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 SECOND AMENDING AGREEMENT





between


ALBPETROL SH.A





- and -


BANKERS PETROLEUM ALBANIA LTD.











In relation to the





PETROLEUM AGREEMENT


dated June 19, 2004


for the Development and Production of Petroleum in


Patos-Marinza Field


ALBANIA


 SECOND AMENDING AGREEMENT


TO THE PETROLEUM AGREEMENT








This Second Amending Agreement (hereinafter referred to as the "Second Amending Agreement") is


made and signed this 2 day of September, 2014 by and between Albpetrol Sh. A. (hereinafter referred


to as "Albpetrol") and Bankers Petroleum Albania Ltd. (hereinafter referred to as "Contractor").


Albpetrol and Contractor hereinafter referred to as "Parties".


WHEREAS a Petroleum Agreement dated 19 June 2004 (hereinafter referred to as the "Original


Petroleum Agreement") was entered into by and between Albpetrol and Saxon International Energy


Ltd. (now Bankers Petroleum Albania Ltd.) and approved by the Council of Ministers of the Republic of


Albania through Decision No. 477 on 16 July 2004;


WHEREAS the Original Petroleum Agreement relates to the License Agreement (the "Original License


Agreement") for the Development and Production of Petroleum in the Patos-Marinza Oilfield dated


June 7, 2004 between the Ministry of Industry and Energy (now the Ministry of Energy and Industry)


as represented by the National Petroleum Agency (now the National Agency of Natural Resources,


and hereinafter referred to as "AKBN") and Albpetrol;


WHEREAS Contractor became a party to the Original License Agreement by an Instrument of


Transfer dated 19 June 2004 which was entered into by and among the Ministry of Industry and


Energy, as represented by AKBN, Albpetrol and Contractor;


WHEREAS certain provisions of the Original Petroleum Agreement were amended by an Amending


Agreement (hereinafter referred to as the "First Amending Agreement") dated 8 December 2008 which


was entered into by and between Albpetrol and Contractor and approved by the Council of Ministers


of the Republic of Albania through Decision No. 251 on 12 March 2009;


WHEREAS the Original Petroleum Agreement as amended by the First Amending Agreement is


hereinafter referred to as the "Petroleum Agreement");


WHEREAS certain provisions of the Original License Agreement were amended by a License


Complementary Agreement (hereinafter referred to as the "First LCA") dated December 08, 2008


which was entered into by and among the Ministry of Economy, Trade and Energy, as represented by


AKBN, Albpetrol and Contractor;


WHEREAS the Original License Agreement as amended by the First LCA is hereinafter referred to as


the "License Agreement"):


WHEREAS the Albanian Parliament has passed the following laws: (1) Law No. 10458, dated 21 July


2011 “On amendments and additions to Law no. 9975 dated 28 July 2008 "On National Taxes" as


amended", Official Gazette No. 107 published on 9 August 2011; (2) Law no. 178/2013, dated 28


December 2013, “On amendments and additions to Law No. 9975 dated 28 July 2008 "On National


Taxes", Official Gazette No. 203 published on 30 December 2013; and (3) Law no. 180/2013, dated


28 December 2013, “On amendments and additions to Law no. 61/2012 “On Excise Tax in the


Republic of Albania”, Official Gazette No. 203 published on 30 December 2013 (collectively the "ECC


Tax Change Laws").





WHEREAS Contractor has the exclusive right to carry out Petroleum Operations and produce


Petroleum in the Project Area described in the Petroleum Agreement and the License Agreement;





WHEREAS the Parties acknowledge that the implementation of the ECC Tax Change Laws requires


the amendment of the Petroleum Agreement in accordance with Article 18.3 of the Petroleum


Agreement, in order to maintain the economic benefits accruing to Contractor from the Petroleum


Agreement, in accordance with Article 5, Clause 3(d) of the Hydrocarbon Law


28.07.1993-;











2


NOW THEREFORE, the Parties hereto agree to amend certain provisions of Article 1, Article 9, Article


13, Article 14, and Articles 2 and 4 (of Annex B) of the Petroleum Agreement.


ARTICLE I


SCOPE


1.1 The scope of this Second Amending Agreement, is to eliminate the negative economic effect


caused to Contractor due to the ECC Tax Change Laws.


ARTICLE II


DEFINITIONS AND INTERPRETATION


2.1 The terms and definitions used in this Second Amending Agreement shall have the same


meaning as specified in the Petroleum Agreement, and Article 1 of the Petroleum Agreement shall be


amended to include the following additions and changes:


"Carbon Tax" means the carbon tax imposed by the National Tax


Law.


"Circulation Tax" means the circulation tax imposed by the National


Tax Law.


"ECC Share" has the meaning given in Article 9.2.


"ECC Tax Change Adjustments" has the meaning given in Article


13.5.


