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 PETROLEUM AGREEMENT


BETWEEN


THE MINISTER RESPONSIBLE FOR





PETROLEUM


REPRESENTING


THE GOVERNMENT OF THE


CO-OPERATIVE REPUBLIC OF


GUYANA


AND


TULLOW GUYANA B.V.


AND


ECO (ATLANTIC) GUYANA INC.














Petroleum Agreement


Government of Guyana - Orinduik PA


 TABLE OF CONTENTS








Article 1 - Definitions.................................................................................


Article 2 - Agreement, the Operator, Liabilities and Indemnities.........


Article 3 - Petroleum Prospecting Licence and Guarantee....................


Article 4 - Exploration Programme and Expenditure Obligation.........


Article 5 - Relinquishment of Areas.........................................................


Article 6 - Delegation; Co-operation between Contractor and GGMC





Article 7 - Annual Work Programme and Budget..................................


Article 8 - Discovery and Development....................................................


Article 9 - Records, Reports and Information; Confidentiality.............


Article 10 - Annual Licence Rental Charge...............................................


Article 11 - Cost Recovery and Production Sharing.................................


Article 12 - Associated and Non - Associated Gas.....................................


Article 13 - Valuation of Crude Oil or Natural Gas.................................


Article 14 - Disposal of Production.............................................................


Article 15 - Taxation and Royalty..............................................................


Article 16 - Contracts and Assignments.....................................................


Article 17 - Domestic Supply Obligation...................................................


Article 18 - Guyana Resources....................................................................


Article 19 - Employment and Training......................................................


Article 20 - Rights to Assets and Insurance...............................................


Article 21 - Import Duties...........................................................................


Article 22 - Foreign Exchange Control......................................................


Article 23 - Accounting and Audits.............................................................


Article 24 - Force Majeure...........................................................................


Article 25 - Assignment.................................................................................


Article 26 - Sole Expert Determination and Arbitration...........................


Article 27 - Applicable Law..........................................................................


Article 28 - Protection of the Environment................................................


Article 29 - Termination and Cancellation.................................................


Article 30 - Effective Date............................................................................





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 Article 31 - Miscellaneous.......................................................................................................66


Article 32 - Stability of Agreement........................................................................................67


Article 33 - Notices..................................................................................................................68








Annex A - Description of Contract Area


Annex B - Map of Contract Area


Annex C - Accounting Procedure


Annex D - Pre-Approved and Certified Petroleum Operations Items














































































































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 PETROLEUM AGREEMENT






This Agreement is made on the...14th..........day ...January......, 2016, between the


Government of the Co-operative Republic of Guyana (the “Government”), represented herein by


the Minister Responsible for Petroleum (hereinafter referred to as the “Minister”) of the One Part





and





Tullow Guyana B.V. (hereinafter referred to as Tullow”) incorporated in the Netherlands,


and having its registered office at Scheveningseweg 58, 2517 KW The Hague, The


Netherlands and registered as a branch in Guyana at 157 ‘C’ Waterloo Street, North


Cumminsburg, Georgetown





and





Eco (Atlantic) Guyana Inc. (hereinafter referred to as “Eco” and together with Tullow, the


“Licensees” or “Contractor” as the case may be) a Company incorporated in Guyana (No.


7701) with its registered office at Whitehall Lot 1 Croal Street, Georgetown, Guyana and


registered in Guyana under the Companies Act 1991 of the Other Part.





WHEREAS





(1) By virtue of the Petroleum (Production) Act, Cap. 65:05, Petroleum existing in its natural


condition in strata in Guyana is vested in the State; the Petroleum (Exploration and


Production) Act, No. 3 of 1986 (hereinafter referred to as the “Act” and the Petroleum


(Exploration and Production) Regulations 1986 (hereinafter referred to as the


“Regulations” make provision with respect to prospecting for and production of


Petroleum, and for matters connected therewith;


(2) The Guyana Geology and Mines Commission (hereinafter referred to as “GGMC”) a body


corporate established under the Guyana Geology and Mines Commission Act (No. 9 of


1979) has been seized with the responsibility, inter alia, of planning and securing the


development, exploitation and management of Petroleum, as defined in the Act, in Guyana


so as to ensure for the people of Guyana the maximum benefits therefrom and for doing


such things in relation thereto;


(3) With respect to prospecting for and producing Petroleum and for matters connected


therewith the Act and Regulations, subject to certain limitations and conditions contained


therein authorize the Minister to grant Petroleum Prospecting Licences and Petroleum


Production Licences;


(4) Section 10 of the Act authorizes the Minister to enter into an agreement with any person


with respect to, inter alia, the grant of a Licence, the conditions to be included in a Licence,


the procedure to be followed by the Minister while exercising any discretion conferred








Petroleum Agreement


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upon him by or under the Act and the manner in which the discretion shall be exercised and


any matter incidental to or connected therewith;


(5) Contractor submitted to the delegatee a proposal (“the proposal”) for a Production Sharing


Agreement in respect of a certain offshore area of Guyana, on terms and conditions


specified in the proposal;


(6) GGMC has been authorized by the Minister to negotiate this Agreement subject to the


provisions of the Act and Regulations and to the final written approval of the Minister of its


contents and execution thereof and to assist in the administration and implementation


thereof;


(7) Contractor will have, or will acquire, the financial resources, the managerial, technical and


industrial competence and the experience to carry out Petroleum Operations and will


provide an affiliate company guarantee, in accordance with section 13 of the Act;


(8) Pursuant to the aforesaid recitals, Contractor made an application to the Minister for a


Petroleum Prospecting Licence in accordance with regulation 13 of the Regulations (as


hereinafter defined), over the area described in Annex A and shown on the map attached as


Annex B, subject to the terms and conditions herein set forth and subject to the provisions


of the Act and Regulations and Contractor has agreed by execution of this Agreement to


accept the said Licence on the said terms and conditions and provisions.


NOW, THEREFORE, in consideration of the premises and covenants and conditions herein


contained, IT IS HEREBY AGREED between the Parties as follows:





















































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Article 1 - Definitions





1.1 In this Agreement, unless the context otherwise requires:


“Accounting Procedure” means the procedure set out in Annex C;


“Act” means the Petroleum (Exploration and Production) Act No. 3 of 1986;


“Affiliated Company” in relation to each Party that is a Contractor means, a company or


corporation;


(i) which is, directly or indirectly controlled by the Party; or


(ii) which directly or indirectly, controls the Party; or


(iii) which is, directly or indirectly, controlled by a company or corporation that also,


directly or indirectly, controls the Party.


For the purpose of this definition “control” means the right to exercise a vote of fifty per


cent (50%) or more of all the voting shares;


“Agreed Interest Rate” means interest computed on a monthly basis at the rate per annum


equal to the average London Interbank Offer Rate (LIBOR) for six (6) months United


States dollar deposits, as published by the Wall Street Journal, on the first Business Day of


such month being calculated, plus three percentage points (3%);


“Agreement” means this Agreement and the Annexes hereto attached and made a part


hereof;


“Appraisal Programme” means a programme carried out following a discovery of


Petroleum in the Contract Area for the purpose of delineating the Petroleum Reservoir, as


defined in the Act, to which that discovery relates in terms of thickness and lateral extent


and estimating the quantity of recoverable Petroleum therein prior to declaration of


commerciality;


“Appraisal Well” means a well drilled for the purpose of an Appraisal Programme;


“Article” means an Article of this Agreement;


“Associated Gas” means all Natural Gas produced from any Petroleum Reservoir of


which the predominant production is Crude Oil and includes the gas-cap which overlies


and is in contact with Crude Oil;


“Barrel” means a quantity consisting of forty-two (42) United States gallons, liquid


measure, measured at standard conditions of atmospheric pressure and temperature (14.7





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lbs/sq. inch absolute or 1 Kg/sq. cm. absolute and corrected to a temperature of sixty (60)


degrees Fahrenheit or fifteen (15) degrees Celsius);


“Business Day” means a day on which the banks in Georgetown, Guyana are customarily


open for business.


