India

The English language shall be the language of this contract.

The contract area is located at the coordinates detailed in Appendix A and the map in Appendix B

Petroleum

Ministry of Petroleum and Natural Gas

The production lease for offhsore and onshore areas shall be for an initial period of 20 years with the possibility of extension by mutual agreement between the parties for 5 years or such period as may be agreed. The exploration period shall be for a period not exceeding 7 consecutive contract years in case of contract areas in on land and shallow water and not exceeding 8 consecutive contract years in case of deepwater area and frontier area and consisting of initial exploration period and subsequent exploration period. The initial exploration period shall consist of the first 4 consecutive contract years in case of contract areas on land and in shallow water and first 5 consecutive contract years in case of deepwater area and frontier area and with provision to proceed to the subsequent exploration period of maximum 3 consecutive years.

Model production sharing contract

The company shall cause a person or persons with special knowledge on environmental matters, to carry out 2 environmental impact studies in order: (a) to determine at the time of the studies the prevailing situation relating to the environment, human beings and local communities, the flora and fauna in the contract area and in the adjoining or neighboring areas; and (b) to establish the likely effect on the environment, human beings and local communities, the flora and fauna in the contract area and in the adjoining or neighboring areas in consequence of the relevant exploration period of petroleum operations to be conducted under this contract, and to submit, for consideration by the parties, methods and measures contemplated in Article 14.4 for minimizing environmental damage and carrying out site restoration activities. Subject to the provisions of all applicable laws and notifications on protection of environment, any new project or expansion or modernization projects for petroleum operations for which a proposal is submitted by the company, the government shall accord environmental clearance in accordance with the relevant notifications, rules, regulations and orders concerning environmental impact assessment issued by the government from time to time. However, wherever forest land is involved, the company shall have to obtain approval of the central government through the state government concerned under the Forest (Conservation) Act, 1980 and rules made under same.

The company shall ensure that petroleum operations are conducted in an environmentally acceptable and safe manner consistent with modern oilfield and petroleum industry practices and that such petroleum operations are properly monitored.

The government and the company recognize that petroleum operations will cause some impact on the environment in the contract area. Accordingly, in performance of the contract, the company shall conduct its petroleum operations with due regard to concerns with respect to protection of the environment and conservation of natural resources and shall in particular: (a) employ modern oilfield and petroleum industry practices and standards including advanced techniques, practices and methods of operation for the prevention of environmental damage in conducting its petroleum operations; (b) take necessary and adequate steps to: (i) prevent environmental damage and, where some adverse impact on the environment is unavoidable, to minimize such damage and the consequential effects of same on property and people; (ii) ensure adequate compensation for injury to persons or damage to property caused by the effect of petroleum operations; and (c) comply with the requirements of applicable laws and the reasonable requirements of the government from time to time. If the contractor fails to comply with these provisions, and any such failure or contravention results in any environmental damage, the contractor shall take all necessary and reasonable measures to remedy the failure and its effects. The company shall ensure that: - the pertinent completed environmental impact studies are made available to its employees and to its contractors and subcontractors to develop adequate and proper awareness of the measures and methods of environmental protection to be used in carrying out the petroleum operations; and - the contracts entered into between the company and its contractors and subcontractors relating to its petroleum operations shall include the provisions stipulated herein and any established measures and methods for the implementation of the company’s obligations in relation to the environment under this contract. Where the contract area is partly located in areas forming part of certain national parks, sanctuaries, mangroves, wetlands of national importance, biosphere reserves and other biologically sensitive areas passage through these areas shall generally not be permitted. However, if there is no passage, other than through these areas to reach a particular point beyond these areas, permission of the appropriate authorities shall be obtained.

The annual audit of accounts shall be carried out on behalf of the company by an independent firm of chartered accountants, registered in India in accordance with the generally accepted auditing and accounting practices in India. The appointment of auditor and the scope of audit should have prior approval of the management committee. The company shall submit the audited accounts to the management committee for approval within 60 days from the end of the year. The management committee shall consider and approve the auditor’s report within 30 days after the submission of such report. Copy of the auditor's report shall be submitted to the government within 30 days after the approval of the management committee. The government shall have the right to audit the accounting records of the company in respect of petroleum operations as provided in the accounting procedure. The accounting and auditing provisions and procedures specified in this contract are without prejudice to any other requirements imposed by any statute in India, including, without limitation, any specific requirements of the statutes relating to taxation of companies. For the purpose of any audit, the company shall make available in original to the auditor all such books, records, accounts and other documents and information as may be reasonably required by the auditor during normal business hours. The government shall have the right to audit the accounting records of the contractor in respect of petroleum operations as provided in the accounting procedure. For the purpose of any audit, the contractor shall make available in original to the auditor all such books, records, accounts and other documents and information as may be reasonably required by the auditor during normal business hours.

