministry immediately and a determination will be made

jointly whether to amend the Work Program, the Winning Bidder's Exploration

Program, the Minimum Exploration Program and the Well program accordingly

to:

(i)



enable successfu l completion of the Exploration Well;



(ii)



substitute another Exploration Well; or



(iii)



determine an alternative solution acceptable to the Parties.



In the event the Parties elect to substitute another Exploration Well pursuant to

Section 5.4(k)(ii), the amount guaranteed under the Financial Guarantee shall be

reduced by the cost of the abandoned Exploration Well.

5.5



Reports on Hydrocarbons Operations . The Contractor shall kccp the Ministry

regularly and fully informed of the progress and results of all Hydrocarbons Operations

and shall Ilrovide thc Ministry with all geologic information, data, samplcs,

interpretation1s and reports, including progress and completion reports, and keep such

original data! records and full particulars at its registered office in Afghanistan, as are

required under this Contract, the Hydrocarbons Law or applicable regulations .



19



Afghan-Tajik Basin Phase I Tender

5.6



5.7



Other Minerals .

(a)



If, in the course of Hydrocarbons Operations, the Contractor discovers minerals

other than Hydrocarbons in the Contract Area that are of economic value and are

capab,le of being developed, it shall within thirty (30) Days inform the Ministry of

the minerals discovered, their location and such other information as the Ministry

may reasonably request and in addition submit a sample of the discovered

minerals to the Ministry.



(b)



If, after the Effective Date, the Ministry seeks to grant licenses within the

Contract Area authorizing prospecting for, exploration for or mining of any

minerals or other substances other than Hydrocarbons, the Ministry shall obtain

the approval of the Contractor, which approval shall not be unreasonably

withheld .



(c)



If others arc granted licenses within the Contract Area authorizing prospecting

for, exploration for or mining of any minerals or other substances other than

Hydrocarbons, or the Ministry proceeds with such prospecting, exploration or

mining directly on its own behalf, the Contractor shall afford proper passage for

the licensee of mineral rights to the relevant parts of the Contract Area, and usc its

reasonable efforts to avoid obstruction or interference with such licensees' or

Minis1try operations within the Contract Area. The Ministry shall use its

reasonable efforts to ensure that operations of third parties do not obstruct or

interfere with the Hydrocarbons Operations within the Contract Area.



Historic and Cultural Items.

(a)



If, in the course of Hydrocarbons Operations, the Contractor finds signs or marks

or discovers items of any historical or cultural significance, including fossils only

of special significance and other items included on the Archaeological and

Cultural Heritage list, it shall immediately inform the Ministry of the find or

discotery.



(b)



The Contractor undertakes not to rcmove any such items as mentioned above .

The Contractor undertakes to keep any such items safe on its own account on

behalf of the State until they are transported by the relevant State authorities.

However, in easc such transportation is not provided by the State within sixty (60)

Days of reporting, the Contractor may arrange transportation for the items,

provided that all rcasonable transportation and related expenses shall bc borne by

the relevant State authority, whom failing then the Ministry.



(c)



Costs incurred by the Contractor in complying with its obligations pursuant to

Section 5.7(b) shall be considered Hydrocarbons Operations Expenditures

recoverable by the Contractor in accordance with the Accounting Procedures.



20



Afghan-Tajik Basin Phase I Tender



ARTICLE VI

EXPLORATION PHASE; WINNING BIDDER'S

EXPLORATION PROGRAM

6.1



Commencement of Hydrocarbons Operations. The Contractor shall commence

Hydrocarbons Operations within the Contract Area not later than thirty (30) Days after

the later of the date that the Ministry approves the first Work Program and Work Program

Budget and the activities and approvals required under Sections 6.2 and 6.3 are

completed or secured.



6.2



Baseline Environmental Assessment and Screening Report. As soon as practicable

following the, Effective Date and prior to commencing any Exploration Operations that

would be subject to review under the applicable environmental laws of Afghanistan, the

Contractor shall carry out a Baseline Environmental Assessment to determine the then

prevailing situation relating to the environment in the portion of the Contract Area where

the Contractor intends to commence Exploration Operations. The Contractor shall submit

that Baseline Environmental Assessment, along with a Screening Report describing the

Exploration Operations proposed to be conducted in that portion of the Contract Area, to

the National Environmental Protection Agency. If, after review of such Baseline

Environmental Assessment and Screening Report, the National Environmental Protection

Agency determines that an Environmental Impact Assessment and environmental

management plan are required prior to commencement of the proposed Exploration

Operations, the Contractor shall prepare such Environmental Impact Assessment and

environmental management plan in compliance with the regulations or procedures of the

National Environmental Protection Agency and with Section 7.1 (i)(ii)g-7.1 (i)(ii)h.



6.3



Social Impact Assessment. As soon as practicable following the Effective Date and

prior to commencing any Exploration Operations, the Contractor shall prepare and submit

to the Ministry for approval a Social Impact Assessment relating to communities in or

immediately adjacent to the portion of the Contract Area where the Contractor intends to

commence Exploration Operations.



6.4



Winning Bidder's Exploration Program. Subject to Section S.4(k) and Section 6.5, the

Contractor undertakes to carry out and comply with the work commitments established

by the Winning Bidder's Exploration Program. The amount estimated to be expended by

the Contractor in conducting the Minimum Exploration Program is set forth in Exhibit I I

and the amount estimated to be expended by the Contractor in conducting the entire

Winning Bidder's Exploration Program is set forth in Exhibit I.



6.5



Changes to Winning Bidder's Exploration Program. The Parties recognize that the

portion of the Winning Bidder's Exploration Program that exceeds the requirements of

the Minimum Exploration Program may require changes in the event the Contractor

determines th!at:



21



Afghan-Tajik Basin Phase I Tender

(a)



Exploration Operations cannot be conducted as proposed due to abnormal or

unforeseen technical or operational conditions, including the conditions described

in Secrtion 5.4(j); or



(b)



development of a Commercial Discovery should be prioritized in order to

promi te the early production of Hydrocarbons from thc Contract Area.



The Contractor shall notify the Ministry immediately of any such determination and the

Parties shall rpeet as soon as reasonably practicable to determinc jointly whether to adopt

any proposed changes to such portion of the Winning Bidder's Exploration Program;

provided, however, that any such changes shall not reduce the amount estimated to be

expended by the Contractor in conducting the entire Winning Bidder's Exploration

Program as set forth in Exhibit I.



ARTICLE VII

DISCOVERY; DEVELOPMENT AND PRODUCTION

7.1



Discovery; Development.

(a)



The q ontractor shall immediately notify the Ministry in writing of any Discovery,

specifying all pertinent information concerning the Discovery and submitting a

sample of the Hydrocarbons discovered to the Ministry.



(b)



If the Contractor determines to conduct a drill -stem or production test, in open

hole or through perforated casing, with regard to the Discovery, it shall notify thc

Ministry of the time of such test at least forty-eight (48) hours prior to the

proposed test, and the Ministry shall have the right to have a representative

present during such test. The duration of such test shall be in accordance with

Good I Oilfield Practices and Hydrocarbons produced during such test may be

flared. Not later than onc hundred and twenty (120) Days after completion of

such test, the Contractor shall complete its analysis and interpretation of the

rcsulting data and submit a report to the Ministry, which shall contain copies of

such data and its analysis and interpretation thereof, and which shall also contain

a written notification of whether or not, in thc Contractor's opinion, such

Discovery is of commercial intcrest. If the Contractor's report informs the

Ministry that a Discovery of Non-Associatcd Gas is of commercial interest, the

provisions of Section 15.2 shall apply.



(c)



If the Contractor plugs and abandons a Well which encountered a Discovery

without conducting a drill-stem or production test, or fails to conduct a drill -stem

or pr6duction test within one hundred and eighty (I80) Days from the date on

which such Discovery was made (or within such additional period of time as the

Ministry may grant pursuant to Section 15.2 or upon application by the Contractor

demonstrating the Contractor's firm intention to conduct such test and a

compelling commercial rationale for the extension), the Contractor shall be



22



Afghan-Tajik Basin Phase I Tender

deemed to have notified the Ministry that, in the Contractor's opinion, such

Discovery is not of commercial interest

(d)



If, pursuant to Sections 7,I(b) or 7.I(c), the Contractor notifies, or is deemed to

have notified, the Ministry that such Discovery is not of commercial interest, the

Minisfry shall have the option, exercisable by notice in writing to the Contractor,

to rc~uire the Contractor to relinquish the area corresponding to such Discovery

and f?rfeit any rights relating to sueh Discovery and any production from that

area. The area subject to relinquishment shall not exceed the vertical projection to

the surface of the prospective producing area determined by taking into account

the area of the structural closure of the prospective horizon and other relevant

technical factors. Notwithstanding any other provision of this Contract, if the

Contractor notifies the Ministry that it cannot declare a Commercial Discovery in

respect of a Discovery within the time period specified in Section 7.I(b) for

econo/nic reasons, the Ministry agrees that prior to it requiring the Contractor to

relinquish such Discovery, the Ministry shall meet with the Contractor and give

the Cllntraetor the opportunity to discuss the basis on which development of such

relinquished area would be commercially viablc for the Contractor.



(e)



If, pursuant to Section 7.I(b), the Contractor notifies the Ministry that the

Discovery is of commercial interest, the Contractor shall within ninety (90) Days

prepare and submit to the Ministry for approval an Appraisal Program and an

Appraisal Program Budget for the appraisal of such Discovery. Such Appraisal

Program and Appraisal Program Budget shall include a complete program of

appraisal operations necessary to determine whether such Discovery is a

Commercial Discovery.



(f)



Within thirty (30) Days after the submission of the Appraisal Program and

Appraisal Program Budget pursuant to Section 7.1 (e), the Contractor and the

Ministry shall meet with a view to adopting such Appraisal Program and

Appraisal Program Budget or mutually agreeing upon amendments or additions

theretb . Failing agreement between the Contractor and the Ministry as to such

Appraisal Program and Appraisal Program Budget at such meeting, or within

twenty (20) Days thereafter, the original Appraisal Program and Appraisal

Program Budget submitted by the Contractor, revised in accordance with any

agreed amendments or additions thereto, shall be deemed adopted, provided that it

conforms to Good Oil Field Practices and the applicable legislation and

regulations, and the Contractor shall immediately commence implementation

thereof. On adoption of the Appraisal Program and Appraisal Program Budget,

the Work Program and Work Program Budget adopted pursuant to Section 5.3

shall be revised accordingly.



(g)



If, pursuant to Section 7. I(b), the Contractor has notified the Ministry that the

Disco1very is of commercial interest, the Contractor shall, unless otherwise agreed:

(i)



in respect of a Discovery of Liquid Hydrocarbons, advise the Ministry by

notice in writing whether or not in its opinion the Discovery is a



23



Afghan-Tajik Basin Phase I Tender

Commercial Discovery prior to the expiration of the Exploration Phase;

provided, however, that if the Discovery occurs in the final year of the

Exploration Phase, the Contractor shall have a period of twelve (12)

Months following the expiration of the Exploration Phase in which to

advise the Ministry by notice in writing whether or not in its opinion the

Discovery is a Commercial Discovery; and

(ii)



in respect of a Discovery of Non-Associated Gas, advise the Ministry by

notice in writing whether or not in its opinion the Discovery is a

Commercial Discovery within twenty-four (24) Months following

adoption of the Appraisal Program or such other period as may be

stipulated in an agreement made pursuant to Section I S.2(c) or in an

Evaluation Agreement.



The Contractor shall include in any request for an extension of the Exploration

Phase submitted pursuant to Section 3.1 information pertaining to each Discovery

that is of commercial interest and which remains under evaluation for

development, including a description of the feasibility studies and evaluation

activities conducted by the Contractor in respect of such Discovery.

(h)



If Sections 7. I(g)(i) or 7.I(g)(ii) apply to such Discovery and the Contractor

notifies the Ministry that the Discovery is not a Commercial Discovery, or fails to

notify the Ministry that the Discovery is a Commercial Discovery, within the

periods prescribed in Sections 7.1 (g)(i) and 7.1 (g)(ii), the Ministry shall have the

option, exercisable by notice in writing to the Contractor, to require the

Contractor to relinquish the area corresponding to such Discovery and forfeit any

rights relating to such Discovery and any production from that area. The area

subject to relinquishment shall not exceed the vertical projection to the surface of

the p ~ospective producing area determined by taking into account the area of

structural closure of the prospective horizon and other relevant technical factors.

Relinquishment shall be without prejudice to the Contractor' s right to be

reimb~rsed for Hydrocarbons Operations Expenditures in respect of the

relinquished areas to the extent otherwise provided in this Contract.



(i)



(i)



The notice submitted to the Ministry by the Contractor pursuant to

Sections 7.1(g)(i) or 7. I (g)(ii) shall be accompanied by a report on the

Discovery setting forth all relevant technical and economic data, including

geological and geophysical information , areas, thicknesses and extent of

the productive strata, petrophysical properties of the reservoir formations ,

the reservoir' s productivity indices for the Wells tested at various rates of

flow, permeability and porosity of the reservoir formations, the relevant

characteristics and qualities of the Hydrocarbons discovered, additional

geological data and evaluations ofthe reservoir, Liquid Hydrocarbons and

Natural Gas reserves estimates and any other relevant characteristics and

properties of the reservoirs and fluids contained therein, as well as all



24



Afghan-Tajik Basin Phase I Tender

evaluations, interpretations and analyses of such data and feasibility

studies relating to the Discovery prepared by the Contractor, its

contractors, subcontractors and Affiliated Entities .

(ii)



In addition, if the Contractor believes that the Discovery is commercial, a

proposed Development Program and a Development Program Budget fo r

the development of such Discovery shall be submitted to the Ministry for

approval together with the report described in Section 7. 1(i)(i). The

Development Program and the Development Program Budget shall

include the following information:

a.



a description and map of the area that contains such Discovery and

that the Contractor proposes to delineate as a Field. The map

should be defined by reference to gratieular sections and

geological formations;



b.



a detailed report, accompanied by supporting data and all analyses

and interpretations thereof, which demonstrates that the area

described in subparagraph a. above contains, alone or in

conjunction with other areas, as the case may be, a Commercial

Discovcry;



c.



detailed proposals for commencement and a working plan for the

operation of the Hydrocarbons Operations, including drilling

schedules, number of Wells, Well spacing and depth objective,

Delivery Point location, production forecasts and a timing schedule

in accordance with generally accepted engineering practices and

economics of the international petroleum industry, all of which

shall ensure that the area docs not suffer an excessive rate of

decline of production or an excessive loss of reservoir pressure, but

rather keeps such production rates compatible with the nature and

extent of the Hydrocarbon reservoir discovered;



d.



detailed proposals for the construction, establishment and

operation of all facilities and services for and incidental to the

development, extraction, production, storage, transportation, sale

and other disposal of Hydrocarbons and a proposed timetable for

the commencement of Hydrocarbons production, all of which shall

ensure that the area does not suffer an excessive rate of decline of

production or an excessive loss of reservoir pressure;



e.



a detailed forecast of cost estimates, capital investment

requirements, operating costs and sales revenues, and the

anticipated type and source of financing;



f.



a risk management plan prepared in accordance with the

requirements of the Hydrocarbons Law and applicab lc regulations,



25



Afghan-Tajik Basin Phase I Tender

including the measures and directions cstablished by the Ministry

to prevent any damage and remove any hazards that the

Hydrocarbons Operations may cause to affected communities, the

Contractor's personnel and the environment;

g.



an Environmental Impact Assessment;



h.



an environmental management plan, including a socio-economic

management pl an, prepared in accordance with the requirements of

the Hydrocarbons Law and any other applicable laws and

regulations, including the measures planned for the protection of

the environment, the elimination or the reduction of pollution and

the protection and compensation of affected populations if

applicable, and the verification of the effectiveness of such

measures;



OJ



I.



a Social Impact Assessment;



J.



an emergency response plan prepared in accordance with the

requirements of the Hydrocarbons Law and applicable regulations,

including measures to respond to any accident that may occur at

the site of the Hydrocarbons Operations, medical treatment and

evacuation of employees and surrounding populations and the

protection of the environment; and



k.



particulars of feasible alternatives, if any, considered by the

Contractor for the development and exploitation of the Discovery

and economic feasibility studies carried out by or for the

Contractor with respect to the Discovery, taking into account the

location, meteorological conditions, cost estimates, the price of

Hydrocarbons and any other relevant data and evaluations.



The Ministry shall examine the report and any documents submitted pursuant to

Section 7.1 (i)(ii), and may require the Contractor to provide, within a specified

period of time, such additional information and data as it may reasonably require

in order to evaluate such documents . As soon as possible after the submission of

such aocuments pursuant to Section 7.1 (i)(ii) or receipt of such additional

information and data, the Ministry and the Contractor shall meet to determine the

boundaries of the area to be delineated as a Fi eld and adopt a Development

Program and Development Program Budget for the development of the Discovery

and an environmental management plan in connection therewith .



(k)



(i)



At the meeting described in Section 7.IOJ, the Contractor shall carefully

consider and take into account any proposals of the Ministry and the

reasons for the proposals and shall attempt in good faith to reach

agrecment with the Ministry on the points at issue, paying particular



26



Afghan-Taj ik Basin Phase I Tender

consideration to the objective of achieving Initial Commercial Production

expeditiously from the Field in question, taking into account generally

accepted engineering practices and economics of the international

petroleum industry .

(ii)



If the Ministry and the Contractor agree upon the boundaries of the area to

be delineated as a Field and upon the adoption of a Development Program

and Development Program Budget for the development of the Discovery,

the date upon which such agreement is reached , as reflected in writing

signed by the Ministry and the Contractor, shall be the date of the

declaration of the Commercial Discovery for all purposes of this Contract

(the "Commercial Discovery Declaration Date").

The area so

determined shall, on such date, be automatically converted into a Field.



(iii)



In the event that no agreement is reached between the Ministry and the

Contractor within one hundred and eighty (1 80) Days from the date of

submission of the report and proposed Development Program and

Development Program Budget pursuant to Section 7.1 (i), the Ministry or

the Contractor may refer the matter for determination pursuant to Article

XXIV. The determination in accordance with Article XXIV shall be final

and the Development Program and Development Program Budget for the

development of the Discovery and the boundaries of the area to be

delineated as a Field, as the case may be, shall be deemed to have been

adopted and agreed as determined, except that the Contractor may, within

sixty (60) Days of receipt of such determination, notify the Ministry that

the Discovery to which such Development Program and Development

Program Budget and arca so determined relate is no longer considered to

be commercial. If the Contractor so notifies the Ministry, the provisions of

Section 7. I (g)(ii) shall apply. Failing such notification, the date sixty (60)

Days after the receipt of such determination shall be decmcd to be the

Commercial Discovery Declaration Date. The area so determined shall,

on such date, be automatically converted into a Field.



(iv)



The Ministry shall provide the Contractor with a permit to conduct

Development and Production Operations in the Field substantially in the

form attached hereto as Exhibit L within thirty (30) Days after the later of

(A) the Commercial Discovery Declaration Date and (B) approval by the

National Environmental Protection Agency of the Contractor's

Environmental Impact Assessment and environmental management plan.

The Contractor shall, as soon as is practicable after receipt of such permit,

commence and continuously carry out Development and Production

Operations in the Field according to the adopted Development Program

and the Development Program Budget. Upon adoption of the

Development Program and Development Program Budget as aforcsaid, the

Work Program and Work Program Budget adopted pursuant to Section 5.3

shall be revised accordingly.



27



Afghan-Tajik Basin Phase I Tender



7.2



(I)



In the event that Initial Commercial Production from a Field has not occurred

within six (6) Months after the period agreed in the Development Program (as

amended from time to time), the Ministry may require the Contractor to relinquish

the arb comprising such Field and to forfeit any rights relating to such Field and

any production from such Field. Notwithstanding the foregoing, if the Contractor

demonstrates to the reasonable satisfaction of the Ministry that, despite the

Contrkctor having acted in accordance with Good Oil Field Practices, In itial

Commercial Production will not occur within six (6) Months after the period

agreed in the Development Program (as amended from time to time), the Ministry

shall not require the Contractor to relinquish the area comprising such Field and

the Development Program shall be automatically amended to reflect the revised

date for Initial Commercial Production and such revised Development Plan shall

be deemed approved by the Ministry. The Contractor shall notify the Ministry as

soon as reasonably practicable if it cannot meet the Initial Commercial Production

date and the Contractor shall provide the Ministry with written notice of any

extension requested under this section at least thirty (30) Days prior to the Initial

Commercial Production date .



(m)



If the IC ontractor is required to relinquish an area pursuant to the provisions of this

Section 7.1, ownership of all fixtures, including but not limited to pipes, pipelines,

installations, facilities, downhole well equipment, wellhead equipment and other

equipment or materials within the geographic limits of the area shall be

transferred to the Ministry. Unused inventory and fixtures which can be used by

the q ontractor for Hydrocarbons Operations elsewhere in the Contract Area,

leased equipment and other Contractor equipment may be removed if such

remo~a l may be accomplished without damage to the area.



(n)



The regulations or procedures of the National Environmental Protection Agency

requi ~e submission and review of a Screening Report prior to submission of the

Environmental Impact Assessment and environmental management plan

described in Section 7.I(i)(ii)g-7. I(i)(ii)h. The Contractor will ensure that such

Screening Report is submitted in a timely manner so as not to introduce delay in

submission of the Development Program and Development Program Budget.



Production. I

(a)



Not less than three (3) Months prior to Initial Commercial Production in any

Field,1 the Contractor shall submit to the Ministry for approval proposed

procedures and related operating regulations and financial terms covering, as

applicable, the scheduling, storage and lifting of Liquid Hydrocarbons and the

sChedbling, storage and extraction of Natural Gas from such Field. The

procedures, regulations and terms shall comprehend the subjects necessary to

efficient and equitable operations, including Delivery Point location, rights of

partiek, notification time, maximum and minimum quantities, duration of storage,

nomination and schedul ing of transportation, volumetric balancing, conservation,

spillage, liabilities of the parties, through-put fees, and safety and emergency

procedures.



28



Afghan-Tajik Basin Phase I Tender



7.3



(b)



The Contractor shall produce Liquid Hydrocarbons from the Contract Area at the

Maximum Efficient Rate. The Contractor and the Ministry shall establish the

Maxirum Efficient Rate of production for Liquid Hydrocarbons and the

production rate for Non-Associated Gas in conjunction with the adoption of each

Work Program that relates to the development of a Field. In the case of NonAssooiated Gas, the production rate shall not be required by the Ministry to be

less t?an that required to satisfy any contracts then in existence for the sale of

such Natural Gas.



(c)



No later than September 30 of each Calendar Year during the Development and

Production Phase of any Field, the Contractor shall, in accordance with Good Oil

Field Practices, prepare and furnish to the Ministry for approval a forecast

statement setting forth by Quarter the total quantity of Liquid Hydrocarbons (by

quality, grade and gravity) and Natural Gas that the Contractor estimates can be

produced, saved and transported hereunder during the ensuing Calendar Year,

together with estimates, if available, of recoverable reserves of Hydrocarbons,

broken down into proven and proven plus probable. The Contractor sha ll

endeavor to produce in each Calendar Year the forecast quantity. The Liquid

Hydrocarbons shall be run to storage tanks, constructed, maintained and operated

by thd Contractor in accordance with applicable regulations, in which such Liquid

Hydrocarbons shall be metered or otherwise measured for all purposes of this

Contrkct. Natural Gas shall be stored, transported and metered or otherwise

measured in accordance with the provisions of the Natural Gas Development

Program adopted pursuant to the provisions of Article XV.

I



Cessation of lP roduction.

(a)



The Contractor shall submit to the Ministry for approval a proposed Field

decommissioning and abandonment plan (the "Decommissioning and

Abandonment Plan") after exhaustion of fifty percent (50%) of Recoverable Gas

Initiailly in Place (RGIIP) / Recoverable Oil Initially in Plaee (ROIIP), or seven

(7) Chlendar Years hefore the expiration of the Development and Production

Phase for the relevant Field, whichever is earlier, which shall include a detailed

techn Ical and engineering description of the decommissioning, removal and

disposal of the facilities and installations, and of the site clean-up and restoration

measures, consistent with the Hydrocarbons Law, Good Oil Field Practices and

with the obligations of Contractor under Sections 4.5, 23.2 and 25 .7, including

measures to rehabilitate, as far as reasonably practicable, the environment affected

by the Hydrocarbons Operations to its natural or prior state as established by the

Baseline Environmental Assessment.

The Contractor shall submit the

Decommissioning and Abandonment Plan together with a detailed and itemized

budg9t of the Hydrocarbons Operations Expenditures to bc incurred in connection

thererth (the "Decommissioning and Abandonment Budget").



(b)



No later than twelve (12) Months prior to the expiration of the Development and

Production Phase of any Field, the Contractor shall notify the Ministry of its

intention to terminate Hydrocarbons Operations. Within thirty (30) Days from the



29



Afghan-Tajik Basin Phase I Tender

date of the Contractor's notice under this Section 7.3(b), the Ministry shall notify

the Contractor in writing whether it will require the Contractor to carry out all or

part of the decommissioning measures set out in the Decomm issioning and

Abandonment Plan. Following receipt of the Ministry's notice, the Ministry and

the Contractor shall meet to agree upon a final Decommissioning and

Abandonment Plan and a final Decommissioning and Abandonment Budget.

(c)



The Gontractor and the Ministry shall set up an escrow account in the joint name

of thel Contractor and the Ministry (the "Escrow Account") with a bank of good

international reputation (the "Bank") to finance the Hydrocarbons Operations

Expenditures specified in the Decommissioning and Abandonment Budget in

accordance with Section 7.3 (e).



(d)



The Escrow Account shall be funded by monthly contributions made by the

Contractor on a unit-of-production basis until the target value of the

Decommissioning and Abandonment Budget is reached. The monthly

contribution wi ll be calculated by following the procedure established in

Appendix I to the Accounting Procedures.



(e)



The amount of the Decommissioning and Abandonment Budget, pro-rated on a

unit of production basis over the period from the date of opening of the Escrow

Account to the estimated date of cessation of production, shall be included in the

Hydrocarbons Operations Expenditures and shall be recovered by the Contractor

in accordance with Section I 0.1(b). At the end of each Quarter in which the

Contractor shall have recovered any part of the Decommissioning and

Abanoonment Budget, the Contractor shall deposit the amount so recovered in the

Escrow Account. Upon cessation of production, the Contractor shall diligently

carry lout the Decommissioning and Abandonment Plan and the Hydrocarbons

Operations Expenditures due in connection therewith shall be paid by the Bank

upon receipt of a written joint instruction from the Ministry and the Bank . Any

un-spent monies remaining in the Escrow Account upon settlement of all

Decot;nmissioning and Abandonment Expenditures shall be remitted by the Bank

to the Ministry.



(I)



In the event the Ministry elects to continue Hydrocarbons Operations in any Field

(or thel Ministry permits a third party to commence or continue Hydrocarbons

Operations in any Field) following the Contractor's termination of Hydrocarbons

Operations in relation thereto, the Contractor's liability for decommissioning

measures shall be limited to the balance of the Escrow Account.



ARTICLE VIII

FINANCIAL AND PERFORMANCE GUARANTEES; BONUSES

8.1



Financial Glu arantee. Not later than thirty (30) Days after the Effective Date, the

Contractor shall submit a Financial Guarantee in an amount equal to the estimated



30



Afghan-Tajik Basin Phase I Tender

expenditures necessary to perform the Minimum Exploration Program for the Initial

Exploration Period. If the Contractor wishes to proceed to thc First Extension Period or

the Second Extension Period, as the case may be, it shall submit the corresponding

Financial Guarantee as provided in Section 3.1.

8.2



Reduction of Financial Guarantee. During the Exploration Phase, the amount of the

Financial Guarantee shall be reduced at the end of each Contract Year by the amount

actually expended on the Minimum Exploration Program.



8.3



Drawdown. If, at the end of the Initial Exploration Period or any extension thereof, the

Contractor has not performed the Minimum Exploration Program required for such

period, a portion of the Financial Guarantee corresponding to the then current balance of

the Financial Guarantee for such period shall be paid to the Ministry in accordance with

Article XIII. The Ministry shall have the right to draw down on the Financial Guarantee

to collect such amount.



8.4



Drawdowu Upou Termination or Relinquishment. If, upon the date of termination of

this Contract, or upon relinquishment of the entire Contract Area by the Contractor

pursuant to Article IV, whichever first occurs, the Contractor has not completed the

Minimum Exploration Program, an amount corresponding to the then current balance of

the Financial Guarantee shall be paid to the Ministry in accordance with Article XII I.

The Ministry shall have the right to draw down on the Financial Guarantee to collect such

amount. The Ministry will not grant partial credit for Wells that do not reach target depth

unless the Parties elect to substitute another Exploration Well pursuant to Section

5.4(k)(ii).



8.5



General Performauce Guarautee. On the date that this Contract is executed, the

ultimate parent entity of each Contractor Entity shall execute and deliver the General

Performance Guarantee to the Ministry.



8.6



Bonuses. The Contractor shall pay to the Ministry the following one-time bonuses:

(a)



Within seven (7) Days following the Effective Date, the Ministry shall invoice the

Contractor for one million U.S. Dollars (US$ 1,000,000) (the "Signature

Bonus"). The Signature Bonus shall be payable by the Contractor within seven

(7) Days following the date on which the exclusive License for Hydrocarbons

Operations is issued to the Contractor pursuant to Section 9.2(1).



(b)



As soon as reasonably practicable following the date on which the first permit to

conduct Development and Production Operations is granted to the Contractor

pursuant to Section 7.1 (k)(iv), the Ministry shall invoice the Contractor for three

million U.S. Dollars (US$ 3,000,000), to be paid within seven (7) Days following

receipt of such invoice .



Each invoice issued pursuant to this Section 8.6 shall include the bank account details of

the Treasury Single Account in Da Afghanistan Bank and other details necessary for the

Contractor to make an electronic transfer of the relevant sums within the time period

prescribed.

31



Afghan-Tajik Basin Phase I Tender

These bonuses shall not be recoverable by the Contractor and shall be excluded from

Hydrocarbons Operations Expenditures.



ARTICLE IX

OBLIGATIONS OF THE MINISTRY

9.1



9.2



Data. The Ministry shall supply or otherwise make available to the Contractor:

(a)



all geological, geophysical, geographical, drilling. Well, production and other

information, including Well location maps, relating to the Contract Area in the

possession of the Ministry or coming into its possession and which it has the right

to disclose to the Contractor;



(b)



a list of the sites of national parks andlor ecological reserves, as well as sites

identified as having Archaeological and Cultural Heritage significance, such list

to be provided prior to commencement of Hydrocarbons Operations and to

contain available detai ls of the sites, including maps and other pertinent

information; and



(c)



information reasonably available to the Ministry related to private land ownership

in the Contract Area.