“Calendar Month” or “Month” means any of the twelve months of the Calendar Year;





“Calendar Quarter” or “Quarter” means a period of three (3) consecutive months


beginning on the first day of January, April, July or October;


“Calendar Year” or “Year” means a period of twelve (12) consecutive Months


commencing on January 1 and ending on the succeeding December 31 provided however


that a Year of a term of a Licence shall be the period specified in section 2 (2) (b) of the


Act;


“Commercial Discovery” means any discovery, which the Contractor in its sole


judgment, considers economic to develop and produce pursuant to the terms of the


Agreement;


“Contract Area” means:


(i) on the Effective Date the area described in Annex A and shown on the map in


Annex B and the subject of the Petroleum Prospecting Licence granted to the


Contractor pursuant to Article 3; and


(ii) thereafter any areas which at any particular time are subject to the Petroleum


Prospecting Licence or Petroleum Production Licence(s) granted to the Contractor


under Article 8;


“Contract Costs” means Exploration Costs, Development Costs, Operating Costs, Service


Costs, General and Administrative Costs and Annual Overhead Charge;


“Contractor” means Tullow and Eco and includes each of their successors and permitted


assignees;


“Cost Gas” has the meaning assigned in Article 11;


“Cost Oil” has the meaning assigned in Article 11;





“Crude Oil” or “Oil” means crude mineral oil, asphalt, ozokerite, distillates, condensates


and all kinds of hydrocarbons and bitumens, both in solid and liquid forms, at standard


conditions of temperature and pressure (60 degrees Fahrenheit or 15 degrees Celsius and


14.7 lbs/sq. in or 1 Kg/sq. cm);


“Delivery Point” means in the case of Crude Oil the inlet flange of the lifting tankship; in


the case of Natural Gas shall be the sales point and the point at which custody transfers


from seller to buyer. In the case of LNG sales the Delivery Point shall be the inlet loading


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a


 flange for the LNG tanker. In the case of pipeline deliveries, the Delivery Point shall be the


inlet flange to buyer’s pipeline or distribution system, or the inlet to a third party’s pipeline


transporting buyer’s Natural Gas. The Delivery Point for LPGs shall be the sales point and


the point at which custody transfers from seller to buyer. In the case of LPG exports, the


Delivery Point shall be the inlet loading flange for the LPG tanker or truck. In the case of


pipeline deliveries of LPGs, the Delivery Point shall be the inlet flange to buyer’s pipeline


or distribution system, or the inlet to a third party’s pipeline transporting buyer’s LPGs; or


in any case, such other economically viable point for export of Petroleum in the


Co-operative Republic Of Guyana which shall be agreed to by the Contractor and the


Minister;


“Development Costs” means the expenditure so categorized in Annex C;


“Development Plan” means the plan referred to in Article 8.4;


“Development Well” means any well drilled as part of a Development Plan;





“Discovery Area” means an area which is part of a Prospecting Area consisting of a


Discovery Block or Blocks in respect of which the Minister has been informed under


section 30 of the Act;


“Discovery Block” means that as defined in the Act;


“Discovery of Petroleum” means that as defined in the Act;





“Effective Date” means the date on which this Agreement comes into force pursuant to


Article 30;


“Expatriate Employee” means any employee (other than a Guyanese citizen) not


permanently resident in Guyana who is engaged under a contract of service for the purpose


of Petroleum Operations;


“Exploration Costs” means those expenditures so categorized in Annex C;


“Exploration Period” means the initial period, and/or the first renewal period and/or the


second renewal period referred to in Article 4.1, as the case may be;


“Exploration Well” means a well drilled, which is not a Development Well, with the





objective of exploring for Petroleum on a geological entity (be it of structural,


stratigraphic, facies or pressure nature) to a depth or stratigraphic level specified in the


work programme for the exploration work programme;


“Field” means an area within the Contract Area consisting of a Petroleum Reservoir or


multiple Petroleum Reservoirs all grouped on, or related to, the same individual geological


structural features or stratigraphic conditions from which Petroleum may be produced


commercially;





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 “General and Administrative Costs” and “Annual Overhead Charge” means the


expenditures so categorised in Annex C;





“Geologic Basement” means any igneous or metamorphic rock or any stratum in and


below which the geological structure or physical characteristics of the rock sequence do


not have the properties necessary for the accumulation of petroleum in commercial


quantities and which reflects the maximum depth at which any such accumulation can be


reasonably expected;


“Government” means the Government of the Co-operative Republic of Guyana and its


ministries and agencies;


“GGMC” means the Guyana Geology and Mines Commission, established under section 3


of the Guyana Geology and Mines Commission Act 1979;


“GGMC Act” means the Guyana Geology and Mines Commission Act 1979;





“Licence” means the Petroleum Prospecting Licence and/or the Petroleum Production


Licence(s) or both as the context requires;


“Lifting Entitlement” means the quantity of Crude Oil to which a Party shall be entitled in


any given period pursuant to Article 11;


“Minister” means the Minister assigned responsibility for Petroleum or where there is no


such Minister, the President;


“Natural Gas” or “Gas” means all hydrocarbons which at standard conditions of


temperature and pressure (60 degrees Fahrenheit or 15 degrees Celsius and 14.7 lbs/sq. in


or 1 Kg/sq. cm) is in a gaseous state including but not limited to wet mineral gas, dry


mineral gas and casing head gas, all substances contained therein including helium, which


are produced from an oil or gas well, in their natural state or residue gas remaining after


extraction of NGLs from wet gas. For purposes of this Agreement, Natural Gas shall also


include liquefiable hydrocarbons obtained from Natural Gas by condensation or extraction,


including ethane, propane, butane, pentanes and heaviers (“Natural Gas Liquids” or


“NGLs”). Liquefied methane shall not be considered an NGL, but rather Natural Gas in


the liquid state.


“Non-Associated Gas” means Natural Gas or Gas other than Associated Gas;


“Non-Resident Sub-Contractor” shall mean a Sub-Contractor the control and





management of whose business are exercised outside Guyana.


“Operating Costs” means those costs so categorized in Annex C;


“Operator” shall have the meaning assigned to it in Article 2.2(a);








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“Parties” means the Government, Tullow and Eco and includes Tullow’s and Eco’s


successors and permitted assignees, and a Party shall mean any of the Parties;


“Petroleum Operations” means Prospecting Operations and/or Production Operations, as


defined in the Act;


“Petroleum Prospecting Licence” means a Licence issued by the Government under the


Act and the Regulations to Contractor for carrying out Prospecting Operations and set forth


in Form C of the schedule as specified in the Regulations;


“Petroleum Production Licence” means a Licence to be issued by the Government under


the Act and the Regulations to Contractor for carrying out Production Operations and set


forth in Form D of the schedule as specified in the Regulations;


“Profit Gas” has the meaning assigned in Article 11;


“Profit Oil” has the meaning assigned in Article 11;


“Recoverable Contract Costs” has the meaning assigned in Article 11;


“Regulations” means the Petroleum (Exploration and Production) Regulations 1986;


“Service Costs” means the expenditures so categorized in Annex C;


“Sub-Contractor” means any company or entity which provides services to the


Contractor in connection with Petroleum Operations;


“Third Party Sales” means third party arms length sales made by (i) Contractor or (ii)


Affiliated Company of Contractor to a third party for an arms-length price which is


disclosed to the Minister.


1.2 The words and terms used in this Agreement but not defined herein shall, if meanings have


been assigned to them under section 2 of the Act, have, for the purposes of this Agreement,


the same meanings.


1.3 The provision of this Agreement relating to the Petroleum Prospecting Licence shall be


read as part of the provisions of such Licence.


1.4 The provision of this Agreement relating to any Petroleum Production Licence shall be


read as part of the provisions of such Licence.


1.5 The provisions in the Act and Regulations dealing with rights and obligations of the


Contractor shall be read as part of but not nullify the provisions of this Agreement and any


Licence issued to the Contractor.











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Article 2 - Agreement, the Operator, Liabilities and


Indemnities





2.1 Agreement


This Agreement constitutes an agreement made under section 10 of the Act consistent with


the Act and the Regulations, and is a production sharing agreement, the objective of which


is the exploration for development and production of Petroleum in the Contract Area by the


Contractor subject to the terms hereof and the provisions of the Act and Regulations under


which the Contractor shall have an economic interest in the development of Petroleum


from the Contract Area.





2.2 The Operator


(a) Tullow shall be the Operator charged with conducting the day to day activities of


the Contractor under this Agreement. No transfer of operatorship to another Party


not comprising the Contractor shall take effect unless it has been approved by the


Minister which approval shall not be unreasonably withheld. The Minister shall be


notified of any change of operatorship to another Party comprising the Contractor


in writing.