Company, their employees, persons providing any materials, supplies, services or facilities or supplying any ship, aircraft, machinery, equipment or plant (whether by way of sale or hire) to the company for petroleum operations or for any other purpose and the employees of such persons shall be subject to all fiscal legislation in India except where, pursuant to any authority granted under any applicable law, they are exempted wholly or partly from the application of the provisions of a particular law or as otherwise provided in this contract.

Except as provided in this article, all provisions of the Income-tax Act, 1961 shall apply.

The parties to this contract shall share in the profit petroleum in each year in accordance with the provisions of this article. A party’s share of profit petroleum in any year, shall be calculated on the basis of the investment multiple actually achieved by the company at the end of the preceding year for the contract area as provided in Appendix D. When the investment multiple of the company at the end of any year is less than or equal to 1.500, the government shall be entitled to take and receive [X]% and the company shall be entitled to take and receive [X]% of the total profit petroleum from the contract area with effect from the start of the succeeding year. When the investment multiple of the company at the end of any year is equal to or more than 3.500, the government shall be entitled to take and receive [X]% and the company shall be entitled to take and receive [X]% of the total profit petroleum from the contract area with effect from the start of the succeeding year. When the investment multiple of the company at the end of any year is more than 1.500 but is less than 3.500, the government shall be entitled to take and receive [Z]%, and the company shall be entitled to take and receive [100-Z]% of the total profit petroleum from the contract area with effect from the start of the succeeding year. The government share [Z]% shall be calculated by interpolation as under: Z = a + [(b – a) * (X – 1.5)/2] Where: ‘a’ denotes government share; ‘b’ denotes government share; ‘b’ should always be higher than ‘a’; ‘X’ denotes investment multiple of company at the end of preceding year, rounded off to three decimal places. Note: these figures shall be as per the bid of the company and accepted by the government.

The maximum amount of cost petroleum to which the contractor shall be entitled shall be [X] % of the total value of the petroleum produced and saved from the contract area. The company shall be entitled to recover contract costs out of a percentage of the total value of petroleum produced and saved from the contract area in the year in accordance with the provisions of this article. Exploration costs incurred by the company in the contract area up to the date of first commercial production shall be aggregated, and the company shall be entitled to recover the aggregate of such exploration costs out of the cost petroleum at the rate of 100% per annum of such exploration costs beginning from the date of such commercial production. The company shall be entitled to recover out of the cost petroleum from the contract area the exploration costs which it has incurred in any year after the date of commercial production at the rate of 100% per annum of such exploration costs beginning from the date such exploration costs are incurred. Development costs incurred by the company in the contract area up to the date of first commercial production shall be aggregated, and the company shall be entitled to recover out of the cost petroleum the aggregate of such development costs at the rate of 100% per annum of such development costs beginning from the date of such commercial production. The company shall be entitled to recover out of the cost petroleum from the contract area the development costs which it has incurred after the date of first commercial production at the rate of 100% per annum of such development costs beginning from the date such development costs are incurred. The company shall be entitled to recover in full during any year the production costs incurred in that year out of the cost petroleum. The company shall be entitled to recover in full during any year the royalty payments to the government/state government(s) in that year out of the cost petroleum.

In the event that all sales of crude oil in a delivery period by a company are to be made to an affiliate, the parties may agree on an alternative method of valuing the crude oil for the purposes of this contract, provided that such alternative method results in an internationally competitive fair market valuation for that delivery period. In case of disagreement, the decision of the government on determining a crude price in case of sales to an affiliate shall be final and binding.

Company (lessee) shall be required to pay royalty to the government (lessor) for offshore areas at the rate of 10% of the well-head value of crude oil and natural gas. In case of an onshore area, company shall be required to pay to the state government (lessor) at the rate of 12.5% of the well-head value of crude oil and 10% of the well-head value of natural gas. In case of an offshore area falling beyond 400 meter isobath, the rate of royalty payable by company (lessee) to the government (lessor) shall be at the rate of 5% of the well-head value of crude oil and natural gas for the first 7 years from the date of commencement of commercial production in the field.