Assistance. In accordance with the provisions of the Hydrocarbons Law, the Ministry

shall for the duration ofthis Contract:

(a)



provide for the right of way and passage over State-owned land and facilitate the

Contractor in obtaining the right of way and passage over privately owned land in

order to conduct Hydrocarbons Operations (including nationalization to the extent

permissible under Afghanistan Law), provided that the Contractor shall bear any

compensation to the owner or occupier. Such costs and any compensation shall be

considered Hydrocarbons Operations Expenditures recoverable by the Contractor

in accordance with the Accounting Procedures;



(b)



in respect of occupation and use of privately owned land for lIydrocarbons

Operations, and upon notice submitted by the Contractor no later than ninety (90)

Days prior to a proposed operation, obtain consent for such use from the owner or

occupier of the land in question to enable the Contractor to conduct the proposed

operations thereon, and provide the Contractor with evidence of such consent,

provided that the Contractor shall pay fair market value for the use or occupation

of such land, and in the event the owner or occupier has suffered a disturbance to

activities or damage to land or assets caused by surface or sub-surface oil and gas

exploration operations, and the Contractor and the owner or occupier fail to agree

on the amount of compensation, review the matter and determine the amount of

damages in the first instance;



32



Afghan-Tajik Basin Phase I Tender

(c)



provide reasonable access to State facilities in the Contract Arca at reasonable

cost to the Contractor, provided that the Contractor's terms and conditions of

access shall not be less favorable than the terms and conditions granted to

similarly situated parties;



(d)



provide reasonable access to surface areas relinquished by the Contractor pursuant

to this Contract and rcasonable access to and use of existing infrastructure and

facilities on such relinquished areas at no cost to the Contractor in the case that

such infrastructure and facilities are owned by the State, provided that acccss and

use of surface areas relinquished by the Contractor shall be limited (i) to a period

of two (2) years following relinquishment and (ii) to the extent necessary to

enable the Contractor to conduct Hydrocarbons Operations or to retrieve unused

inventory and fixtures, leased equipment and other Contractor equipment from the

relinquishcd area in accordance with Section 7.I(m);



(c)



assume responsibility for the rehabilitation of environmental contamination on

State owned and private land identified in Baseline Environmental Assessments

completed by the Contractor and approved by the National Environmental

Protection Agency;



(1)



on the Effective Date, or no later than thirty (30) Days thereafter, issue to the

Contractor the appurtenant exclusive License for Hydrocarbons Operations within

the Contract Area, subject to the satisfaction of any terms and conditions of such

License;



9.3



(g)



upon app lication in the prescribed manner and pursuant to applicable legislation,

provide or facilitate all necessary visas, work permits, import licenses, export

permits (including but not limited to licenses for Hydrocarbons), rights of way

and easements which (i) may be required by the Contractor and its subcontractors

and contractors in connection with the Hydrocarbons Operations and (ii) may be

available from resources within the Government's control; and



(h)



provide the same assistance as set out above in (a) to (g) in relation to any

operations carried out by the Contractor pursuant to a Decommissioning and

Abandonment Plan or in respect of the Supplemental Exploration Area .



Security. The Government shall, at no cost to the Contractor, endeavor to provide

adequate security within the Contract Area, the Supplemental Exploration Area and any

other areas in Afghanistan in which IIydrocarbons Operations or operations related

thereto (including any operations carried out by the Contractor pursuant to a

Decommiss ioning and Abandonment Plan) are conducted, including during travel to and

from such areas. However, in the event that the Contractor, in its reasonable opinion,

considers the security provided for its personnel is inconsistent with its health, safety

and environmental policies, Good Oil Field Practices or inadequate to allow

Hydrocarbons Operations to be conducted safely and without threat to lifc, both the

Ministry and the Contractor hereby agree supplementary security measures shall be

implemented by the Contractor, as the case may be, including, but not limited to, the



33



Afghan-Tajik Basin Phase I Tendcr

engagement of competent private security providers licensed to operate in Afghanistan,

such costs to be considered Hydrocarbons Operations Expenditures if included in an

approved Work Program and Work Program Budget but without prejudice to the

Contractor's right to recover costs incurred under Section 23.9 not included in an

approved Work Program and Work Program Budget Such arrangements shall be

revised from time to time in response to changes in security conditions, subject to an

international independent third party conducting a security review.



9.4



Approvals. If the Government's consent or approval is required by the Contractor in

accordance with this Contract, the Contractor shall submit its request for consent or

approval to the appropriate authority and shall provide the Ministry with a copy of such

request contemporaneously therewith . The Government shall endeavor to respond to

such request as soon as reasonably practicable. If the Contractor does not receive a

response from the Government within thirty (30) Days following the Contractor's

submission of its request, the Contractor may submit a follow-up request to the

appropriate authority, with a copy to the Ministry. Without prejudice to any time period

otherwise specified herein or under applicable law, the Government's consent or

approval shall be deemed to have been given if the Government has not notified the

Contractor of its disapproval or required clarification of such request within seven (7)

Days following the Government's and Ministry'S receipt (whichever is later) of the

Contractor's follow-up request The Ministry acknowledges and agrees that to thc

extent the Contractor is unable to carry out certain Hydrocarbons Operations as a result

of a failure by the Government to respond to or issue any consent, approval, permit or

license relating to Hydrocarbons Operations that any time periods applicable to the

performance of the Contractor's obligations hereunder shall bc suspended for the period

during which thc Contractor is prcvented from performing and that the Parties shall

meet and seek to agree to further extensions of time with regard to such delay. Each

Contractor Entity shall bcnefit from thc same rights as Contractor under this Section 9.4.



ARTICLE X

ALLOCATION OF PRODUCTION

10.1



Royalty; Productiou Share. The Hydrocarbons produced and saved from the Contract

Area in any Quarter and not used in Hydrocarbons Operations prior to the Delivery Po int,

or lost, flared or re-injected into the Contract Area shall be allocated as follows :

(a)



A portion of such Hydrocarbons cqual to the Royalty shall first be allocatcd to the

Ministry as the royalty payable under the Hydrocarbons Law, but shall be lifted

by the Contractor in accordance with any deemed salcs made to the Contractor

pursuant to Section 10.4.



(b)



Thc Contractor shall be entitled to recover llydrocarbons Operations

Expenditures incurred by retaining and disposing of the amount of Hydrocarbons

available after payment of the Royalty for the Quarter that is equal in value to the

unrecovered Hydrocarbons Operations Expenditures for the Quarter plus all



34



Afghan-Tajik Basin Phase I Tender

unrecovered Hydrocarbons Operations Expenditures from prior Quarters .

Hydrocarbons not used for the recovery of Hydrocarbons Operations

Expenditures shall be Net Hydrocarbons. All such Hydrocarbons Operations

Expenditures shall be recovered in the manner provided for in, and subject to, the

Accounting Procedures.

(c)



For the purpose of determining the quantity of such Hydrocarbons to which the

Contractor is entitled in any Quarter pursuant to Section ID . I (b), each type and

grade of Hydrocarbons shall be valued at a price (i) in the case of Arm's-Length

Sales made by the Contractor or its Affiliated Entities, equal to the net price at the

applicable Delivery Point obtained by the Contractor or its Affiliated Entities in

respect of sales of such Hydrocarbons produced in such Quarter (after deduction

of a standard location differential agreed between the Parties to account for

deemed transportation costs from the applicable Delivery Point to the point of

sale) and (i i) in the case of other sales made by the Contractor or its Affiliated

Entities, equal to the Market Price for such Hydrocarbons . If the Contractor and

the Ministry fai l to agree upon the Market Price within sixty (60) Days after

Contractor has provided the Ministry with written notification of its proposal. the

determination of Market Price may be referred by either the Ministry or the

Contractor to expertise proceedings pursuant to Section 24 .2. The Ministry may,

in its sole discretion, determine that any sale of Hydrocarbons by the Contractor

or its Affiliated Entities to a related buyer shall be deemed an Arm's-Length Sale

if (A) the sale results from a fair, transparent and competitive tender process

conducted in accordance with good international petroleum industry practices and

(B) the price and payment terms accurately reflect the then prevailing fair market

value for the Hydrocarbons, taking into consideration the grade, gravity and

quality of the Hydrocarbons, transportation costs and any other appropriate

adjustments .



(d)



After deduction of the Royalty as provided in Section 10.I(a) and recovery of the

Hydrocarbons Operations Expenditures as provided in Section I 0.1(b), the

Ministry shall be allocated a portion of the Net Hydrocarbons produced and saved

in the Quarter determined in accordance with the formula set forth below

(provided that such a llocation shall be lifted by the Contractor in accordance with

any deemed sales made to the Contractor pursuant to Section 10.4) and the

remaining Net Hydrocarbons after such allocation shall be allocated to the

Contractor:

If R:S1.25

If 1.25
IfR>2.50



then

then

then



P= 50%

P = 60%-[(2.50-R) x 8%]

P = 60%



In the above formula:



"p" shall mean the Ministry' s percentage share of Net Hydrocarbons, and



35



A fghan-Taj ik Basin Phase I Tender



"R"



shall mean the cumulative Gross Contractor Revenues up to the end of the

Quarter immediately preceding the Quarter in question, divided by the cumulative

Hydrocarbons Operations Expenditures incurred up to the end of the Quarter

immediately preceding the Quarter in question.



10.2



Calculations and Adjustments. The calculations required by this Article X shall be

made for each Quarter on a cumulative basis. An example of the required calculations is

attached hereto as Exhibit J. To the extent that actual quantities, prices and expenses are

not known, calculations shall be made on the basis of the estimate, and quarterly updates

thereto, provided to the Ministry pursuant to Section 10.3. Within thirty (30) Days after

the end of each Quarter, adjustments shall be made based on actual Hydrocarbons

quantities, prices and expenses in relation to such Quarter to the extent then available.

Within ninety (90) Days after the end of each Calendar Year. final calculations shall be

prepared and submitted to the Ministry for approval, and any necessary adjustments shall

be made based upon the detailed accounts submitted for such Calendar Year pursuant to

Section 26.2.



10.3



Estimates and Approvals. Not less than ninety (90) Days prior to the beginning of each

Calendar Year, the Contractor shall prepare and furnish to the Ministry for approval an

estimate by Quarter for the forthcoming Calendar Year of all Gross Contractor Revenues

and Hydrocarbons Operations Expenditures, and of the value of the Royalty and of the

Ministry's and the Contractor's respective shares of Net Hydrocarbons, Net Taxable

Income and Income Tax for such Calendar Year. Such estimate shall be consistent with

the forecast statement furnished pursuant to Section 7.2(c) and the Work Program Budget

approved pursuant to Section 5.3 , and shall set forth the other assumptions and

projections upon which it is based. Upon approval by the Ministry, such estimate shall

serve as the basis for the quarterly calculations required pursuant to Section 10.2 and for

tbe Income Tax pursuant to Article XVI. Quarterly updates of such estimate shall be

submitted by the Contractor to the Ministry within thirty (30) Days after the end of each

Quarter.



10.4



Deemed Sales. The Hydrocarbons allocated to the Ministry under this Article X in any

Quarter shall , unless the Ministry otberwise elects in accordance with Section 10.5, be

deemed sold by the Ministry to the Contractor upon production at the wellhead. The

purchase price for each type of Hydrocarbons produced shall be the applicable Market

Price for such Hydrocarbons, and shall be payable to the Ministry no later than thirty (30)

Days following the Quarter in which such Hydrocarbons are produced. Payment shall be

accompanied by a certificate from the Contractor setting forth in detail the basis for

computation of the purchase price, in a form acceptable to the Ministry. The provisions

of this Section 10.4 shall not apply to Hydrocarbons produced during production testing

and sold by the Contractor, the proceeds of which shall be applied to reduce the amount

of the Contractor's capital expenditures in accordance with the Accounting Procedures .



10.5



Notice and Election . The Ministry may, in respect of any Calendar Year, elect to retain

title to all or any part of the Hydrocarbons allocated to it under this Article X, rather than

sell such Hydrocarbons to the Contractor. In such event, the Ministry shall provide the

Contractor with notice of its election at least six (6) Months prior to the commencement



36



Afghan-Tajik Basin Phase I Tender

of the Calendar Year in question. If the Ministry elects to retain Hydrocarbons that

include Natural Gas, it shall follow the Contractor's procedures for nomination and

scheduling of transportation, volumetric balancing, and similar operational requirements

approved by the Ministry pursuant to Section 7.2(a).



ARTICLE XI

MEASUREMENT OF HYDROCARBONS

Il.l



Verification . Within thirty (30) Days following the end of each Quarter, the Contractor

shall submit to the Ministry for its verification the volumes, gravity in API and sulfur

content of the Liquid Hydrocarbons produced and saved from the Contract Area during

the Quarter in question . In the event that the Ministry raises objections to the Contractor's

determinations, the Parties shall meet within fifteen (15) Days from the Ministry'S notice

of objection to mutually agree upon the appropriate determinations.



1l.2



Measuring Equipment. The Contractor shall supply, operate and maintain equipment

for measuring the volume and quality of the Hydrocarbons produced and saved, or

transported, stored or exported under this Contract, including gravity, density,

temperature and pressure measuring devices and any other devices that may be required.

All measurement equipment and devices shall, prior to their installation or usage, be

approved in writing by the Ministry. Such equipment and devices shall at all reasonable

times be available for inspection and testing by the Ministry or its authorized

representatives . Any such inspection or testing shall not interfere with the normal

operation of the facilities involved. The equipment and devices used or installed pursuant

to this Section I 1.2 shall not be replaced or altered without the prior written approval of

the Ministry.



11.3



Measurement Standards . The Contractor shall undertake to measure the volume and

quality of the Hydrocarbons produced, saved, transported, stored and exported hereunder,

consistent with Good Oil Field Practices for fiscal metering, with such frequency and

according to such procedures as are approved in writing by the Ministry .



11.4



Notice. The Contractor shall give the Ministry timely notice of its intention to conduct

measuring operations and the Ministry shall have the right to be present at and observe,

either directly or through authorized representatives, such operations.



11.5



Measurement Inaccuracies and Ad justment. If it is determined, following an

inspection or test carried out by the Ministry or its representatives, that the equipment,

devices or procedures used for measurement are inaccurate and exceed the permissible

tolerances which shall be established by agreement between the Ministry and the

Contractor to be entered into prior to the installation and usage of such equipment, and

such determination is verified by an independent surveyor acceptable to the Ministry and

the Contractor, such inaccuracy shall be deemed to have existed for one-half of the period

since the last previous such inspection or test, unless it is proved that such inaccuracy has



37



Afghan-Tajik Basin Phase I Tender

been in existence for a longer or shorter period. Appropriate adjustments covering such

period shall be made within th irty (30) Days from the date of such determination.



ARTICLE XII

DOMESTIC REOUIREMENTS

12.1



Local Preference. In marketing any part of its share of the Liquid Hydrocarbons

produced and saved from the Contract Area, the Contractor shall seek competitive bids in

U.S. Dollars from national and international purchasers for the purchase of the Liquid

Hydrocarbons in accordance with generally accepted procedures and standards for

competitive tenders in the international petroleum industry, including reasonable, nondiscriminatory requirements concerning tinancial capability and assurance of payment.

The Contractor shall notify the Ministry in writing from time to time of its procedures for

marketing Liquid Hydrocarbons. In the event that comparable bids are received from a

bidder that is an Afghan national or company and another bidder that is not, the bidder

that is an Afghan national or company will be preferred. Within thirty (30) Days

following the Contractor's completion of the bid evaluations, the Contractor shall prepare

and deliver to the Ministry a competitive bid analysis setting forth the Contractor's

recommendation as to the winning bidder, the reasons therefor, and the commercial and

contractual terms to be agreed upon.



12.2



Storage. Liquid Hydrocarbons that the Ministry has elected to take in kind and not to

sell to the Contractor shall , to the extent practicable, be delivered by the Contractor at

regularly spaced intervals at the Delivery Point or to the Ministry'S storage facilities in

the Field, or both, at the option of the Ministry. The Ministry shall provide at such

Delivery Points, at its sole expense and risk, all storage, transportation and other facilities

necessary to receive such Liquid Hydrocarbons.



12.3



Internal Consumption of Liquid Hydrocarbons . Out of the total quantity of Liquid

Hydrocarbons production to which the Contractor is entitled in each Calendar Year, the

Ministry may elect to take a quantity of Liquid Hydrocarbons, of the gravity, grade and

quality of its choice (but which shall be of no better than average quality if this

substantially decreases the marketability of the remaining Liquid Hydrocarbons), that the

Ministry requires to satisfy the requirements of internal consumption in Afghanistan for

such Calendar Year. The Ministry shall reimburse the Contractor for such quantity at the

applicable Markct Price. The maximum quantity of Liquid Hydrocarbons that the

Min istry may take to satisfy the internal consumption requirements of the country shall

be calculated as follows :

DMOc



~



APe x (DMOI - GOv,J / API



Where:

DMOc



is the maximum quantity of Liquid Hydrocarbons from

the Contract Area that the Ministry may take to satisfy the



38



Afghan-Tajik Basin Phase I Tender

internal consumption requirements of the country in the

period of reference;

APe



is the total quantity of Liquid Hydrocarbons produced

from the Contract Area during the reference period, less

(a) the amount of the Royalty, (b) the Ministry's share of

Liquid Hydrocarbons production under Section 10.1 (d),

(c) consumption of Liquid Hydrocarbons incidental to

Hydrocarbons Operations, and (d) the quantity of Liquid

Hydrocarbons that Contractor is already selling to the

Afghanistan domestic market.



DMOt



is the internal consumption requirements of Afghanistan

during the reference period;



GOV



is (a) the quantity of Liquid Hydrocarbons rendered, in

the reference period, to the Ministry by all contractors in

the form of production payments, royalties and

production shares plus (b) any quantity of Liquid

Hydrocarbons produced directly by the Ministry or any

State oil company within Afghanistan in the reference

period; and



APt



is the volume of all Liquid Hydrocarbons produced in

Afghanistan in the reference period.



12.4



I nternal Consumption of Natural Gas. Out of thc total quantity of Natural Gas to

which the Contractor is entitled in each Calendar Year, the Ministry may elect to take a

quantity of Natural Gas to meet its internal consumption requirements on the following

basis. The Contractor shall be obliged to provide and supply to the State such quantities

of Natural Gas that are equal to the proportion that the Contractor's production of Natural

Gas bears to the aggregate quantities of Natural Gas produced in Afghanistan (according

to the principles set forth in Section 12.3 for Liquid Hydrocarbons) at the applicable

Market Price(s), provided that if the Contractor has notified the M inistry within thirty

(30) Days of executing a Natural Gas sales contract of greater than twelve (12) Months

duration excluding option periods, volumes of Natural Gas committed to purchasers

under such contracts shall be excluded from the amounts that might be available to the

State for internal consumption. The Contractor shall have no obligation to pay for any

infrastructure necessary to transport, process or deliver Natural Gas to the Ministry. If

the Ministry elects to take a quantity of Natural Gas to meet its internal consumption

requirements, it shall follow the Contractor's procedures for nomination and scheduling

of transportation, volumetric balancing, and similar operational requirements approved

by the Ministry pursuant to Section 7.2(a).



12.5



Notification and Election . If the Ministry elects to exercise its rights under Sections

12.3 or 12.4, it shall so notify the Contractor in accordance with the provisions of Section



39



Afghan-Tajik Basin Phase I Tender

10.5. The amounts to be taken shall be based upon estimates, including those contained

in the forecast statement furnished pursuant to Section 7.2(c), and final adjustments shall

be made within ninety (90) Days after the end of each Calendar Year on the basis of

actual quantities.



ARTICLE XIII

PAYMENT PROCEDURE

13.1



Payments to the Ministry. All payments due to the Ministry hereunder shall be made in

U.S. Dollars to the Treasury Single Account in Da Afghanistan Bank, details of which

may be provided from time to time by the Ministry, and shall be made in accordance with

the provisions of the Public Finance and Expenditure Management Law.



13.2



Payments to the Contractor. All payments due to the Contractor hcreundcr shall be

made in U.S . Dollars at a bank to be designated by the Contractor or, at the Ministry's

election, such other currency as is acceptable to the Contractor.



13.3



Timing of Payments. Except as otherwise expressly provided herein, all payments

required to be made pursuant to this Contract shall be made within thirty (30) Days

following the end of the Month in which the obligation to make such payment occurs.



13.4



Late Payments. If any payment is not made when due, such unpaid amount shall be

increased as from and after the due date until the date of payment at a rate, compounded

monthly, of five percent (5%) per annum above the London Interbank Offer Rate

("LIBOR") for one (I) month deposits of U.S. Dollars, as reported in the London

Financ ia l Times or any other agreed publication.



ARTlCLEXIV

SURFACE RENTAL FEES

14.1



State-owned Land . In accordance with the Hydrocarbons Regulations, the Contractor

shall be liable for payment of the following annual surface rental fees to the Ministry in

respect of all unsurrendered State-owned land forming part of the Contract Area:

(a)



for so long as a Commercial Discovery has not been declared with respect to any

Field:

(i)



during the Initial Exploration Period, one U.S. Dollar (US$ 1.00) per

hectare;



(ii)



during the First Extension Period, four U.S. Dollars (US$ 4.00) per

hectare; and



40



Afghan-Tajik Basin Phase I Tender

(iii)



(b)



during the Second Extension Period and any extension granted pursuant to

Section 3.1, eight U.S. Dollars (US$ 8.00) per hectare;



from the first declaration of Commercial Discovery with respect to any Field:

(i)



fifteen U.S. Dollars (US$ 15.00) per hectare, excluding Fields; and



(ii)



forty U.S. Dollars (US$ 40.00) per hectare of each Fi eld.



14.2



Timing of Payments. The Contractor shall make surface rental fee payments to the

Ministry annually in respect of the then current Calendar Year. The first annual surface

rental fee payment under Section 14.1 shall be made within thirty (30) Days after the

date on which the Ministry has provided the Operator with an approved surveyor

geographic projection in accordance with Section 14.4. Following the provision of such

surveyor geographic projection to the Operator, all subsequent annual surface rental fee

payments shall bc made within thirty (30) Days after each anniversary of the Effective

Date. In the event the area of a Field is further delineated or otherwise adjusted during a

Calendar Year so as to increase or decrease the number of hectares of State-owned land

forming part of such Field, no corresponding adjustment shall be made to the amount of

any surface rental fcc payment already paid in respect of such Calendar Year.



14.3



Privately Owned Land . For its use of privately owned or occupied land, the Contractor

shall pay such rental fees as are agreed with the owner or occupier. Upon the request of

the Contractor, the Ministry shall facilitate negotiations between the Contractor and the

owner or occupier on the amount of such rental fees. The Ministry may seek the

assistance of other agencies in the Government for this task. If the Contractor and the

owner or occupier fail to agree on the amount of such rental fees, the amount shall be

determined by the Ministry. If the Contractor or the owner or occupier do not agree with

the amount determined by the Ministry, the dispute shall be settled by a dispute

resolution board which shall consist of representatives from the Ministries of Justice,

Mines, Agriculture and Finance and the National Environmental Protection Agency. All

such rental fee payments shall be considered Hydrocarbons Operations Expenditures

recoverable by the Contractor in accordance with the Accounting Procedures.



14.4



Area Subject to Surface Rental Fees. The area of State-owned land subject to surface

rental fees under Section 14.1 shall be determined by a survey approved by the Ministry;

provided, however, that in the absence of such a survey, such area shall be determined on

the basis of a geographic projection approved by the Ministry .



14.5



Obligatiou to Pay Compeusatiou. The Contractor's payment of rental fees pursuant to

this Article XIV shall not relieve the Contractor of its obligation to pay compensation to

the extent required by Afghanistan Law and the decisions of authorized dispute

settlement bodies for any actual injury, damage or loss resulting from an act or omission

of the Contractor, its subcontractors or its agents, employees or representatives in the

course of the conduct of Hydrocarbons Operations.



41



Afghan-Tajik Basin Phase I Tcnder



ARTICLE XV

NATURAL GAS

15.1



Associated Gas. The Contractor shall have the right to use, free of charge, Associated

Gas for Hydrocarbons Operations, including reinjection for pressure. Associated Gas

that is not used in Hydrocarbons Operations, and the processing and utilization of which,

in thc opinion of both thc Contractor and the Ministry, is not economical, shall be

rcturned to the subsurface structure, or may be otherwise disposed of, so long as such

alternatc disposition is (i) in accordance with Good Oil Field Practices or (ii) the Ministry

consents to such alternate disposition in writing. In the event that the Contractor chooses

to process and sell Associated Gas, the Contractor shall notify the Ministry of the same

and upon such notification, the Ministry and thc Contractor shall, as soon as practicable

thereafter, mect together with a view to reaching an agreement on the production,

processing and sale of such Associated Gas. In the event the Contractor chooses not to

process and sell Associated Gas, the Ministry may elect to off-take at the outlet flange of

the gas-oil separator and use such Associated Gas which is not required for Hydrocarbons

Operations. There shall be no charge to the Ministry for such Associated Gas, provided

that the cost to gather such Associated Gas in the Field and to process and utilize it shall

be for the account of the Ministry.



15.2



Non-Associated Gas.

(a)



Where Non-Associated Gas is discovered in the Contract Area and the Contractor

has, pursuant to Section 7.I(b), informed the Ministry that the Discovery is of

commercial interest, a Natura l Gas development comm ittee composed of an equal

number of representatives of the Ministry and the Contractor shall be established

upon adoption of the Appraisal Program relating to such Discovery pursuant to

Section 7.1 (1) . The purpose of the development committee is to jointly evaluate

the use of such Natural Gas in:

(i)



the domestic market and the chain of downstream activities required to

bring the Natural Gas to thc cnd consumers in such market; and



(ii)



currcnt or potential export markets .



(b)



The Natural Gas development committee shall conduct (or cause to be conducted)

gas marketing studies and programs to ascertain the benefits, commercialization

issues and economics of sales of Natural Gas to the various potential markets.

The costs of such studies and related expenses shall be recoverable as

Hydrocarbons Operations Expenditures.



(c)



Within twelve (12) Months following adoption of the Appraisal Program, the

Ministry and the Contractor will meet with a view to reaching an agreement on

the most economic market for commercialization of the Natural Gas, with the

objective of securing the highest value for the Natural Gas resources, and the

related development, production, processing, utilization, disposition or sale of



42



Afghan-Tajik Basin Phase I Tender

such Natural Gas, as well as the period within which the Contractor shall be

to advise the Ministry in writing whether or not in its opinion the

Discovery of Non-Associated Gas is a Commercial Discovery.



requi ~ed



(d)



15.3



If, pursuant to Section 15.2(c), the Ministry and the Contractor determine that a

Discovery of Non-Associated Gas, although substantial, is not then, either alone

or in combination with other Discoveries, commercially viable, but is likely to

become so within eight (8) years thereafter with appropriate gas marketing

operations, feasibility studies and further evaluation, the Ministry and the

Contractor shall enter into an agreement for an initial term of five (5) years,

extendible for up to three subsequent periods of one (I) year each (the

"Evaluation Agreement") postponing the agreement contemplated under Section

15 .2(c). Under these circumstances, to allow for gas marketing operations,

feasibility studies and further evaluation, the Ministry shall refrain from

cxercising its option under Section 7.1 (h) to require the Contractor to relinquish

the area corresponding to such Discovery for the term of the Evaluation

Agreement. On or prior to January I sl of each year commencing after the

expiration of the initial five (5) year term of the Evaluation Agreement, the

Contractor shall submit to the Ministry for review a report specifying the gas

marketing operations, feasibility studies and evaluation activities conducted, and a

written notification of whether or not, in the Contractor's opinion, such Discovery

continues to be of commercial interest. The Evaluation Agreement shall be

extended until the earlier to occur of the following:

(i)



the expiration of cight (8) years from the date of the Parties' Evaluation

Agreement;



(ii)



the date on which the Ministry receives a report from the Contractor

indicating that the Discovery is no longer of commercial interest; and



(iii)



the date on which the Ministry informs the Contractor that it disagrees

with the Contractor's conclusion in a report that the Discovery continues

to be of commercial interest and exercises the Ministry's option under

Section 7.1 (h) to require relinquishment.



Allocation of Revennes and Expenditnres. In the event that the development,

production, processing, utilization, disposition or sale of Natural Gas from the Contract

Area is determined by the Parties to be economically feasible in accordance with this

Article XV, the costs of development and production of the same from the reservoir to

the Delivcry Point, and the revenues derivcd therefrom, shall, unless othcrwise agreed

pursuant to Sections 15 .1 and 15.2, be included in Hydrocarbons Operations

Expenditures and Gross Contractor Revenues, respectively, for all purposes of this

Contract, subject to the Accounting Procedures.



43



Afghan-Tajik Basin Phase I Tender



ARTlCLEXVI

INCOME TAX

16.1



Income Taxes. Income tax issues related to Hydrocarbons Operations are governed by

the Income Tax Law.



16.2



Income Tax Rate. Subject to Section 16.4. each Contractor Entity agrees that its Net

Taxable Income shall be subject to the then prevailing Income Tax rate for the period of

the Contract.



16.3



Business Receipts Tax . Each Contractor Entity shall be exempted from Business

Receipt Tax during the term of this Contract for all business conducted in connection

with this Contract.



16.4



Tax Stabilization. It; at any time after the Effective Date, (a) any new tax, levy or other

fee is introduced in Afghanistan that (i) is targeted at Hydrocarbons Operations or (ii) is

in the nature or the equivalent of a value added tax or provincial, local, municipal tax or

windfall tax (the taxes referred to in this clause (ii) being ("Designated Taxes")) or (b)

there is any change in Afghanistan Law (or the interpretation thereof) that (i) is targeted

at Hydrocarbons Operations or (ii) discriminates or has the effect of discriminating

against the Contractor or any Contractor Entity (including but not limited to a Progressive

Tax Rate) and (c) as a result of the circumstances described in (a) or (b), the Contractor

or any Contractor Entity suffers an adverse effect of a material nature on the economic

benefits it derives from Hydrocarbons Operations or the Contract, the Contractor will

notify the Mi,nistry in writing and the Parties will, as soon as possible thereafter, meet to

verify such effect and, within ninety (90) Days of such meeting, agree on such changes to

this Contract as may be required in order to restore, as closely as possible, the economic

benefits that the Contractor and each Contractor Entity would have derived from the

Hydrocarbons Operations or the Contract in the absence of such new tax, levy or other

fee or such change of Afghanistan Law (or the interpretation thereof). In the event that

the Contractor and the Ministry fail to reach an agreement within the time period

specified in this Section 16.4, the matter may be referred to arbitration pursuant to

Section 24.1. Except in the case of Designated Taxes, the provisions of the preceding

sentences shall not apply with respect to Income Tax that is applied generally or any tax,

levy or fee of general application that is not specifically targeted at Hydrocarbons

Operations and which does not discriminate or have the effect of discriminating against

the Contractor or any Contractor Entity. Nothing in this Section 16.4 shall be construed

as imposing any limitation or constraint on the scope, or due and proper enforcement, of

Afghanistan Law which does not discriminate, or have the effect of discriminating,

against the Contractor or any Contractor Entity, and provides for the protection of health,

safety, labor or the environment, or for the regulation of any category of property or

activity carried on in Afghanistan.