(b) The Contractor shall provide the Minister with a memorandum summarizing the


operating arrangements between the Operator and the Contractor, including any


Party comprising the Contractor for the conduct of Petroleum Operations which


will include, inter alia, a provision whereby the Operator agrees to conduct the


Petroleum Operations in accordance with this Agreement, the Licences and any


applicable laws of Guyana.


2.3 Liability


The duties, obligations and liabilities of the Parties comprising the Contractor under this


Agreement and under any Licence issued pursuant hereto shall be joint and several.


2.4 Indemnity





The Contractor shall, at all times, keep Government indemnified against all actions, claims


and the demands that may be brought or made against Government by a third party by


reason of negligence (any act or omission or reckless disregard of harmful consequences


which results in damage to a third party) by the Contractor or the Operator in the exercise


or purported exercise of the rights of the Contractor under the Act or the Licence, provided


however, that nothing in this Article shall require the Contractor to give the said indemnity


for any claim or demand in respect of Petroleum taken by the Minister pursuant to Article


11 after title has passed to the Minister at the Delivery Point or in respect of assets acquired


by the Minister pursuant to Article 20 from and after the date of acquisition. Liability by


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 the Contractor to the Government for damages in respect of Petroleum Operations under


this Agreement is limited to insurance required in accordance with Article 20.2 (a),


provided however, that the Contractor shall not be liable to the Government for indirect,


punitive or consequential damages, including but not limited to, production or loss of


profits.












































































































































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 Article 3 - Petroleum Prospecting Licence and Guarantee





3.1 Petroleum Prospecting Licence


(a) On the date of this Agreement, the Minister, in accordance with the Act, the


Regulations and the terms of this Agreement, shall grant to the Contractor the


Petroleum Prospecting Licence for an initial period of four (4) years from the


Effective Date over the area described in Annex A and shown on the map attached


as Annex B hereto.


(b) Subject to Article 4 and the other terms of this Agreement, such Petroleum


Prospecting Licence may be renewed but not more than twice at the election of the


Contractor for consecutive periods of up to three (3) years each in accordance with


the provisions of the Act and the Regulations.


3.2 Guarantee





The Contractor shall on or before the sixtieth (60th) day from the Effective Date during


year one (1) of the initial period in accordance with Article 4.1 hereunder, and thereafter,


no later than ninety (90) days after the commencement of all subsequent work commitment


periods as specified in Article 4.1, provide an Affiliate Company guarantee or other form


of guarantee acceptable to the Minister in the amount of ten percent (10%) of the budget


submitted by the Contractor, pursuant to Article 7.1, for each specific work commitment


period. Notwithstanding the foregoing, if the Contractor exceeds its minimum work


commitment in any phase specified in Article 4.1, the completion of such work


commitment shall constitute a waiver of such proportion of the requirement of the


guarantee by the Minister which is the equivalent of the excess work previously completed


but which is applicable to the subsequent work commitment phase.


If the guarantees are Affiliate Company guarantees they shall be in lieu of and satisfy any





obligation to provide a guarantee and/or bond pursuant to the Act, Regulations or this


Agreement on the part or on behalf of the Contractor.






































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 Article 4 - Exploration Programme and Expenditure


Obligation





4.1 Exploration Programme





Subject to the provisions of this Agreement, in discharge of its obligations to carry out


Prospecting Operations in the Contract Area, the Contractor shall carry out the minimum


work described herein, during the periods into which Prospecting Operations are divided


hereunder:-





(a) The initial period of four (4) years shall be divided into two (2) phases. Each phase


shall consist of two (2) years duration.





(i) Phase One - (Two (2) years)


(aa) During Phase One of the initial period. The Contractor shall complete a





geological and geophysical evaluation report of the Contract Area based on


the available geological information, 2D seismic and 3D seismic data


previously acquired and from reprocessed seismic data which may be


determined necessary by Contractor.





(bb) At the end of Phase One of the initial period, the Contractor shall elect


either to relinquish the entire Contract Area or to enter Phase Two (2) of the


Initial Period.


(ii) Phase Two (Two (2) years)





(aa) Subject to Article 5, during Phase Two (2) of the Initial Period, the


Contractor shall, in accordance with the conclusions and recommendations


of the geological and geophysical evaluation report completed in Phase One


(1), acquire a minimum of one thousand square kilometres (1000 sq. km) of


3D seismic within the Contract Area during year one (1) of Phase Two (2).


Contractor shall process and interpret same to identify drillable targets


within the Contract Area.





(bb) At the end of Phase Two (2) of the Initial Period, Contractor shall elect


either to relinquish the entire Contract Area or to renew the Petroleum


Prospecting Licence for a three (3) year period.


(b) (i) The First Renewal Period of three (3) years duration.








(aa) Subject to Article 5. During the first two years of the first Renewal Period,


the Contractor shall drill one (1) Exploration Well to the Cretaceous


Formation in accordance with Article 4.2





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 At the end of the First Renewal Period, the Contractor shall elect either to


relinquish the Contract Area except for any Discovery Areas in respect of


which the Minister is informed under Section 30 of the Act and the area


contained in any Petroleum Production License, or subject to Article 5,


relinquish twenty (20%) of the Contract Area and renew the Petroleum


Prospecting License for a second period of three (3) years,





(c) (i) The Second Renewal Period of three (3) years


(aa) Subject to Article 5, during the Second Renewal Period the Contractor shall





drill one (1) Exploration Well to the Cretaceous Formation in accordance


with Article 4.2





At the end of the Second Renewal Period, the Contractor shall relinquish


the entire Contract Area except for, (i) any Discovery Area in respect of


which the Minister is informed under Section 30 of the Act, (ii) for the area


contained in any Petroleum Production License, and any other portion of


the Contract Area on which the Minister agrees to permit the Contractor to


conduct further exploration activities





(d) The minimum work commitment for a given phase or period referred to in Article


4.1(a), (b) and (c) may be undertaken in an earlier phase or period in whole or in


part and in such a case the work commitment with respect to the subsequent period


shall be deemed to be satisfied accordingly in whole or in part as the case may be.


Contractor may conduct additional work beyond the minimum work commitment


in accordance with the terms and conditions of this Agreement, which shall be


subject to Cost Recovery.


Subject to Article 24 herein and section 43 of the Act, the Minister may extend any


Exploration Period pursuant to a showing of good cause by the Contractor.


4.2 No Exploration Well drilled by the Contractor shall be treated as discharging any


obligation of the Contractor to drill such Exploration Well unless either it has been drilled


to the depth or formation agreed with the Minister and specified in the annual work


programme, or before reaching such depth or formation:


(a) the Contractor has expended on such well and any substitute well drilled pursuant


to Article 4.2 (d) below the amount for such work commitment in the budget


submitted by the Contractor and approved by the Minister as specified in Article


7.1; or


(b) the Geologic Basement is encountered or such Exploration Well has drilled at least


3,000m, whichever is encountered first; or


(c) a Discovery is made and the Minister is informed thereof; or








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 (d) insurmountable technical problems are encountered which, in accordance with


good oilfield practice, make further drilling impractical, provided that if the said


Well is abandoned owing to the said problems before reaching the Geologic


Basement, the Contractor shall drill a substitute well in the Contract Area to the


same minimum depth as aforesaid unless otherwise agreed with the Minister or


until the amount in Article 4.2 (a) less any amounts actually expended on the


abandoned well is reached or one of the criteria listed at Articles 4.2 (b) to (d) is


satisfied.


4.3 Expenditure Obligation





The sum actually spent in fulfillment of the work obligation in a specific phase or period





shall be deemed to have satisfied the Contractor’s minimum expenditure obligation for that


phase or period. For the avoidance of doubt, in the event the Contractor has performed its


work obligation(s) for an amount less than the amount specified in an annual work


programme and budget submitted under Article 7, Contractor shall be deemed to have


fulfilled its expenditure obligation for that phase or period.






















































































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Article 5 - Relinquishment of Areas





5.1 If prior to the end of the initial period of the Petroleum Prospecting Licence issued to the


Contractor under Article 3.1, an application is made by the Contractor for renewal of the


Licence under section 24 (1) of the Act, the Contractor shall not be required to relinquish at


the end of the initial period any area of the original Contract.