Without prejudice to the right of the company to select and employ such number of personnel as, in the opinion of the company, are required for carrying out petroleum operations in a safe, cost effective and efficient manner, the company shall, to the maximum extent possible, employ, and require the operator and subcontractors to employ, citizens of India having appropriate qualifications and experience, taking into account experience required in the level and nature of the petroleum operations.

In the conduct of petroleum operations, the company shall: (a) give preference to the purchase and use of goods manufactured, produced or supplied in India provided that such goods are available on terms equal to or better than imported goods with respect to timing of delivery, quality and quantity required, price and other terms; and (b) employ Indian subcontractors having the required skills or expertise, to the maximum extent possible, insofar as their services are available on comparable standards with those obtained elsewhere and at competitive prices and on competitive terms; provided that where no such subcontractors are available, preference shall be given to non-Indian subcontractors who utilize Indian goods to the maximum extent possible.

The operator shall offer a mutually agreed number of Indian nationals the opportunity for on-the-job training and practical experience in petroleum operations during the exploration period. Not later than 6 months after approval of the development plan, the operator shall, in consultation with the government, establish and implement training programs for staff positions in each exploration period and level of petroleum operations including skilled, technical, executive and management positions, with a view to ensuring employment of nationals of India and gradual and progressive reduction of foreign personnel. At the request of the government, the foreign companies shall separately endeavor to negotiate, in good faith, technical assistance agreements with the government or a company nominated by government for this purpose setting forth the terms by which each foreign company constituting the contractor may render technical assistance and make available commercially proven technical information of a proprietary nature for use in India by the government or the company nominated by government. The issues to be addressed in negotiating such technical assistance agreements shall include, but not be limited to, licensing issues, royalty conditions, confidentiality restrictions, liabilities, costs and method of payment.

The company has the right to lay pipelines, build roads, construct bridges, ferries, aerodromes, landing fields, radio telephones and related communication and infrastructure facilities and exercise other ancillary rights as may be reasonably necessary for the conduct of petroleum operations subject to such approvals as may be required and the applicable laws in force.

Until such time as the total availability of crude oil, condensate and natural gas from all petroleum and natural gas production activities in India meets the total national demand as determined by the government, each company comprising the contractor, shall sell in the domestic market in India all of the company’s entitlement to crude oil, condensate and natural gas from the contract area. Excess associated natural gas which is not commercially exploited by the contractor, or taken by the government, shall be returned to the subsurface structure or flared or otherwise disposed off as approved by the government in the context of the development plan, provided that flaring will be resorted to only for small quantities and as a last resort.

The company shall be required to undertake and complete the 2D seismic API, in grid size of [X] LKM X [X] LKM covering the entire contract area during initial exploration period. In case due to any reason intrinsic to the contract area, the company is not able to cover any part of the contract area by 2D seismic survey of grid size specified in this article, the company shall submit a proposal for substitution of the shortfall in the mandatory work program to the management committee for approval. During the currency of the initial exploration period, the company shall complete the following work program: (a) a seismic program consisting of the acquisition, processing and interpretation of line kilometers of 2D and square kilometers of 3D seismic data in relation to the exploration objectives; and (b) [X] exploration well(s) shall be drilled to at least one of the following depths: (i) [X] meters (from sea bed); (ii) to basement; (iii) that point below which further drilling becomes impracticable due to geological conditions encountered and drilling would be abandoned by a reasonable prudent operator in the same or similar circumstances. Abandonment of drilling under this provision by the company would require unanimous approval of the management committee. During the currency of subsequent exploration period, the company shall complete the following work program: for on land blocks and shallow water blocks: 1 exploration well in per year or for deepwater blocks: 1 exploration well to at least one of the following depths: (i) [X] meters from sea bed; (to be specified by the company at the time of exercising the option) (ii) to basement (iii) that point below which further drilling becomes impracticable due to geological conditions encountered and drilling would be abandoned by a reasonable prudent operator in the same or similar circumstances. Abandonment of drilling under this provision by the company would require unanimous approval of the management committee. (The details of the work program to be filled in these articles shall be as per the NIO and the bid of company(ies) and accepted by the government.) In the event that the contractor fails to fulfill the mandatory or minimum work program during the initial exploration period or subsequent exploration period or early termination of the contract by the government for any reason whatsoever, each company constituting the contractor shall pay to the government, its participating interest share for an amount which shall be equivalent to liquidated damages as specified below: Per well: Onland: US$ 1 million - Shallow water: US$ 3 million - Deep water: US$ 6million Per sq. km of 3D: Onland: US$ 1 million - Shallow water: US$ 3 million - Deep water: US$ 6million Per line km of 2D: Onland: US$ 1 million - Shallow water: US$ 3 million - Deep water: US$ 6million