"ECC Tax Change Laws" means: (1) Law No. 10458, dated 21 July


2011 "On amendments and additions to Law No. 9975 dated 28 July


2008, "On National Taxes", Official Gazette No. 107 published on 9


August 2011; (2) Law no. 178/2013, dated 28 December 2013, "On


amendments and additions to National Tax Law", Official Gazette No.


203 published on 30 December 2013; and (3) Law no. 180/2013,


dated 28 December 2013, “On amendments and additions to Excise


Law", Official Gazette No. 203 published on 30 December 2013.


"Excise Law" means Law no. 61/2012, as amended, including the


amendment by Law no. 180/2013, dated 28.12.2013.


"Excise Tax" means excise tax prescribed by the Excise Law.


"National Tax Law" means Law no. 9975 dated 28.07.2008, as


amended, including the amendment by Law No. 10458, dated


21.07.2011 and Law no. 178/2013, dated 28.12.2013.





2.2 This Second Amending Agreement, together with Petroleum Agreement, describes the terms


and conditions regulating the Petroleum Operations in the Contract Area or in any portion


thereof retained under the Petroleum Agreement, and the rights and obligations provided for


hereunder and in the Petroleum Agreement.


2.3 It is hereby recognized and agreed that the rights and obligations of the Parties in respect to


Petroleum shall be governed by the provisions of the Petroleum Agreement as amended by


this Second Amending Agreement.


2.4 All the provisions of the Petroleum Agreement as amended by this Second Amending


Agreement are hereby ratified and confirmed, and shall remain in full force and effect, it being


understood that, in the event of any conflict with the Petroleum Agreement, the provisions


this Secqfid Amending Agreement shall supersede those of the Petroleum Agreement


2.5 The reference to the Articles and Sections of the Petroleum Agreement is made with respect


to the text of Original Petroleum Agreement dated June 19, 2004, as modified by the First


Amending Agreement.


ARTICLE III


ARTICLE 9 OF THE PETROLEUM AGREEMENT


3.1 The title of Article 9 of the Petroleum Agreement is deleted and replaced with the following:


Available Petroleum, Albpetrol Share, Royalty Tax, ECC Share, Cost Recovery


and Profit Petroleum


3.2 The first paragraph and table in Article 9.2 of Petroleum Agreement is changed as follows:





At the start of the first paragraph of Article 9.2 of the Petroleum Agreement, will be


added the phrase "From April 1st, 2008, until December 31st, 2013,".


The table after the first paragraph of Article 9.2 of the Petroleum Agreement, will


be labeled "TAB1 - Table of the allocation of available petroleum from April 1st,


2008, until December 31st, 2013".


Within the content of the table "TAB1 - Table of the allocation of available


petroleum from April 1st, 2008, until December 31st, 2013", in the column "Period",


in the second row of this column, the phrase "20 August 2008 - Termination of PA"


will be replaced with the phrase "20 August 2008 - 31 December 2013".


3.3 After the table "TAB1 - Table of the allocation of available petroleum from April 1st, 2008, until


December 31st, 2013" of Article 9.2 of the Petroleum Agreement, will be added the paragraph and


table as follows:


Available Petroleum shall be measured at the Measurement Point and allocated as





set forth in this Agreement. Available Petroleum shall be allocated between the


Government of Albania (the "Royalty Tax"), Albpetrol (the "Albpetrol Share"),


Contractor ("ECC Share" and "Cost Recovery Petroleum") as set forth in the


following table:





"TAB2 - Table of the allocation of available petroleum from January 1st, 2014, until


the day of Termination of the Petroleum Agreement"





Period R Factor Royalty Albpetrol ECC Cost Recovery


Tax Share Share Petroleum


1 January 2014


- Termination of the R< 1.0 10% 1% X 100%-(10%+ 1% + x)


Petroleum


Agreement 1.0 =







1.5=







R>=2.0 10% 5% X 100%-(10%+ 5%+*)


3.4 The following paragraph shall be added in Article 9.2 of Petroleum Agreement immediately


before the paragraph starting with "The R Factor is calculated as follows


The Excise Tax, Carbon Tax and Circulation Tax Share ("ECC Share")


Contractor shall be entitled to the ECC Share to recover the ECC Tax Change


Adjustments borne by it in connection with conducting Petroleum Operations.


The ECC Tax Change Adjustments shall be calculated in accordance with


Article 13.5.


Contractor shall recover all ECC Tax Change Adjustments under this


Petroleum Agreement out of one hundred percent (100%) of the Available


Petroleum after deducting the Royalty Tax and the Albpetrol Share.


An amount equal to the ECC Tax Change Adjustments shall be included in


the Petroleum Costs.