5.2 If prior to the end of the first renewal period of the Petroleum Prospecting Licence an


application is made by the Contractor for a second renewal of the Licence under section


24(1) of the Act, the Contractor shall then relinquish at the end of this first renewal period


an area equal to at least twenty percent (20%) of the original Contract Area less the


exclusions provided for in Articles 5.3.





5.3 The areas to be relinquished pursuant to Articles 5.1 and 5.2 shall:


(a) comprise Blocks, as defined in the Act;


(b) exclude any Discovery Area together with a reasonable area of protective acreage





surrounding the Discovery Area;


(c) exclude any area under an Appraisal programme, any Production Area, and any


Natural Gas Discovery;


(d) be selected by Contractor so that:





(i) the area relinquished shall comprise one (1) discrete area, having regard to


any representations made by the Minister with respect to location, shape


and size;





(ii) the Blocks to be retained for and during the first renewal period pursuant to


Articles 5.1 and 5.2 shall constitute one (1) discrete area unless otherwise


agreed to by the Minister.


5.4 In the event that an area or areas cannot be identified for relinquishment in accordance with


this Article without including in such area or areas in whole or in part a subsisting


Discovery Area or Production Area or the Minister is of the opinion that the area(s) to be


relinquished will not enable licensing separately or jointly with contiguous unlicensed


areas then the Minister and Contractor shall consult together with a view to agreeing on the


area(s) to be relinquished in the light of the circumstances then prevailing. If after sixty


(60) days from receiving notice of the Contractor’s proposed relinquishments the Parties


cannot agree on a proposed relinquishment, the Parties shall refer the matter to a sole


expert pursuant to Article 26.





For the purpose of this Article, a Discovery Area shall not include any Discovery Block


which relates to a Discovery in respect of which the Contractor has notified the Minisft


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 that the Discovery is not of potential commercial interest pursuant to section 31 (1) of the


Act, unless such Discovery Block forms a part (and only to that extent) of another


subsisting Discovery Area.


5.6 If a Petroleum Prospecting Licence ceases to have effect with respect to Discovery Blocks


pursuant to section 32 (1) of the Act, such reduction in size of the Contract Area shall be


treated as an advance relinquishment under this Article and shall reduce the area next


required to be relinquished accordingly.





5.7 Without prejudice to the obligations undertaken in Article 4, the Contractor may at any


time during the period of the Petroleum Prospecting Licence, on giving the Minister no less


than three (3) months’ notice in writing of its intention to do so, relinquish any Block or


Blocks in the Contract Area pursuant to section 28 of the Act and in accordance with


Articles 5.4 and 5.5. Any such relinquishment shall count towards any subsequent


mandatory relinquishments required under Articles 5.1, 5.2 or 5.3 above as the case may


be.



















































































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Article 6 - Delegation; Co-operation between Contractor and


GGMC





6.1 The Minister may, subject to the provisions of the Act, or any other law delegate any


person to exercise and perform any of his functions under this Agreement and anything


done by the delegate in pursuance of the delegation shall have the same validity and effect


as it would have if done by the Minister.


6.2 The Minister also hereby authorizes GGMC to perform, inter alia the following functions:


(a) to monitor the Petroleum Operations carried out by the Contractor;


(b) to review any proposed exploration work programme and budgets presented by


Contractor under Article 7 and any Appraisal Programme presented by the


Contractor under Article 8;


(c) to review any Development Plan submitted by the Contractor in connection with an


application for a Petroleum Production Licence pursuant to section 34 of the Act;


(d) to ensure the maintenance and availability for inspection of operating records and


reports for Petroleum Operations in accordance with this Agreement;


(e) to ensure the accounting procedures specified in Annex C of this Agreement are


followed;


(f) to ensure compliance with the provisions of this Agreement, Petroleum Act and


Regulations.


6.3 The Contractor and the delegate shall co-operate in good faith in the exercise of the


Minister’s functions delegated pursuant to this Article and the Contractor shall keep the


delegate advised of all activities taking place during the course of Petroleum Operations


and shall provide the delegate with all available information relating to Petroleum


Operations as the Minister or the delegate may reasonably require. Towards this end the


delegate and the Contractor shall meet at regular intervals, but at least once every six (6)


months, to review the progress and results of the Petroleum Operations and to discuss the


work programme and other activities to be undertaken in the ensuing months.


6.4 With respect to the matters to be reviewed pursuant to Article 6.2, should the delegate wish


to make any specific proposals or revisions thereto, the delegate shall so notify the


Contractor specifying its reasons therefor; within reasonable time thereafter the Contractor


and the delegate shall meet and endeavour to agree on the proposals or revisions. The


Contractor shall consider and take into account the proposals of the delegate and shall


attempt in good faith to reach agreement on such proposals. If the Contractor and the


delegate fail to agree within sixty (60) days of submission by the Contractor, the





16


Petroleum Agreement


Government of Guyana - Orinduik PA


 exploration work programme and budget (including as appropriate any minimum work


programme to be undertaken pursuant to Article 4) submitted pursuant to Article 7 and the


Appraisal Programme (except in the case of Gas to which the provision of Article 12 shall


apply) submitted pursuant to Article 8 (revised in accordance with any amendments or


additions thereto agreed by the delegate and the Contractor) shall be deemed adopted.


6.5 Nothing herein above provided shall preclude the right of the Minister to delegate any





additional function to the delegate or subject to Article 6.1 to delegate from time to time


any functions, including those herein contained, to any other agency of Government. A


delegation shall not increase the obligations or liabilities of the Contractor and notice of


any delegation shall be given promptly to the Contractor.


6.6 Any approvals required by the Minister or delegates of the Minister shall not be


unreasonably withheld. If the Contractor requests required approval from the Minister or


delegates of the Minister, such approval shall be deemed as granted if no response is


provided within sixty (60) days of the request.





6.7 The Minister and the delegate shall, upon request, either provide to the Contractor or assist


the Contractor in obtaining the assistance required for Contractor to fulfill requirements of


the contract including but not limited to the following:





--- (a) approvals issued by Government agencies or local government institutions which


are required to conduct hydrocarbon operations, including approvals necessary to


import goods and services free from duties and taxes;


(b) approvals for easements and right-of-way to enable Contractors to conduct


operations;


--- (c) approvals for security for field operations and personnel;


--- (d) permission for entry and exit visas and working permits for Contractor’s


employees, subcontractors and their dependents;


--- (e) supply reports, analyses, samples, geological, geophysical and production data


necessary to Contractor from areas inside and outside the Contract Area;


(0 approvals to export hydrocarbons, and use essential infrastructure necessary for the


,_ economic export of hydrocarbons at normal commercial terms.


























17


Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 7 - Annual Work Programme and Budget





7.1 Within sixty (60) days after the Effective Date, the Contractor shall prepare and submit to


the Minister in detail a work programme and budget, setting forth the Prospecting


Operations, which the Contractor proposes to carry out (including, as appropriate, any


minimum work obligations to be undertaken pursuant to Article 4) during the remaining


portion of the Calendar Year. In subsequent years no less than one (1) month before the


beginning of the Calendar Year, the Contractor shall prepare and submit to the Minister a


work programme and budget setting forth Petroleum Operations which the Contractor


proposes to conduct during the upcoming Calendar Year.


7.2 The Contractor may, for good cause, amend the details of any work programme or budget


submitted to the Minister pursuant to Article 7.1 provided that:


(a) notice of the details of the reasons for the amendments is given to the Minister;


(b) such amendments shall not have the effect of reducing the minimum work


obligations undertaken under Article 4 without the prior consent in writing of the


Minister;


(c) any proposed amendment shall be subject to review pursuant to Article 6.
























































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Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 8 - Discovery and Development





8.1 Where, pursuant to section 30 of the Act, notice has been given to the Minister of a


] Discovery in the Contract Area, the Contractor shall forthwith inform the Minister of the


steps it proposes to take to satisfy the requirements of section 30 (1) (a) (iii) of the Act.


8.2 Where the Contractor, pursuant to section 31 (1) of the Act, has informed the Minister that,





in its opinion, the Discovery is of potential commercial interest, the Contractor shall, as


soon as practicable thereafter, submit, for the consideration of the Minister, its proposals


for an Appraisal Programme to meet the requirements of section 30 (1) (b) of the Act.





