The company shall carry on petroleum operations, and shall procure that they are carried on, in a proper, efficient and workmanlike manner, and in accordance with the Petroleum Act, this contract and good oil field practice.
The company shall control the flow nad prevent the waste or escape of petroleum, water or any product used in or derived by processing petroleum. The company shall also prevent the escape of any mixture of water or drilling fluid with petroleum and prevent damage to petroleum-bearing strata in or outside the contract area.
In particular, the company shall carry on petroleum operations, and ensure that they are carried on, in such a manner to protect the environment and that petroleum operations result in minimum ecological damage or destruction.
The company shall employ in regard to the protection of the environment (including the marine environment and the atmosphere and the prevention of pollution).
Except with the consent of the government, or in an emergency, the company shall not flare natural gas.
The company shall remedy in a timely fashion any damage caused to the environment.
The government may require, at the company’s cost, an independent audit (starting, except in the case of manifest error or fraud, within 24 months after the end of the calendar year, and concluding within 12 months of this start) of the company’s books and accounts relating to this contract for any calendar year. The company shall forward a copy of the independent auditor's report to the government within 60 days following the completion of the audit.
The government may inspect and audit (by itself or as it directs), and at its own cost, the company's books and accounts relating to this contract for any calendar year (starting within 24 months after the end of the year, and concluding within 12 months of this start).
Partage de production - Eléments de "Profit Oil" (critères pour la modification du partage, - TRI, facteur "r", niveau de production, etc.)
In each calendar year, the parties shall take and receive the following shares of every grade and quality of petroleum as and when it is delivered at the field export point:
The government:
(i) 5%; plus
(ii) its share of any balance as mentioned below;
The company:
(i) 95% percent but not more than is equal in value to recoverable costs for the calendar year concerned; plus
(ii) its share of any balance as mentioned below;
Any petroleum not taken by the company under (i) above shall be shared as to 40% by the government and as to 60% by the company.
Partage de production - Eléments de "Cost Oil" (base de calcul, limites sur le recouvrement des coûts, e.g. comme % des revenues ou de la production, crédit d'investissement, etc.)
Only costs and expenses incurred by the operator in carrying on petroleum operations, and (unless there is only one company and the company is the operator) properly charged to the company under an agreement made between them and consented to by the government, are recoverable costs, but without prejudice to any other provision of this contract which would result in any such cost or expense not being a recoverable cost.
In any calendar year, recoverable costs are, subject as further provided in Annex C, the sum of those of the following that are not ineligible costs:
The sum of:
(i) recoverable exploration costs;
(ii) recoverable appraisal costs;
(iii) recoverable capital costs; and
(iv) recoverable operating costs.
Timor-Leste may, within 60 days of a declaration, decide to participate in the development of petroleum through a state-owned company.
The decision to participate shall specify the percentage of the participation, up to a maximum of 20%.
From the date of the decision, the state-owned company shall contribute, in the percentage specified, to expenditures under an approved development work program and budget.
The company agrees to revise the joint operating agreement to take into account the decision.
Each company shall with due regard to occupational health and safety requirements, give preference in employment in petroleum operations to nationals of Timor-Leste. Within 30 days of the end of each calendar year, the company shall submit to the government a report demonstrating compliance with this obligation.
Each company shall give preference to the acquisition of goods and services from persons based in Timor-Leste, provided they are offered on competitive terms and conditions. Within 30 days of the end of each calendar year, the company shall submit to the government a report demonstrating compliance with this obligation.
Droits d'accès à la zone de concession (pour des parties non contractantes)
Except with the consent of the government, the company shall ensure that persons, equipment and goods do not enter the contract area without meeting the lawful entry requirements of Timor-Leste, and shall notify the government of all persons, vessels, aircraft, vehicles and structures entering or leaving the contract area for the purposes of petroleum operations.
The development plan shall include the company’s proposal for training and employment of Timor-Leste nationals.
All costs and expenses incurred by the company in the training of its employees engaged in petroleum operations, and such other training as is required by this contract.
Petroleum operations means any activity authorized by the government, and includes the construction, installation and operation of structures, facilities, installations, equipment and other property, and the carrying out of other works, necessary.
Except with the consent of the government, all structures, facilities, installations, equipment and other property, and other works, used or to be used in petroleum operations, shall be and remain the property of the company while so used or held for use.
The company shall provide for third party access to the structures, facilities, installations, equipment and other property within the contract area on reasonable terms and conditions.
The company shall use all reasonable efforts to negotiate a satisfactory agreement for third party access, and where mutual agreement cannot be reached, the government shall set the terms for such third party access in accordance with internationally accepted principles.
If, in the event of national need declared by the government of Timor-Leste, it is necessary to limit exports of crude oil, the government may, with 30 days advance written notice, require the company to meet the needs of the local market with crude oil that it has produced.