16.5



No Double Taxation. The revenues generated from Hydrocarbons Operations for the

Contractor's account shall only be subject to Income Tax once in Afghanistan. Each

Contractor Entity shall be liable to pay Income Tax on its share of such revenue or the

44



Afghan-Tajik Basin Phase I Tender

Shareholders shall be liable to pay Income Tax on such revenue in accordance with

applicable laws. If at any time after the Effective Date, there is any change in the legal ,

fiscal and/or economic framework applicable to the Contract (or the interpretation

thereof) which results in the Contractor Entities and the Shareholders both being liable to

pay Income Tax on such revenue, the terms and conditions of this Contract shall be

altered so as to restore the Contractor Entities and the Shareholders to the same overall

position as that which such persons would have been in, had no such change in the legal,

fiscal and/or economic framework occurred . If a Contractor Entity believes that its

economic position, or the economic position of its Shareholders, has been detrimentally

afl'ected herein by a change or interpretation of law that results in double taxation of

income, upon the Contractor Entity ' s written request, the Parties shall meet to agree on

any necessary measure to resolve the issue.

16.6



Benefit of Changes to Law. Without prejudice to Section 16.4, the Contractor shall be

entitled to the benefit of any future changes to Afghanistan Law; provided that this

Section 16.6 shall not apply to any benefit arising from any changes in Afghanistan Law

that relate to financial or fiscal matters agreed in this Contract, including in respect of

royalty, cost recovery, production sharing and surface rental fees (other than any change

in the Income Tax rate).



16.7



Capital Gains Tax. Nothing contained in the Contract shall excuse or exempt the

Contractor or any Contractor Entity (or any Affiliated Entity of a Contractor Entity) from

any obligation that may otherwise exist under Afghanistan Law to pay any tax on the sale

or transfer of any tangible or intangible property, including such Person ' s direct or

indirect interest in this Contract or any asset owed by it directly or indirectly in whole or

in part; provided, however, that a transfer or sale by a Contractor Entity to an Affiliated

Entity pursuant to Section 28.4 shall not be deemed to constitute a taxable event for

purposes of any tax on gains imposed under Afghanistan Law if both the transferring

Contractor Entity and its transferee Affil iated Entity confirm, prior to effecting the sale or

transfer, in writing to the Ministry that the tax basis of the transferred asset immediately

after the consummation of the transfer or sale shall be the same as the tax basis for the

transferred asset immediately prior to the consummation of the transfer or sale.



ARTICLE XVII

CUSTOMS DUTIES

17.1



Customs Duties related to Hydrocarbons Operations are governed by the Customs Law

of Afghanistan, provided, however, that:

(a)



for the duration of this Contract, each Contractor Entity shall be entitled to import

into Afghanistan (including by its subcontractors as joint consignees) free of

Customs Duties the equipment and supplies designated by the Parties as required

to be imported for Hydrocarbons Operations and shall be entitled to export the

same (provided that no transfer of ownership of such equipment or supplies has

occurred after the date of their import into Afghanistan) free of Customs Duties



45



Afghan-Tajik Basin Phase 1 Tender

pursuant to that separate Memorandum of Understanding between the Parties

dated October 8, 2013, as the same may be amended from time to time; and

(b)



for the duration of this Contract, each Contractor Entity shall be entitled to export

Hydrocarbons free of Customs Duties.



ARTICLE XVIII

EXCHANGE AND CURRENCY CONTROLS

The Contractor shall be subject to the applicable exchange control legislation and regulations in

effect from time to time in Afghanistan, provided, however, that:

(a)



the Contractor shall be entitled to retain outside Afghanistan, and freely transfer,

foreign currency received by it outside of Afghanistan, including the proceeds of

sales of Hydrocarbons to which it is entitled hereunder;



(b)



the Contractor shall be entitled to export from Afghanistan , free of limitation or

restriction, in the same currency as that in which the investment was made, the

funds held by it, provided, however, that this subsection (b) shall not impose any

obligation upon the Ministry or the Government to provide foreign currency to the

Contractor;



(c)



the Ministry shall endeavor to ensure (by liaising with other Government agencies

or instrumentalities from time to time as appropriate and when requested to do so

by the Contractor in writing and by offering such other reasonable support as may

be requested by the Contractor) that there is sufficient availability of U.S . Dollars

or other freely convertible foreign currency in Afghanistan to facilitate the

Contractor' s right to convert any proceeds from the sale of Hydrocarbons or other

cash received in local currency into U.S. Dollars and/or other convertible foreign

currency without delay, provided, however, that this subsection (c) shall not

impose any obligation upon the Ministry or the Government to provide foreign

currel)cy to the Contractor;



(d)



in the matter of purchase and sale of currency within Afghanistan, whether of

Afghanistan or other countries, the rates of exchange shall not be less favorable to

the Contractor than those granted to any Person that introduces or transfers

foreign currency into Afghanistan;



(c)



no restriction shall be placed on the importation by the Contractor of funds

necessary for carrying out Hydrocarbons Operations under this Contract; and



(f)



the Contractor shall have the right to pay directly outside of Afghanistan from its

offices abroad for purchases or services for Hydrocarbons Operations hereunder,

provided that no such payments shall be made to Afghan citizens or to firms using

Afghanistan as their main base of operations, whether natural or juridical,

contrary to the laws of Afghanistan.



46



Afghan-Tajik Basin Phase I Tender

Each Contractor Entity, its Affiliated Entities and Shareholders, and the Contractor's

subcontractors shall benefit from the same rights as the Contractor under this Article XVIII.



ARTICLE XIX



TREATMENT UNDER AFGHANISTAN LAW

The treatment acco~ded to the Contractor, each Contractor Entity, its Affiliated Entities and

Shareholders by Afghanistan in relation to the Contract shall not be less favorable than the

treatment required to be accorded to foreign investors under Afghanistan Law.



ARTICLE XX



TRAINING, EMPLOYMENT AND LOCAL CONTENT

20.1



Training of Afghan Nationals. The Contractor agrees to as far as possible train and

employ qualified Afghan nationals in the Hydrocarbons Operations and after Initial

Commercial Production will undertake the schooling and training of Afghan nationals for

staff positions, including administrative and executive management positions. The

Contractor will require its major contractors and subcontractors to do the same, provided

that if the Contractor is unable to secure the agreement of its major contractors and

subcontractors to train and employ qualified Afghan nationals, the Contractor shall

inform the Ministry but shall nonetheless be allowed to contract with such major

contractors and subcontractors. The Contractor undertakes to give priority to Afghan

nationals with equivalent qualifications and experience and actively search for Afghan

nationals in order to meet the training and employment obligations established in the

prevailing legislation and to gradually replace its expatriate staff with qualified Afghan

nationals as they become available. An annual program for training and phasing in of

Afghan nationals shall be established by the Contractor and shall be submitted for

approval to the Ministry. Such program shall be included in the Work Programs

submitted by the Contractor pursuant to Section 5.3. Within thirty (30) Days after the

end of each Calendar Year. the Contractor shall submit a written report to the Ministry

describing the number of personnel employed, their nationality, their positions and the

status of training programs for Afghan nationals.



20.2



Training of Ministry Personnel. The Contractor shall also be required to establish a

program , reasonably satisfactory to the Min istry, to train personnel of the Ministry to

undertake skilled and technical jobs in Hydrocarbons Operations for the State. Such

program shall include provisions for involving representatives of the Ministry in the

preparation of the Work Programs and Work Program Budgets as required by Section

5.3(c).



20.3



Minimum Expenditures. The Contractor shall expend a minimum of fi fty thousand

U.S. Dollars (US$ 50,000.00) during the period from the Effective Date until

December 31, 2013 for training pursuant to Sections 20.1 and 20.2. Thereafter the



47



Afghan-Tajik Basin Phase I Tender

minimum expenditure for training pursuant to Sections 20.1 and 20.2 shall be increased

by five thousand U.S . Dollars (US$ 5,000.00) annually, provided that the Contractor shall

expend a minimum total amount of one hundred thousand U.S . Dollars (US$ 100,000.00)

for training annually from the date of commencement of the Development and Production

Phase in respect of any Field.



20.4



Long Range Plan and Budget. A long range plan and budget for the training programs

described in Sections 20.1 and 20.2 is attached hereto as Exhibit F. All annual training

programs and budgets shall be consistent with such long range plan and budget.



ARTICLE XXI

PURCHASES IN AFGHANISTAN

21.1



Local Preference. In procurement, the Contractor shall give preference to goods that arc

produced or available in Afghanistan and services that are rendered by Afghan nationals

and companies, provided that such goods and services are similar in quality, quantity and

price to imported foreign goods and services and available at the time. The Contractor

shall, upon request of the Ministry, develop local preference targets and specific plans to

meet such targets. Such plans shall be provided as part of the Contractor's Work

Programs to be approved by the Ministry and shall include, but not be limited to,

timelines, key milestones and formal review dates, a description of potential areas of the

Contractor's business in which to integrate local preferences, and a summary of

Contractor's local preference initiatives and results, including the then current percentage

and sources of Afghan goods and services used in Contractor's Hydrocarbons Operations.



21.2



Equivalcncy. Locally produced or available equipment, materials and supplies shall be

deemed equal in price to imported items if the local cost of such locally produced or

available items at the Contractor' s operating basc in Afghanistan is not more than fifteen

percent (15%) higher than the cost of such imported items after transportation and

insurance costs have been added.



ARTICLE XXII

JOINT DEVELOPMENT / UNITIZATION

22.1



Joint Dcvelopment in Other Awarded Areas. If thc Contractor identifies a proposed

Field within the Contract Area that appears to extend beyond the Contract Area to other

areas of Afghanistan over which other parties have the right to conduct exploration,

development and production operations, the Contractor shall notify the Ministry and the

other party of the proposed Field in conjunction with its Appraisal Program submitted

under Section 7 .1 (e) or its geological report submitted under Section 7.1 (i)(i). The

Ministry may require that the development of the proposed Field and the production of

Hydrocarbons from such proposed Field be carried out in collaboration with the other

parties. The same rule shall be applicable if deposits of Hydrocarbons within the



48



Afghan-Tajik Basin Phase I Tender

Contract Area, although not equivalent to a Commercial Discovery if developed alone,

would he deemed to be a Commercial Discovery if developed with those parts of the

deposits that extend to areas controlled by other contractors.

22.2



Joint Development in Non-Awarded Areas. If a Hydrocarbons deposit or potential

deposit appears to extend into a non-awarded block adjacent to the Contract Area or if

deposits of Hydrocarbons within the Contract Area, although not equivalent to a

Commercial Discovery if developed alone, would be deemed to be a Commercial

Discovery if developed with those parts of the deposits that extend to such areas, the

Contractor shall promptly notify the Ministry in the same manner set forth in Section

22.1. The Ministry may decide if and how the non-awarded area shall be explored and

awarded, and any terms and conditions for such joint development.



22.3



Supplemental Exploratiou Area.

(a)



The Parties have identified potential Hydrocarbons deposits in an area of a nonawarded block adjacent to the Contract Area (such area, the "Supplemental

Exploration Area") that may be part of a common reservoir located w ithin the

Contract Area. The boundaries of the Supplemental Exploration Area are as

described as such in Exhibit A and delineated as such in Exh ibit B, as the same

may be reduced by relinquishments made in accordance with the terms of this

Contract.



(b)



In order to further delineate the potential Hydrocarbons deposits in the

Supplemental Exploration Area and maximize the ultimate recovery therefrom.

the Contractor may conduct Exploration Operations in the Supplemental

Exploration Area during the Initi al Exploration Period in accordance with the

provisions of this Contract. In addition, the Contractor shall be granted the right

to conduct Exploration Operations in the Supplemental Exploration Area during

the Fi:rst Extension Period upon the Contractor's request delivered to the Ministry

not later than ninety (90) Days prior to the expiration of the Initial Exploration

Period, subject to the Contractor having fulfilled its obligations under this

Contract for the Initial Exploration Period and having submitted with such request

a Work Program and Work Program Budget in which the Contractor undertakes

to complete at least one (I) Exploration Well in the Supplemental Exploration

Area iluring the First Extension Period .



(c)



All Exp loration Operations and operations pursuant to an Appraisal Program

conducted in the Supplemental Exploration Area pursuant to this Section 22.3

shall be considered Hydrocarbons Operations Expenditures recoverable by the

Contractor in accordance with the Accounting Procedures.



(d)



If the Contractor's Exploration Operations in the Supplemental Area result in a

Discovery, the provisions of Section 7.1 or 15 .2 shall apply as if the Discovery

had been made within the Contract Area. If the Discovery is declared a

Commercial Discovery in accordance with Section 7.1 (k), the Parties shall amend



49



Afghan-Tajik Basin Phase I Tender

this Contract no later than fifteen (15) Days following the Commercial Discovery

Declaration Date so as to include the resulting Field within the Contract Area.

(e)



During the Initial Exploration Period and the First Extension Period, as

applicable, the Ministry shall not provide any Person (other than the Contractor)

with a li cense to conduct Hydrocarbons Operations in the Supplemental

Exploration Area.



22.4



Collaborative Proposals. The Contractor shall collaborate with other parties in

preparing a collective proposal for common development and production of the deposits

of Hydrocarbons for approval by the Ministry.



22.5



Ministry Proposals. If the proposal for common development and production pursuant

to Section 22.4 has not becn prescnted within ninety (90) Days of the notice described in

Section 22. 1, or if the Ministry does not approve such proposal, the Ministry may prepare

or cause to be prepared, for the account of the Contractor and the other parties involved, a

reasonable plan for common development and production. The Ministry shall submit

such common development and production plan to the Contractor and other parties for

approval. Should the Contractor wish to propose revisions to the plan for common

development and production, it shall within ninety (90) Days after receipt thereof so

notify the Ministry, specifying in reasonable detail its reasons for the proposed revisions.

Promptly thereafter, the Parties shall meet and endeavor to agree on the revisions

proposed by the Contractor.



22.6



International Coordination . This Article XXII shall also be applicable to Discoveries

of Hydrocarbons within thc Contract Area which extend to areas that are not within the

dominion of Afghanistan, provided that in these cases the Government shall be

empowercd to imposc the special rules and conditions which may be necessary to satisfy

obligations under any agreements with international organizations or adjacent states with

respect to the development and production of such Hydrocarbons. If a Hydrocarbons

deposit extends onto the territory of another state, the Ministry will assist the Contractor

in, as far as possible, negotiating an agreement with the governmcnt of that other state on

the most efficient co-ordination of Hydrocarbons Operations in connection with the

deposit as well as on the apportionment of the deposit. This shall apply similarly when,

in the case of several Hydrocarbons deposits, joint Hydrocarbons Operations wou ld be

more efficient.



22.7



Unitization . Within ninety (90) Days following the approval or adoption of a unitization

plan for common development and production by the Ministry, the Contractor shall

proceed to operate under any such plan. If a clause of a cooperative or unitary

development and production plan which has been approved or adopted by the Ministry,

and which by its terms affects the Contract Area or a part of the same, contradicts a

clause of this Contract, the clause of the cooperative or unitary plan shall prevail.



50



Afghan-Tajik Basin Phase I Tender



ARTICLE XXIII

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION

23.1



Compliance with Laws. In the conduct of the Hydrocarbons Operations, the Contractor

shall comply, and shall require its subcontractors to comply, with any applicable laws and

regulations, including the Hydrocarbons Law and any regulations issued thereunder,

relating to the protection of the environment and the health, safety and welfare of workers

and the public.



23.2



Oversight and Rehahilitation . Prior to the commencement of Hydrocarbons Operations

in any portion of the Contract Area, Contractor shall undertake and complete a Baseline

Env ironmental Assessment of the subject area consistent with Good Oil Field Practices

and applicable laws and noting any existing deficiencies, including any environmental

contamination existing in the area on or prior to the commencement of Hydrocarbons

Operations. In the course of the Hydrocarbons Operations, the Contractor shall consider.

investigate, assess and manage the impact of the Hydrocarbons Operations on the

environment and the socio-economic conditions of any person who might directly be

affected thereby. Furthermore the Contractor shall, upon completion of any

Hydrocarbons Operations, rehabi litate as far as reasonably practicable the environment

affected thereby to its natural or prior state as established by the Baseline Environmental

Assessment.



23.3



Health and Safety Plan. The Contractor shall take all necessary measures to secure the

health, safety and welfare of individuals consistent with Good Oil Field Practices and as

requircd under applicable Afghanistan Law.

Prior to the commenccmcnt of

lIydrocarbons Operations in the Contract Area, the Contractor shall establish, submit to

the Ministry and publish, implement and enforce a health and safety plan throughout all

Hydrocarbons Operations, whieh shall include the following measures:

(a)



all equipment and facilities shall afford reasonable safety from accidents, and

shall be inspected by a qualified person as often as may be necessary to ensure the

safety of the equipment or facility and compliance with the relevant laws and

regulations ;



(b)



the person performing the inspection shall make a written report of the inspection

and shall forward a copy of the report to the Ministry, and any equipment found to

be defective or unsafe shall be repaired or replaced;



(c)



adequately designed, tested and maintained blowout prevention equipment shall

be employed in connection with the drilling, testing, completing or working over

of any Well;



(d)



adequate, easily accessible and properly maintained fire fighting equipment shall

be provided at all operational locations where the potential of fire exists, the

personnel shall be trained in the effective use of such cquipment and fire fighting

contingency procedures shall be published and displayed around the site;



51



Afghan-Tajik Basin Phase I Tender



23.4



(e)



all completed Wells shall be reasonably protected and a notice warning persons of

the danger that exists shall be prominently displayed;



(f)



all personnel shall wear clothing and footwear suitable for the operational

conditions and the work being performed, including, where appropriate, industrial

protective equipment, such as helmets, eye protectors, gloves and hearing

protection equipment;



(g)



where appropriate, notices in English and in the prevalent language of the area of

operations shall be displayed at the operational sites warning all personnel of any

potential danger and of the associated safety requirements;



(h)



adequate first aid equipment and personnel shall be avai lable on all operational

sites whi le work is in progress and procedures shall be established for the

transportation of persons needing prompt medical attention;



(i)



reliable communication facilities shall be provided at all operational locations;

and



Ul



all aircraft operations shall be conducted

Afghanistan,



In



accordance with existing laws of



Manuals. The Contractor shall prepare and submit to the Ministry for approval prior to

the commencement of Hydrocarbons Operations:

(a)



a manual of instructions for the safety operations which shall detail procedures to

be followed to safeguard the health and safety of all personnel associated with all

foreseen operations and to safeguard the environment;



(b)



a manual of response to emergencies which may occur, including the escape or

ignition of Hydrocarbons, serious injuries, and other conditions requiring the

evacuation of the site; and



(c)



a manual of procedures for the maintenance of Well control which shall detail

procedures and equipment which will be used in the event of a blowout.



All appropriate personnel at the site shall be made aware of and be trained

procedures detailed in the manuals.

23.5



In



the



Additional Protective Measures. In addition to the requirements for the protection of

the environment as is provided in the environmental management plan approved by the

Ministry, the Contractor shall. when carrying out Hydrocarbons Operations, take all

practical measures to :

(a)



prevent the pollution of any water well, spring, river. lake or reservoir by the

escape of Hydrocarbons, drilling fluids, chemical additives or any othcr waste

product or effluent;



52



Afghan-Tajik Basin Phase I Tender

(b)



where pollution occurs, treat or disperse it in an environmentally acceptable

manner;



(c)



dispose of all waste liquids used during the drilling of a Well

approved by the Ministry;



(d)



properly secure permanent installations;



(e)



removc all worn, damaged or surplus equipment and supplies, and other rubbish

from site to an approved waste disposal site to be reused or recycled if possible;

and



(f)



on the completion or abandonment of a Well, promptly restore the Well site and

any surrounding area as near to the state existing prior to the conduct of

Hydrocarbons Operations as may practically be done and render that area safe.



In



a manner



23.6



Minimization of Flaring. When carrying out Hydrocarbons Operations, the Contractor

shall furthermore take all practical measures to minimize flaring of any Natural Gas by

re-injecting such Natural Gas into suitable strata or undcrground storage in accordance

with Good Oil Field Practices or in any other approved scheme. The Contractor shall

seek the Ministry'S approval (such approval not to be unreasonably withheld or delayed)

to flare any such Natural Gas which cannot be re-injected due to specific reservoir

considerations or for other reasons that are accepted internationally or in an approved

scheme in line with Good Oil Field Practices. Before flaring, the Contractor shall take

reasonable measures to ensure the extraction of Natural Gas and other liquids contained

in the Associated Gas if the Ministry and the Contractor have agreed that such extraction

is economically justifiable. Notwithstanding anything in this Article XXIII to the

contrary, Associated Gas may be flarcd if necessary for the conducting of Well and

production tests and during any emergency.



23.7



Remedial Measures . If the Ministry reasonably determines that any works or

installations erected by the Contractor or any operations conducted by the Contractor

endanger or may endanger persons or third party property or cause pollution or harm

wildlife or the environment to an unacceptable degree, or are otherwise not in compliance

with the provisions of the applicable laws and regulations or of this Contract, the

Ministry may require the Contractor to take remedial measures and to repair any damage

to the environment within a reasonable period established by the Ministry. In the event

that the Contractor fails to take the remedial measures required by the Ministry within the

time period established by the Ministry, the Ministry may carry out such remedial

measures and the Contractor shall be liable for any costs related to such measures. If the

Ministry deems it necessary, it may also require the Contractor to discontinue

Hydrocarbons Operations in whole or in part until the Contractor has taken such remedial

measures or has repaired any damage. The period of discontinuance shall not exceed six

(6) Months.



23.8



Reporting of Accidents or Hazards. The Contractor shall as soon as possible report

any serious or fatal accident that occurs, or any imminent hazard that anses, In



53



Afghan-Tajik Basin Phase I Tender

connection with the Hydrocarbons Operations by the most rapid means of

communication to the Ministry and the local State administrative authorities under whose

jurisdiction the accident or hazard occurs or arises.

23.9



Emergency Measures. In case of imminent threat to life, property, or the environment,

the Contractor shall take every measure possible in accordance with the risk management

plan to mitigate or avoid such imminent threat and such immediate action as is necessary

to preserve life, prevent destruction of property, or protect the environment. The

Contractor shall as soon as possible thereafter notify the Ministry of the action taken.

The costs incurred by the Contactor in relation to such action shall be recoverable as

Hydrocarbons Operations Expenditures so long as the imminent threat to lifc, property, or

the environment is not a direct result of the Contractor's gross negligence or willful

misconduct. The Ministry shall take such measures to assist in efforts to mitigate or

avoid such imminent threat as it deems appropriate and issue such orders and/or

instructions as it deems necessary .



ARTICLE XXIV

DISPUTE SETTLEMENT/ ARBITRATION

24.1



lCSID Arbitration. Subject to Section 24.2, any dispute, controversy or claim arising

out of or relating to this Contract that is not resolved by mutual agreement within fortyfive (45) Days from the date on which the existence of a dispute is notified in writing by

a Party to another Party or Parties shall be settled by arbitration initiated by a Party by

submission to the International Centre for Settlement of Investment Disputes (ICSID)

pursuant to the Convention on the Settlement of Investment Disputes between States and

Nationals of other States as of March 18, 1965 (ICSID Convention) and the arbitration

rules promulgated thereunder. For the avoidance of doubt, the Ministry hereby expressly

consents to the submission of any dispute which may arise under this Contract to ICSID

for settlement by arbitration in accordance with Article 25 (1) of the ICSID Convention.

For the purpose of Article 25 (2) (b) of the ICSID Convention, the Contractor shall be

treated as a national of a state other than Afghanistan. The number of arbitrators shall be

three. The arbitration shall be conducted in the English language. The arbitration award

may take the form of an order to pay a sum of money, or an order to perform an act, or an

order to refrain from an act, or any combination of such orders. The place of arbitration

shall be London, England . 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 an order of enforcement,

as the case may be. As far as practicable, both the Contractor and the Ministry shall

continue to implement this Contract during pendency of any dispute .



24.2



Expertise Proceedings. In the event (i) that the Ministry disagrees with the Contractor's

determination of the Market Price or (i i) in the event of there being any dispute as to

whether or the extent to which an expenditure is disqualified as a Hydrocarbons

Operations Expenditure, the Parties shall submit the matter to administered expertise

proceedings in accordance with the Rules for Expertise of the International Chamber of



54



Afghan-Tajik Basin Phase I Tender

Commerce (the "Expertise Rules") provided that the Ministry or the Contractor may (but

shall not be obliged to) refer any dispute which falls under paragraphs (i) and (ii) above

to arbitration where it reasonably estimates that the disputed amount is likely to exceed

twenty-five million U.S. Dollars (US$ 25,000,000), in which case there shall be no

expertise proceedings in respect of such dispute. The Request for Administration (as

such term is defined in the Expertise Rules) shall be copied to all Parties concerned and

shall specify that:

(a)



if the expert is not appointed pursuant to the agreement of the Parties, the expert

should have appropriate experience in the administration of exploration and

production sharing agreements for Hydrocarbons;



(b)



if the expert is not appointed pursuant to the agreement of the Parties, the expert

shall not be a citizen of Afghanistan or of any jurisdiction in which any

Contracting Entity or its ultimate parent entity is organized or has its principal

place of business;



(c)



unless otherwise agreed by the Parties and the expert, the expert shall endeavor to

deliver his report within sixty (60) Days after acceptance by the expert of his

appointment;



(d)



the report shall include a determination by the expert as to the allocation of the

costs of administration (including the fees and expenses of the expert) among the

Parties;



(e)



the expert may require (including as a result of a suggestion by a Party) that any

Party produce to the expert (and if the expert so determines, to such Persons as the

expert may direct) any documentation or explanation relating to the matters in

dispute;



(f)



the language of the expertise proceedings shall be English; and



(g)



as far as practicable both the Ministry and the Contractor shall continue to

implement this Contract during the pendency of the expertise proceedings and

pending any expert determination regarding the calculation of the Market Price

the Market Price applicable shall be the Market Price determined by the

Contractor.



Each Party shall bear its own costs of counsel in connection with the expertise

proceedings, and pending determination by the expert as to the allocation of the costs of

administration, sueh costs shall be borne equally by the Parties. The report of the expert

shall be tinal and binding on the Parties. If a Party fails to comply with a determination

contained in such report within thirty (30) Days after the date the report is del ivered to

the Parties, such failure to comply shall constitute a breach of this Contract. Any dispute

regarding a Party's failure to comply with a determination contained in the report may be

referred to arbitration in accordance with Section 24.1.



55



Afghan-Tajik Basin Phase I Tender

24.3



Contractor Parties. For purposes of (i) the selection and appointment of arbitrators

pursuant to Section 24.1 and (ii) the allocation of costs of administration in expertise

proceedings pursuant to Section 24.2, the Contractor and the Contractor Entities shall be

considered to be one (I) Party.



24.4



Jurisdictional Defenses. The Parties hereby stipulate that the investment contemplated

by this Contract constitutes an investment for the purposes of the ICSID Convention and

the Government and the Ministry each acknowledge that its rights and obligations

hereunder are of a commercial and not a governmental nature. For purposes of this

provision, the tenn "Covered Persons" shall mean the Ministry, the Government, or any

of its or the Government's agencies or instrumentalities and the term "Commercial

Property" shall mean the property of a Covered Person that: (a) is invested for a

commercial purpose or (h) is used for a commercial activity, and specifically shall

exclude any property that: (i) constitutes the assets of a diplomatic or consular mission

outside Afghanistan; (ii) is used in connection with a military activity, is of a military

character and is under the control of a military authority or defense agency of the

Government; (iii) consists of assets of the central bank of Afghanistan. including

accounts held by it in other financial institutions; or (iv) consists of aircraft or related

equipment that is used predominantly for the transport of Government officials. It is

agreed that any Covered Person shall not use its status as a state or instrumentality of the

state to avoid any legal proceeding (includ ing expertise proceedings) commenced in

accordance with this Contract, including any application for interim relief and any action

to enforce or execute any award or judgment or determination of an expert pursuant to

Section 24.2 and it is further agreed that any property subject to any such action,

including any property used to enforce or execute any award or j udgment or

determination of an expert, shall be limited to the Commerc ial Property of the Covered

Persons.



ARTICLE XXV

TERMINATION AND REVOCATION

25.1



Termination for Default. The Ministry shall have the right to terminate this Contract

upon giving thirty (30) Days' written notice of its intention to do so if the Contractor: (a)

fails to provide or maintain in effect the Financial Guarantee as required under this

Contract; (b) subject to Section 24.2, fails to make any monetary payment required by

law or under this Contract, including any payment in respect of the purchase price of the

Hydrocarbons deemed sold by the Ministry to the Contractor pursuant to Article X, for a

period of thirty (30) Days after the due date for such payment; (c) fails to comply with

any other materia l obligation that it has assumed under this Contract, including the

obligation to perform the Winning Bidder's Exploration Program; (d) fa ils to comply

with a material obligation imposed by the Hydrocarbons Law or regulations thereunder or

any lawful acts, regulations, orders or instructions issued by the Government or any

department or agency of the Government.



56



Afghan-Tajik Basin Phase I Tender

25.2



Termination for Default of a Contractor Entity. The Ministry shall also have the right

to terminate this Contract only in respect of the relevant Contractor Entity upon giving

thirty (30) Days' written notice to such Contractor Entity, if such Contractor Entity: (a)

fails to provide or maintain in effect its General Performance Guarantee as required under

this Contract; or (b) becomes bankrupt, or goes into liquidation because of insolvency or

makes a composition with its creditors.



25.3



Cure Period. If the circumstance or circumstances that result in termination under

Section 25 .1 are remedied (i) by the Contractor (x) in the case of Section 25.I(a) or (b),

within the thirty (30) Day period following the notice of termination as aforesaid or (y) in

the case of Section 25.I(c) or (d), within the sixty (60) Day period following the notice of

termination as aforesaid or (ii) by the relevant Contractor Ent ity in the case of Section

25.2, within the thirty (30) Day period following the notice of termination as aforesaid,

such termination shall not become effective.



25.4



False or Fraudulent Information.

(a)



If the Ministry finds that the Operator has presented false or fraudulent

information in its capacity as Operator or information has been withheld by the

Operator in such capacity, the Min istry may require the Operator to provide any

necessary information and explanation. If the Operator fails to provide such

information or the information and/or explanations provided are unsatisfactory,

and the incorrect information provided or the omission to provide information

constitutes a material breach of Contract, the Contract may be revoked and the

State is entitled to compensation from the Contractor for losses incurred as a

result of the breach of contract or other remedies for breach of contract.



(b)



If the Ministry finds that a Contractor Entity acting in its individual capacity has

presented false or fraudulent information or information has been withheld by

such Contractor Entity, the Ministry may require such Contractor Entity to

provide any necessary information and explanation. If the Contractor Entity fails

to provide such information or the information and/or explanations provided are

unsatisfactory, and the incorrect information provided or the omission to provide

information constitutes a material breach of Contract. the Contract may be

terminated only in respect of the relevant Contractor Entity and the State is

entitled to compensation from the Contractor for losses incurred as a result of the

breach of contract or other remedies for breach of contract.



(c)



If an arbitral tribunal convened pursuant to Section 24.1 determines in a final

decision that the Contractor or any Contractor Entity has breached the prohibition

on bribing state officials pursuant to Afghanistan Law in respect of the award or

operation of this Contract, the Contract may be revoked and the State is entitled to

compensation from the Contractor for losses incurred as a result of the breach of

contract or other remedies for breach of contract. In case of revocation, the

Ministry shall publish reasons justifying revocation of the Contract and shall send

a copy thereof to the Contractor. In such case, the rights and privileges granted to



57



Afghan-Tajik Basin Phase I Tender

the Contractor shall be revoked, and the Contract Area shall be forfeited as well

as the Financial Guarantee in accordance with its terms.