8.3 Where an Appraisal Programme has been adopted by the Contractor pursuant to Article


8.2, the Minister may, on application by the Contractor pursuant to section 31 (2) of the


Act, stating reasons therefor, extend the period within which application may be made by


the Contractor for a Petroleum Production License.


Where the Contractor has made an application to the Minister for a Petroleum Production


8.4


Licence in respect of any part of the Contract Area in accordance with section 34 (1) of the


Act, such application shall be accompanied by the proposals required under section 34 (3)


of the Act (hereinafter referred to as “the Development Plan”) and shall satisfy the


provisions of section 36 of the Act and the Regulations. The Development Plan shall


provide that not later than six (6) months after the grant of the first Petroleum Production


Licence, the Contractor shall in consultation with GGMC, prepare and implement a


programme for training and employment of Guyanese nationals in each phase and level of


Petroleum Operations and for the development of management and technical skills for the


safe and efficient conduct of Petroleum Operations.


8.5 Where the Minister considers that the application has not met the requirements of Article


8.4, he shall so notify the Contractor within sixty (60) days of receipt of the application,


and GGMC and Contractor shall meet to discuss the application with a view to ensuring


that the requirements of Article 8.4 are met. In the event that the Parties are unable to agree


on amendments to the application to meet such requirements within sixty (60) days from


the date of aforesaid application (or such longer period as the Parties shall agree), or where


the Minister fails to respond to or act on the aforesaid application within sixty (60) days,


the Contractor may refer the matter to a sole expert pursuant to Article 26 for determination


within sixty (60) days of appointment of such expert or such other time period as may be


agreed between the Contractor and the Minister.





Where the Minister considers that the aforesaid application has met the requirements of


Article 8.4 he shall, within sixty (60) days of receipt thereof, so notify the Contractor. In


such event or where in the event of a dispute it is determined by the sole expert pursuant to


Article 26 that the Contractor has made an application which meets the requirements of


Article 8.4, provided the Contractor is not in default under this Agreement, the Minister


shall grant, within sixty (60) days of such notification or determination as the case may to


19


Petroleum Agreement


Government of Guyana - Orinduik PA


to Contractor, a Petroleum Production Licence (in the Form D of the schedule as specified


in the Regulations) over the area for which the application has been made on terms and


conditions consistent with this Agreement and the Act and Regulations which will enable


the Contractor to carry on Petroleum Operations in the Production Area in accordance with


the Development Plan wherein the level of production set shall be consistent with the


maximum efficient rate of production which conforms to sound reservoir engineering


principles in accordance with good international petroleum industry practice. The initial


term of a Petroleum Production Licence shall be twenty (20) years commencing from the


date of the grant of the licence under the said Act. The Minister may impose policy-based


production limits on production below those consistent with maximum efficiency rates for


the field or fields, any such production limits will be imposed countrywide and shall be


allocated proportionately based upon demonstrable, verifiable field production capacities.


8.7 While the Contractor holds a Petroleum Prospecting Licence or has made an application


pursuant to Article 8.4 and in accordance with section 34 (1) of the Act, the Minister shall


not grant a Petroleum Production Licence in respect of all or part of the Contract Area or


area covered by such application (whether on a geographical or geological basis) to any


third party.


8.8 Where the Contractor pursuant to section 31 (1) of the Act has served notice on the


Minister that in its opinion a Discovery made in the Contract Area is not of potential


commercial interest, the provisions of section 32 (1) of the Act shall apply.


8.9 The Contractor may apply for a renewal of a Petroleum Production Licence for a maximum


ten (10) years. The application for renewal of ten (10) years shall be granted as long as the


Contractor is in good standing under the Licence.


(a) Natural Gas. In the event of any Non-Associated Gas discovery within the


Contract Area, in recognition of the fact that Natural Gas projects generally have


much longer lead times from discovery to first commercial production than is the


case for Crude Oil projects, the Minister shall grant Contractor’s request for the


maximum ten (10) year Petroleum Production License renewal so long as


Contractor is in good standing under the Licence.


(b) The Minister shall not refuse to grant the renewal of a Petroleum Production


Licence under section 40(1) of the Act without first providing the Contractor;


(i) Notice stating the grounds of the intended refusal; and


(ii) Ninety (90) calendar days following the date of the notice referenced in


Article 8.9(b)(i) to respond to or remedy the stated grounds for refusal.


8.10 If it was determined that the Field as to which the Commercial Discovery applies extends


beyond the boundaries of the Contract Area, or if such is subsequently determined in the


course of development or producing operations in the Field, then Contractor may apply for


an extension of the Contract Area to include the additional acreage encompassing the Field


as determined by the analysis of all the relevant information. The Minister may grant the


20


Petroleum Agreement


Government of Guyana - Orinduik PA


 extension to the Contractor for such additional acreage to enable the entire Field to be


developed and produced with optimal efficiency in accordance with good oil Field


practice. The said acreage shall not be available to Contractor if it is held under Licence to


a third party. In such instances, the provision of Section 44 of the Act shall apply.















































































































































21


Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 9 - Records, Reports and Information; Confidentiality


9.1 Records, Reports and Information





(a) The Contractor shall, at all times while this Agreement is in force, maintain and


submit to the Minister in accordance with the provisions of the Act and the


Regulations, the Petroleum Production Licence and this Agreement, full and


accurate reports, records, returns and accounts of Petroleum Operations in the


Contract Area.


(b) All data, well logs, maps, magnetic tapes, cuts of cores and cutting samples and all


other geological and geophysical information obtained by the Contractor in the


course of carrying out Petroleum Operations hereunder and all geological,


technical, financial and economic reports, studies and analyses generated in


relation thereto (hereinafter referred to as “Petroleum Data”) shall be submitted to


the Minister in accordance with the Regulations.


(c) The Contractor may freely export for processing or laboratory examination or


analysis samples or other original materials constituting Petroleum Data, provided


that samples equivalent in size and quality or, where such material is capable of


reproduction, copies of equivalent quality have first been delivered to the Minister.


(d) Petroleum Data shall be the joint property of the Minister and the Contractor but


shall become the sole property of the Minister with respect to any area which ceases


to be part of the Contract Area, whether as result of relinquishment, or expiry,


surrender or termination of a Licence or otherwise in accordance with the Act, from


the date on which such area ceases to be part of the Contract Area.


(e) The Minister, through duly appointed representatives, upon providing the


Contractor with at least seven (7) days’ notice, shall be entitled to observe the


Petroleum Operations conducted by the Contractor at his sole cost and expense and


at all reasonable times to inspect all assets, records and data kept by the Contractor


relating to such Petroleum Operations. In the exercise of such rights under this


paragraph the Minister shall not unduly interfere with the Contractor’s Petroleum


Operations under this Agreement.


(f) Nothing in this Article shall be construed as requiring the Contractor or any of the





Parties comprising the Contractor to disclose any of its proprietary technology or


that of its Affiliated Companies, which is not acquired in the course of Petroleum


Operations under this Agreement.














22


Petroleum Agreement


Government of Guyana - Orinduik PA %





9.2 Confidentiality





(a) All Petroleum Data, information and reports obtained or prepared by the Contractor


hereunder shall, so long as they relate to any part of the Contract Area, be treated as


confidential and each of the Parties undertakes not to publish, reproduce or


otherwise deal with such Petroleum Data or to disclose the same or the contents


thereof to any other person without the consent in writing of the other Parties, such


consent not to be unreasonably withheld, provided however, that subject to Article


9.2 (b), this Article shall not:


(i) prevent disclosure by the Contractor:





(aa) to an Affiliated Company or employees of an Affiliated Company;


(bb) to consultants, professional advisers, data processing centres,


laboratories and Sub-Contractors where disclosure is for the


conduct of Petroleum Operations;


(cc) to a bank or other financial institution in connection with financing


for Petroleum Operations or general financing requirements


established by Contractor or an Affiliated Company of Contractor;


(dd) to the extent required by any applicable law or the regulations of any





stock exchange upon which the shares of the Contractor or an


Affiliated Company are quoted, or by governmental order, decree,


regulation or rule, or to the extent required under any legal


proceeding or any court order binding on Contractor or Affiliated


Company of Contractor;


(ee) to bona fide prospective assignees or transferees of an interest


hereunder of the Contractor or in connection with merger,


consolidation, or a sale of stock of the Contractor or an Affiliated


Company thereof;


(ff) in connection with data trades;


(gg) of data information and reports already known to the Contractor or





Affiliated Company prior to the Effective Date; or


(hh) of data, information and reports acquired independently from a third


party that represents that it has the right to disseminate such data at


the time it is acquired by the Contractor or Affiliated Company;


(ii) Save as provided in Article 9.2 (a) (i), prevent disclosure pursuant to section


4 of the Act, provided however that neither the Minister nor Contractor


shall disclose Petroleum Data relating to any area subject to a Licence to a





23


Petroleum Agreement


Government of Guyana - Orinduik PA $





 competitor of the Contractor, without the prior written consent of the other


Party; or


(iii) be construed as imposing on any Party any obligation hereunder with


respect to any petroleum data, information or reports, which are, without


disclosure by such Party, generally known to the public.