The parties shall use their best efforts to settle amicably all disputes, differences or claims arising out of or in connection with any of the terms and conditions of this contract or performance of same. Matters which the parties have agreed to refer to a sole expert, may be referred to a sole expert. Such sole expert shall be an independent and impartial person of international standing with relevant qualifications and experience, appointed by a written agreement between the parties. He or she shall not, by virtue of nationality, personal connection or commercial interest, have a conflict between his/her own interest and his/her duty as a sole expert. Where there is no agreement on the body or an institution or an agency or a person for appointing sole expert or such institution or agency or body fails to appoint a sole expert within 30 days or such longer period as may be mutually agreed by parties, the matter shall be referred to arbitration. Any sole expert appointed shall be acting as an expert and not as an arbitrator and the decision of the sole expert on matters referred to him/her shall be final and binding on the parties and shall not be subject to arbitration. The parties agree that any controversy, difference, disagreement or claim for damages, compensation or otherwise arising, which cannot be settled amicably within 90 days after the dispute arises, may (except for those referred to in Article 33.2, which may be referred to a sole expert) be submitted to conciliation or an arbitral tribunal for final decision. The arbitral tribunal shall consist of 3 arbitrators. The arbitration agreement contained in this article shall be governed by the Arbitration and Conciliation Act, 1996. Arbitration proceedings shall be conducted in accordance with the rules for arbitration provided in Arbitration Act. The right to arbitrate disputes under this contract shall survive expiry or the termination of this contract. Prior to submitting a dispute to arbitration, the parties may by mutual agreement submit the matter for conciliation in accordance with Part III of the Arbitration and Conciliation Act, 1996. The venue of the sole expert, conciliation or arbitration proceedings pursuant to this article, unless the parties agree otherwise, shall be New Delhi, India and shall be conducted in the English language. The parties shall continue to implement the terms of this contract notwithstanding the initiation of proceedings before a sole expert, conciliator or arbitral tribunal and any pending claim or dispute.

All data, information and reports obtained or prepared by, for or on behalf of, the company pursuant to this contract shall be treated as confidential and, subject to the provisions below, the parties shall not disclose the contents of same to any third party without the consent in writing of the other parties. The obligation specified above shall not operate so as to prevent disclosure: (a) to affiliates, contractors, or subcontractors for the purpose of petroleum operations; (b) to employees, professional consultants, advisers, data processing centers and laboratories, where required, for the performance of functions in connection with petroleum operations for any party comprising the company; (c) to banks or other financial institutions, in connection with petroleum operations; (d) to bona fide intending assignees or transferees of a participating interest of a party comprising the company or in connection with a sale of the stock or shares of a party comprising the company; (e) to the extent required by any applicable law or in connection with any legal proceedings or by the regulations of any stock exchange upon which the shares of a party or an affiliate of a party comprising the company are quoted; (f) to government departments for, or in connection with, the preparation by or on behalf of the government of statistical reports with respect to petroleum operations, or in connection with the administration of this contract or any relevant law or for any purpose connected with petroleum operations; and (g) by a party with respect to any data or information which, without disclosure by such party, is generally known to the public. Any data, information or reports disclosed by the parties comprising the contractor to any other person shall be disclosed on the terms that such data, information or reports shall be treated as confidential by the recipient. Prompt notice of disclosures made by companies shall be given to the Government.

This contract shall be governed and interpreted in accordance with the laws of India.

If any change in or to any Indian law, rule or regulation dealing with income tax or other corporate tax, export/import tax, excise, customs duty or any other levies, duties or taxes imposed on petroleum or dependent upon the value of petroleum results in a material change to the expected economic benefits accruing to any of the parties after the date of execution of the contract, the parties shall consult promptly in good faith to make necessary revisions and adjustments to the contract in order to maintain such expected economic benefits to each of the parties, provided, however, that the expected economic benefits to the parties shall not be reduced as a result of the operation of this article. The governing laws will also include amendments, revisions, modifications, etc.