25.5



Continuing Obligations. The termination or revocation of this Contract for whatevcr

rcason shall be without prejudice to the obligations incurred and not discharged by the

Contractor or the relevant Contractor Entity (as the case may be) prior to the date of

termination or revocation . In the case of any termination or revocation of the Contract in

respect of the Contractor, the Ministry and the Contractor shall promptly agree on a plan

for take-over and/or abandonment. Subject to Section 7.3(f) and Section 27.3 .

termination or revocation of this Contract is without prejudice to accrued liabilities of

each Party and in particular the Contractor is liable to rehabilitate as far as reasonably

practicable the environment affected by Hydrocarbons Operations to its natural or prior

state as established by the Baseline Environmental Assessment.



25.6



Continuing Performance. In the event of termination or revocation pursuant to Section

25.1 , Section 25.4 or Section 25.9, the Ministry may require the Contractor, for a period

not to exceed one hundred eighty (180) Days from the effective date of termination, to

continue, for the account of the Ministry, Liquid Hydrocarbons or Natural Gas production

activities until the right to continue such production has been transferred to another

entity. During such period, the Contractor shall be entitled to its share of Hydrocarbons

production as determined in accordance with Section 10.1. Upon termination, the

provisions of Sections 4.4 and 4.5 shall apply.



25.7



Mitigating Environmental Damages or Hazards. Within ninety (90) Days after the

termination or revocation of this Contract pursuant to Section 25.1, Section 25.4 or

Section 25 .9, unless the Ministry has granted an extension of this period, the Contractor

shall complete any reasonably necessary action as directed by the Ministry to avoid

environmental damage or a hazard to human life or third party property.



25.8



Transfer of Ownership. Upon the termination or revocation of this Contract for any

reason, ownership of all pipes, pipelines, installations, facilities, downhole well

equipment, wellhead equipment and other equipment or materials within the geographic

limits of the Contract Area and for which the Contractor has recovered the Hydrocarbons

Operations Expenditures pertaining thereto shall be transferred to the Ministry, other than

unused inventory, leased equipment and other Contractor equipment which can be

removed without damage to the Contract Area.



25.9



Area Closed to Hydrocarbons Operations. If, after

Contract, the State declares or designates a portion

Supplemental Exploration Area as disputed, prohibited

with the Hydrocarbons Law, then the Contractor shall

negotiate this Contract. The Contractor shall also be

incurred due to such declaration or designation.



the Contractor has signed this

of the Contract Area or the

or unauthorized in accordance

be entitled to terminate or reentitled to damages for losses



25.10 Transfer of Participating Interest on Termination in respect of a Contractor Entity.

If the Contract is terminated under Section 28.2, Section 25.2 or Section 25.4, the

Participating Interest of the terminated Contractor Entity shall be transferred to the other



58



Afghan-Tajik Basin Phase I Tender

Contractor Entities in the proportions which their Participating Interests bear to the

aggregate of the Participating Interests of all such Contractor Entities (unless otherwise

agreed by the Contractor Entities).



ARTICLE XXVI

BOOKS, ACCOUNTS AND AUDITS;

RECORDS, REPORTS AND INSPECTIONS

26.1



Maintenance of Accounts, Books and Records. The Contractor shall, in accordance

with prevailing legislation and regulations, be obliged to keep and maintain complete

accounts, books and records at its registered office in Afghanistan reflecting all

Hydrocarbons Operations, Hydrocarbons Operations Expenditures and Gross Contractor

Revenues consistent with International Financial Reporting Standards, generally accepted

procedures and standards in the international petroleum industry and the requirements of

this Contract, including the Accounting Procedures .



26.2



Submission of Accounts . No later than June 30 of each Calendar Year, the Contractor

shall submit to the Ministry detailed accounts showing all Hydrocarbons Operations

Expenditures and all Gross Contractor Revenues during the past Calendar Year. Before

submission to the Ministry, the accounts shall be audited and certified by an independent

chartered accountant or certified public accountant acceptable to both the Ministry and

the Contractor, at the expense of the Contractor (such expense to be considered as

Hydrocarbons Operations Expenditures recoverable by the Contractor in accordance with

the Accounting Procedures). It is understood that the Ministry retains the authority to

review and audit the Contractor's accounts, books and records with respect to

Hydrocarbons Operations conducted hcreunder either directly or through an independent

accountant designated by the Ministry.



26.3



Inspection Rights. The Ministry shall have full and complete access to the Contract

Area at all reasonable times with a right to observe Hydrocarbons Operations and shall

have the right to inspect all accounts, books, records, assets and data kept by the

Contractor relating to Hydrocarbons Operations and this Contract, such observations and

inspection to be conducted at the expense of the Ministry. The Ministry may, upon

reasonable advance notice to the Person-in-Charge, perform examinations, surveys,

drawings. tests and analyses, inspect and make copies for the purpose of implementing

this Contract. In doing so, the Ministry shall not unduly interfere with the Contractor's

lIydrocarbons Operations. The Ministry shall be entitled to make reasonable use of the

equipment and instruments of the Contractor for purposes of this Section 26.3, provided

that no damage to the equipment or instruments or impediment to the Hydrocarbons

Operations hereunder shall result from such use. The Ministry shall indemnify and

reimburse the Contractor for any loss or damage that may in fact result from any such use

of cquipment and instruments. The Ministry shall be given reasonable assistance by the

Contractor for such functions, and the Contractor, the Pcrson-in-Charge and the

Contractor's representatives shall be required to provide the Ministry with all reasonable

facilities and assistance for the effective exercise of its functions, inter alia by affording



59



Afghan-Tajik Basin Phase I Tender

to the Ministry all facilities and privileges afforded to its own personnel in the field

including the use of available office space and housing free of charge.

26.4



Current Recordkeeping and Reporting. The Contractor shall prepare and maintain

accurate and current records of its activities in the Contract Area. The Contractor shall

furnish all information, reports and data concerning its activities and operations under

this Contract in such formats, at such times, and to such parties as may be required under

the Hydrocarbons Law and any regulations issued thereunder or pursuant to any

transparency principles or po licies adopted by the Government, including the EITI.



26.5



Samples. The Contractor shall save and keep for the duration of this Contract all unused

cores and samples taken from the Wells drilled, which shall be forwarded to the Ministry

or its representatives at such time and in the manner directed by the Ministry. All cores

and samples acquired by the Contractor shall be available for inspection by the Ministry

or its representatives at all reasonable times. Unless previously forwarded to the Ministry

pursuant to instructions given under this Section 26.5, the Contractor shall forward to the

Ministry all remaining cores and samples upon expiration or termination of this Contract.

Unless otherwise agreed to by the Ministry, in the case of exporting any rock or

Hydrocarbons samples from Afghanistan for the purpose of testing and analysis, samples

equivalent in size and quantity shall, before such exportation, be delivered to the

Ministry.



26.6



Exportation of Original Data. Originals of records and other data can be exported only

with the prior permission in writing of the Ministry; provided, however, that any data

which must be processed or analyzed outside Afghanistan may be exported if a

comparable record is maintained in Afghanistan to the extent feasible and such exported

records and data, including processed and interpreted data, are repatriated to Afghanistan.

Response to a request for such permission shall be given without undue delay.



26.7



Ownership and Confidentiality of Data. The Contractor shall provide to the Ministry

in appropriate form all original data resulting from Hydrocarbons Operations, inc luding

geological , geophysical, petrophysical, engineering, Well logs, production data and

completion status reports and any other data (including derivative data) which the

Contractor may compile during the term hereof, including all reports, analyses,

interpretations, maps and evaluations thereof prepared by the Contractor and any

contractors, subcontractors or consultants to the Contractor or by its Affiliated Entities,

and cuttings of all samples that have been obtained or compiled during the term hereof

("Data"). The State shall have title to all Data. The Data shall not be disclosed to third

parties by the Ministry prior to relinquishment of the area to which they relate, or prior to

the end of the Exploration Phase if such area is not sooner rel inquished, provided,

however, that the Ministry may make copies available to professional consultants, legal

counsel, accountants, underwriters, lenders and such Government entities as may need to

be made aware thereof or have the right to require disclosure. In any event, the

Contractor may retain copies of all Data. The Contractor shall not disclose the Data to

any third parties without the Ministry's prior written consent, provided, however, that the

Contractor may make copies available to professional consultants, legal counsel,

accountants, underwriters, lenders, its Affiliated Entities, the Contractor Entities, their



60



Afghan-Tajik Basin Phase I Tender

respective Shareholders and Affiliated Entities, contractors and subcontractors of the

Contractor and such government entities as may need to be made aware thereof or have

the right to require disclosure. Any Data that are disclosed by the Ministry or the

Contractor to third parties pursuant to this Section 26.7 shall be disclosed on terms that

ensure that the Data are treated as confidential by the recipient. To the extent that there is

any inconsistency between the provisions of this Section 26 .7 and the provisions of

Article XXXIII, the provisions of this Section 26.7 shall govern except to the extent that

application of this Section 26.7 would violate applicable law.



ARTICLE XXVII

INSURANCE AND INDEMNIFICATION

27.1



Insurance. To ensure that the Contractor shall meet its obligations to third parties, or to

Government agencies, that might arise in the event of damage or injury (including

environmental damage or injury and cleanup of accidents in accordance with Good Oil

Field Practices) caused by Hydrocarbons Operations, notwithstanding that the damage is

accidental, the Contractor shall maintain in force a third party liability insurance policy

through an internationally recognized insurance company reasonably acceptable to the

Ministry covering the activities of itself, its contractors and subcontractors and the

employees of all such parties, to the extent that sueh insurance is reasonably available to

the Contractor. Such insurance policy shall include the Min istry as an additional insured,

shall waive subrogation against the Ministry, and shall provide that it may not be

cancelled except upon thirty (30) Days prior written notice to the Ministry . A certificate

evidencing such insurance policy shall be provided to the Ministry within ninety (90)

Days of the Effective Date. The limits, coverage, deductibles and other terms thereof

shall be subject to approval in writing by the Ministry (such approval not to be

unreasonably withheld or delayed) . To the extent that such third party liability insurance

is unavailable or is not obtained, or does not cover part or all of any claims or damage

caused by or resulting from Hydrocarbons Operations, each Contractor Entity shall

remain fully responsible for the obligations of the Contractor and shall defend, indemnify

and hold the Ministry harmless against all such claims, losses and damages of any nature

whatsoever.



27.2



Indemnification . Subject to Section 27.3, each Contractor Entity shall indemnify,

defend and hold the Government harmless against all claims, losses and damages of any

nature whatsoever, including, without limitation, claims for loss or damage to property or

injury or death to persons, caused by or resulting from any Hydrocarbons Operations

conducted by or on behalf of the Contractor, provided that a Contractor Entity shall not

be held responsible to the Government under this Section 27.2 for any loss, claim,

damage or injury caused by or resulting from any negligent action of personnel of the

Government or from any environmental contamination existing in the Contract Area on

or prior to the Effective Date.



27.3



Limitation on Liability. Notwithstanding any other provision of this Contact, no Party

shall be liable to any other Party (and for the benefit of the Contractor, the Ministry



61



Afghan-Tajik Basin Phase I Tender

agrees that no Contractor Entity, its Shareholders or their respective Affiliated Entities, or

any subcontractor of the Contractor shall be liable to the Ministry) for loss of profits,

punitive dam.ages, exem.plary or indirect damages, business interruption damages or loss

of goodwill arising out of a failure to comply with an obligation (including in respect of

Hydrocarbons Operations) under this Contract (whethcr such failure is characterized as

breach of contract or a tort or otherwise), including under any indemnity provision under

this Contract, unless such Party has caused the damages or losses by its willful

misconduct or gross negligence. Nothing contained in this Section 27.3 shall preclude

the Ministry or any other agency or instrumentality of the Government that exercises

regulatory functions from assessing fines to the extent specifically provided in

Afghanistan Law and not assessed based on lost profits or loss of goodwill and not

intended to indemnify for business interruption or indirect damages. Reference to

"willful misconduct or gross negligence" means (a) a marked and flagrant departure from

the standard of conduct that a reasonable and prudent person acting in such circumstances

would have been expected to display at the time of the purported misconduct, or such

wanton and reckless conduct as constitutes in effect an utter disregard for harmful,

foreseeable, and avoidable consequences; or (b) an act or failure to act with knowledge or

reckless disregard of the harmful, foreseeable, and avoidable consequences



ARTICLE XXVIII

ASSIGNMENT AND SUBCONTRACTORS

28.1



Assignment. Subject to Section 28.4, a Contractor Entity may not sell, assign, transfer.

convey. pledge or otherwise dispose of any part or all of its rights or obligations under

this Contract to any person or entity, unless approved by the Council of Ministers and

subsequently authorized by the Ministry. In the case of any assignment authorized under

this Section 28. I, the assignor shall provide to the Ministry an unconditional undertaking

by the assignee to assume all obligations of the assignor under this Contract.

Notwithstanding the foregoing, (i) the assignor shall remain liable for all obligations

under this Contract that the assignor has incurred prior to the date upon which such

assignment, encumbrance or transfer takes effect and (ii) the assignor shall remain jointly

and severally liable with the assignee for performance of the obligations of the assignor

arising after the effective date of the assignment unless the assignor assigns its entire

interest under this Contract.



28.2



Indirect Transfers; Change of Control. The Ministry shall have the right to terminate

this Contract only in respect of the relevant Contractor Entity upon notice to the relevant

Contractor if, without the prior approval of the Counc il of Ministers and subsequent

approval of the Ministry, such Contractor Entity shall, during the life of this Contract,

undergo, directly or indirectly, a change of control (it being understood that for this

purpose "control" of the Contractor Entity means the power. directly or indirectly, to

direct or change its management or policies, whether through ownership of shares or

other voting securities or by any other means). Notwithstanding the foregoing, nothing in

this Article XXVIII shall prohibit the ultimate parent entity of any Contractor Entity or



62



Afghan-Tajik Basin Phase I Tender

any Shareholder from entering into any merger, acquisition or other business

combination.



28.3



Application to the Ministry. Prior to any proposed assignment or change of control

under this Article XXVIII, the Contractor Entity assignor or the Contractor Entity

undergoing a change of control, as applicable, shall notify the Ministry in advance

together with an application which shall include:

(a)



the name, address and nationality of the third party;



(b)



in the case of the third party organized as a corporation:

(i)



its place of registration or incorporation, its principal place of business, the

names, addresses and nationality of the directors, principal officers and

authorized signatories of the company and its capital structure;



(ii)



the corporate structure of the third party, its parent company, if any, and

other Affiliated Entities;



(iii)



financial information on the third party and its parent company, if any,

including annual reports, audited balance sheets and profit and loss

statements for the past three years, and any reports of relevance for the

Hydrocarbons Operations which the third party or its parent company may

have filed with government agencies responsible for securities regulation

during that period;



(c)



how the Hydrocarbons Operations would be financed;



(d)



the third party ' s previous experience and technical expertise in Hydrocarbons

Operations, specitically including the third party's experience in developing

countries;



(e)



information concerning experience and technical competence of significance to

the area or areas to which an application applies;



(f)



a description of the organization and expertise which the third party will have

available in Afghanistan and elsewhere for activities in connection with the

Contract Area;



(g)



a description of the relevant equipment, machinery. tools and personnel that will

be available for the Hydrocarbons Operations of that third party;



(h)



an indication of who will be the representative in relation to the authorities;



(i)



a description of the third party's experience and procedures that will apply for

securi,ng the health, safety and welfare of persons involved in or atfected by the

Hydrocarbons Operations;



63



Afghan-Tajik Basin Phase I Tender



(j)



a description of the third party's experience and procedures that will apply for

protecting the environment, preventing, minimizing and remedying pollution and

other harm from the Hydrocarbons Operations;



(k)



proposals with respect to the training of Afghan nationals and expenditures to be

incurred therefor;



(I)



such guarantees requi red pursuant to Article 40, Section 14 of the Hydrocarbons

Law and as required herein, including a General Performancc Guarantee executed

by the ultimate parent entity of the third party in a maximum amount equal to the

product of (i) the Participating Interest to be acquired by the third party and (ii)

one hundred million US Dollars (US$ 100,000,000).



(m)



such other particulars as the Ministry may reasonably require to be submitted

within a reasonable spccified time frame .



If such further information is not submitted within the specified timeframe, the

application shall be deemed to be withdrawn. The Ministry wi ll not unreasonably

withhold its consent to any such assignment or change of control, except that the Ministry

may in its sole discretion withhold any such consent in the event of any transaction which

would result in a change in the Operator or the ultimate parent entities of the prequalified parties in the consortium constituting the Winning Bidder owning in the

aggregate, directly or indirectly, less than fifty-one percent (51 %) of the Participating

Interests at any time during the Exploration Phase.

28.4



Assignments to Affiliated Entities. A Contractor Entity may sell, assign, transfer,

convey, pledge or otherwise dispose of any part or all of its rights or obligations under

this Contract to an Affiliated Entity. In the case of any assignment authorized under this

Section 28.4, the Contractor Entity shall notify the Ministry of such assignment and shall

provide to the Ministry an unconditional undcrtaking by the assignee to assume all

obligations of the assignor under this Contract. The assignment, encumbrance or transfer

of this Contract or interests hereundcr shall not affect any liability that the Contractor

Entity has incurred prior to the date upon which such assignment, encumbrance or

transfer takes effect. Notwithstanding such undertaking, the Contractor Entity shall

remain jointly and severally liable with the assignee for performance of the obli gations of

the Contractor.



28.5



Subcontractors.

The provIsIons of this Article XXV III shall not apply to the

engagement of subcontractors that are engaged to perform special operations or provide

services. The Contractor undertakes to provide copies of all such subcontracts to the

Ministry and the Ministry of Finance.



64



Afghan-Tajik Basin Phase I Tender



ARTICLE XXIX

LAW OF THE CONTRACT

This Contract shall be govcrned by, construed under and interpreted in accordance with the laws

of Afghanistan.



ARTICLE XXX

FORCE MAJEURE

Except as otherwisc provided in this Article, each Party shall be excused from complying with,

or pennitted to dclay its performance of, this Contract, except for the payment of money due and

only with respect to those terms that are directly affected by the event in question, for so long as

such compliance is prevented or delay in performance is caused by Force Majeure. "Force

Ma jeure" shall mean any act or cause that is rcasonably beyond the control of such Party and

does not result from the fault or negligence of such Party, including natural catastrophes, fires,

earthquakcs, strikes (except strikes by the Contractor' s employees), wars (declared or

undcclared), acts of terrorism and acts of God. It is cxpressly understood that Force Majeure

shall not mean economic hardship or change in market conditions. In the event that either Party

hereto is rendered unable, wholly or in part, by any of these causes to carry out its obligations

under this Contract, such Party shall give notice and details of Force Majeure in writing to the

other Party within seven (7) Days after its occurrence. In such cases, the obligations of the Party

giving the notice shall be suspended during the continuance of any inability so caused , and the

duration of any period specified in this Contract for carrying out the obligations affected by any

of the aforcsaid causes, including, but not limited to, the Exploration Phase and the Development

and Production Phase, shall be extended for a period equal to the impact of delay caused by the

Force Majeure occurrence; provided, however, that the term of this Contract shall not be

extended unless the delay caused by the Force Majeure event in question persists for a

continuous period of at least three (3) Months. The Party claiming Force Majeure shall use all

reasonable efforts to remove or corrcct the event that gave rise to the Force Majeure. If this

Contract is subject to Force Majeure for more than ninety-six (96) consecutive Months, either the

Ministry or the Contractor shall have the right, upon notice to the other, to terminate this

Contract with respect to the part or parts of the Contract Area affected .



ARTICLE XXXI

ENTIRE CONTRACT AND AMENDMENTS

31.1



Entire Agreement. This Contract embodies the entire agreement and understand ing

between the Contractor and the Ministry relative to the subject matter hereof, and

supersedes and replaces any provisions on the same subject in any other agreement

between the Parties, whether written or oral, prior to the date of this Contract.



65



Afghan-Tajik Basin Phase I Tender

31.2



Amendment. This Contract may not be amended, modified, varied or supplemented

except by mutual consent in writing, executed, endorsed and approved in accordance with

the Hydrocarbons Law, and signed by the Contractor and the Ministry .



31.3



Severability. The provisions of this Contract shall be separate and severable each from

the other to the extent that if any portion or anyone provision or portion thereof is held to

be inoperative or unenforceable in any jurisdiction then the remainder of this Contract

shall remain binding upon and enforceable by the Parties hereto in that jurisdiction and

shall be construed as if the Contract had been executed without such inoperative or

unenforceable provision or portion thereof, provided that the provision or portion so

severed shall not materially affect the remainder of this Contract.



31.4



Governing Language and Duplicate Originals. This Contract shall be executed in

English and in Dari in eight (8) originals, with the Ministry holding two (2) originals, one

(1) in English and one (1) in Dari and the Contractor holding six (6) originals, three (3) in

English and three (3) in Dari. In the event that a dispute arises under this Contract

between the English and Dari versions, the English version shall be definitive as to the

terms and conditions of this Contract and the rights and obligations of the Parties.



ARTICLE XXXII

WAIVERS; CUMULATIVE REMEDIES

32.1



Express Waiver Required . Performance of any condition or obligation to be performed

hereunder shall not be deemed to have been waived or postponed except by an instrument

in writing signed by the Party that is claimed to have granted such waiver or

postponement.



32.2



No General Waivers . No waiver by a Party of anyone or more obligations or defaults

by the other Parties in the performance of this Contract shall operate or be construed as a

waiver of any other obligations or defaults, whether of a like or of a different character.



32.3



Cumu lative Remedies . All rights, powers, and remedies provided hereunder are

cumulative and not exclusive of any other rights, powers or remedies provided hereunder

or under applicable laws .



ARTICLE XXXIII

TRANSPARENCY IN AFGHANISTAN HYDROCARBONS OPERATIONS

33.1



Transparency. The Ministry shall have the right to keep a copy of this Contract in the

Hydrocarbons Register, publish and keep public ly available and distrihute to provincial

offices such information and reports on the Contract, related documents and the

Contractor as is required pursuant to the Hydrocarbons Law and any regu lations issued

thereunder or pursuant to any transparency principles or policies adopted by the

Government, including the EITI. Such information and reports may include production

66



Afghan-Tajik Basin Phase I Tender

and financial data concerning all revenues from income taxes, production shares,

royalties, fees and other taxes and other direct or indirect economic benefits received by

the Ministry and all amounts paid by the Contractor under or in relation to this Contract.

The foregoing shall not preclude the Ministry from disclosing the Contract or any

information relating to Hydrocarbons Operations if the Ministry concludes that such

disclosure is in the national interest or complies with the EITI or other internationally

accepted norms relating to transparency in the extractive industries.

33.2



T rade Secrets. If any information referred to in Section 33. 1 concerns technical devices,

production methods, business analyses and calculations and any other industrial and trade

secrets and are of such a nature that others may exploit them in their own business

activities, the Ministry may approve that such information may rightfully be subject to

contidentiality for a period of time determined by the Ministry.



33.3



No Corrupt Action. Each of the Ministry and the Contractor Entities represents and

covenants that it is, and during the term of this Contract will remain, in full compliance

with all laws applicable to it prohibiting corrupt business practices, including the

Hydrocarbons Law.



ARTI CLE XXXIV

NOTICES

All notices, reports and other communications required or permitted hereunder or any notices

that one Party may desire to give to the other Party shall be in writing in the English language

and deemed to have been properly delivered if personally handed to an authorized representative

of the Party for whom intended or sent by electronic mail, registercd airmail or cable, except as

otherwise provided herein. at or to the address of such Party for whom intended as indicated

below, or such other address as either the Ministry or the Contractor may from time to time

designate by notice in writing to the other Party:

CONTRACTOR:



Dragon Oil (Sanduq li) Limited

Attn: Afghanistan Country Manager

Burj Ghazanfar, 5th Floor

Baihaqi Street

Mazar-i -Sharif, Afghanistan



MIN ISTRY:



Ministry of Mines & Petroleum

Pashtoonistan Watt

Across from Ministry of Finance

Kabul, Afghanistan

Telephone: +93 (0) 202 100 309

Attn: Director of Afghanistan Petroleum Authority



67



Afghan-Tajik Basin Phase I Tender

Any notice, report or other communication hereunder (other than reports under Article XXIII)

that is required to be submitted within seven (7) Days or less shall be due on the next business

Day if Government offices in Afghanistan are closed on the Day it would otherwise be duc.



ARTICLE XXXV

EFFECTIVENESS AND REGISTRATION

35.1



Effective Date and Validity. This Contract, which has been endorsed by the Interministerial Committee and approved by the Council of Ministers, shall become effective

and binding on the Parties on the Effective Date. The Ministry shall inform the

Contractor of the Effective Date within forty-eight (48) hours thereof. The Ministry

represents that it has all requisite power and authority to enter into this Contract and

perform its obligations hereunder and that the execution, delivery and performance of this

Contract by the Ministry has been duly authorized in accordance with the constitutional

and admin istrative procedures for the Ministry and that only the approval of the Council

of Ministers is required to give this Contract legal effect.



35.2



Registration of Contract; Pnblication. Within ten (10) Days following the Effective

Date, the Ministry shall (i) register this Contract in the Hydrocarbons Register and (ii)

publish in at least three (3) newspapers of national circulation in Afghanistan and on the

Ministry's website an announcement summarizing the material tenns of the Contract.



[signature pagefollows}



68



Afghan-Tajik Basin Phase I Tender



IN WITNESS WHEREOF, the Parties hereto have caused this Contract to be executed by their

respective duly authorized representatives as of the date first above written .

DRAGON OIL (SANDUQLI) LIMITED



By



_Lv_71li

__



_ v_ -4Jy

_ _ __



CL..L

_-



Mark W. Sawyer

Manager, New Ventures and

Bus iness Development



TP AFGHANISTAN LIMITED



By ____~~~~~----------------



GI IAZANFAR INVESTMENT LTD.



~



'.



' BY ~ _ _

I ae

azanfar

Chief Executive Officer



THE MINISTRY OF MINES & PETROLEUM OF

TIlE GOVERNMENT OF THE ISLAMIC

REPUBLIC OF AFG HAN ISTAN



B ~ cA

y



-



"



Abdul Jalil Jumriany

Director General

Afghanistan Petroleum Authority



69



Afghan-Tajik Basin Oil and Gas Tender



EXHIBIT A

DESCRIPTION OF CONTRACT AREA AND

SUPPLEMENTAL EXPLORATION AREA



A- I



Afghan-Tajik Basin Phase I Tender



COORDINATES OF CONTRACT AREA

The Contract Area consists of the following coordinates, comprising the interiors of the

geographic region described by its corners, stated with reference to the meridian of Greenwich

and the Equator:

SANDUQLI



66° 10' 0" E



37°21' 58.0278" N



66° 10' 0" E



37° 0' 0" N



66° 55' 0" E



37°0' 0" N



66° 55' 0" E



37° 22' 36.48" N



COORDINATES OF SUPPLEMENTAL EXPLORATION AREA

The Supplemental Exploration Area consists of the following coordinates, comprising the

interiors of the geographic region described by its corners, stated with reference to the meridian

of Greenwich and the Equator:



66° 03' 14.3244" E



37° 27' 04.7520" N



66° 03' 14.3244" E



37° 0' 0" N



66° 10' 0" E

66° 10' 0" E



37° 21' 58.0278" N



A-2



Afghan-Taj ik Basin Phase I Tender



EXHIBITB

MAP OF CONTRACT AREA AND

SUPPLEMENTAL EXPLORATION AREA



B-1



Afghan-Taj ik Basin Phase I Tender



66.053979E

66.916667E

37.3768N



--



66 .166667E

37.366119N



Safldu41

6&i91~E



3-'1N



66.053979E

37N



B-2



Afghan-Tajik Basin Phase I Tender



EXHIBIT C



ACCOUNTING PROCEDURES



C- l



Atghan-Tajik Basin Phase I Tender



TABLE OF CONTENTS



ARTICLE I General Provisions ... .... ................................................................ ........................... C-3

1.1

1.2

1.3

1.4

1.5

1.6

1.7

I.S

1.9

1.10

1.1 I



Definitions and Scope ....................... ............................................. .............................. C-3

Inconsistency ........... ............................................... ................. .................................... C-3

Accounting Records and Reports .............. .. ........... .. ............... .................................... C-3

Language and U nits of Account.. ......................................... .. .. ................. .................. C-4

Cash Basis ......... .......................................... ................................................................ C-4

"R" Factor Expenditure Account .............................................................. .......... ......... C-4

"R" Factor Income Account ...... ... ................................................... .... ..... ................... C-6

Arm's Length Transactions ...... ....................................................... ............................ C-6

General Exclusions ......................................................... ............................................. C-6

Currency Exchange Rates ....... ...................................... .................... ... ........................ C-S

Acceptance of Costs .................................................................................................... C-8



ARTICLE II Accounting Methods and Principles ...................................................................... C-S

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.S

2.9



Labor Costs .................... ........................................ .... ................. ................................. C-S

Material Costs .... ... ....... ........................... ..................................................................... C-9

Technical Services Costs .................... ... .... .................................................................. C-9

Insurance and Claims .... ................................................................................... .......... C- I 0

Legal and Litigation Costs ................. ..... ................................................................... C-I 0

General Administration and Services Overhead Costs ....... ........................ ...... ......... C- 10

Office Costs, et cetera, in Afghanistan ........... .. ........................................................ C- II

Land Use and Surface Rental Fees ................................................................. ... ........ C- II

Training Costs ................................................................. .. ........................ .. .............. C-II



ARTIC LE III Audit and Inspection Rights of the Ministry ...................................................... C- II

APPENDIX I: Escrow Account... ................................................. ...................... ..................... C-13

APPENDIX 2: Procurement Manual. .... ... . .. . .. . . ..... .. .. .. .. . .. ... ...... . .. ..... . .. . .. ............ C- 14



C-2



Afghan-Tajik Basin Phase I Tender



EXHIBITC

ACCOUNTING PROCEDURES

ARTICLE I

General Provisions

1.1



Definitions and Scope

The Accounting Procedures described herein are to be fo llowed and observed in the

performance of the Ministry's and the Contractor's obligations for purposes of Article X

of the Contract. Except as otherwise provided in the Contract, these Accounting

Procedures shall not apply to Contractor's Incomc Tax obligations, which shall be

governed by the provisions of the Income Tax Law.

The definitions appearing in Article I of the Contract shall also apply to this Exhib it C.

In order to determine the "R" Factor, the Contractor shall keep a particular system of

accounts to record, in U.S. Dollars, income and expenditure related to the Hydrocarbons

Operations. This system shall consist of two main accounts: the "R" Factor Income

Account, and the "R" Factor Expend iture Account as defined in this Exh ibit C.

In all matters of procurement under the Contract, the Contractor shall comply with the

policies and procedures set forth in the Procurement Manual, a form of which is attached

as Appendix 2 to these Accounting Procedures. The Procurement Manual shall be

subject to review by the Parties at the end of each Calendar Year, and may be amended,

supplemented or replaced as mutually agreed between the Parties.