(b) Any petroleum data, information or reports disclosed by the Contractor pursuant to


this Article shall be disclosed on terms which ensure that the data, information or


reports aforesaid are treated as confidential by the recipient (except for disclosures


made pursuant to Article 9.2 (a) (i) (dd) and prompt notice of all disclosures with


respect to Articles 9.2(a)(i) (ee) and (ff) shall be given to the Minister.





(c) All petroleum data which becomes the sole property of the Minister pursuant to


Article 9.1 (d) shall continue to be treated as confidential by the Contractor for a


period of one (1) year from the date on which it became the sole property of the


Minister, but may be used by the Contractor in connection with data trades with the


prior written consent of the Minister, such consent not to be unreasonably withheld


subject however to Article 9.2 (b).





(d) Where a Licence ceases to be in force with respect to any area, the Contractor shall


deliver to the Minister originals of all petroleum data and other information relating


to such area pursuant to regulation 26 of the Regulations provided however that, on


application duly made to him pursuant to regulation 28 of the Regulations, the


Minister shall permit the Contractor to retain copies of petroleum data and


information relating to the Contract Area subject to Article 9.2 (b).





(e) Notwithstanding the provisions of Article 9.1 (d), all the Contractor’s proprietary


technology, except technology for which the cost of development has been


approved as Recoverable Contract Cost under this Agreement, shall remain the


property of the Contractor.












































24


Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 10 - Annual Licence Rental Charge





The Contractor shall on the Effective Date of the Petroleum Prospecting Licence or the date of


grant of any Petroleum Production Licence as the case may be and, thereafter, so long as the said





Licence remains in force, on each anniversary date thereof, pay without demand to the


Government an annual Licence rental charge in respect of the Contract Area for the entire


Exploration Period and such payments shall apply to those areas remaining after taking into


account any relinquishments pursuant to Article 5 as specified below. Payments under this Article


10 shall be paid directly into bank accounts held and controlled by GGMC. Contractor shall verify


such bank accounts and GGMC agrees to cooperate, assist and provide Contractor any information


it requires to conduct such verification.





Initial Period*: US$40,000/annum


First Renewal Period: US$40,000/annum


Second Renewal Period: US$40,000/annum




























































































25


Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 11 - Cost Recovery and Production Sharing








11.1 Subject to the terms and conditions of this Agreement, the Contractor shall bear and pay all


Contract Costs incurred in carrying out Petroleum Operations and shall recover Contract


Costs only from Cost Oil and/or Cost Gas as herein provided.





11.2 All Recoverable Contract Costs incurred by the Contractor shall, subject to the terms and


conditions of any agreement relating to Non-Associated Gas made pursuant to Article 12,


be recovered from the value, determined in accordance with Article 13, of a volume of


Crude Oil (hereinafter referred to as “Cost Oil”) and/or Natural Gas (“Cost Gas”) produced


and sold from the Contract Area and limited in any Month to an amount which equals


seventy-five percent (75%) of the total production from the Contract Area for such Month


excluding any Crude Oil and/or Natural Gas used in Petroleum Operations or which is lost.





“Recoverable Contract Costs” means such costs as the Contractor is permitted to recover,


as from the date they have been incurred, pursuant to the provisions of Annex C.


11.3 To the extent that in any Month, Recoverable Contract Costs exceed the value of Cost Oil





and/or Cost Gas determined in accordance with Article 13 and/or Article 12, the


■ unrecoverable amount shall be carried forward and, subject to the limitation stipulated in


ir Article 11.2, shall be recoverable in the immediately succeeding Month, and to the extent





not then recovered, in the subsequent Month or Months.





11.4 The balance of Crude Oil and/or Natural Gas available in any Month after Recoverable


Contract Costs have been satisfied to the extent aforesaid (hereinafter referred to as “Profit


k Oil” and/or “Profit Gas” as the case may be) shall be shared between the Government and


the Contractor for each Field in the following proportions:


Monthly Profit Oil Sharing Chart





Production Per Day Profit Share


Minister Contractor


First 25,000 Bbls 50% 50%


Next 25,000 Bbls 52.5% 47.5%


XT VU/IAADLI 55%


= Next 15.000 Bbls /. v. i ■ 57.5% m


>80,000 Bbls wtmmmmmmBm'mmmm





11.5 The quantity of Cost Oil and/or Cost Gas actually utilized in satisfying the Recoverable


Contract Costs may be allocated by the Contractor to production from any Field or Fields.





11.6 Subject to the provision of Article 14, the Profit Oil and/or Profit Gas shall be shared


between the Government and Contractor on a Monthly basis according to their respective


entitlements as set out in Article 11.4.








26


Petroleum Agreement


Government of Guyana - Orinduik PA


I---!


11.7 To the extent that the actual quantities and costs required to determine Cost Oil and/or Cost


Gas and Profit Oil and/or Profit Gas for the Month in question are not known, Crude Oil


and/or Natural Gas sharing shall be calculated on an interim basis each Month using the


following:


(a) unrecovered Recoverable Contract Cost;


(b) estimated current Recoverable Contract Cost by reference to the agreed work


programme and budget supplemented by any other relevant documents or


information which are accepted by Contractor and Minister as being reliable


indicators of the actual position for the Month in question;


(c) estimated production for the Month in question;


(d) Crude Oil and/or Natural Gas price from the previous Month calculated.


11.8 Retroactive adjustments shall be made to the Crude Oil and/or Natural Gas entitlements


and shall be agreed with the Minister based on recalculations utilizing actual quantities of


Crude Oil and/or Natural Gas produced and saved and Recoverable Contract Costs. Any


revised entitlements shall be made, subject to any applicable lifting agreements, as soon as


practicable after such elements have definitely been determined.


11.9 The Contractor shall have the right to use in any Petroleum Operations as much of the


production as may reasonably be required by it therefor and the quantities so used or lost


shall be excluded from any calculations of Cost Oil and/or Cost Gas and Profit Oil and/or


Profit Gas entitlement.





















































27


Petroleum Agreement


Government of Guyana - Orinduik PA


Article 12 - Associated and Non - Associated Gas?





12.1 Associated Gas


(a) The Associated Gas produced from any Oil Field within the Contract Area shall be


with priority used for the purposes related to the operations of production and


production enhancement of Oil Fields, such as Gas injection, Gas Lifting and


power generation.


(b) Based on the principle of full utilisation of the Associated Gas, and with no


impediment to normal production of Crude Oil, a plan of utilisation of the


Associated Gas shall be included in the Development Plan of each Oil Field. It


there is any excess Associated Gas in the Oil Field after utilisation pursuant to


Article 12.1 (a) the Contractor shall carry out a feasibility study regarding the


utilisation of such excess Associated Gas of such Oil Field. Such feasibility study,


if carried out before submission of the Development Plan of an Oil Field, shall be


included in the Development Plan. In the event that the Contractor conducts a


further feasibility study of the utilisation of the excess Associated Gas of such Oil


Field, such further feasibility study shall be submitted to the GGMC for review and


discussion. If the excess Associated Gas in any Oil Field is utilized, the


construction of facilities for such utilisation and the production of excess


Associated Gas shall be carried out while a Petroleum Production Licence


continues in force.