In each contract year mentioned below, the company shall carry out an exploration work program and budget of not less than the amount of work specified for that contract year:
Contract year 1; Evaluation [X]; Surveys [X]; Wells [X]
Contract year 2; Evaluation [X]; Surveys [X]; Wells [X]
Contract year 3; Evaluation [X]; Surveys [X]; Wells [X]
In each contract year mentioned below, and unless the company has relinquished all of the contract area (not being a development area or a gas retention area) before the start of the 4th contract year, the company shall carry out an exploration work program and budget of not less than the amount of work specified for that contract year.
Contract year 4; Evaluation [X]; Surveys [X]; Wells [X]
Contract year 5; Evaluation [X]; Surveys [X]; Wells [X]
In each of the 6th and 7th contract years, and unless the company has relinquished all of the contract area (not being a development area or a gas retention area) before the start of the contract year concerned, the company shall carry out such exploration work program and budget of not less than the amount of work specified for that contract year.
Contract year 6; Evaluation [X]; Surveys [X]; Wells [X]
Contract year 7; Evaluation [X]; Surveys [X]; Wells [X]
If any well forming part of the exploration work program and budget provided for in this article is abandoned for any reason other than a reason specified below before reaching the defined objectives of such well, the company shall drill a substitute well. In this event, the first, second or third exploration period, as the case may be, shall be extended by a period of time equal in length to the time spent in preparing for and drilling the substitute well, including mobilisation and demobilisation of the drilling rig, if applicable.
Unless otherwise agreed by the government, any well which forms part of the exploration work program and budget provided for in this Article 4 shall be drilled to such depth as is necessary for the evaluation of the geological formation established by the available data as the target formation and which good oil field practices would require the company to attain, unless before reaching such depth:
(i) a formation stratigraphically older than the deepest target formation is encountered;
(ii) basement is encountered;
(iii) further drilling would present an obvious danger, such as but not limited to the presence of abnormal pressure or excessive losses of drilling mud;
(iv) impenetrable formations are encountered;
(v) petroleum-bearing formations are encountered which require protecting, thereby preventing planned depths from being reached; or
(vi) the company and the government agree to terminate the drilling operation; and
(vii) the government confirms that the drilling obligation has been fulfilled.
In such circumstances the drilling of any such well may be terminated at a lesser depth and shall be deemed to have satisfied the company’s obligations in respect of that well.
Where a well which forms part of the exploration work program and budget provided for in this article results in a discovery and the company inform the government that the discovery merits appraisal, that well will be deemed to have met its objective and to have satisfied the company’s obligations in respect of that well.
The company shall carry out petroleum operations substantially in accordance with work programs and budgets approved by the government.
If a dispute arises between the government and the company relating to the interpretation or implementation of the terms of this contract, the parties shall attempt to resolve that dispute by means of negotiation.
If such a dispute cannot be resolved by negotiation, it shall be submitted to arbitration.
Any arbitration between the government and the company shall be conducted in accordance with:
(a) the 1965 Washington Convention, or the regulations and rules, of the International Centre for the Settlement of Investment Disputes (ICSID) between States and Nationals of other States;
(b) the rules set out in the ICSID Additional Facility adopted on 27 September 1978 by the Administrative Council at the ICSID between States and Nationals of other States, whenever the foreign entity does not meet the requirements provided for in Article 25 of the Convention; or
(c) the rules of such other international instances of recognized standing, (as agreed by the parties, in respect of the conditions for implementation, including the method for the designation of the arbitrators and the time limit within which the decision must be made).
The obligations of the parties under the contract shall continue pending the resolution of any matter submitted to arbitration.
The government shall not publicly disclose or make available, other than as required by the Petroleum Act or for the purpose of the resolution of disputes under this contract, any data or information mentioned in section 15.1 (all data and information, whether raw, derived, processed, interpreted or analyzed (including cores, cuttings, samples, and all geological, geophysical, geochemical, drilling, well, production and engineering data and information) that the company collects and compiles) until the earlier of:
(i) 5 years after it was acquired by the company; and
(ii) this contract ceasing to apply in respect of the point at or in respect of which it was acquired.
Except with the consent of the government, a company shall not disclose the data or information mentioned in Section 15.1 (see above list) other than:
(i) to its employees, agents, contractors and affiliates to the extent necessary for the proper and efficient carrying on of petroleum operations;
(ii) as required by law;
(iii) for the purpose of the resolution of disputes under this contract; or
(iv) as required by a recognized stock exchange.
The government shall not publicly disclose or make available, other than required by the Act or for dispute resolution, any data or information submitted by the company which:
(i) is a trade secret of, or data and information the disclosure of which would, or could reasonably be expected to adversely affect, the company in respect of its lawful business, commercial or financial affairs; and
(ii) was clearly marked as such when it was submitted to the government.
Except with the consent of the government, or as required by law or the rules of a recognized stock exchange, a company may not sell or disclose the data information and records detailed in Art. 15.