1.2



Inconsistency

In the event of any inconsistency or conflict between the provisions of this Exhibit C and

the other provisions of the Contract, the other provisions of the Contract shall prevail.



1.3



Accounting Records and Reports

(a)



The Contractor shall establish and maintain at its business office in Afghanistan

complete accounts, books and records of all revenues, costs and expenses relating

to all Hydrocarbons Operations hereunder in accordance with International

Financial Reporting Standards and generally accepted procedures and standards in

the international petroleum industry. Such accounts, books, records and reports

will be available for the inspection and use of the Government and its

representatives in carrying out its supervisory, financial and fiscal functions under

the Contract.



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Afghan-Tajik Basin Phase I Tender



1.4



(b)



All accounts, books, records, reports and statements will be prepared in

accordance with the Contract, applicable Afghanistan Law, and where there are

no relevant provisions of either of these, in accordance with International

Financial Reporting Standards and Good Oil Field Practices.



(c)



The Ministry may, in accordance with the prevailing laws and regulations, from

time to time by no less than thirty (30) Days' notice to the Contractor, specify the

style, format and level of details of the reports, documents and materials that the

Ministry may reasonably require fro m the Contractor.



Language and Un its of Account



Un less otherwise agreed or prescribed in prevailing legislation, all accounts, records,

books and reports shall be maintaincd and prepared in the English language and shall be

recorded in U.S. Dollars.

1.5



Cash Basis



Notwithstanding any other provision of this Contract, International Financial Reporting

Standards or generally accepted procedures and standards in the international petrolcum

industry, the Contractor shall prcpare on a cash basis the 'R' Factor Expenditure Account

described in Section 1.6 of this Exhibit C and the ' R' Factor Income Account described

in Section 1.7 of this Exhibit C. In such books, accounts, and records relating to the ' R'

Factor Expenditure Account and the 'R' Factor Income Account, all cash receipts and

cash expenditures shall be attributed to the time period in which the cash receipt or

expenditure is realized .

1.6



"R" Factor Expenditure Account

Hydrocarbons Operations Expenditures may consist of capital and operating expenditures

as follows :

(a)



Capital Expenditures

Capital expenditures arc those Hydrocarbons Operations Expenditures for assets

that normally have a useful life that extends beyond the year in which the asset

was acquired.

In addition to expenditures relating to assets that normally have a useful life

beyond the year in which the asset was acquired, the costs of exploration and

development operations, as described in Sections 1.6(a)(v), (vi), (vii), (viii) and

(ix) of this Exhibit C, wi ll be classified as capital expenditures. Capital

expenditures shall be reduced by the amount of any proceeds received by the

Contractor from sales of Liquid Hydrocarbons or Natural Gas produced during

production testing, such sales to be valued at the net realized price obtained by the

Contractor therefor.

Capital expenditures include, but are not limited to, the following :

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Afghan-Tajik Basin Phase I Tender



(i)



Construction utilities and auxiliaries - work shops, power and water

facilities, warehouses, and field roads. Cost of Liquid Hydrocarbons

treating plants and equipment, secondary recovery systems, Natural Gas

plants and steam systems;



(ii)



Construction housing and welfare housing - recreational fac ilities and

other tangible property incidental to construction;



(iii)



Production facilities - production rigs (includ ing the costs of labor, fuel,

hauling and supplies for both the offsite fabrication and onsite installation

of rigs, and other construction costs in erecting rigs and installing

pipelines), wellhead equipmcnt, subsurface lifting equipment, production

tubing, sucker rods, surfacc pumps, flow lines, gathering equipment,

delivery lines and storage facilities;



(iv)



Movables - surface and subsurface drilling and production tools,

equipment and instruments, barges, floating craft, automotive equipment,

aircraft, construction equipment, furniture and office equipment and

miscellaneous equipment;



(v)



Development and production drilling - labor, materials and services used

in drilling Wclls with the object of penetrating a proven reservoi r,

including the drilling of delineation Wells as well as redrilling, deepening

or recompleting Wells, and access roads, if any, leading directly to Wells;



(vi)



Exploration drilling - labor, materials and services used in the drilling of

Wells with the object of finding unproven reservoirs of Liquid

Hydrocarbons and Natural Gas, and access roads, if any, leading directly

to Wells;



(vii)



Surveys - labor, materials and services used in aerial, geological ,

topographical, geophysical and seismic survcys, and core hole drilling;



(viii)



Security and de-mining - the engagement of private security providers

licensed in Afghanistan and de-mining or mine clearance costs associated

with Hydrocarbons Operations;



(ix)



Third-party assessments - the engagement of internationally recognized

third parties to conduct assessments, including Baseline Environmental

Assessments, wireIine, well-logging and testing, logistics, security and demining assessments; and



(x)



Other exploration expenditures - auxiliary or temporary facilities having

lives of one year or less used in exploration and purchased geological and

geophysical information.



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Afghan-Tajik Basin Phase I Tender



(b)



Operating Expenditures

Operating expenditures are all Hydrocarbons Operations Expenditures other than

capital expenditures.



1.7



"R" Factor Income Account

The following shall be recognized as income and recorded in the "R" Factor Income

Account:



1.8



(a)



The value of Hydrocarbons allocated to the Contractor in accordance with Article

X of the Contract.



(b)



Income from sales of assets acquired by the Contractor for Hydrocarbons

Operations, the cost of which was recorded in the "R" Factor Expenditure

Account.



(c)



Income from services rendered to third parties involving personnel whose

remuneration and benefits arc recorded in the "R" Factor Expenditure Account

and/or involving goods whose acquisition cost has been recorded in the "R"

Factor Expenditure Account.



(d)



Income from letting assets bclonging to the Contractor, whose acquisition cost has

been recorded in the "R" Factor Expenditure Account or subletting of goods

whose hire is charged to the " R" Factor Expenditure Account.



(e)



Compensation received from insurance pol icies taken out in relation to Contract

activities for damaged goods, including compensation for loss of profits.



(f)



Other income representing credits applicable to charges to the " R" Factor

Expenditure Account.



Arm's Length Transactions

Except as provided in Section 2.3 or as may be otherwise agreed in writing between the

Ministry and the Contractor (including pursuant to Section 2.6), all transactions giving

rise to revenues, costs or expenses which will be credited or charged to the books,

accounts, records and reports prepared, maintained or submitted hereunder shall be

conducted at arm's length or on such a basis as will assure that all such revenues, costs or

expenses will not be higher or lower, as the case may be, than would result from a

transaction conducted at arm's lenb>th on a competitive basis with third parties.



1.9



General Exclusions

The following expenditures shall not be included m Hydrocarbons Operations

Expenditures:

(a)



costs and expenses incurred at any time prior to the Effective Date;



C-6



Afghan-Taj ik Basin Phase I Tender



(b)



costs relating to Hydrocarbons refining, marketing or transportation beyond the

Delivery Point (unless otherwise specifically agreed in an approved Development

Program and Development Program Budget as constituting recoverable

Hydrocarbons Operations Expenditures);



(c)



contributions and donations, except those approved by the Government;



(d)



gifts or rebates to suppliers, and gifts or commissions to intermediaries arranging

service or supply contracts;



(e)



any costs relating to the provision of the Financial Guarantee including payments

made to the Ministry pursuant thereto or otherwise for failure to perform the work

commitments in accordance with Section 6.4 of the Contract;



(f)



any interest, fees and other financial charges relating to loans and credits obtained

by the Contractor to acquire funds for the execution of Hydrocarbons Operations,

as well as amortization of such loans and credits and any exchangc gains or losses

thereof;



(g)



any fines, interest, monetary corrections or increases in expenses resulting from

the Contractor's failure to comply with its obligations under the Contract,

applicable law or regulations or agreements with third parties;



(h)



overhead or payments to any Affiliated Entity of the Contractor, any Contractor

Entity or any of Affiliated Entity of a Contractor Entity that are not allocable to

Hydrocarbon Operations Expenditures pursuant to Article II;



(i)



income taxes paid in Afghanistan and all taxes paid outside of Afghanistan;



(j)



costs relating to equipment, inventory or fixtures removed by the Contractor from

the Contract Area following relinquishment pursuant to Article IV of the

Contract, Section 7.1 of the Contract or upon termination or revocation of the

Contract for any reason;



(k)



any expenditures that are required to be made in accordance with the policies and

procedures set forth in the Procurement Manual attached hereto as Appendix 2 (as

it may be amended from time to time) to the extent such expenditurcs are not

made in accordancc with such po licies and procedures and to the extent that such

breach results in the Contractor incurring higher costs andlor results in material

delays in Hydrocarbons Operations;



(I)



any other expenditures not directly related to Hydrocarbons Operations or not in

compliance with the provisions of this Exhibit C; and



(m)



costs that would otherwise be recoverable as Hydrocarbons Operations

Expenditures but exceed by ten percent (10%) or more the approved Work

Program Budget as may be amended by the Parties from time to time; provided,

however, that costs in excess of one hundred and ten percent (110%) of any

C-7



Afghan-Taj ik Basin Phase I Tender



approved Work Program Budget shall be included in Ilydrocarbons Operations

Expenditures where such costs are associated with emcrgency measures taken in

accordance with Section 23.9 of the Contract.

The fo llowing shall not be recognized as income for the purposes of calculating the "R"

Factor:



1.10



(a)



Financial income in general.



(b)



Ineome received for services rendered by the Contractor or sales of Contractor' s

assets occurring before the Effective Date.



(e)



Income received for activities not related to the Hydrocarbons Operations.



Currency Exchange Rates

For conversion purposes between Afghanis. or any other currency, and U.S. Dollars, the

average of the buying and selling rate of exchange shall be used as issued by Da

Afghanistan Bank on the first Day ofthe Month in which the revenues, costs or expenses

are recorded .



1.11



Acceptance of Costs

The acceptance by the Ministry of the values and treatment proposed by the Contractor

relating to all costs and expenses may be conditional upon the presentation by the

Contractor, following a request by the Min istry or its representatives, of all records and

original documents supporting such costs and expenses, such as invoices, cash vouchers,

debit notes, price lists or similar documentation verifying the value and treatment

proposed. Any dispute, claim or controversy regarding whether, or the extent to which,

an expenditure should be disqualified as a Ilydrocarbons Operations Expenditure shall be

settled in accordance with Section 24.2 of the Contract.



ARTICLE II

Accounting Methods and Principles

Hydrocarbons Operations Expenditures incurred hereunder shall be calculated and

accounted for in a manner consistent with the following principles and definitions and

shall include:



2.1



Labor Costs

Costs of salaries and wages of the Contractor's and Contractor Entities' employees

directly engaged in Hydrocarbons Operations, including costs of holidays, vacations,

sickness, living and housing allowances, travel time, bonuses and other established plans

for employee benefits customarily granted to the Contractor's and Contractor Entities'

employees and their families in similar ventures .



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Afghan-Tajik Basin Phase I Tender



2.2



Material Costs

Costs of materials, equipment, machines, tools and any other goods of a similar nature

used or consumed in Hydrocarbons Operations, subject to the following :

Acquisition - the Contractor shall only supply or purchase materials for usc in

Ilydrocarbons Operations that may be used in the foreseeable future. The accumulation

of surplus stocks and inventory shall be avoidcd. Inventory levels shall, however, take

into account the time lag for replacement, emergency needs and similar considerations;

Components of Costs - costs of materials purchased by the Contractor for use in

Hydrocarbons Operations may include, in add ition to the invoice price for such materials

(subtracting the discounts given, if any) and provided that they arc properly documented

with invoices:

(a)



freight costs and costs of transportation bctween the supply point and delivery

point (provided that such costs are not included in the invoice price);



(b)



inspection costs;



(c)



insurance; and



(d)



Customs Duties, taxes and other items that may be charged to imported materials

or to materials purchased in Afghanistan; and



Inventories - the Contractor shall maintain both a physical and accounting inventory of

all materials in stock in accordance with Good Oil Field Practices. The Contractor shall

make a physical inventory of all such materials at least once in any Contract Year. The

Ministry may carry out total or partial inventories whcnever it deems it neccssary.

2.3



Technical and Professional Services Costs

The value of technical and professional services costs relating to Hydrocarbons

Operations, which shall be:

(a)



In the case of technical and professional services performed by third parties

directly subcontracted, including outside consultants, contractors and utilities, the

price paid by the Contractor, provided that such prices are no higher than the

prices charged by other suppliers for comparable work and services; and



(b)



In the case of technical and professional serv ices performed by the Contractor or

its Affiliated Entities, prices which are no higher than the prevailing prices

charged to other Affiliated Entities of the Contractor and to third parties for

comparahle services.



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Afghan-Tajik Basin Phase I Tender



2.4



Insurance and Claims

Costs relating to insurance, provided such insurance is customary, affords prudent

protection against risks and is at a premium no higher than that charged on a competitive

basis by insurance companies which are not Affiliated Entities of the Contractor. The

proceeds of any insurance or claim shall be credited against Hydrocarbons Operations

Expenditures. Except in cases where insurance coverage is required pursuant to Article

XXVII of the Contract, if no insurance is carried for a particular risk, all costs incurred by

the Contractor in settlement of any related loss, claim, damage (including payment under

indemnities to third parties other than indemnities arising under this Contract or

Afghanistan Law) or judgment, including legal services, shall be includable in

Hydrocarbons Operations Expenditures, provided that such costs did not result from the

Contractor's gross negligence or breach of its obligations under this Contract or

Afghanistan Law.



2.5



Legal and Litigation Costs

Costs and expenses of litigation and legal or related services necessary or expedient for

the protection of the Contract Area. Any damages or compensation received shall be

credited against Hydrocarbons Operations Expenditures. Under no circumstances may

the Contractor's costs incurred in the course of arbitration or expertise proceedings

entered into under Article XXIV of this Contract be included in lIydrocarbons Operations

Expenditures.



2.6



General Administration and Services Overhead Costs

General administration and services costs, other than direct costs, including:

(a)



Personne l of Contractor' s Affiliated Entities, personnel of any Contractor Entity

or any of its Affiliated Entities and services costs, incurred outside of

Afghanistan, relating to administration, legal, accounting, treasury, auditing,

taxation, planning, employee relations, purchasing and other functions required

for llydrocarbons Operations under the Contract; and



(b)



Reasonable travel expenses of the Contractor's Affiliated Entities' personnel,

personnel of any Contractor Entity or any of its Affiliated Entities in the general

and administrative categories listed in (a) above for the purpose of inspection and

supervision of lIydrocarbons Operations in Afghan istan;



shall be allocable to Hydrocarbons Operations Expenditures according to methods agreed

to by the Contractor and the Ministry. The methods agreed shall result from a detailed

study and the methods selected following such study shall be applied each year

consistently un less otherwise agreed by the Parties. These general and administration

and services overhead costs shall not exceed two percent (2%) of the direct costs incurred

in Hydrocarbons Operations in each Quarter.



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Afghan-Tajik Basin Phase I Tender



2.7



Office Costs, et cetera, in Afghanistan

Staffing and maintenance of the Operator's head office in Afghanistan and other offices

in Afghanistan, including rent, telephone and radio expenses, as well as the expenses of

general facilities such as bases, warehouses, water, power and communications systems,

roads and bridges.



2.8



Land Use and Surface Rental Fees

Any compensation paid to private landowners or occupiers pursuant to Section 9.2 of this

Contract and any annual surface rental fees paid to the Ministry in respect of State-owned

land in accordance with Article XIV of this Contract shall be included in Hydrocarbons

Operations Expenditures.



2.9



Training Costs

Any expenditures pursuant to Sections 20 .1 or 20.2 of this Contract for the purposes of

training Afghan nationals and Min istry personnel.



ARTICLE III

Audit and Inspection Rights of the Ministry

The Ministry, upon thirty (30) Days advance written notice to the Contractor, shall have

the right to inspect and audit, during normal business hours, the Contractor's accounts,

books and records with respect to thc Hydrocarbons Operations conducted hereunder,

provided that such right shall apply only for a period of thirty-six (36) Months following

the end of the year to which the relevant accounts, books and records relate and that such

accounts, books and records shall in the absence of fraud conclusively be presumed to be

true and correct after such period. During the Exploration Phase of the Contract, it may

bc necessary to conduct such an examination at the office of the Contractor, a Contractor

Entity or their respective Affiliated Entities in a foreign jurisdiction. Where this is the

case. the Contractor agrecs to reimburse the Ministry direct economy airfare costs to such

office and return and a reasonable foreign per diem living allowance for a reasonable

period for two auditors to conduct such an examination. The cost of any audits or

examinations by the Ministry within Afghanistan shall be for its sole expense. Any audit

exceptions identified by the Ministry or its designated auditors following an audit of the

Contractor's accounts, books and records (i) submitted to thc Ministry pursuant to

Section 26.2 of the Contract or (ii) obtained by the Ministry in connection with an

inspection conducted pursuant to Section 26.3 of the Contract or this Article III must be

submitted to the Contractor in writing within one hundred and eighty (180) Days

following completion of such audit and fai lure to give such written exception within such

time shall establish the correctness of the Contractor's books and accounts. The one

hundred and eighty (180) Days referred to above shall be tolled for the number of Days

during which the Contractor has fa iled to provide reasonable assistance to the Ministry or

its auditors or otherwise satisfy their reasonable requests for access or documentation in

connection with such audit.



C- II



Afghan-Tajik Basin Phasc I Tcndcr



For purposes of auditing, the Ministry may examine and verify, at reasonable times upon

prior notice to the Contractor, all charges and credits relating to the Hydrocarbons

Operations, such as books of account, accounting entries, material records and

inventories, vouchers, payrolls, invoices and any other documents, correspondence and

records necessary to audit and verify the charges and credits.

The auditors shall have the right in connection with such audit, to visit and inspect at

reasonable times, all sites, plants, facilities, warehouses and offices of the Contractor

directly or indirectly serving the Hydrocarbons Operations.

The Contractor shall include in its contracts with subcontractors provisions granting to

the Ministry the samc audit and inspection rights in respect of the subcontractors that it

has in respect of the Contractor pursuant to this Contract.

The provisions of the present Article shall not infringe with the power of inspection for

authorized representatives of the Ministry pursuant to the laws and regulations of

Afghanistan.

All agreed adjustments resulting from an audit shall be made

accounts.



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the Contractor' s



Afghan-Tajik Basin Phase I Tender



APPENDIX 1: Escrow Account

The amount in the Escrow Account shall be subtracted from the Decommissioning and

Abandonment Budget to establish a net shortfall. The net shortfall shall be divided by the

remaining RGllP/ROllP as of the beginning of the Quarter, then multiplied by that Quarter's

production, in accordance with the following methodology:

Example Calculation of Escrow Under Section 7.3(d) of the Contract:



At beginning of Quarter,

ROllP = 2.000,000 Barrels

Decommission ing and Abandonment Budget = US$ 2,400,000

Amount in Escrow Account = US$ 800,000

Net shortfall = US$ 2,400,000 - US$ 800,000 = US$ 1,600,000

Quarterly production = 100,000 Barrels

Quarterly contribution = 100,000/2,000,000 x US$ 1,600,000 = US$ 80,000

At end of Quarter,

ROllP = 1,900,000 Barrels

Amount in Escrow Account = US$ 880.000



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Afghan-Tajik Basin Phase J Tender



APPENDIX 2: Procurement Manual



C-14



PROCUREMENT MANUAL

FOR THE SANDUOLI CONTRACT AREA

1.



INTRODUCTION

1.1



This Procurement Manual (the "Manual") and any additional and more detai led

Procurement procedures adopted in accordance with Paragraph 8 of this Manual

(collectively, the "Tender Procedures") establish the tendering, bidding and

contract awarding policies and procedu res fo r purchasing services, goods and

other assets needed for the Contractor to perform its obligations in accordance

with the Exploration and Production Sharing Contract for Hydrocarbons

Exploration, Development and Production in the Sanduqli Block dated

October 8, 2013 (the "Contract"), by and among the Ministry of Mines &

Petroleum of the Government of the Islamic Republ ic of Afghanistan (the

"Ministry") and TP Afghanistan Limited ("TPAL"), Dragon Oil (Sanduqli)

Limited ("DOSL"), and Ghazanfar Investment Ltd . ("GIL") (the "Contractor").

TPAL, DOSL and GIL, and their respective successors and assignees (if any),

may sometimes individually be referred to as "Contractor Entity" and

collectively as the "Contractor".



1.2



The Tender Procedures shall be applicable to all transactions of the Operator (as

defined in the Contract) for the purchase of services, goods and other assets in

relation to Il ydrocarbons Operations, including, but not limited to, purchasing by

means of commercial financing and long-term leasing ("Procurement"). The

Contractor Entities, the Operator, the CPD (the Contracts and Procurement

Department defined in Paragraph 5.1 of this Manual) and their respective

employees shall adhere to the terms of the Tender Procedures.



1.3



This Manual has been adopted by agreement of the Ministry and the Contractor as

an exhibit to the Contract. Notwithstanding Section 31 .2 of the Contract, this

Manual may be amended, supplemented or restated solely by written agreement

of the Ministry and the Operator.



1.4



All terms that arc capitalized in this Manual but are not defined herein shall, to the

extent defined in the Contract, have the same meaning as set out in the Contract.



1.5



In the event of any inconsistency between the provisions of this Manual and the

provisions of the Contract, the terms of the Contract shall prevail.



1.6



As contemplated in Section 1.9(k) of the Accounting Procedures, costs that arc

incurred by the Contractor pursuant to sub-contracts, purchase ordcrs or any other

contractual arrangements for the conducting of Hydrocarbons Operations ("SubContracts") awarded, issued or otherwise entered into by the Contractor in

breach of the Tender Procedures shall be non -recoverable to the extent such

breach results in the Contractor incurring higher costs and/or results in material

delays in Hydrocarbons Operations.



2.



PRINCIPLES AND OBJECTIVES OF THE MANUAL

2.1



The principles and objectives of this Manual are as follows :

2. 1.1 procuring services, goods and other assets required by the Operator in

relation to Hydrocarbons Operations of good quality at the relevant times

in a well-planned, economic and efficient manner through competitive

bidding (except as noted in Paragraph 4.4 of this Manual) that results in

best value to the citizens of Afghanistan;



3.



2.1.2



procuring services, goods and other assets consistent with approved annual

Work Programs and Work Program Budgets;



2. 1.3



conducting ethical and transparent Procurement activities and ensuring

equitable and unbiased treatment of suppliers of services, goods and other

assets (the "Sub-Contractors");



2.1.4



awarding Sub-Contracts to Sub-Contractors and otherwise implementing

Procurement procedures in accordance with the requirements of this

Manual, the Contract and the applicable requirements of Afghanistan Law;



2.1.5



acting with the participation and approval of the Operator and, to the

extent required by this Manual, of the Government authority overseeing

Procurement activities conducted pursuant to this Manual (the

"Authority"), as such Authority may be appointed or substituted from

time to time by the Ministry and notified to the Operator;



2.1.6



providing the Authority with the access, information, reports, training and

tools necessary or useful for the Authority to carry out its functions under

this Manual;



2.1.7



mitigating risk and reducing costs through effective and competitive

contract terms; and



2. 1.8



supporting the development of Afghanistan ' s economy and petroleum

industry.



OVERVIEW OF THE MANUAL

3.1



General

This Manual describes the contracting and procurement policies and procedures

of the Operator with respect to Hydrocarbons Operations, which include the

functions of the CPD and the Authority in the process leading up to the awarding

of contracts to Sub-Contractors (each an "Award") and the concluding of Sub-



-2-



Contracts between the Operator and Sub-Contractors, depending on the applicable

method of Procurement.

A reasonable estimation of the total costs related to each Award in accordance

with Good Oil Field Practices shall be made by the user department of the

Operator and validated by the CPD prior to any tender or direct Award in order to

determine which method of Procurement applies and whether and which

approvals by the Authority will be required.

This Manual sets Forth the policies and procedures applicable to all stages of

Procurement, including the planning, tendering, awarding and concluding of SubContracts and to any amendments of Sub-Contracts. The CPD shall develop

additional and more detailed Procurement procedures to implement this Manual,

subject to approval in accordance with Paragraph 8 of this Manual.

3.2



Methods of Procurement

3.2.1



The methods of Procurement shall be determined in accordance with this

Manual and shall consist of:

(A)



Tenders conducted in accordance with Good Oil Field Practices for

competitive bidding and open to any potential Sub-Contractors,

where the invitation to participate in the tender or the invitation to

pre-qualify is communicated by means of publication in

appropriate Afghan and international mass media (each an "Open

Tender");



(B)



Tenders open only to potential Sub-Contractors invited to

participate by the Operator pursuant to the requirements set forth

herein (the "Selective Tender"); and



(C)



Direct A wards made to Sub-Contractors pursuant to Paragraph 4.4

of this Manual (each a "Sole-Sourced Procurcment").



3.2.2



Open Tenders conducted in accordance with Good Oil Field Practices for

competitive bidding shall be the standard method for all Procurement

exceeding one million five hundred thousand Dollars (US$ 1,500,000).



3.2.3



Selective Tenders shall be the standard for all procurement of more than

two hundred fifty thousand Dollars (US$ 250,000) and less than or equal

to one million five hundred thousand Dollars (US$ 1,500,000) in value

and shall require submission of written price quotations from potential

Sub-Contractors.

(A)



For each Selective tender, unless otherwise agreed upon in writing

by the Authority, the Operator shall issue at least two-thirds (2/3)



-3-



of the invitations to partIcIpate to Sub-Contractors that are not

Related Parties as the term is defined in Paragraph 3.3.1 (A).

(8)



3.3



For each Selective Tender, if the Operator does not issue at least

two-thirds (2/3) of the invitations to participate to Sub-Contractors

that are not Related Parties and the Operator does not obtain the

Authority's written consent to conduct the Selective Tender with

less than the required amount of non-Related Parties, the Tender

shall be deemed to not comply with this Manual.



3.2.4



All potential Sub-Contractors shall confirm their compliance with

Afghanistan Law and international standards with respect to transparency,

accountability and the strict observance of business ethics and anticorruption laws and regulations.



3.2.5



All potential Sub-Contractors shall confirm their compliance with health,

safety and environmental requirements under Afghanistan Law and Good

Oil Field Practices pursuant to the Contract.



3.2.6



Proposals received after the closing date of a tender shall not be accepted .



Related Party Transactions

3.3.1



3.3.2



All Awards to Related Parties shall be made on an arm's-length basis on

terms that are no less favorable to the Operator than those that could have

been obtained by the Operator in a comparable transaction with an

unrelated third party.

(A)



For the purposes of this Manual, "Related Parties" means, in

relation to any Contractor Entity, its Affiliated Entities and its

Associates, all of them and each of them as the context admits.



(B)



For the purposes of this Manual, "Associates" means, in relation to

any Party, an entity in which the Party has a holding of 20% or

more of the voting power (directly or through Affiliated Entities).



The Operator shall not, without the prior written approval of the

Authority, award any Sub-Contracts to any Related Parties or amend,

supplement or otherwise modify any Sub-Contract awarded to any Related

Parties, or waive or compromise rights or obligations for the benefit of any

Related Parties. Notwithstanding the foregoing, any approval shall not be

unrcasonably withheld or delayed by the Authority.



-4-



3.4



Contract-Splitting; Material Amendments to Sub-Contracts; Extensions

3.4.1



3.4.2



3.5



The Operator shall not split potential Sub-Contracts or potential

amendments to Sub-Contracts such that any thresholds established by this

Manual are not met.

(A)



With respect to Sole-Sourced Procurement, the prior written

approval of the Authority shall be required before an Award is

made that (i) would result in the award of more than one SubContract with the same vendor or Affiliated Entities of such vendor

for (a) the same, substantially similar or interchangeable goods or

other assets, within the same Contract Award Period, or (b) the

same, substantially similar or equivalent services, within the same

Contract Award Period; and (ii) would result in the aggregate value

of such Sub-Contracts within the same Contract Award Period

exceeding the thresholds set forth in Paragraph 4.4 of this Manual.



(8)



If the earlier of the Sub-Contracts contemplated in Paragraph

3.4.1(A) above is awarded between January I and June 30 of any

Gregorian calendar year, then the term "Contract Award Period'·

shall mean January I of such calendar year through June 30 of the

following calendar year. If the earlier of the Sub-Contracts

contemplated in Article 3.4.1 (A) above is awarded between July I

and December 31 of any Gregorian calendar year, then the term

"Contract Award Period" shall mean July I of such calendar year

through December 31 of the following calendar year.



The Operator shall not make any Material Amendment to a Sub-Contract

without the prior written approval of the Authority. For the purposes of

th is Manual, "Material Amendment to a Snb-Contract" means (a) any

Amendment to a Sub-Contract (other than a Major Sub-Contract) that

increases the consideration under the Sub-Contract such that the SubContract becomes a Major Sub-Contract, or (h) any Amendment to a

Major Sub-Contract that increases the consideration under such Major

Sub-Contract by the lesser of (i) 15% of the consideration under such

Major Sub-Contract, or (ii) one million Dollars (US$ 1,000,000). The term

"Amendment" includes any amendment, supplement or other

modification of, or any waiver or compromising of rights or obligations

under, any Sub-Contract (including any change order or similar

discretionary modification of any Sub-Contract in connection with the

implementation or administration thereof), or any series of such

amendments, supplements, modifications, waivers or compromises.



As a general rule, Sub-Contracts shall be awarded for a fixed period oftime. One

extension option may be set forth in such Sub-Contracts but the duration of such

Sub-Contracts should be planned to avoid the need for additional extensions. Any



-5 -



additional extensions beyond the one extension option and any extension that

consists of a Material Amendment to a Sub-Contract shall require the prior written

approval of the Authority. In determining whether a potential Sub-Contract or a

potential amendment to any Sub-Contract meets any thresholds established by this

Manual, the consideration payable under the extension option and any additional

extensions shall be aggregated with the consideration payable under the SubContract, as if the Sub-Contract had been extended.

4.



OPEN TENDERS; SOLE SOURCE PROCUREMENT; PURCHASE

ORDERS

4.1



Open Tenders conducted in accordance with Good Oil Field Practices for

competitive bidding shall be used for all Awards of Sub-Contracts under which

the aggregate consideration payable by any party thereto exceeds one million five

hundred thousand Dollars (US$ 1,500,000).



4.2



In all Open Tenders, the Operator shall require the submission of two sets of two

separate proposals: (a) a "Technical Proposal"; and (b) a "Commercial

Proposal". A bidder's Commercial Proposal will be opened and considered only

atier such bidder's Technical Proposal is found to have met the tender's technical

criteria and has been scored.



4.3



In each Open Tender, the Operator shall (a) publish an Open Tender

announcement in a local Afghan newspaper (in an official language of

Afghanistan), in appropriate international mass media (in English), and on

Operator's or Operator's parent company's international website accompanied by

brief information on the tender subject and (b) deliver an invitation to potential

local, regional and international suppliers identified by the Operator. The

invitations shall summarize the relevant terms, conditions and requirements for

participation or pre-qualification. The tender announcement shall be issued at

least thirty (30) days prior to the Operator's issue of the formal invitation to bid.

Invitations to bid shall be issued to pre-qualified bidders at least thirty (30) days

in advance of the bid submission date. Exceptions to the preceding thirty (30) day

periods may be approved by the Authority in special circumstances.