(c) If the Contractor believes that excess Associated Gas of an Oil Field has


commercial value, the Contractor shall be entitled, but not required, to make further


investment to utilise such excess Associated Gas subject to terms at least as


attractive as those established for Crude Oil in Article 11 including, but not limited


to, cost recovery for such further investment. If the Contractor believes improved


terms are necessary, the Parties shall carry out good faith negotiations in a timely


manner to find a new solution to the utilisation of the said excess Associated Gas


and reach an agreement in writing.


(d) If the Contractor does not believe that the Associated Gas has commercial value,


but the Minister believes the Associated Gas does have commercial value, the


Government may utilize the Associated Gas provided there is no impediment to


normal production of Crude Oil. All handling from the point of separation of Crude


Oil shall be at the sole risk and expense of the Government and will not affect the


amount of Cost Oil and Profit Oil due to Contractor.


(e) Expenses incurred by the Contractor in the production and use of the Associated


Gas of an Oil Field as stipulated in Article 12.1 and those incurred in carrying out


any feasibility study on the utilisation of the excess Associated Gas shall be


charged to the development cost of the Oil Field and shall be Recoverable Contract


Costs.








28


Petroleum Agreement


Government of Guyana - Orinduik PA


(f) If the Parties agree that the excess Associated Gas of an Oil Field has no


commercial value, then such Gas shall be disposed of by the Contractor, provided


that there is no impediment to normal production of the Crude Oil in the most


economic manner to the Contractor, consistent with good international petroleum


industry practice.


12.2 Non - Associated Gas


(a) When the Contractor in accordance with Article 8.2 has informed the Minister of


any Non - Associated Gas discovery within the Contract Area that is of potential


commercial interest, the Contractor shall inform the Minister whether Contractor


believes such discovery is potentially commercial under the current Agreement


terms. If the Contractor believes that the fiscal terms will have to be revised in


order to economically commercialize the Non-Associated Gas discovery, the


Contractor shall propose revisions to the fiscal terms as the basis for entering into


good faith negotiations to reach mutually acceptable terms for developing the


Non-Associated Natural Gas discovery. The agreement, which shall form an annex


to this Agreement, shall be based on and include the following principles:


(i) For a period of twenty-four (24) months from the date of the notice


delivered to the Minister under Article 8.2, the Contractor and the Minister


shall engage in good faith negotiations of such revisions to Article 11 that


would be necessary in order to provide the Contractor with project


economics that will provide the Contractor with a rate of return of not less


than twenty percent (20%). The Parties recognize that in order to achieve


an economically viable development of Non-Associated Natural Gas.


different fiscal regimes may have to be considered. In the event the Parties


cannot agree upon the necessary revisions to Article 11, a sole expert shall


be engaged pursuant to Article 26.3. Once the sole expert renders its


decision, the Contractor shall review the decision and shall notify the


Minister as to whether it shall proceed with the development of the


Non-Associated Gas discovery under the terms of the sole expert decision.


In the event the Contractor elects not to proceed, the Contractor shall


relinquish the non-Associated Gas discovery to the Government.


(ii) The time period between the notice of discovery provided for in section


31(1) of the Act and the application for grant of a Petroleum Production


Licence shall be extended pursuant to section 31(2) of the Act. if necessary,


to provide reasonable time, as agreed between the Parties, to conduct an


Appraisal Programme, develop a Gas market, and design and construct


facilities necessary to commercialize the Natural Gas.


(b) Following the signature of the agreement herein the Contractor shall work out an


Appraisal Programme for the discovered Gas Field according to the terms and


conditions determined in the said agreement and submit it to the GGMC for rew“”'


pursuant to Article 6.4. The Contractor shall carry out the Appraisal Prograr





29


Petroleum Agreement


Government of Guyana - Orinduik PA


which was reviewed and agreed upon with GGMC. The expenses incurred in


carrying out the said Appraisal Programme by the Contractor shall be charged to


the Exploration Costs of the Contract Area and shall be Recoverable Contract Costs


as permitted under the terms of Annex C.


(c) After completion of the Appraisal Programme of a Gas Field, the Contractor shall


submit a report on the Appraisal Programme to GGMC for its review and


discussion. If the Contractor decides that a Gas Field is non-commercial, the


corresponding area covered by the Gas Field may be retained in the Contract Area


during the Exploration Period. With respect to a Gas Field which has potential


commercial value but has not been developed because the market and consuming


facilities are not available, the period during which the Gas Field is retained in the


Contract Area shall be extended at the request of the Contractor. Such extended


period, however, shall not be more than five (5) consecutive Contract Years after


the date of expiration of the Exploration Period hereunder. In case the time


necessary for the market to develop and for the consuming facilities to be


constructed for the Gas Field exceeds such extended period Contractor shall then


have the right to request from the Minister a grant of further extended period. Prior


to expiration of the Exploration Period, if the Parties agree that any commercial


Gas Field needs to be reappraised because of some favourable factors, the


Contractor shall work out and submit a new evaluation report on the Gas Field and


submit it to the GGMC for its review pursuant to Article 6.4 and any expenses


incurred in doing so shall be cost recoverable.


(d) If the Contractor retains a Gas Field beyond the expiration of the Exploration


Period pursuant to Article 12.2, the Contractor shall pay to the Minister at the


commencement of each year of the retention period an annual rental to be arrived at


through good faith negotiations but which shall be no less than twenty thousand


United States Dollars (US$20,000). The holding fee shall be refunded to


Contractor on a pro rata daily basis in the event the Contractor relinquishes the Gas


Field or declares such Gas discovery to be a commercial discovery prior to the end


of such year.


12.3 General Conditions Applicable to Natural Gas


(a) Subject to the Government’s election to take its production in kind and reserving its


rights to market its own production, the Contractor shall have the sole


responsibility for marketing all the available Natural Gas from the Contract Area


and for negotiating for the sale thereof on a joint basis at fair market prices and


terms common to both the Minister and the Contractor in accordance with Third


Party Sales principles. The Contractor will pursue markets both within and outside


Guyana and seek to market Natural Gas to the highest realization outlets after


deduction of transportation costs. The Contractor will seek to recognize Natural


Gas’ potential value at the international value of alternative fuels in the end user


market of the buyers.








30


Petroleum Agreement


Government of Guyana - Orinduik PA


(b) The Contractor shall have the right, but not the obligation, to process Natural Gas


for conversion to liquids, chemicals or similar Gas utilisation projects and


Contractor shall have the right to dispose of the liquids or products therefrom. The


Contractor shall have the right to process Natural Gas for recovery of the liquids


contained therein. Natural Gas Liquids (NGLs) recovered and sold shall be valued


based upon the international value of such products as published in Platts and


adjusted to reflect the fair market value of such products FOB Guyana. In addition,


the Contractor shall have the right to liquefy the Natural Gas for sale as LNG and/or


the right to compress the Natural Gas to accommodate sales as compressed natural


gas (CNG).


(c) The Contractor shall have the right to use Natural Gas, both Associated Gas and


Non-Associated Gas, as may be required for Oil Field and Gas Field operations,


including the right to re-inject for pressure maintenance and enhanced recovery


without charge, fee or royalty.


12.4 General Conditions Related to Petroleum Operations


(a) Subject to the approvals of appropriate governmental authorities, which approvals


shall not be unreasonably withheld, the Contractor shall have the right to construct,


operate and maintain roads, drill water wells and to place and/or construct fixtures


and installations necessary to conduct the Petroleum Operations, including but not


limited to, storage tanks, trunk pipelines, shipment installations, pipelines, cables


or similar lines, liquefaction, processing and compression, located inside or outside


the Contract Area, as well as construct, operate and maintain or lease facilities for


the transportation of Crude Oil and Natural Gas from the Contract Area. Any


required governmental approvals may be conditional on the use by other producers


of the excess capacity, if any, of those facilities, subject to receipt of


indemnification of Contractor by any such other producers against any cost,


liability or claim that may arise from such use.= Where the Minister and Contractor


agree that a mutual economic benefit can be achieved by constructing and


operating common facilities, the Contractor shall use its reasonable efforts to reach


agreement with other producers on the construction and operation of such common


facilities.





(b) Subject to negotiations on a reasonable price and available capacity rights, the


Contractor may have access to and use of any export facility or pipeline or other


facilities or infrastructure built by the Government or by any wholly or partial 1 >


owned Guyana state enterprises on terms no less favorable than those of any other


party having access or use of such facility.