3.5 The paragraph starting with "The R Factor is calculated as follows:", in Article 9.2 of the


Petroleum Agreement, is changed as follows:





The paragraph "Ak means the sum of Contractor's Revenues minus profit


petroleum tax accrued in Calendar Quarter N and all preceding Calendar


Quarters following the Effective Date.", it is replaced with the following


paragraph:


"Ak means the sum of Contractor's Revenues minus profit petroleum tax


accrued in Calendar Quarter N and all preceding Calendar Quarters following


the Effective Date, adding the value of the ECC Share for all Calendar


Quarters."








ARTICLE IV


ARTICLE 13 OF THE PETROLEUM AGREEMENT


4.1 Article 13.2 of the Petroleum Agreement is amended by replacing "Article 13.1" with "Article





13.1, 13.5".


4.2 A new Article 13.5 is added after Article 13.4 of the Petroleum Agreement, which states as


follows:





13.5 ECC Tax Change Adjustments





Excise Tax





(a) Article 10, paragraph “3/dh" of the Excise Law provided


Excise Tax exemptions for imported petroleum products (for


its own use, from oil exploration entities and for exploiting oil


field areas, in such cases when fulfilled required specific


conditions, according to the law and agreements for this


scope), used in Petroleum Operations. The ECC Tax Change


Laws repealed such Excise Tax exemption, as of 1 April,


2014. As a result of such repeal:








5


 (i) the Contractor shall be required to pay Excise Tax


pursuant to the Excise Tax Law in cash to the


customs authority for imports of goods subject to


Excise Tax; in accordance with Albanian Law; and





(ii) an amount equal to the value of all Excise Tax paid


by Contractor after 1 April 2014 as set forth in point


(i) herein above for imported petroleum products


used in Petroleum Operations shall be: (A) allocated


to Contractor from Available Petroleum and (B)


included as a Petroleum Cost as part of the ECC


Tax Change Adjustments.





Carbon Tax and Circulation Tax


(b) The Carbon Tax and the Circulation Tax were introduced,





and amended, pursuant to the National Tax Law. As a result


of such tax changes:





(i) For any Carbon Tax that Contractor is found liable to


pay either to: (1) the customs authority for imports of


goods subject to Carbon Tax; or (2) local suppliers


for local purchase of goods subject to Carbon Tax,


pursuant to the National Tax Law, an amount equal


to the difference between the value of such Carbon


Tax paid by Contractor in connection with Petroleum


Operations with the amount of Carbon Tax that the


Contractor would have paid based on the rate of


Carbon Tax as of the Effective Date of the Petroleum


Agreement shall be: (A) allocated to Contractor from


Available Petroleum and (B) included as a Petroleum


Cost as part of the ECC Tax Change Adjustments..


(ii) For any Circulation Tax that Contractor is found


liable to pay either to: (1) the customs authority for


imports of goods subject to Circulation Tax; or (2)


local suppliers for local purchase of goods subject to


Circulation Tax pursuant to the National Tax Law, an


amount equal to the value of the Circulation Tax paid


by Contractor in connection with Petroleum


Operations shall be: (A) allocated to Contractor from


Available Petroleum and (B) included as a Petroleum


Cost as part of the ECC Tax Change Adjustments.





(iii) This paragraph (b), of Article 13.5, of the Petroleum Agreement,


will be applied only for those amounts of the Carbon Tax, and/or Circulation


Tax that Contractor has paid and/or will pay from the date January 1st, 2014


until the Termination of this Petroleum Agreement








4.3 A


follows:

















6


 a) Contractor hereby acknowledge and agree that, by entering into the Second


Amending Agreement it is eliminated every negative economic effect due to


the changes in the laws (ECC Tax Change Laws). For this reason, Contractor


hereby acknowledges and agrees that in no case, will not apply in the


respective state authorities for the reimbursement of such taxes (ECC Tax


Change Adjustments). The violation of this provision will be considered a


material breach of Contractor's fundamental duties and obligations under the


Petroleum Agreement.





b) Notwithstanding the provision of paragraph 13.6.(a) here above, if any


amount of taxes which has been included as part of the ECC Tax Change


Adjustments, is reimbursed and/or compensated in favor of the Contractor by


respective authorities, then the respective reimbursed and/or compensated


amount: (A) will be added in the amount of the Cost Recovery Petroleum; and


(B) will be deducted from the amount of the Petroleum Costs. Pursuant to this


paragraph, will be performed the recalculation of Factor R, and the


recalculation of the Profit Petroleum.











ARTICLE V


ARTICLE 14 OF THE PETROLEUM AGREEMENT


5.1 Article 14.1 of the Petroleum Agreement is amended by replacing the first word "The" with





"Except for the Taxes described in Article 13.5, the".