4.4



Sole-Sourced Procurement may be used to procure services, goods and other

assets in the following cases:

4.4.1



Awards of Sub-Contracts under which the aggregate consideration payable

by any party thereto is up to or equal to two hundred and fitiy thousand

Dollars (US$ 250,000);



4.4.2



When the extension of an eXlstmg Sub-Contract, entered into in

accordance with this Manual, offers obvious advantages and where

conducting a tender would be uneconomic and inefficient;



-6 -



4.4.3



When a tender conducted in accordance with this Manual has not resulted

in bid conditions acceptable to the Operator and more favorable conditions

can be obtained by the Operator through Sole-Sourced Procurement;



4.4.4



When certain services, goods or other assets can be provided by only one

supplier as a result of the inability of any other suppliers to provide the

required services, goods or other assets and there exists no reasonable

alternative;



4.4.5



When only one supplier offers services, goods or other assets compatible

with those utilized by the Operator;



4.4.6



When the provision of particular services, goods or other assets is urgently

required, where such urgency was unforeseeable and did not arise as a

result of the Operator's failure to act in a timely manner; or



4.4.7



In cases of emergency, where the failure to act may cause material damage

or harm to Hydrocarbons Operations.



4.5



Except for any Procurement conducted pursuant to Paragraphs 4.4.1 or 4.4.7 of

this Manual, Sole-Sourced Procurement shall not be conducted without the prior

written approval of the Authority.



4.6



Sub-Contracts for routine services and supplies under which the aggregate

consideration payable thereunder is up to or equal to two hundred and fifty

thousand Dollars (US$ 250,000) may be awarded by means of purchase orders

issued in accordance with the following procedurcs:

4.6. 1 The CPD will pre-qualify and maintain a CPD approved vendor list for

items normally procured through purchase orders. In accordance with the

Contract, Afghan suppliers shall be the preferred source for services,

goods and other assets procured pursuant to purchase orders.

4.6.2



Procurement through purchase orders not exceeding two hundred and fifty

thousand Dollars ($250,000) requires price quotes from a minimum of

three approved suppliers, must adhere to standard terms and conditions,

and must be approved by the Operator. If the Operator is unable to identify

at least three suppliers for the services, goods or other assets required by

the Operator, or is unable to obtain price quotes from at least three

suppliers in respect of such services, goods or other assets, then the

Operator shall be deemed to have satisfied the obligations under this

provision irrespective of the number of price quotes obtained.



4.6.3



Procurement through purchase orders not exceeding tcn thousand Dollars

($10,000) may be accomplished through requests for quotes from entities

listed on a vendor list pre-approved by the CPD.



-7-



S.



6.



FUNCTIONS OF THE CONTRACTS AND PROCUREMENT

DEPARTMENT

5.1



The Operator shall establish a Contracts and Procurement Department (the

"CPD") which shall be responsible for planning, initiating and managing all

Procurement activities and supervising and administering all contracts for

Hydrocarbons Operations and the performance of all Sub-Contractors In

compliance with this Manual, the Contract and Afghanistan Law.



5.2



The Operator shall implement a Procurement management system that meets the

needs of the Contract and Good Oil Field Practices for Procurement that provides

for accurate preparation, transmission, rev iew, approval, retrieval, maintenance

and audit of all Procurement Documentation and Tender Documentation. All

Procurement Documentation and Tender Documentation shall be maintained by

the CPO in the Operator's registered office in Afghanistan, provided that (unless

otherwise agreed) the CPO shall open all proposals in Afghanistan.



5.3



Relevant departments of the Operator shall provide support to the CPO and

participate in relevant Procurement activities.



FUNCTIONS OF THE AUTHORITY

6.1



The Authority shall have an oversight function with respect to all aspects of

Procurement. The Authority shall have the right to appoint one or more

representatives to participate as observers (without approval powers except as

contemplated in Paragraph 6.2 below) in all stages of Procurement, including

Procurement planning, the preparation of tender strategies and vendor lists, the

opening and scoring of bids, compliance with local preference rules and Award

recommendations.

The CPD shall provide quarterly reports during the

Exploration Phase and monthly reports during the Development and Production

Phase to the Authority describing the Operator' s ongoing Procurement activities

and shall furnish such information as the Authority may from time to time

reasonably request with respect to the Operator's Procurement activities. The

Authority shall also have the right to audit the Operator's Procurement activities

in accordance with Article III of the Accounting Procedures.



6.2



The following shall require the prior written approval of the Authority:

(a)



The revision of Annual Procurement Plans and adoption of Development

Procurement Plans, as provided in Paragraphs 9.1 and 9.2 of this Manual;



(b)



The adopting of additional and more detailed Procurement procedures, as

provided in Paragraph 8.1 of this Manual;



-8·



(c)



The conduct of certain Sole-Sourced Procurement, as provided

Paragraph 4.5 of this Manual;



(d)



The award of any Major Sub-Contract. "Major Sub-Contract" shall

mean a Sub-Contract under which the aggregate consideration payable by

any party thereto exceeds four million Dollars (US$ 4,000,000);



(e)



Material Amendments to Sub-Contracts, as provided in Paragraph 3.4.2 of

this Manual;



(I)



Additional extensions of Sub-Contracts, as provided in Paragraph 3.5 of

this Manual;



(g)



Awards to Related Parties and any Amendments to Sub-Contracts with

Related Parties, as provided in Paragraph 3.3.2 of this Manual; and



(h)



Any requests by the Operator to waive any provision of this Manual with

respect to any Sub-Contract or to otherwise conduct Procurement

activities in a manner different from the procedures set forth in this

Manual.



In



6.3



When requesting any of the forego ing approvals, the CPD shall provide to the

Authority the commercial, technical or operational reasons for which the Operator

believes that approval is justified. It is understood that any approval by the

Authority under this Manual shall be based upon the information and

justifications provided in writing by the Operator and that the participation of the

Authority in Procurement activities and any approval by the Authority under this

Manual shall not in any way lessen the Operator's obligations under the Contract.

In particular, it is understood that any approval by the Authority shall solely

satisfy the procedural requirement for approval under this Manual and shall not

imply approval by the Authority of the substance of any Sub-Contract, including

the need for the Sub-Contract, the scope of work set forth in a Sub-Contract, the

ability of the Sub-Contractor to perform the activities contemplated by the SubContract, the performance by the Sub-Contractor of its duties under the SubContract, and the reasonableness of the consideration payable under the SubContract, all of which shall be and shall remain, under the Contract, the joint and

several responsibility of the Contractor Entities.



6.4



If the Authority fails to respond within ten (10) Afghanistan business days

regarding any requested approval, then the Authority shall be deemed to have

granted the requested approval. In the event that the Authority requests any

information in connection with a requested approval, the foregoing ten (10) day

period shall be extended by one (I) day for every day required by the Operator to

provide the information requested by the Authority. Any approval shall not be

unreasonably withheld or delayed by the Authority.



-9-



6.5



In accordance with Article XX of the Contract, the Opcrator shall provide the



Authority with the training and software tools necessary or useful for the

Authority to carry out its functions under this Manual. Any expenses incurred by

the Operator in this regard shall be counted towards thc Contractor's minimum

expenditure requirement pursuant to Section 20.3 of the Contract.

7.



8.



STORAGE AND OPENING OF PROPOSALS

7.1



All proposals received in relation to any tender shall be stamped with date and

time of receipt, logged in the Procurement management system, and stored under

the control and custody of the CPD. Any proposals relating to Awards of an

estimated value equal to or exceeding two million Dollars (US$ 2,000,000) shall

be stored by the CPD in a single, secure location (the "Tender Box").



7.2



The CPD shall open all proposals during its regular meetings in order to ensure

that all Procurement is conducted in accordance with this Manual.



7.3



Each of the Contractor Entities and the Authority shall have the right to access

and audit the documents related to the tenders carried out under this Manual

including those stored in the Tender Box.



ADDITIONAL PROCEDURES

8.1



9.



Additional and more detailed Procurement procedures than those set forth in this

Manual shall be developed by the CPD. If the additional and more detailed

Procurement procedures are consistent with this Manual, they may be approved

by the Operator and the Authority. If the additional and more detailed

Procurement procedures are not consistent with this Manual, they may not be

approved unless and until this Manual is amended to render the additional and

more detailed Procurement procedures consistent with the amended Manual. In

the event of any inconsistency between the provisions of the Manual and the

additional and more detailed Procurement procedures, the terms of the Manual

shall prevai I.



PLANNING OF PROCUREMENT

9.1



The Operator shall prepare a plan of its proposed Procurement activities in

relation to Hydrocarbons Operations for each calendar year (an "Annual

Procurement Plan") . The Annual Procurement Plan shall form part of the annual

Work Program and Work Program Budget. The Operator and the CPD shall

conduct all Procurement activities in accordance with the Annual Procurement

Plan and no Procurement exceeding two hundred and fifty thousand Dollars

(US$ 250,000) shall be conducted without an associated Annual Procurement

Plan. All Procurements must be consistent with the applicable approved annual

Work Program and Work Program Budget. Annual Procurement Plans may be



-10-



revised by the Operator with the prior written consent of the Authority, such

consent not to be unreasonably withheld or delayed.



10.



11.



9.2



In addition to the Annual Procurement Plan, the Operator shall prepare a plan of

its proposed Procurement activities in relation to Hydrocarbons Operations during

the Development Phase (a "Development Phase Procurement Plan"). The

Development Phase Procurement Plan shall form part of the Development

Program and Development Program Budget and shall be approved or deemed

approved in thc same manner.



9.3



Annual Procurement Plans and Development Phase Procurement Plans shall

include plans to: (a) provide the Authority with the training and software tools

necessary or useful for the Authority to carry out its functions under this Manual,

and (b) maximize the use of Afghan suppliers, including plans for developing the

capability and competiveness of in-country supplicrs and workforce, in

accordance with Section 21 . 1 of the Contract.



MARKET RESEARCH

10.1



At the outset of each Procurement, the user department of the Operator requesting

the Procurement shall submit to the CPD a written request containing the specifics

and scope of the Procurement requested .



10.2



The CPD shall , with reference to each request for Procurement and to the extent

necessary, perform appropriate market research to determine which potential SubContractors, both in Afghanistan and elsewhere, possess the relevant technical

and financial capacities to satisfy the particular requirements of each request.



10.3



The CPD shall usc information collected during market research exercises to

develop and maintain a supplier database, which shall document the capabilities

of potential Sub-Contractors and be used in the preparation of vendor lists.



PROCUREMENT DOCUMENTATION

11 .1



For each Procurement, the proponent user department shall, in collaboration with

the GPD and other relevant departments of the Operator, prepare a set of

documents containing full and complete information on the subject of the

Procurement and the terms and conditions of the Procurement (the "Procurement

Documentation").



11.2



For Open Tenders and Selective Tenders, the following documents shall comprise

the Procurement Documentation:

11 .2. 1 tender documentation (the "Tender Documentation"), which shall itself

comprise:



-11-



(A)



announcement of the tender (ifapplicable);



(B)



an invitation to the tender and confidentiality agreement;



(C)



instructions to tender participants;



(D)



technical and financial requirements/conditions;



(E)



a draft of the contract; and



(F)



a bid guarantee (if used);



I 1.2.2 the criteria for evaluation of the bids, including technical and commercial

evaluations;

I 1.2.3 the bids from participants; and

I 1.2.4 determination of the winning bidder.

I 1.3



For a Sole-Sourced Procurement, in addition to the above Tender Documentation,

the following documents shall comprise the Procurement Documentation:

I 1.3. I the justification for selection of the particular Sub-Contractor;

I 1.3.2 the request for quotation sent to the particular Sub-Contractor and any

other potential Sub-Contractor with respect to the Procurement; and

I 1.3.3 the proposal from the Sub-Contractor.



I 1.4



For any method of Procurement, the following documents shall also be a part of

the Procurement Documentation :

I 1.4. I amendments to the Procurement Documentation, if any;

11.4.2 resolutions of the Operator directly related to the specific Procurement, if

applicable;

I 1.4.3 any approvals of the Authority directly related to the specific

Procurement, if applicable;

I 1.4.4 the tender strategies and all other documents directly related to the specific

Procurement.



I 1.5



If bidders submit incomplete information or if their proposals do not meet the

requirements set out in Tender Documentation, such fai lures may be grounds for

disqualification.



-12-



12.



11.6



If bidders submit false information which the CPO determines to be material to

the bid, they shall be disqualified and such bidders (and its owners and the ir

affiliates) may be excluded from all other tenders.



11.7



To the extent that it is prepared by the Operator, the Procurement Documentation

shall be prepared for each speci fi c Procurement in accordance with this Manual.



PROCUREMENT VIA TENDERS

12. 1



Pre-qualification of bidders

12.1.1 When appropriate, a process under which participants in an Open Tender

must pre-qualify to submit proposa ls shall be carried out.

12.1.2 The invitation to pre-quali fy shall be published in a local Afghan

newspaper (in an official language of Afghanistan), in appropriate

international mass media (in English), on Operator' s or Operator's parent

company's international website, and circulated to potential SubContractors identified by the CPO. The invitation shall be accompanied

by brief information on the tender subject. When drawing up the list of

potential Sub-Contractors, it shall be mandatory for the CPO to review the

leading companies in the relevant area of expertise as well as the relevant

companies included in the database prepared pursuant to Paragraph 10.3

of this Manual and any potential Sub-Contractors in Afghanistan. In

preparing the pre-qualification criteria, the CPI) shall take into account the

technical and financial qualifications of potential Sub-Contractors in

Afghanistan and, to the extent possible, shall determine appropriate prequalification criteria that both meet the Contractor's requirements and

maximize the participation of potential Sub-Contractors in Afghanistan.

12.1.3 Potential Sub-Contractors shall be provided with the pre-qualification

requirements, forms for filling and list of documents required for

submission.

12.1.4 The completed forms and documents submitted by participants seeking

pre-qualification shall undergo an evaluation by at least three (3) Experts

(as such term is defined in Paragraph 12.6.2 of this Manual) and a

representative of the CPD.

12. 1.5 A list of pre-qualified bidders shall be drawn up by the CPO on the basis

of the Experts' conclusion on compliance of the participants with the prequalification requirements.

12. 1.6 All participants seeking pre-qualification shall be notified by the CPI)

about the results of pre-qualification, and the participants that have prequalified may be invited by the CPD to participate in the Open Tender via



-13-



an invitation to bid without the need to further publicize the Open Tender

in mass media.

12.2



Break Down into Items

12.2.1 Orders for the supply of services, goods and other assets may be separated

into items in the Tender Documentation, with different applicable terms

and conditions.

12.2.2 Tum-key contracts (e.g., for the supply of equipment for technical

upgrading, construction, repair of power facilities, etc.) including such

activities as engineering design, selection of main and auxiliary

equipment, automated control systems' installation and commissioning

need not be broken down into individual items, but grouped according to

functional activity.



12.3



Tender Announcement

12.3. 1 In each Open Tender, the Operator shall (a) publish an invitation to

participate in the tender or an invitation to pre-qualify in appropriate

media in accordance with Paragraph 4.3 , and (b) del iver an invitation to

appropriate potential suppliers identified by the Operator. The invitations

shall summarize the relevant terms, conditions and requ irements for

participation or pre-qualification. The tender announcement shall precede

the formal invitation to bid by at least thirty (30) days unless a shorter

period is approved by the Authority.

12.3.2 Potential Sub-Contractors who confirmed their intention to participate in

the tender and who paid the cost of Tender Documentation (if applicable)

shall be provided with the Tender Documentation package described In

Paragraph 11.2.1 of this Manual.



12.4



Invitation to Bi d

12.4.1 Bidders who meet pre-qualification criteria will be informed of their

qualification and will be issued a formal invitation to bid. Bidders who do

not meet the pre-qualification criteria will be informed of the reasons

therefor. The invitation to hid shall precede the bid closing date by at least

thirty (30) days unless a shorter period is approved by the Authority.

12.4.2 Tender participants may receive additional information explaining

tendering procedures and tender terms and conditions.

12.4.3 Changes and amendments may be introduced In the Tender

Documentation prior to the deadline for submission of bids with a



- 14-



mandatory notification to all bidders and, if necessary, with an extension

of term for submission of bids.

12.4.4 A preliminary meeting with bidders for clarification of possible questions

may be held prior to the deadline for submitting of bids.

12.4.5 Any clarification requested by any bidder shall be sent to all tender

participants.

12.5



Bids Receiving and Opening

12.5.1 Each bidder shall submit its bid comprising a Technical Proposal

(envelope A) and a Commcrcial Proposal (envelope B) in separate scaled

envelopes.

12.5.2 The bid shall be in compliance with the rules of bid submission indicated

in the Tender Documentation.

12.5.3 Each bidder shall be entitled to submit only one bid in the same tender. If

the bidder submits more than one bid or participates directly or through its

Affi liated Entities in several bids in the same tender, the bidder itself and

any bids in which it is involved shall not be admitted to participate in the

tender.

12.5 .4 If the Procurement subject is broken down into items in the Tender

Documentation, each bidder shall be entitled to bid for a particular item or

for several items.

12.5.5 Each tender must involve not less than two bidders, otherwise such tender

shall be considered unsuccessful and a second tender shall be conducted.

However, a Sub-Contract may be awarded to a bidder in the second tender

irrespective of the number of bidders that participate in the second tender

in which the Sub-Contract is rebid.

12.5.6 Technical Proposals shall be opened first, by the CPD in the presence of

one or more representatives of the Authority, with the results being

recorded by the CPD in the minutes of the tender meeting. The CPD shall

prepare a Technical Evaluation Report for submission to the Authority and

the Operator prior to opening the Commercial Proposals. Thereafter, the

Commercial Proposals of the bidders whose Technical Proposals are

deemed technically acceptable according to the evaluation criteria shall be

opened by the CPD in the presence of one or more representatives of the

Authority. The CPD shall prepare a Commercial Evaluation Report to

submit to the Authority and the Operator. Notwithstanding the foregoing,

failure of the representative(s) of the Authority to attend, or participate in,

the opening of the Technical Proposal or Commercial Proposal shall not



- 15-



prevent CPD to commence with the opening of such Technical Proposal

and/or Commercial Proposal.

12.6



Bids Evaluation

12.6. 1 The evaluation of bids shall be carried out by the CPD on the basis of a

balanced scorecard method in accordance with approved criteria of

evaluation in two stages.

(A)



In the first stage, the Technical Proposals shall be evaluated and

scored. The scoring shall result in a determination that a bidder is

either technically qualified or technically not qualified;



(8)



In the second stage, the Commercial Proposals of the technically

qualified hidders shall be evaluated and scored.



(C)



The relative weighting of scores fo r Technical Proposals and

Commercial Proposals shall be specified in the Procurement

Documentation package and shall be used in the bid evaluation

process in accordance with the balanced scorecard method.



12.6.2 At least three (3) of the Operator's employees with relevant expertise (the

"Experts") plus a representative from the CPD shall be appointed in

writing to evaluate the Technical Proposals.

12.6.3 At least three (3) Experts plus a representative from the CPD shall be

appointed in writing to evaluate Commercial Proposals.

12.6.4 If a Technical Proposal is determined by the Experts to be non-compliant

with the requirements of the Tender Documentation or the bidder who has

submitted a Techn ical Proposal is determined to be technically not

qualified, such proposal shall not be admitted to the second stage of

evaluation.

12.6.5 When a bid was not admitted to the second stage of evaluation, the

envelopes containing the Commercial Proposal of such bids shall remain

unopened and be kept for two years.

12.6.6 If necessary, bidders may be requested to provide additional data for

clarification of information contained in the bids.

12.6.7 If necessary an additional stage of bid evaluation

auetionlreduetion may be carried out.



In



the form of



12.6.8 In evaluating bids, the CPD shall comply with the requirements of Section

21.2 of the Contract. The Contractor and the Authority shall, from time to

time, agree on the definition of " locally produced or available" as used in



- 16-



Section 21.2 of the Contract and of "Afghan suppliers and "SubContractors in Afghanistan" as used in this Manual. To be "locally

produced or available", (a) "services" shall be provided by companies

formed in Afghanistan that are majority owned by Afghan nationals and

that pay at least 75% of their total payroll costs to Afghan nationa ls, and

(b) "goods and other assets" shall be provided by companies formed in

Afghanistan that are majority owned by Afghan nationals that produce at

least 50% of the value of the goods or other assets in Afghanistan. The

Contractor and the Authority shall increase the preceding percentages over

time, as compatible with the rising technical and financial capabilities of

Afghan suppl iers over time.

12.6.9 The technically qualified bidder whose bid received the highest total

balanced scorecard shall be considered a winner of the tender (the

"Winner"). The decision on the Winner shall be properly documented by

the CPD.

12.6.10 The Contractor may elect to cancel the tender or not to award the

contract to the Winner.

12.6.11 Notification of the recommended Award shall be promptly provided by

the CPD to the Authority. Should the Authority fail to respond within

ten (10) Afghanistan business days, then the Authority (when its

approval is required under this Manual) shall be deemed to have

approved the Award . In the event that the Authority requests any

information in connection with a recommended Award, the foregoing

ten (10) day period shall be extended by one (I) day for every day

required by the CPD to provide the information requested by the

Authority.

13.



CONCLUSION OF THE SUB-CONTRACT

13.1



Subject to Paragraph 12.6.10, the technically qualified bidder whose bid receives

the highest score rating as a result of evaluation of the bids, shall be notified that

it has won the tender. Forwarding of a notification by the Operator to such bidder

shall be considered as a commitment for conclusion of the Sub-Contract.



13.2



In the event that additional negotiation of the final Sub-Contract with the Winner

is required and the relevant Sub-Contract is a Major Sub-Contract, thc Authority

may, through one or more of its representatives, attend the negotiation as an

observer.



13.3



In the event that, during the negotiations of the final Sub-Contract with the

Winner, there has been a material deviation from the terms of the successful bid,

the Operator shall obtain the prior written approval of the revised Award from the

Authority (when its approval is required under this Manual), prior to entering into



-17-



the fina l Sub-Contract. Should the Authority filii to respond within five (5)

Afghanistan business days, then the Authority (when its approval is required

under this Manual) shall be deemed to have approved the A ward . In the event

that the Authority requests any infonnation in connection with a recommended

Award, the foregoing five (5) day period shall be extended by one (I) day for

every day required by the CPD to provide the information requested by the

Authority.



14.



13.4



If applicable, the Winner of the tender shall provide a performance guarantee

which amounts to no less than five percent (5%) of the Award value in the

required form.



13.5



If the Winner refuses or avoids signing of the Sub-Contract within a reasonable

period of time detennined by the CPD, which may not exceed two (2) months

from the announcement of the Winner, then the tecbnically qualified bidder

whose bid is next in the score rating shall be named as a Winner of the tender.



13.6



Preparation and signing of the Sub-Contract with the Winner shall be carried out

in accordance with the CPD's policies on contract preparation, coordination and

registration, provided that such policies do not have an adverse effect on carrying

out Procurement activities under this Manual.



13.7



The CPD shall ensure that all Sub-Contracts contain all provisions necessary to

satis fy the requ irements with respect to the obligations of Sub-Contractors that are

stipu lated in the Contract.



STORAGE

OF

CONTRACTS,

PROCUREMENT

DOCUMENTATION AND TENDER DOCUMENTATION

14.1



15.



PAYMENT POLICY

15.1



16.



All Sub-Contracts entered into under this Manual, and all Procurement

Documentation and Tender Documentation in connection therewith shall be

stored under the control and custody of the CPD which will maintain a good

record of all such contracts and related documents so that they are easily

accessible by the Operator or the Authority.



Payment to suppliers will ordinarily be made within thirty (30) days after receipt

of the Sub-Contractor's undisputed invoice or as agreed in tbe Sub-Contract.



CONFIDENTIALITY

16.1



The CPD shall take reasonable measures to ensure confidentiality of any

confidential infonnation provided by the CPD to potential Sub-Contractors. Any



-18-



breach by potential Sub-Contractors of their confidentiality obligations may be

deemed grounds for disqualification.

16.2



17.



Negotiations on behalf of the Operator with representatives of potential SubContractors sha ll be held on ly by one or more authorized representatives of the

CPD.



TERM

17. 1



This Manual shall take effect on thc Effective Date of the Contract and shall

expire, unless renewed by the Contractor and thc Ministry, on December 31 of the

fifth (5 th ) calendar year from the Effective Date of the Contract.



- 19-



Afghan-Taj ik Basin Phase I Tender



EXHIBIT D

FINANCIAL GUARANTEE FOR

MINIMUM EXPLORAnON PROGRAM



0 -1



Afghan-Taj ik Bas in Phase I Tender



EXHIBITD

FINANCIAL GUARANTEE



Ministry of Mines & Petroleum

Government of the Islamic Republic of Afghanistan

Pashtonstan Watt, Across from Ministry of Finance

Kabul, Afghanistan



Gentlemen:

Re:



Our Irrevocable Letter of Guarantee No.



In compliance with the request of Dragon Oil (Sanduqli) Lim ited, TP Afghanistan Limited and

Ghazanfar Investment Ltd. (collectively, the "Contractor"), we, (Name of bank), issue this

unconditional irrevocable letter of guarantee in your favor for a sum not exceeding

_ _ _ _ _ __ U.S. Dollars (US$

), which represents the total estimated

expenditures for the Minimum Exploration Program during [the Initia l Exploration Periodl [the

First Extension Period] [the Second Extension Period] , as set forth in Exhibit H of the

Exp loration and Production Sharing Contract for the Sanduqli Block (the "Contract"), dated

________, between the Contractor and the Ministry of Mines & Petroleum of the

Government of the Islamic Republic of Afghanistan (the "Ministry"), relating to Hydrocarbons

Operations in Afghanistan, to guarantee the Contractor's faithful performance of such Minimum

Exploration Program. The said sum of

U.S. Dollars (US$

________ ) shall be reduced at the end of each Contract Year in [the Initial Exploration

Period] [the First Extension Period] [the Second Extension Period] by the amount determined in

accordance with Section 8.2 of the Contract, as such amount is evidenced by a signed certificate

from the Ministry.

The terms and conditions of this Letter of Guarantee are as follows:

I.



Capitalized terms used herein and not otherwise defined shall have the meanings as set

forth in the Contract.



2.



The said amount, or any part thercof, shall be paid to the Ministry upon our receipt of

your demand by way of a written statement that the amount c1aimcd is duly payable

under the Contract.



3.



We hereby waive diligence, presentment, demand for payment, protest, any requirement

that thc Ministry exhaust any right or power or take any action against the Contractor, all

notices (whether of non-payment by the Contractor, dishonor, protest or otherwise) and

all demands whatsoever. Our obligations hereunder are continuing, absolute and



D-2



Afghan-Tajik Basin Phase I Tender



unconditional, and will not be in any way affected by giving of time or any forbearance

by the Ministry, the waiver or consent by the Ministry with respect to any provision of

the Contract, and irrespective of the validity, regularity, enforceability or value of the

Contract, or by any other circumstances which might otherwise constitute a legal or

equitable discharge or defense of a surety or guarantor, all of which are hereby expressly

waived.

4.



Our obligations hereunder shall be paid in U.S. Dollars to the bank account designated by

the Ministry, free and clear of and without reduction by reason of any and all present and

future taxes, levies, imposts, deductions, assessments, charges or withholdings

whatsoever levied, assessed, imposed or collected with respect thereto by the government

of [name of jurisdiction of issuing bank] or any political sub-division or taxing authority

thereof or therein. We shall bear and pay any and all fees and expenses in relation to or

in connection with this Letter of Guarantee .



5.



In order to give effect to this Letter of Guarantee, we hereby declare that the Ministry

shall be at liberty to act as though we were the principal debtor, and we hereby waive all

and any of the rights as surety which may at any time be inconsistent with any of the

above provisions.



6.



Any claim or dcmand under this Lcttcr of Guarantee shall be presented to us on or before

the expiration of the date of the validity of this Letter of Guarantee.



7.



This Letter of Guarantee shall be effective immediately and shall remain eFFective until

Ienter date that is ninety (90) days after the last day of the Initial Exploration Period, the

First Extension Period or the Second Extension Period, as applicable], and shall thereafter

automatically without any formality become null and void for all its effects and this

Letter of Guarantee sha ll be returned to us immediately.

Yours very truly,



(Name of Bank)



D-3



Afghan-Tajik Basin Phase I Tender



Dragon Dil pic

Clc Dragon Oil (Holdings) Ltd. (Dubai Branch)



P.O. Box 34666 Dubai, United Arab Em irates

Tol. (971-4) 3053600, Fax (971 -4) 335 6954

'WW'N.dragonoil.com



EXHlBITE

GENERAL PERFORMANCE GUARANTEE



E- l

15300516v2

Reg. Office : Drago n Oil pic, 6th Floo r, South Bank House, Barrow Street, Dublin 4 , Ireland

Reg. No.

: 35228 , Registered in Dublin, Ireland



Directors



: M. AI Ghurair (UAE), DrA J. AI Khalifa (KSA), A. Sharaf (UAE), A. AI Muhairbi (UAE) ,S. AI Mazrooei (UAE), T.K. Haugnaess (Norway)



Afghan-Tajik Basin Phase I Tender



EXHIBIT E



GENERAL PERFORMANCE GUARANTEE

Dragon Oil pic, a company organized and existing under the laws of Ireland with registered

office at 6th Floor, South Bank House, Barrow Street, Dublin 4, Ireland (the "Guarantor"); and

The Ministry of Mines & Petroleum of the Government of the Islamic Republic of Afghanistan

(the "Ministry").

RECITALS



(A)



Reference is made to the Exploration and Production Sharing Contract for the Sanduqli

Block (the "Contract"), dated

October 2013, entered into between (i) the Ministry and

(ii) each of Dragon Oil (Sanduqli) Limited, TP Afghanistan Limited and Ghazanfar

Investment Ltd. (together with their respective successors and permitted assigns,

collectively the "Contractor").



(8)



Pursuant to Section 8.5 of the Contract, the ultimate parent entity of each Contractor

Entity is required to deliver this Guarantee to the Ministry.



(C)



Under this Guarantee, the Guarantor guarantees the prompt payment and performance

when due of the Guaranteed Obligations.



The Guarantor and the Ministry agree as follows:

I.



Capitalized terms used and not otherwise defined herein shall have the meanings as set

forth in the Contract. In this Guarantee, the following ternlS shall have the following

meanmgs:

"Contract" shall have the meaning set forth in the preamble of this Guarantee.

"Contractor" shall have the meaning set forth in the preamble of this Guarantee.

"Demand" shall have the meaning set forth in Clause 5 of this Guarantee.

"Guarantee" shall mean this general performance guarantee.

"Guaranteed Obligations" means all obligations of the Contractor under the Contract

(except those obligations that are covered by the Financial Guarantee) which arise or are

incurred prior to the date on which the Guarantor Subsidiary ceases to hold a

Participating Interest in compliance with the provisions of the Contract.



E-2

15300516v2



Afghan-Tajik Basin Phase I Tender



6.



7.



(b)



states the relevant Guaranteed Obligation(s);



(c)



states that the Contractor has not performed the specified Guaranteed

Obligation(s);



(d)



where applicable, specifies the amount(s) of such Guaranteed Obligation(s) or the

date(s) on which such Guaranteed Obligation(s) were due to be performed; and



(e)



is received by the Guarantor on or before the Longstop Date.



The liability of the Guarantor hereunder is irrevocable, continuing, absolute and

unconditional and the obligations of the Guarantor hereunder shall not be discharged or

impaired or otherwise affected by, and the Guarantor hereby irrevocably waives any

defenses to enforcement it may have (now or in the future) by reason of:

(a)



any illegality or lack of validity or enforceability of any Guaranteed Obl igation or

the Contract related agreement or instrument;



(b)



any change in the time, place or manner of payment or performance of, or in any

other term of, the Guaranteed Obligations or any other obligation of any party

under the Contract, or any rescission, waiver, amendment or other modification of

the Contract or any other agreement, including any increase in the Guaranteed

Obligations;



(e)



any taking, failure to take, exchange, substitution, release, impairment or nonperfection of any collateral, or any taking, failure to take, release, reduction,

impairment, amendment, waiver or other modification of any guaranty, for the

Guaranteed Obligations;



(d)



any default, failure or delay, willful or otherwise, m the performance of the

Guaranteed Obligations;



(e)



any change, restructuring or termination of the corporate structure, ownership or

existence of any ContTactor Entity or any of its Affiliated Entities or any

insolvency, bankruptcy, reorganization or other similar proceeding affecting any

Contractor Entity or any of its Affiliated Entities of its assets or any resulting

release or discharge of any obligation; or



(f)



the failure of the Ministry to assert any claim or demand or to exercise or enforce

any right or remedy against any Person under the Guaranteed Obligations or

otherwise.



After the Ministry has received indefeasible payment in full in cash of all Guaranteed

Obligations for which it has issued a Demand, it shall, at the Guarantor's request and

expense, execute and deliver to the Guarantor, without recourse or representation or

warranty, appropriate documents necessary to evidence the transfer by subrogation to the



E-4

15300516v2



Afghan-Tajik Basin Phase I Tender



Guarantor of the Ministry's interest

Guaranteed Obligations.



In



any Insurance proceeds



In



respect of such



8.



If a Demand is delivered to Guarantor that requires the performance of non-monetary

Guaranteed Obligations, the Ministry shall provide to the Guarantor (or its approved

subcontractor) permits that are required to conduct Hydrocarbons Operations associated

with such Guaranteed Obligations, subject to fulfillment of reasonable and customary

requirements for the grant of such permits (e.g. qualifications and safety programs to

conduct blasting operations).



9.



The aggregate liability of the Guarantor under this Guarantee to the Ministry shall not

exceed forty million u.s. Dollars (US$ 40,000,000); provided that if the Participating

Interest of the Guarantor Subsidiary increases, the aggregate liability shall henceforth be

equal to the product of (i) the new Participating Interest of the Guarantor Subsidiary and

(ii) one hundred million U.S. Dollars (US$ 100,000,000).



10.



This Guarantee is irrevocable and unconditional and shall remain in full force and effect

until the earlier of the date that:

(a)



all of the Guaranteed Obligations are fully and irrevocably satisfied and

discharged; or



(b)



five (5) years following termination of the Contract (the "Longstop Date").



II .



The Guarantor's obligations under this Guarantee shall be independent and absolute, and

the Guarantor shall have no right to set-off or counterclaim with respect to any other

claims it may have against the Ministry or any other Person.



12.



All of the obligations of the Guarantor set forth herein shall bind the Guarantor and its

successors and permitted assigns. The Guarantor may not assign or delegate its duties

hereunder without the prior written consent of the Ministry, and any purported

assignment or delegation without such consent shall be null and void. The Guarantor

confirms that this Guarantee shall remain in effect notwithstanding the assignment of the

Guarantor Subsidiary's Participating Interest to an Affiliated Entity of the Guarantor

Subsidiary. Upon any such assignment the assignee shall be considered the Guarantor

Subsidiary for all purposes hereunder to the extent of the assigned obligations. The

Guarantor also confirms that any assignee of the Ministry under the Contract may

exercise all rights and remedies ofthe Ministry under this Guarantee. No other person or

entity shall be a beneficiary of this Guarantee or have or acquire any rights by reason of

this Guarantee.



13.



This Guarantee shall be governed and construed in accordance with Afghanistan Law.

Any dispute, controversy or claim arising out of or relating to this Guarantee that is not

resolved by mutual agreement within forty-five (45) Days from the date on which the

existence of a dispute is notified in writing by one party to the other shall be settled by



E-5

15300516v2



Afghan-Tajik Basin Phase I Tender



arbitration initiated by either party by submission to the International Centre for

Settlement of Investment Disputes ("ICSID") pursuant to the Convention on the

Settlement of Investment Disputes between States and Nationals of other States as of

March 18, 1965 ("ICSID Convention") and the arbitration rules promulgated thereunder.

For the avoidance of doubt, the Ministry hereby expressly consents to the submission of

any dispute which may arise under this Guarantee to ICSID for settlement by arbitration

in accordance with Article 25 (I ) of the ICSID Convention. For the purpose of Article 25

(2) (b) of the ICSID Convention, the Guarantor shall be treated as a national of a state

other than Afghanistan. The number of arbitrators shall be three. The arbitration shall be

conducted in the English language. The arbitration award may take the form of an order

to pay a sum of money, or an order to perform an act, or an order to refrain from an act,

or any combination of such orders. The place of arbitration shall be London, England.

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 an order of enforcement, as the case may be. Each

party agrees that at the request of the other party it will consent (and will cause its

Guarantor Subsidiary to consent) to the consolidation of any arbitration brought under the

provisions of this Clause 13 with any arbitration under Section 24.1 of the Contract in

which the Ministry, on the one hand, and the Contractor or any Contractor Entity, on the

other hand, is a party that relates to matters at issue in the arbitration brought under this

Clause 13.

14.



Any fai lure of the Ministry to exercise any right, in whole or in part, hereunder shall not

be construed as a waiver of the right to exercise the same or any other right.



15.



No amendment or modification of this Guarantee shall be effective unless in writing and

signed by both the Guarantor and the Ministry.



16.



The Guarantor shall pay upon demand and presentation of invoices all reasonable and

actual costs and expenses incurred by the Ministry in connection with the successful

enforcement of this Guarantee (excluding all costs and expenses incurred by the Ministry

in connection with claims under the Insurance), including, without limitation, reasonable

fees and expenses of counsel.



17.



All notices, demands, instructions, waivers, consents or other communications hereunder

shall be in writing in the English language and deemed to have been properly effective

upon receipt, and shall be sent by personal delivery, courier, first class mail or fax to the

following addresses :

GUARANTOR:



Dragon Oil PIc

C/O Dragon Oil (Holdings) Limited

PO Box: 34666, Dubai, United Arab Emirates



E-6

15300516v2



Afghan-Tajik Basin Phase I Tender



MINISTRY:



TO BE CONFIRMED



The Addresses and fax numbers by either party to this Guarantee for notices given

pursuant to this Guarantee may be changed by means of written notice to the other party

at least fourteen (14) working days prior to effective date of such change.

18.



This Guarantee shall be effective immediately.



IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be executed and the

Ministry duly authorized the satre, both parties represented by their respective duly authorized

representatives on this day of € October 2013.



DRAGON OIL PtC



fl/~~

By: Mark William Sawyer

Authorised Signatory

THE MINISTRY OF MINES & PETROLEUM OF

THE GOVERNMENT OF THE ISLAMIC

REPUBLIC OF AFGHANISTAN



~\



By _____________________________

The Minister of Mines & Petroleum



E-7

15300516v2



EXHIBIT E



GRN ERAL PERFORMANC E GUARANTEE

Turkiyc Pctrolleri Anonim Orhlkligi, a company organized and existing under the laws



or



the Republic of Turkey with registered office at [Sogutozu :v1ahallesi 2 I 80. Cad. 1'\0:86.

06100, CankayaiAnkara Tu rkiye] (the "Guaranto r''): and

The Min istry of Mines & Petroleum of the Government of the Islamic Republic of

Afghanistan (the "Ministrv").



I{ECITALS

(A)



Reference is made to the Exploration and Production Sharing Contract for the

Sanduqli Block (the "Contract"), dated 08 October 2013, entercd into between (i) the

Ministry and (ii) each of Dragon Oil (Sanduqli) Limited, TP A fgha nistan Limited and

Ghazan far Investment Ltd. (together with their respective successors and permit1ed

assigns. collectively the "Contractor'}



(B)



Pursua nt to Section 8.5 of the Contract. the ultimate parent entity of each Contractor

Entity is req uired to deliver this Guarantee to the Ministry.



(C)



Unde r this Guarantee, the Guarantor guarantees the prompt payment and performance

when due of the Guaranteed Obligations.



The Guarantor and the Ministry agree as fo llows:

I.



Capitalized terms used and not otherwise denned herein shall have the meanings as set

forth in the Contract. In this Guarantee, the following terms shall have the following

meanings:

"Contract" shall have the meaning set t(lIth in the preamble of this Guarantee.

"Contractor" shall have the meaning set forth in the preamble of this Guarantee.

"Demand" shall have the meaning set forth in Clause 5 of this Guarantee.

"Guarantee" shall mean th is genera l performanc.e guarantee.

"Guuranrccd Obligations" means all obliga tion s of the Contractor under the Contract

(exce pt those obligations that are covered by the financial Guara ntee) which arise or

are incurred prior to the date on which the Guarantor Subsidiary ceases to hold a

Part icipating Interest in compliance with the provisions of the Contract.

"Guarantor" shull have the n1caning set fo rth inlhc preamble of this Guarantee.



"Guarantor Subsidiary" means TP Afghanistan Limited, a company organized and

existing under the laws of Jersey and any successor entity and permitted assignee



which is an Affiliated Entity of the Guarantor.



"Insurance-- shall mean any insurance obtained pursuant to Section 24_1 of the



Contract.

"LongstoD Date" shall have the meaning set forth in Clause 8(b) Drthis Guarantee .

"Min istr,," shall have the meaning set lorth in the preamble of this Guarantee.

2.



The Guarantor shall make available to the Contractor the necessary reSOllrCes that the

Contractor may requir~ to meet. on a timely basis, the Contractor's obligations under

the Contract.



3.



The Guarantor hereby expressly represents and warrants to the Ministr) that (i) it is

du ly orga nized, validly existing and in good standing order under the law s of its



jurisdiction of organizat ion. (ii) it has all requisite corporate power and auth ority to

execute. deliver and perform thi s Guarantee. (iii) the execution, delivery and

performa nce of this Guarantee have been du ly authorized by al l necessary corporate

action, (iv) this Guarantee constitutes the legal, valid and binding obl igation of thc

Guardntor, enforceable against the Guarantor in accordance with its terms. (v) no

governmental approvals are required in connection with the execution, delivery and



performance of thi s Guarantee, except as has been obtained and is in force on this day

of signature as sct forth below or as may be required in Afghanistan lor the Guarantor

or its perm itted subcon tractors to perform H ydrocarbons Operations, ( vi) execution.



delivery and performance of this Guarantee by the Guarantor will not vio late any

provision of any existing law or regulation to which the Guarantor is su~j\!ct or any



provis ion of the Guarantor's constitlltive documents or of any material agreements to

which it may be a party and (vii) it is the one hundred percent (100%) beneficial

owner of the Guarantur Subsidiary.



4.



Subject to Clause 5, in cons ideration of the Ministry entering into the Co ntract. thc

Guarantor hereby unconditionall y and irrevocably guarantees to the Ministry the

payment and performance of the Guara nteed Obli gations when due (s ubject to any

app licable cure periods).



5_



The obligation of the (iunrantor pursuant to Clause 4 in respect of any Guaranteed

Obligation is conditioned on the receipt by the Guarantor of a writte n demand from

the Ministry (the " Demand") that:



6_



(a)



makes specific reference to this G uarantee;



(b)



statcs the relevant Guaranteed Obligation(s);



(c)



states that the Co ntractor has not performed the specified Guaranteed

Obligation(s):



(d)



where applicable, specifies the amount(s) of such Guarantecd Obligation(s) or

the date(s) on which such Guaranteed Obligat ion(s) wcre due to bc performed:

and



(e)



is received by the Guaran tor on or before the Longstop Date.



Th e liahility of the Ciuarantor hereunder is irrevocable, continuing. absolute and

uncond itional and the obliga tions of the Guarantor hereunder shall not be discharged



or impaired or othcnvise allected by. and the Guarantor hereby irrevocably waives any

defen ses to enforcement it may have (nmv or in the futu re) by reason of:



(a)



any illegality or lack of validity or enforceability of any Guaranteed Obligation

or the Contract related agreement or instrument;



(b)



any change in the time, plac e or manner of payment or performance ot: or in



any other term oC the Guaranteed Obligations or any other obligation of any

party under the Contract. or any rescission. waiver, amendment or other

modification orthe Contract or any other agreement, including any increa se in



the Gu aranteed Obligations:

(c)



any taking, failure to take. exchange. substitution, release, impairment or nOI1perfection of any co llateral, or any taking, failure to take, release, reduction.

impairment, amendment, \.-vai ver or other modification or (lny guaranty, for the



Guaran teed Obligations;

(d)



any defaul t. failure or delay, willful or otherwise, in the performance of the

Guaranteed Obligations;



(e)



any change, restructuring or termination of the corporate structure. ownership

or exi stence of any C ontractor Entity or any of its Affil iated Entitics or any

insolvency, bankru ptcy, reorganization or other similar proceeding atTecting



any Contractor Entity or any of its Affiliated Entities of its assets or any

resulting release or discharge of any obligation; or



(f)



the failure of the Ministry to assert any claim or demand or to exercise or

enforce any right or re medy against any Person under the Guaranteed



Obl igations or otherwise.

7.



After the Ministry has received indefeasi ble payment in full in cash or all Guaranteed

Obligations ror which it has issued a Demand, it shall, at the Guarantor's request and

expense, execute and deliver to the G uarantor, without recourse or representation or

warranty. appropri ate documents necessary to evidence the transfer by subrogation to



the Guarantor of the Min istry' s interest in any Insurance proceeds in respect of such



Guaranteed Obligations.

8.



If a D em and is delivered to Guarantor that requires the performa nce of non-monetary



Guaranteed Obligations, the Ministry shall provide to the Guarantor (or its approved

subcontractor) permits that arc required to conduct Hydrocarbons Operations

associated with sllch Guaranteed Obligations. subject to fulfillment of reasonable and

customary requi rements for the gran t of such perm its (e.g. qualifkalions and safety

programs to conduct blasting operations).



9.



The aggregate liability of the Guarantor under this Guarantee to the M inistry shall not

exceed forty million U.S. Dollars (USS 40,000.000); provided that if the Participating

Interest of the Guarantor Subsidiary increases, the aggregate liability shall henceforth

be equul to the product of (i) the new Participating Intcrc.st of the Guarantor



Subsidiary and (ii) one hundred million U.S. Dollars (USS 100,000.(00).

10.



Th is Guarantee is irrevocable and unconditional and sha ll rcmain in full force and



effect until the earlier of the date that:



(a)



all of the Guaranteed Ob ligations arc ful ly and irrevocably satisfied and

discha rocd' or



I



(b)

II.



~



,



r ve (5) years following termination of the Contract (the "Longston Date").



Th e Guarantor's obligations LInder this Guarantee shall be independen t and absolute.



and the Guarantor shall have no right to setworr or counterclaim with respect to any

other claims it may have against the Ministry or any other Person .



12.



All of tge obligatio ns of the Guarantor set forth herein shall bind the Guarantor and its

successors and perm itted assigns. The Guarantor may not assign or delegate its duties

hereunder without the prior written consent of the Ministry, and any purported

assignment or delegation without such consent shall be null and void. The Guarantor

confirms that this Guarantee shall remain in effect notwithstanding the assignment or

the Guarantor Subsidiary's Participating Interest to an AtTiliated Entity of the

Guarantor Subsidiary. Upon any such assignntent the assignee sha ll be considered the

Guarantor Subsid iary fo r all purposes hereunder to the extent of the assigned

obligations. The Guarantor also coofi rms that any assignee of the Ministry unde r the

Contract may exercise all rights and remedies of the Ministry under this Guarantee.

No other person or entity shall be a beneficiary of this Guarantee or have or acquire

any rights by reason of th is Guarantee.



13.



Th is GU'arafltcc shall be governed and construed in accordance with Afghanistan Law.

Any dispute. controversy or claim arising out of or relating to this Guarantee that is

not resolved by mutual agreement within forty-five (45) Days from tbe date on which

the existence ofa dispute is notified in writ ing by one pany to the other shall be settled

by arbitration initiated by either party by submission to the International Centre for

Settlement of Investment Disputes ("ICSID") pursuant to the Convention on the

Settlement of Investme nt Disputes between States and Nationals of other States as of

March 18, 1965 ("ICSID Convention") and the arbitration rules promulgated

thereunder. For the avo idance of doubt, the Ministry bereby expressly consents to the

subm ission of any dispute which may arise under this Guarantee to ICSID for

settlement by arbi tratio n in accordance with Article 25 (I) of the ICSID Convention.

For the purpose of Article 25 (2) (b) of the ICSID Convention, the Guarantor shall be

treated as a national of a state other than Afghanistan . The number of arbitrators shall

be three. The arbitration shall be conducted in the English language . The arbitration

award may take the form of an order to pay a sum of money, or an order to perform an

act, or an order to refrain from an act, or any combination of such orders. The place of

arbi tration shall be London, England. The award rende red shall be linal and

conc!usi1ve. Judgment on the award rendered may bc entered in any court having

jurisdiction or application may be made in such court for a judicial acceptance of the

award and an order of enforcement, as the case may be. Each party agrees that at the

request

the other party it will consent (and will cause its Guarantor Subsidiary 10

consent) to the consolidation of any arbitration brought under the provisions of this

Clause 13 with any arbitration under Section 24 .lof the Contract in which the

Ministry, on the one hand, and the Contractor or allY Contractor Entity, on the other

hand, is a party that relates to matters at issue in the arbitration brought under this

Clause 13.



bf



14.



Any failure of the Ministry to exercise any right, in whole or in part. hereunder shall

not be construed as a waiver of the right to exercise the same or any other right.



15 .



No amondmcnt or modification of this Guarantee shall be effective unless in writing

and signcd by both the Guarantor and thl: V1inistry.



16.



The Guarantor shali pay upon demand and presentation of invoices all reasonable and

act ual costs and expenses incurred by the M inistry in connection with the successful

enforcement of this Guarantee (excluding all costs and expenses incurred by the

Ministry in connection with claims under the In surance), including. without limitati on.



reasonabl e fees and expenses of counsel.

17 .



All notices, demands, instructions, waivers, consents or other communications



hereunder sh all be in writing in the English language and deemed to have been

properly effec tive upon receipt, and shall be sent by personal delivery. courier, first

class mail or fax to the following addresses:

GUARANTOR:



[TURKiYE PETROLLERi A.O.

Sogutnzu Mahallesi 2 180. Cad, No:86, 06100, Ca nkayaJAnkara Turkiye]

MINISTRY:

Ministry of M ines & Petro leum

Pashtoonistan Watt

Across from Ministry of Finance

Kabul , Afghanistan



Telephone: +93 (0) 202 100 309

Attn: Director of Afghanistan Petroleum Authority



The Addresses and fax numbers by either party to this Guarantee for notices given

pursuant to this Guarantee may be changed by means of written notice to the other

party at least fourl een (14) working days prior to effective date of such change.

18.



This Guarantee shall be efTective immediately.



11\ WITI\ ESS WI IEREOF, the Guarantor has caused this Guarantee to bc executed and the

Ministry duly authori zed the same, both parties represented by their respective duly

authorized re presentatives on this day 01'08 October 2013.



TORKiYE PETROLLERi A.O.I



By



ITit101



~<



--~

->"""'"



-:J



Besim $I$MAN



P~esident anrl rr::' f



THE MI:-iISTRY OF MINES &

PETROLEUM OF THE GOYER.!'\lMEl'iT OF

THE ISLAMIC REPUBLIC OF

AFGHANISTAN



~J



BY ~



The Minister of Mines & Petroleum



Afghan-Taj ik Basin Phase I Tender



EXHIBITF

LONG RANGE PLAN FOR

THE TRAINING OF AFGHAN NATIONALS



F- I



EXHIBIT F

LONG RANGE PLAN FOR THE TRAINING OF

AFGHAN NATIONALS

1. Overview & General Approach



Contractor is committed to the training and development of a competent Afghan workforce

that meets the needs of our business and increases the capability and percentage of Afghan

personnel in our operations over time. Consistent with this, as well as the requ irements of

the EPSC, Contractor will foster an environment where training and development is a key

activity within our operations. All Afghan cmployces will be encouraged to participate in

developing their own skills to enhance their knowledge for use in thei r current job, as well as

jobs that they can reasonably expect to progress to during their careers. Our training plans

wi ll be based on individual job evaluations and competency assessments, which will help

Contractor idcntify the optimal training requirements for each Afghan employee. A

sophisticated computer-based assessment system will bc uscd to design and track each

Afghan employee's skills leve ls to track progress and futurc training needs.

In this regard, Contractor will:















Implement on-thejob, course-based in-house as well as external training. In-house

training will be conducted by experienced personnel from the Operator as well as

international-standard trainers from well reputed training companiesfrom all over the

Itxternal training will be in the form of training activities or professional

world.

conferences located inside or (subject to the reasonable availability of visas) outside

of Afghanistan

Use performance reviews to identifY individual development plans that will encompass

enhanced performance in an employee's current position as well as on their long term

development.

Manage and develop training activities via an annual training program that reflects

individual, team and organizational needs.

Work with sub -contractors to establish training program requirements ./ilr their

personnel.







Provide training programs to the Ministry and other Afghan Government entities

consistent with their needs and as agreed in the annual training program.



F-2



2. Annnal Training Program

Each year, the Operator will submit an Annual Training Program (' ATP') at the same time as

the Work Program and Work Program Budget. The ATP shall identify the specific classes or

other training activities that will be conducted for Afghan employces, Afghan subcontractors

and Ministry personnel in the coming year. The ATP shall be subject to approval by the

Ministry.

The minimum ATP cost will meet the amounts specified in the Contract.

3. Post Commercial Discovery, In-Country Training - 'Center of Excellence'

Once Contractor proves a Commercial Discovery and has an approved Development

Program and Development Program Budget, Contractor, in association with the Ghazanfar

Group, will establish a 'Center of Excellence' dedicated training facility to be located in

Northern Afghanistan, which will provide classroom space and rcsources for course work

offered by expert teachers from inside and outside the company together with computerbased, self-paced courses driven by specialized software.

The Center will enhance training activities by providing our Afghan employees with the

necessary onsite physical classroom facilities for more and better quality, cost-effective

training in-country.

4. Contractors

As a significant portion of the operations that will be provided by third party contractors

working in Afghanistan on behalf of Contractor, we will routinely seek to include Afghan

training commitments in our contracts with such third party contractors.

5. Training Program for 2013

During the Initial Exploration Period (i.e., the first four years of Hydrocarbons Operations),

training will be primarily focused on introductory skills appropriate to setting up office

operations, the exploration activities being conducted and preparation for development

activities .

It is hard to predict the exact training program during thc first year of Hydrocarbons

Operations, as the specific needs of staff yet to be hired cannot be ascertained now.

However, subject to further evaluation of need and availability, the following lays out the

training areas (subject to revision) for the first year of Hydrocarbons Operations:

F· 3



Preliminary Training Areas

Staff Categorx



Course



Support







Safe Driving



Administrative









Basic Secretarial & Office Administration







Introduction to Accounting Software

















Basic Geology and Geophysics



Financial

Technical



Ministry



All



Microsoft Officc Applications



Basic Seismic Acquisition

Mini Oil & Gas MBA

Oversight of Procurement Activities

English Language

Introduction to HSE Practices



Ministry personnel may attend any of the courses offered, and/or attend a 'Mini Oil & Gas

MBA' program, which would most likely be outside of Afghan istan. Ministry feedback on

proposed training for their personnel is appreciated .

During the first year of Hydrocarbons Operations, Contractor will provide more details on

the specific courses to be offered, how the courses will be conducted and the location in

Afghanistan (or elsewhere) for such training. Contractor will appoint a Human Resources

Manager who shall be the person accountable for assessing training needs and planning

training events.

Training plans for future years will be submitted along with the Work Program and Work

Program Budget for that year. Such training plans shall take into account the training

activities carried out during the first year of Hydrocarbons Operations for the purposes of

assessing whether the Contractor has fulfilled the training requirements under the Contract

for such future years .



F-4



Afghan-Tajik Basin Phase I Tender



EXHIBITG

BIDDING FORM



G- I



Afghan-Tajik Basin Phase I Tender



Bid Form

AFGHAN-TAJIK BASIN PHASE I TENDER

Ministry of Mines of t he Islamic Republic of Afghanistan

Kabul, Islamic Republic of Afghanistan

BIDDER:



Dragon Oil (International) limited

Kuwait Energy Afghanistan limited

Turkiye Petrolleri Anonim Ortakligi

Ghazanfar Investment Limited

Block 1- Sanduqli Block



BLOCK:



ROYALTY BID: Twelve point six percent /12.6 %l

BIDDER'S REPRESENTATIVE: BIDDER'S REPRESENTAnVE: Mark W. Sawyer (Dragon Oil), Michael

Andersen (Kuwait Energy), Murat Fehmi Kard (TPAO) and Ismail Ghazanfar (Ghazanfar)

The undersigned, Tjjrkiye Petrolleri Anonlm Ortaklig;, Dragon Oil (Int ernational) limited, Kuwait



Energy



Afghanistan limited and Ghazanfar Invest ment limited, hereby unconditionally comm it that, if selected

as the winn ing Bidders in the above-referenced tender process, they will cause a company organized

under the laws of the Islamic Republic of Afghanistan and wholly owned by them to enter Into the

Exploration and Production Sharing Contract for the San duqli Block (the "EPSC") in the fina l form

distributed to the Bidders in the above-referenced tender process, with the royalty referred to In the

EPSC being the percentage indicated above. Unless such period is exteMied by the Ministry, the EPSC

shall be executed no later than t hirty (3~) days after notification by the Ministry of award of the EPSC.



The undersigned acknowledge that noncompliance with the obligation set forth above shall result in a

drawing on the Bid Guarantee.

The undersigned further certifies that the electronic version of the bid submitted with the original paper

version Is the same as the original paper version, except for electronic format.

Dragon Oil (International) Limited



1!lJ-Q!J!,*

TUrkiye Petrolleri Anonim Ortakfl iji



Ghazanfar Investment Lim· ed



~/::::::>~

Title:



u;



Pf€,(jf.1--



Title:



Cb"O



Afghan-Tajik Basin Phase I Tender



EXHIBITH

MINIMUM EXPLORATION PROGRAM



H- l



Afghan-Tajik Basin Phase I Tender



EXHIBITH

MINIMUM EXPLORA nON PROGRAM

The Contractor shall perform the following minimum Exploration Operations during the

Exploration Phase:



Exploration Wells



2



Initial EXPlr ration Period

First



Exten~ion Period



2



Second Ext nsion Period



2



Each Exploration Well shall be drilled to a target depth that penetrates the Guri/Bukhara

horizon . For purposes of determining the original amount of the Financial Guarantee.

each such Exploration Well shall be deemed to have a value or fifteen million

U.S. Dollars (US$ 15,000,000.00). For the Initial Exploration Period, drilling in respect

of one of the two (2) Exploration Wells must commence prior to the end or the second

(2 od ) Contract Year, and drilling on both must commence prior to the end of the third

(3,d) Contract Year; provided, however, that such deadlines shall be extended by the

Ministry to later dates within the Initial Exploration Period if the Contractor demonstrates

to the Ministry's reasonable satisfaction that such extension would allow the Contractor

to erficiently, adequately and in a technically sound fashion comply with its Work

Program obligations to better prioritize its operations in order to optimize production of

Hydrocarbons from the Contract Area. The amount of any Exploration Wells dri lled in

excess of the required minimum Exploration Operations for any given period shall be

carried forward to the next period and shall be taken into account to satisfy the required

minimum Exploration Operations and/or calculate the amount of the Financial Guarantee

required for such subsequent period.



H-2



Afghan-Tajik Basin Phase I Tender



EXHIBIT I

WINNING BIDDER'S EXPLORATION PROGRAM



I- I



EXHIBIT I

WINNING BIDDER'S EXPLORATION PROGRAM

FORTHESANDUOLIBLOCK



Part 1

Work commitments



I.



2.



Geological and geophysical studies and services, including:





high resolution topographic mapping survey and interpretation







high resolution aeromagnetic and gravity survey and interpretation



Seismic program, including:





at least one thousand two hundred and seventy line kilometers (1270 line kin) of

new reconnaissance and detai led 2D seismic



3.



Two (2) Exploration Wells, one to the shallower of three thousand five hundred meters

(3500 m) or the top of the Lower Cretaceous formation and a second to the shallower of

five thousand five hundred meters (5500 m) or the top of the Jurassic formation



4.



Logging runs for all Wells, including, at a minimum, the following logs:







Gamma ray



0



Sonic







Density







Neutron







Caliber



In sections where target reservoirs are expected, thc following additional logs will be

run:







Resistivity







FMI



5.



VSP at the end of each Well



6.



Wellsite operations including:





collection of ditch samplcstagging and description of samples for lithology and

shows

1-2



7.







strip log plotting showing drill time, lithology, porosity and verbal dcscription

of sample







bOltoms-up sample of drilling breaks and evaluation for shows and porosity







core cui if shows and porosity are detected







drill slem test if core results show encouragement, drilling is determined to be

safe and required equipment is available within a reasonable time



Post-drilling evaluation of each Well



Part 2

Total estimated cost



Eighty four million U.S. Dollars (US$ 84,000,000) (excluding G&A, training and

land renlals)



1-3



Afghan-Tajik Basin Phase 1 Tender



EXHIBITJ

ARTICLE X CALCULATION EXAMPLE



1-1



Afghan Tajik Exploration & Developmen t

Example of R·Factor Cjllculjltion

(US$ '000 Except Oil & Gas Volumes)

Revenue



~



Period 1



Period 2



Period 3



80.00



80.00



80.00



o



o



o

o

o



o

o

o



5.00



5.00



5.00



o

o

o



o



o



o

o



o



o



80.00



80,00



80.00



o

o

o



o

o

o



o

o

o



o

o



o

o



o

o



0.00



0.00



0.00



5,000

5,000



25,000

30,000



35,000

65,000



"I.



"I.



"I.



o



o



o



o



o



o

5,000

5,000



5,000

25,000

30,000



o

o

5,000



30,000



65,000



o



o



o



Period 4



Period S



Period 6



Period 7



Period 8



Period 9



Period 10



Total



QJl

6

7



,

8



10

11

12

13

14

15

16

17

18

19

20

21



Actujll Sale Price (Sbl)

Totjll Oil Sold (Sb!)

Cumulative Oil Sold (Bb!)