ARTICLE VI


ARTICLE 2 AND ARTICLE 4 OF ANNEX B OF THE PETROLEUM AGREEMENT





6.1 The first paragraph Article 2.10 of ANNEX B of the Petroleum Agreement is deleted and


replaced with the following:





All taxes, duties or levies, including the following:





(a) an amount equal to the portion of the Royalty Tax


paid in Cash to the Albanian Government by


Contractor as provided in Article 9.2 of the


Petroleum Agreement;


(b) an amount equal to the ECC Tax Change


Adjustments, as described in Article 9.2 of the


Petroleum Agreement,





but excluding:





(c) Tax on Profit covered by Article 13.1 of the


Petroleum Agreement, if any; and





the Albpetrol Share, as defined in Article 9.2 of the


Petroleum Agreement.




















7


6.2 A new paragraph is added to Article 2.10 of Annex B of the Petroleum Agreement, which new


paragraph is inserted immediately following the paragraph that starts with "For further clarification",


and which new paragraph states as follows:


For further clarification, an amount equal to 100% of the ECC Tax


Change Adjustments, as defined in Article 9.2 of the Petroleum


Agreement shall be included as a Petroleum Cost. The inclusion of


the ECC Tax Change Adjustments as a Petroleum Cost (in


combination with the subtraction of the ECC Share from the Available


Petroleum as provided in Article 9.2 of the Petroleum Agreement)


provides the mitigation of the negative impact to Contractor of the


implementation of the ECC Tax Change Laws, in compliance with the


scope of this Second Amending Agreement, as provided in Article 1.2


here above.


6.3 A new paragraph is added to Article 2.22 of Annex B of the Petroleum Agreement, which is


inserted immediately following point (e), it is added point (f), with the following content:


"(f) any amount of the taxes that are included as part of the ECC Tax


Change Adjustments as provided by this Second Amending


Agreement, reimbursed to Contractor as provided in Article 8.2, of


this Second Amending Agreement;"


6.4 A new paragraph is added to Article 4.2.2 of Annex B of the Petroleum Agreement, which is


inserted immediately following point (f), it is added point (g), with the following content:


"(g) the amount paid by Contractor for each of the taxes (The Excise


Tax, Carbon Tax and Circulation Tax Share) as part of the ECC Tax


Change Adjustments, and that are included as Petroleum Costs, for


the respective Calendar Quarter, and should be included the


invoices and/or documentation proof for the respective paid


amount;"


6.5 The sample calculation table in Article 2.10 of the Annex B of the Petroleum Agreement,


starting with the words "For Further clarification, an example of the treatment..." is deleted.





ARTICLE VII


COMMUNITY DEVELOPMENT ACTIVITIES





7.1 A new Article 27 is added to the Petroleum Agreement, which states as follows:


Article 27


Community Development Activities





27.1 In accordance with Article 8, Articles 2.1 and 2.20 of the Accounting Procedure and Article 7.2


of the License Agreement, Contractor shall include in an Annual Program and Budget a general


description and the estimated costs therefor, for community development activities which the


Contractor proposes to conduct in the relevant Fiscal Year as Petroleum Operations.





27.2 No later than forty-five (45) days before the beginning of every Calendar Quarter, Contractor


will prepare and submit to Albpetrol and the Ministry a statement detailing the community development


activities proposed to be carried out by Contractor during the succeeding Calendar Quarter, and the


budget therefor (the "Community Development Program") and Albpetrol and the Ministry will inform


Contractor o any amendments to be made to such proposal and the reasons therefor within thirty


days of its receipt. Proposed amendments may only be made to the extent that the proposed


Community Development Program: (a) exceeds the amount designated in the relevant approved


Budget for community development activities; (b) is inconsistent with the published community


development initiatives of the Albanian Government, or (c) is inconsistent with the international


principles of sustainable development.


27.3 If neither Albpetrol or the Ministry inform Contractor of any amendments within the said thirty


(30) days, such proposal shall be deemed to be approved. If any amendments are received within the


said thirty (30) day period, Contractor shall take into consideration such amendments and will reflect


those it deems necessary in a revised proposed Community Development Program. Thereafter,


Contractor will forward its revised proposal to Albpetrol and the Ministry for approval. If neither


Albpetrol or the Ministry inform Contractor of any additional amendments within fifteen (15) days


following such resubmission, such revised proposal shall be deemed to be approved.


27.4 If there is a disagreement about the proposed amendments then the dispute shall be


submitted for determination to an Expert which would be appointed according to the proceedings


described in Article 25.4 of the License Agreement. The Expert shall endeavour to render a


determination within sixty (60) days of his appointment. Prior to resolution of any such dispute,














































































































9


IN WITNESS WHEREOF, the Parties have executed this Second Amending Agreement to be effective


as of the date the Council of Ministers approves this Second Amending Agreement.
































BANKERS PETROLEUM ALBANIA LTD.


By: DQ^tO L.





Bankers


Title: \





BANKERS PETROLEUM ALBANIA LTD.