Total Actual Revenue for Oil

Associated Gas lAG)

Act ual Sale Price for AG (MCF)

Total AG Sold (MCF)

Cumulative AG Sold (MCF)

Total Actual Revenue for AG

Condensates from Associjlted Gas

Act ual Sale Price fo r Condensates (Sbl)

Total Cond e nSjltes Sold (abl)

Cumulative Condensate Sold (Bbl)

Total Actual Revenue for Condensates



o



80,00

2,000,000

2,000,000

160,000



80,00

4,000,000

6,000,000

320,000



80.00

5,000,000

11,000,000

400,000



80.00

6,000,000

17,000,000

480,000



80.00

7,000,000

24,000,000

560,000



80.00

7,000,000

31,000,000

560,000



80.00

7,000,000

38,000,000

560,000



500

1,515,160

1.515,160

7,576



5.00

3,030,320

4,545,480

15,152



5.00

3,787,900

8,333,380

18,940



5.00

4,545,480

12,878,860

22,127



5.00

5,303,060

18,181,920

26,515



5.00

5,303,060

23,484,980

26,515



5.00

5,303,050

28,788,040

26,515



80,00

57,600

57,600

4,608



80.00

115,200

172,800

9,216



80,00

144,000

316,800

11,520



80.00

172,800

489,600

13,824



80.00

201,600

691,200

16,128



80.00

201,600

892,800

16,128



80.00

201,600

1,094,400

16,128



172,184

172,184

86.09



344,368

516,551

86.09



430,460

947,011

86.09



516,551

1,463,562

86.09



602,643

2,066,206

86.09



602,643

2,668,849

86.09



602,643

3,271,492

86.09



3,271,492



160,000

225,000

112.50



200,000

425,000

70.83



200,000

625,000



200,000

1,025,000

42.71



150,000

1,175,000

37.90



75,000

1,250,000

32.89



1,250,000



S6 .82



200,000

825,000

48.53



o



252,000

1,748,000



504,000

3,496,000



630,000

4,370,000



756,000

5,244,000



882,000

6,118,000



882,000

6,118,000



882,000

6,118,000



4,788,000

33,212,000



30,000

35,000

65,000



65,000

160,000

225,000



o



o



o



o



o



o



o



o



o



1,748,000

150,489

74,511

150,489



74,511

200,000

274,511

3,188,585

274,511



200,000

200,000

2,323,099

200,000



200,000

200,000

2,323,099

200,000



200,000

200,000

2,323,099

200,000



150,000

150,000

1,742,324

150,000



75,000

75,000

871,162

75,000



38,000,000

3,040,000



28,788,040

143,940



1,094,400

87,552



22



23

24

25



Oil AG and Condensates Combined

Totjll Actual Revenue

Cumulative Actual Revenue

Effecti ve Actual Price on Physicjll Sales / Bbl of Oi l Sold



26

27

28 All Recove ra ble Cjloex & Expenses

29

Total Capex, 5G&A & Opex

30

Cumulative Ca pe ~ , SG&A & Opex

Effe ctive Cumulative Cost/Sbl of Oil Sold

31



32

33 Production Shjlring

34

Royalty Oil to GolRA at 12 .6% (8bl)

35

Oil Rema ining for E~p & Profit Share



36

37

38



3'

40

41



42



43

44

45



46

47



48

49



50

51

52



Cost Recovery Hyd rocarbons

Unrecovered Exp From Previous Peri od

Recoverable Exp This Period

Total Recoverable Exp Due to Operator - S

Remaining Hydrocarbons Allocated to Exp (Bbl)

Va lue of Hyd rocarbons Allocated to Exp

Unrecove red Exp Carrie d Forward

Cumulative Recoverable Ex p Paid to Operator

Ne t Hydrocarbons IB bll

R Formula Calculation

Net Hyd rocarbons to Co ntractor (%)

Ne t Hyd rocarbons to Co nt ractor (Bbl)

NH to Contractor - Value

Gross Contractor Revenue (GCR)

Cumula tive GCR



14,519,368

1,250,000



o



o



o



o



o



o



425,000



625,000



825,000



1,025,000



1,175,000



1,250,000



307,415

0.669

100.0%

307,415

26,466

300,977

451,466



2,046,901

1.062

50.0%

1,023,451

88,111

288,111

739,577



2,920,901

1.183

50.0%

1,460,451

125,733

325,733

1,065,310



3,794,901

1.291

49.7%

1,884,917

162,276

362,276

1,427,586



4,375,676

1.393

48.9%

2,137,862

184,053

334,053

1,761,638



5,246,838

1.499

48.0%

2,5 18,790

216,847

291,847

2,053,486



18,692,632



1,023,451

1,653,451

142,349

207,434



1,460,451

2,216,451

190,818

398,253



1,909,984

2,791,984

240,367

638,620



2,237,814

3,119,814

268,591

907,21 1



2,728,048

3,610,048

310,796

1,218,006



9,359,747

14,147,747

1,218,006



o



o



o



o



0.000

100.0%



0.000

100,0%



0.000

100.0%



0.000

100.0%



o

o

o

o



o

o

o

o



o

o

o

o



o

o



o

o

o

o



o

o

o

o



o



o



o



o

o

o



252,000

21,695

21,695



504,000

43,390

65,085



150,489

150,489



1,250,000



9,332,885

803,486

2,053,486



53



"



55

56

57



Net Hydrocarbons to GolRA (Bbl)

Total Hyd roca rbons to GolRA w/ Royalty (Sbl)

Total S Paid to GolRA for Royalty & Profit Oil

Cumu lative Paid to GolRA for Royalty & Profit Oil



Afghan Tajik Exp loration & Development

Example of R-Factor Calcu lation



.B.2..w



(US$ '000 Except Oil & Gas Volumes)



Notes



Revenue



Qi!

6

7

8



9

10

11



Actual Sale Price (SOl)



Assumption. For demonstration purposes only.



Total Oil Sold (Bbl)



Assumption. For demonstration purposes only.



Cumulative Oil Sold (Bbl)

Total Actual Revenue for Oil



Formula: Row16 - Row7/1000



Associated Gas lAG)

Actual ::tale Price for AG (MCF)



12

13



Total AG Sold (MCF)



14



Cumulative AG Sold (MCF)



15

16

17



Total Actual Revenue for AG



Assumption. For demonstration purposes only.

Assumption of 0.75758 mcf of Associated Gas for each barrel of oil

Formula: Row12-Row13/1000



Condensa tes f rom Associated Gas



18

19



Actual Sale Price for Condensates (Bbl)



Assumption. For demonstration purposes only.



Total Condensates Sold (Sbl)



Ass umption of 0.0288 mcf of condensate for each barrel of oil



20



Cumulative Condensate Sold (Bbl)



21

22

23

24



Tota l Actual Revenue for Condensa t es



25



26

27



Formula: Row18 " Row19/1000



Oil AG and Condensates Combined

Total Actual Revenue



Formu la: Row9+Row15+Row21



Cumulative Actual Revenue

Effective Actu al Price on Physical Sales



I Bbl of Oil Sold



Exp ressed in terms of bbls of oil sold.



28 All Recoverable Capex & Expenses

29



Total Capex, SG&A & Opex



30



Cumulative Capex, SG&A & Opex



31

32



Effective Cumulative Cost/Sbl of Oi l Sold



Ass umption. For demonstration purposes only.

Expressed in terms of bbls of oil sold. Formula: Row30 -1000/Row8



33 Production Sharjng

34



Roya lty Oil to GolRA at 12.6% (Sbl)



Expressed in terms of bbls of oil, but GIRoA also receives proportional AG & condensates. Formula: Row7 "12.6%



35

36



Oil Remaining for Exp & Profit Sha re



Formula: Row7 -Row34



37



Cost Recovery Hydrocarbons

unrecovered Exp From Previous Period



Formula: [Previous Period]Row43



38

39

40

41

42

43

44

45



46

47



Recoverable Exp This Period



Formula: Row29



Total Recoverable Exp Due to Operator - $



Formula: Row38+Row39



Remaining Hydrocarbons Allocated t o Exp (Bbl)

Value of Hydrocarbons Allocated to Exp



Measured in oi l. Formula: =IF(Row35=O,0,IF(Row26=0,0,IF(Row3S>(Row40*1000/Row26),(Row40*1000/Row26],Row35)))

Includes va lue of oil & proportional AG & condensates. Formula: Row41-Row26/ 1000



Unrecove red Exp Carried Forward



Formula: Row40-Row42



Cumulative Recoverable Exp Paid to Operator



Formula: Row42+(Previous PeriodjRow44



Net Hydrocarbons lBbll



Formula: Row35-Row41



R Formula Calculation



Formula: [Previous Period)Row52/[Previous Period]M30. Note: Contract stipulates Previous "Period"" is Previous "Month".



48

49

50



Net Hydrocarbons to Contractor (%)



Formula: IF(Row47<1,1,IFjRow47<1.25,0.5,IFjRow47>2.5,0.4,j0.4+(j2.5-Row47)/j2.S-1.2S)) O(0.5-0.4)))))



51

52

53

54

55

56

57



Gross Contractor Revenue (GCR)



Net Hydrocarbons to Contractor (Bbl)

NH to Contractor - Value

Cumulative GCR

Net Hydrocarbons to GolRA (Bbl)



Measured in oi l - Contractor also receives proportional AG & condensates. Formula: Row48 * Row46

Includes value of oil & proportional AG & condensates. Form ul a: Row49*Row26/1000

Includes value of oil & proportional AG & condensates. Formula: Row42+Row49*Row26/1000

Formula: Row51+(Previous PeriodjRow52

Measured in oi l - GIRoA also recei ves proportional AG & con densates. Formula: Row46-Row49



Total Hydrocarbons to GolRA wI Royalty (Bb l)



Measured in oil - GIRoA also recei ves proportional AG & condensates. Formula: RowS4+Row34



Total $ Paid to GolRA for Royalty & Profit Oi l



Includes value of oil & proportiona l AG & condensates. Formula: RowS5*Row26/1000



Cumulative Paid to GolRA fo r Royalty & Profit Oil



Formu la: Row56+[Previous Period]Row57



Afghan-Tajik Basin Phase I Tender



EXHIBITK

FORM OF HYDROCARBONS LICENSE



K- I



A fghan-Tajik Basin Phase I Tender



311dllmic l\epubhc of ~f !1bllnista:n

;fINinistrp of ;fINines

QJ;xploration JLicense

Issued to



Persuant to contract _ _ _

For _ __

Basin of northern Afghan istan



IValid From _ __ _ __ To _ __ _ __



Ministry of Min es



Oate:_ _ __



K-2



Afghan-Tajik Basin Phase I Tender



,,~~L ~LL ~)';d\ " ?<.

~~b 4)~



A:$l::..,L. L.; ","~.1 ~$'''AY



.It.)}'~!



_,----_ _ ~I-----J;IJ~! es,Jb



K-3



Afghan-Tajik Basin Phase I Tender



EXHIBITL

FORM OF PERMIT FOR DEVELOPMENT AND

PRODUCTION OPERATIONS



L- I



Afghan-Tajik Basin Phase I Tender



3Jslamic i\epublic of ~fgbanistan

~inistr!, of ~ines

J ermit for ilBebelopment anbJrobudion ®peration

I



Issued to



Persuant to contract _

For _ _ _



I



_



Basin of northern Afghanistan



I



Valid From _ __ _ _ To _ __ _ _



Ministry of Mines



Oate: _ _ __



L-2



Afghan-Tajik Basin Phase I Tender



~~J~I



tl - - -- jl J ~I'

t;

- ---'1

. eo



L-3



MEMORANDUM OF UNDERSTANDING

between



THE MINISTRY OF MINES & PETROLEUM

OFTHE

GOVERNMENT OF THE ISLAMIC REPUBLIC OF AFGHANISTAN,

DRAGON OIL (SANDUQLI) LIMITED,

TP AFGHANISTAN LIMITED,

and



GHAZANFAR INVESTMENT LTD.

for



CUSTOMS DUTY EXEMPTION FOR ITEMS USED EXCLUSIVELY FOR

HYDROCARBONS OPERA nONS



1. Parties. This Memorandum of Understanding ("MOU") is entered into on this 8th day of

October 2013 between the Ministry of Mines & Petroleum of the Government of the Islamic

Republic of Afghanistan (the "MoMP"), acting on behalf of the Government of the Islamic

Republic of Afghanistan (the "Government"), Dragon Oil (Sanduqli) Limited ("Dragon Oil"),

TP Afghanistan Limited ("TPAL"), and Ghazanfar Investment Ltd. ("Ghazanfar"). Each of the

MoMP, Dragon Oil, TPAL and Ghazanfar may be referred to as a " Party," and collectively they

may be referred to as the " Parties." Each of Dragon Oil, TPAL and Ghazanfar may be referred

to as a "Contractor Entity" and collectively as the "Contractor".

2. Background and Scope. On behalf of the Government, the MoMP has entered into an

Exploration and Production Sharing Contract, dated October 8, 2013, with the Contractor for

hydrocarbons exploration, development and production in the Sanduqli Block of the AfghanTajik Basin of Afghanistan (the "EPSC"). Pursuant to Section 17.I(a) of the EPSC, the Parties

have agreed that for the duration of the EPSC, each of the Contractor Entities shall be entitled to

import into Afghanistan (including by its subcontractors asjoint consignees) free of Customs

Duties the equipment and supplies designated by the Parties as required to be imported for

Hydrocarbons Operations and shall be entitled to export the same (provided that no transfer of

ownership of such equipment or supplies has occurred after the date of their import into

Afghanistan) free of Customs Duties pursuant to the terms and conditions of this MOU, as it may

be amended from time to time. Capitalized terms used but not defined herein have the meanings

provided in the EPSC.

3. Import of Equipment and Supplies. To import equipment and supplies into Afghanistan

free of Customs Duties, a Contractor Entity, either on behalf of itself or its subcontractor as joint

consignee, shall submit to the MoMP an appl ication for exemption from Customs Duties that:



a. Categorizes the items under one or more of the imported items within the categories

stipulated in "Appendix I to the MOU for Customs Duty Exemption for Items Used

Exclusively for Hydrocarbon Operations" attached hereto;

b. Identifies the number and value of each item to be imported (on the basis of delivery

FOB and CIF, as such terms are defined in Incoterms 2010);

c. Identi fies the applicable I Iarmonized Commodity Description and Coding System ("H .S.

Code") heading of each item to be imported and the tariff rate applicable to such heading

under the Customs Tariff (20 12) of Afghanistan, as the same may be amended from time

to time;



d. Certifies that the items to be imported are required for Hydrocarbons Operations within

the contract area and will be exclusively devoted to that purpose;

c. Certifies that items similar in quality and quantity to the items to be imported are not

produced or available in Afghanistan at prices that are no more than 15% higher than the

prices of the items to be imported , after transportation and insurance costs have been

added; and



f.



Complies with such other formalities as may be required by the Customs Law of

Afghanistan as instructed by the MoMP.



A Contractor Entity shall submit such application for review and approval at least forty-five (45)

days prior to the date the items are to arrive in Afghanistan or at a time requested by the

Contractor and accepted by the MoMP.



4. Export of Equipment and Supplies. To export from Afghanistan free from Customs Duties

equipment and supplies previously imported into Afghanistan for use in Hydrocarbons

Operations, a Contractor Entity, either on behalf of itself or its subcontractor as joint consignee,

shall submit to the MoMP an application for exemption from Customs Duties that:

a. Identifies the number and value of each item to be exported (on the basis of delivery FOB

and CI F, as such terms are defined in Incoterms 20 I OJ;

b. Identifies the applicable H.S. Code heading of each item to be exported and the tariff rate

applicable to such heading under the Customs Taritf(2012} of Afghanistan, as the same

may be amended from time to time;

c. Certities that the items to be exported were previously imported free from Customs

Duties, were used in Hydrocarbons Operations, and that no transfer of ownership of such

items has occurred after the date of their import into Afghanistan; and

d. Complies with such other formalities as may be required by the Customs Law of

Afghanistan as instructed by the MoMP.

A Contractor Entity shall submit such application for review and approval at least forty-five (45)

days prior to the date the items are to be exported from Afghanistan or at a time requested by the

Contractor and accepted by the MoMP.



2



5. MoMP Review and Approval; Objections. Following consultation with the Afghanistan

Customs Department ("A CD"), the MoMP shall endeavor to respond to any application

submitted by a Contractor Entity pursuant to Paragraphs 3 or 4 of this MOU as soon as

reasonably practicable, but in any event within thirty (30) days or at a time requested by the

Contractor and accepted by the MoMP following the MoMP's receipt of such application. If the

MoMP, the ACD or any other Government ministry or instrumentality determines that any

equipment or supplies identified in an application submitted pursuant to Paragraphs 3 or 4 of this

MOU are not entitled to an exemption from Customs Duties, the MoMP shall inform the

Contractor Entity that submitted the application of the relevant objection(s) and the reason(s)

therefore. Within fifteen (10) days following the Contractor Entity's receipt of the MoMP's

response, the Contractor Entity and the MoMP shall meet to agree upon any required revisions to

the relevant application .

6. Joint and Several Liability. The Contractor is jointly and severally liable with its

subcontractors for any infraction in the use of the Customs Duties exemptions and preferences

set out in this MOU. Without prejudice to Section 1.9(g) of the Accounting Procedures to the

EPSC, any fines, penalties and payments of any nature incurred by the Contractor or its

subcontractors in violation of the Customs Law of Afghanistan or any formalities required by the

ACD shall not constitute a Hydrocarbons Operations Expenditure under the EPSC.

7. Term. This MOU is effective upon signature by the Parties and terminates upon termination

of the EPSC.

8. General Terms and Conditions.

a. Binding Effect. The provisions of this MOU shall create a binding legal obligation on the

Parties.

b. Dispute Resolution. Any dispute, controversy or claim arising out of or relating to this

MOU that is not resolved by mutual agreement within forty-five (45) days from the date

on which the existence of a dispute is notified in writing by a Party to another Party or

Parties shall be settled in accordance with Article XXIV of the EPSC. Under no

circumstances may the costs incurred in the course of any dispute resolution proceeding

commenced under this MOU be included in Hydrocarbons Operations Expenditures

under the EPSC.

c. Notices. Any notice or other communication required or permitted to be given under this

MOU shall be communicated in writing on the official letterhead of the communicating

Party, shall be signed by an authorized representative of such Party, and shall be deemed

to have been sufficiently given or made upon delivery.

d. No Waiver. The failure of any Party to seek redress for violation, or to insist on strict

performance, of any provision of this MOU will not prevent a subsequent act that would

have constituted a violation from having the effect of an original violation.

e. Separability. If a provision of this MOU should be held illegal, void, or unenforceable by

any court or administrative body having proper jurisdiction, such determination shall not

affect the remaining provisions of this MOU, which shall remain in full force and effect

as if such illegal, void, or unenforceable provision had not been included.



3



f.



Assignment and Succession. This MOU shall be binding and shall inure to the benefit of

the Parties and their respective assigns, executors, administrators, and successors in

interest.



g. Choice of Law. This MOU shall be governed by, construed under and interpreted in

accordance with the internal laws of Afghanistan, as such laws may be amended from

time to time and without regard to conflicts of law princ iples.

h. Costs. Each Party shall bear and pay its own legal costs and expenses incurred in the

preparation and review of th is MOU.

I.



Sole Benefit. This MOU is for the sole benefit of the Parties and their successors and

assigns . No other person shall be entitled to enforce this MOU, rely on any

representation, warranty, covenant, or other agreement contained herein, receive any

rights hereunder, or be a third-party beneficiary of this MOU . No Party shall have any

direct liability or obligation to any third party for any election or non-election or any act

or failure to act or in regard to any term of this MOU. Nothing in this MOU shall be

construed to create any duty, standard of care, or liability to any person not a Party to this

MOU .



(Signature pagefollows)



4



AGREED AND ACCEPTED:

MINISTRY OF MINES & PETROLEUM

OF THE ISLAMIC REPUBLIC OF AFGHANISTAN

c,



~.A_ ;£



c~f)



By: Abdul Jalil Jumriany

Title: Director General, Afghanistan Petroleum Authority

Date :

DRAGON OIL hSANDUQLI) LIMITED



I!L.~ ~

By: Mark W. Sawyer

Title: Manager, New Ventures and Business Development

Date:



TP AFGHANISTAN LIMITED



By:

Title:

Date:



GHAZANFAR INVESTMENT LTD .



~\~



.



B .

azanfar

Title: Chief Executive Officer

Date:



5



ADDENDUM 1

to the

MOU FOR CUSTOMS DUTY EXEMPTION

FOR ITEMS USED EXCLUSIVELY FOR

HYDROCARBONS OPERATIONS

1.)



Heavy Equipment:

a. Graders

b. Dozers

c. Dump trucks

d. Backhoes

e. Trenchers

f. Loaders

g. Rock crushcrs

h. Screen shakers for gravel sorting

I.

Hydraulic jackhammers (hand held and mounted on backhoes)

J. Portable rock drills and associated explosive material for blasting rock

k. Culverts for roads

I. Road rails

m. Asphalt plants

n. Asphalt trucks

o. Paving equipment

p. Spare parts for all of the above



2.)



Cranes (all sizes)



3.)



Transportation Vehicles:

a. Trucks

b. Cars

c. Vans



4.)



Support Equipment

a. Diesel tanks

b. Fuel stations

c. Service equipment (hydraul ic jacks, oil incinerators, maintenance tools)



5.)



Storage Depots

a. Explosive bunkers (for dynamite used in seismic and for perforating charges)

b. Radioactive source pits (lead lined bunker which would be cemented into the ground

with which to gain access and secure lead cover)

c. Fucl storage tanks



A-I



d. Oil storage tanks

e. Ventilation

6.)



Pipeline Requirements

a. Pipe, all sizes from 4" to 36"

b. Wrapping for pipe

c. Cathodic protection for pipe

d. Sand bags for pipe

e. Flanges and bolts

f. Welding equipment (gas and electric)

g. Welding rods

h. Generators

I.

Welding safety equipment (eye protection, breathing apparatus, gloves, aprons, etc.)

J. Survey equipment

k. Pressure gauges

I. Painting equipment and paint



7.)



Life Support

a. Portable office containers

b. Portable living containers and associatcd furnishings

c. Refrigeration units for cold storage

d. Generators

e. Portable kitchen units containers w/ associated kitchen accessories

f. Portablc light plants

g. Air conditioners

h. Heaters

I.

Cables/wiring

J. Electrical infrastructure equipment for networking a closed grid



8.)



Office Equipmeut

a. Computers

b. Printers (all sizes)

c. Office supplies (paper, pens, staplers, etc.)

d. Scanners

c. Furnishings (desks, chairs, etc.)

f. VTC (video teleconferencing)

g. Projectors

h. Whitcboards and markers

I.

Teleconferencing equipment

J. Plotters

k. Cables/wiring



A -2



9.)



Drilling Equipment

a. Drill rigs (all sizes and depth requirements)

b. Drill pipe

c. Casing

d. Tubing (all sizes and weights)

e. Bits

f. Drill components (travelling block. drill line. weight indicators, slips, blocks, blowout

preventers, tongs, etc.)

g. Mud pumps

h. Mud storage tanks/pits

I.

Piping (2" to 6")

J. Tools (sledgc hammers, wrenches, etc.)

k. Spare parts



10.) Security Equipment

a. Video monitoring

b. Infrared detectors

c. Metal detectors (walkways, wands, etc.)

d. Hescos

e. Fencing matcrial

f. Entry control (barricades, road blocks, ctc.)

g. Binoculars

h. Alarm system/warning sirens

I.

Spotlights

J. Cables/wiring



11.) Safety Equipment

a. Safety glasses

b. Coveralls (preferably Nomex)

c. Gloves

d. Boots (steel toed)

e. Hearing protection

r. Communication equipment (radios, walkie-talkies, headsets)

g. First aid (containers, kits, equipment, medicines, bandages, etc.)

h. Ambulances

I.

Firetighting equipment

J. Signage

k. I 12S detectors

I. SCBAs (Self Contained Breathing Apparatus)



A-3



m. Dusk masks/fil ters

n. Eyewash stations

o. Cold wcathcr gear

12.) Chemicals

a. Cement

b. Hydrochloric acid

c. Hydroflouric acid

d. Barite

e. Bentonite

f. Surfactants

g. Polymers

h. Anti-foam agents

I.

Dispersants

.I. Emulsifiers

k. Dc-emulsifiers

I. Lost circulation material

m. Hematite

n. Ilmenite

o. Extenders

p. Fluid loss additives

13.) Laboratory Equipment

a. Viscometers

b. Beakers

c. Microscopes

d. Consistometers

e. Compressive strength testers

f. Test tubes

g. Blenders

h. Sample containers

I.

Associated lab equipment

14.) Well Services

a. Wireline logging equipment

b. Wireline logging tools

c. Radioactive sources

d. Pressure pump trucks

e . Pneumatic silos (truck and mobile units)

f. I-loses

g. High pressure pipes



A-4



h. Blenders

I.

Cementing equipment

J. Slickline equipment

k. Well-testing equipment (separators, nares, manifolds, valves, etc. and their

components)

I. Chart recorders

m . Pressure recorders

n. Spares for all of the above

15.) Seismic Equipment

a. Vibrators

b. Dynamite

c. Recording equipment

d. Cables

e. Computers

f. Batteries

g. Geophones

h. Junction Boxes



16.) Gravity/Magnetic Surveys

a. Aerial borne vehicles

b. Gravimeter

c. Magnetometer

d. Differential GPS

e. Geophysical measuring equipment

f. Spares



A-5



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yy\S".)



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.).)\.0..



Islamic Republic of Afghanistan

Ministry of Mines & Petroleum



October 6, 2013

Mr. 'vlarh.

:,\1anager -



Si::m~er

~e\\



V entu res



Dragon Oil (Internati onal) Ltd.

C 0 Dragon Oil (Holding' ) Ltd.



P.O. So, 34666

Duba i

United Arah Emirates

Mr . .\1 ura l Karci

Di rector

nirki~e Petrol leri Ano nil11 Ortakllgl (TPAO)

Sogutozu Mahallesi :: 180

Caddo No. 8606 100



(ankaya/Ankara

Tiirki~1.!



Mr. Ismail Ghazanfar

Ghazanlar Investmen t Ltd.

Kart-e-Pa rwan



Kab ul



Afghanistan

Subject: ,\Jemortlluilim (~f UlldentlllUlillg flIT CWifoms

-"" OU") jf/r Smu/lIqli alld Mazar-i-S"ariJ EPSC,



DlI~r



Exemptio/l



("Cu.~tonl.\·



Duty



Dear Consortium:

Reference is made to the subject Memorandum of Lnderstandi ng. which defines the prol:es~ for

the C ontractor and its subcontractors to document and legall~ import into Afghanistan equipm ent



and supplies. excmpt from Customs Out:. for exclusivc usc in Hydrocarbons Operation::,. -;aid

right established in Article 17 of the EPSCs for both the Sanduqli and Mazar-i-Sharifblocks.



As the Cuntractor and the MinisH; of Mines & Petroleum (the "Part i es~') \\ish to proceed \\ ith the

sign ing of the EPSCs for horh the Sanduqli and Mazar-i-Sharifhlocks. (he Panics agree that the:

shall also sig.n the Custums DUl~ MOL.



The Min istry of Mines & Petrolcum acknowledges that the Contractor believes add itional

discussion between the Parties. and with representatives of the Ministry of Financ e, will lead to

greater clarity and efficiencies in rhe customs dutie!:i exemption process and hence to smoother



Hydrocarbons Operations.

The Min istry of '-'lines & Petroleum agrees to faci litate funher discussions between the Panies

and the Min istry of Finance to identify and mutually agree in good faith on amendments to the

Customs Duty MOU to result in an amended vers ion of that document in a timely fash ion ,

consistent with the applicable customs laws and regulations of Afghanistan and the requirements



of the EPSCs.

We appreciate the Consortium"s commitment to Afghanistan and look forward to a su(.;cessful



signing ceremony fo r the EPSCs .



Jali l Jumriany

Director Genera!

Ministry of Mines & Petroleum



\,:....u~



..,.~ I



I~









1oS)~



~)):; ) 0~w ':")Ij)



':")1)) ~)):; )1 ii\S"~



Islamic Republic of Afghanistan

Ministry of Mines & Petroleum

~.l,.l.;



')\,\ ....,... c:.....4)



October 8, 2013

Mr. Mark Sawyer

Manager - New Ventures

Dragon Oil (International) Ltd.

c/o Dragon Oi l (Holdings) Ltd.

P.O. Box 34666

Dubai

United Arab Emirates



Mr. Tayfull Yener Unlllell

Director

T iirkiye Petrol leri Anonim Ortakllgl (TPAO)

Sogiit6zii Mahallesi 2180

Cadde No. 86 06100

<;:ankaya/ Ankara

Tiirkiyc

Mr. Ismacl Ghazanfar

Ghazanfar Investment Ltd.

Kart-e-Parwan

Kabul

Afghanistan



Subject: Final Exploration a/lll Production Sharing Contracts ("EPSC,") for the Malar-iSharif and SlI/uluqli Blocks

Dear Consortium:

Reference is made to the EPSCs for the Mazar-i-Sharif and Sanduql i Blocks initialed on Ju ly \5 ,

20 130n behalf of the Ministry of Mines & Petroleum and the ConsOitium (the " Initialed EPSCs").

The Ministry notes that the final execution copies of the EPSCs it provided to the Consortium on

October 5, 2013 included various ministerial changes to the Initialed EPSCs required to prepare

the documents fcr signature at the signing ceremony to be held today, October 8, 2013.

In recognition of the limited time available to the Consortium to revicw and approve these

ministerial changes, the Ministry agrees to provide the Consortium until October 22, 2013 to

review the final EPSCs and notifY the Ministry regard ing any material changes from the In itia led

EPSCs that may be contained therein . Upon receiving such notification, the M inistry and the



Consortium will endeavor to agree on such material changes to the fina l EPSCs as may be

requi rcd to bring the final EPSCs into conformity w ith the Ini tialed EPSCs.

S incerely,



Abdul jalil Jumriany

Director General

Afghanistan Petroleum Authority

Ministry of Mines & Petroleum

Government of the Islam ic Rep ubl ic of Afghanistan



AGREED AND ACCEPTED :



/Il~ ~



Ma rk W. Sawyer

Manager, New Vent ures and

13usiness Development

Dragon Oil (Mazar-i-Sharif) Limited and

Dragon Oil (S.anduq li) Limited



TP Afghanistan



Li ~ed



~

Is~



Chief , ecutive Officer

Ghazanfar Investmen t Ltd.



.• ,J': ..j» t..yJg~~



GHAZANFAR GROUP llC



OctoDcr 3. 201J

DeaT Ministry:

Subject: Procurement Manua.l for Silndllqli and M:u:.ar-i-Sharif EPSCs

Reference is made to the subjecl Agreements which wjJJ be signed together 'Io.ith the F:PSCs. The

Consortium rl1cmbcr3 eXJX.'C1 10 le::tm a great deal about me procurement process during the finlt year of

operatillDS as they impleme1\t the Procurement Manual and may ick:ntiry improvements 10 the process,

Accordingly, where improvements are iden1ifled by lIle Consortium, it will make suirabJe

recommendations to the Minish,,}'. 1be Consortium and the Ministry will use their reasonable effoc1s and

act in good faith to incorpol"8lC agreed improvements into the Procurement Manual in a timely fashion.



Respectfully YO"""



"'roileri A. O.



Agreet.llhis _



_ day o f Oc:(obcr, 20 1):



~g



c~



Mi nislcrof Mices and Petroleum