(c) Subject to negotiations as to a reasonable price and ownership interest in the


facilities, the Contractor may have the right to participate in the construction,


ownership and operation of any of the types of facilities described in sub-clause


12.4(a) above that are built by the Government or by any wholly or partially owned








31


Petroleum Agreement


Government of Guyana - Orinduik PA


 state enterprises or by any third parties on terms no less favorable than those of any


other party participating therein.



















































































































































































32


Petroleum Agreement


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 Article 13 - Valuation of Crude Oil or Natural Gas





13.1 For the purpose of this Agreement the value of a Barrel of Crude Oil or an Mcf of Natural


Gas shall be the average fair market price determined as follows:





(a) as soon as practicable after the end of each Calendar Month in which Crude Oil or


Natural Gas has been produced and sold from any Field pursuant to this


Agreement, an average price (in terms of United States dollars per Barrel or Mcf,


FOB, Delivery Point) for each Field shall be determined in respect of production


during that Calendar Month. It is understood that production from different Fields


may be of differing quality and that separate average prices may accordingly be


determined for any Calendar Month in respect of production from each Field:





(b) the prices aforesaid shall be determined as follows:


(i) in the event that fifty percent (50%) or more of the total volume of sales by





the Contractor during the Calendar Month of Crude Oil or Natural Gas of a


given quality produced hereunder from a Field were Third Party Sales, as


hereinafter defined, the price of all Crude Oil or Natural Gas from such


Field of that quality shall be deemed to be the simple arithmetic average


price actually realised, calculated by dividing the total receipts from all such


sales calculated FOB the Delivery Point by the total number of Barrels of


Crude Oil or Mcfs of Natural Gas sold from such Field in such sales;


(ii) in the event that less than fifty percent (50%) of the total volume of sales by


the Contractor during the Calendar Month of Crude Oil or Natural Gas of a


given quality produced hereunder from a Field were Third Party Sales, the


price of all Crude Oil or Natural Gas from such Field of that quality will be


determined by the arithmetic average of:


(aa) The simple arithmetic average price actually realised in the Third





Party Sales during the Calendar Month of such Crude Oil produced


hereunder, if any, calculated by dividing the total receipts from all


such sales calculated FOB at the Delivery Point by the total number


of barrels of Crude Oil sold in such sales from such Field; and


(bb) The simple arithmetic average price per barrel at which one or more





crude oils of similar quality to the Crude Oil are being sold, such


price being determined by calculating the average for the Month in


which production takes place of the mean of the high and low FOB


price or prices for each day of those crude oils as quoted in Platts


Crude Oil Market Wire daily publication. In the event that Platt’s


ceases to be published or is not published for a period of thirty (30)











Petroleum Agreement


Government of Guyana - Orinduik PA


 consecutive days then the Parties shall agree on an appropriate


alternative publication.





In determining the final price, account shall be taken of any


differences between the Crude Oil and the crude oils quoted in


Platt’s, for quality, API gravity, sulphur, pour point, product yield as


well as differences in quantity, delivery time, payment and other


contract terms to the extent known. Allowance will also be made to


take account of the market area into which the Crude Oil is sold


should it be different from the area used for Platt’s.





The selected crude oils will be agreed between Contractor and the


Minister in advance for each Calendar Year and in making the


selection preference will be given to crude oils of similar quality to


Crude Oil from the relevant Field.





The arithmetic average aforesaid will be determined by the


percentage volume of total sales of Crude Oil by Contractor that are,


and that are not, as the case may be, Third Party Sales during the


Calendar Month in question.


(cc) In the case of Natural Gas, the Contractor and the Minister shall


agree on a methodology for valuation of Natural Gas under this


Article 13.1 (b)(ii) which represents the fair market value of such


Natural Gas FOB Guyana, taking into account composition of the


Natural Gas. This methodology will be reviewed annually and


modified if necessary.





(iii) all such prices will be adjusted to FOB Delivery Point.


p (iv) for the purposes of this Article Third Party Sales of Crude Oil or Natural


l


Gas made by the Contractor shall include any Third Party Sales made by the


r Contractor or an Affiliated Company of Contractor on the Minister’s behalf


pursuant to Article 14 but shall exclude:





r (aa) sales, whether direct or indirect through brokers or otherwise, of any


seller to any Affiliated Company of such seller, unless at


demonstrably arms length price (for example where an Affiliate


Company of Contractor buys and then resells to a third party at an


arms-length price which is disclosed to the Minister);





(bb) Crude Oil or Natural Gas exchanges, barter deals or restricted or


distress transactions, or any Crude Oil or Natural Gas transaction


which is motivated in whole or in part by considerations other than


the usual economic incentives for commercial arms length crude oil


or natural gas sales; and





34


Petroleum Agreement


Government of Guyana - Orinduik PA


 (cc) Government to government sales.








13.2 Contractor shall be responsible for determining the relevant prices in accordance with this


Article. The calculation, basis of calculation and the price arrived at, shall be supplied to


the Minister and shall be subjected to agreement by the Minister before it is finally


determined. Pending final determination the last established average Crude Oil or Natural


Gas price shall be used.


13.3 During the first Calendar Year of production from the Contract Area, the Contractor and


the Minister will meet in order to establish a provisional selection of the crude oils and an


appropriate mechanism for the purposes of giving effect to Article 13.1 (b)(ii) above. This


selection will be reviewed from time to time upon request of the Minister, GGMC or


Contractor and modified if necessary.


13.4 In the event of any difference or dispute between the Contractor and the Minister


concerning selection of the crude oils or natural gas, the calculation or the basis of


calculation of the prices and the prices arrived at or generally about the manner in which


the prices are determined according to the provisions of this Article, the matter or matters


in issue shall finally be resolved by a sole expert appointed pursuant to Article 26.3.


13.5 For the purposes of this Article, in determining the “quality” of a Crude Oil regard shall be


given to all relevant characteristics including but not limited to gravity, sulphur and metal


content, pour point and product yield. In the case of Natural Gas, quality of the Natural


Gas shall be determined based on its composition.



























































35


Petroleum Agreement


Government of Guyana - Orinduik PA


*8


Article 14 - Disposal of Production


14.1 Each of the Parties shall have the right to take in kind at the Delivery Point and separately


dispose of its share of the total quantities of production available under this Agreement.


The Contractor shall have the right to use as much production as may be needed in any


Petroleum Operations within the Contract Area and also within the transportation and


terminal system. In the event of third party usage of the transportation terminal systems the


quantities so used or lost outside the Contract Area shall be proportionate to aggregate use


of that transportation and terminal system. All quantities so used or lost shall be excluded


from any calculations of entitlement pursuant to Article 11. The quantity of production to


which the Government is entitled pursuant to Article 11 shall be measured and delivered to


the Government at the Delivery Point and the Government shall be responsible for all costs


and risks associated with the Government’s Lifting Entitlement from and after the Delivery


Point.


14.2 Within twelve (12) months after the Minister’s approval of a Development Plan, or within





a later period as may be agreed between the Parties but in any event no longer than three (3)


months before the first scheduled lifting of Crude Oil, the Contractor shall propose to the


Minister offtaking procedures to govern the method whereby the Parties will nominate and


lift their respective shares of Crude Oil. The details of such procedures shall be discussed


and agreed upon between Minister and Contractor. The major principles of such


procedures shall include the following:


(a) Lifting shall be carried out so as to avoid interference with Petroleum Operations.





(b) In the event that any Party shall find itself unable for any reason to lift such


quantities of Crude Oil as are to be lifted in accordance with procedures it shall


forthwith notify the other Parties to that effect. Such procedures shall include such


deterrents as the Parties may agree, to prevent a Party from delaying the lifting of


any quantities of Crude Oil not so lifted, to a later period.


(c) In the absence of any agreement to the contrary between the Parties, the Contractor


and the Minister shall share in each type of grade of Crude Oil in proportion to their


respective Lifting Entitlement.


14.3 The Contractor shall, if requested by the Minister, use reasonable efforts to market abroad


on competitive terms all or part of the Minister’s Lifting Entitlement subject to payment by


Minister of costs normally borne by a seller in such transactions and on other terms to be


agreed including an agreed marketing fee in respect thereof. The Minister shall provide the


Contractor with at least six (6) months’ notice before changing between receiving


payments in kind as provided under Article 14.1 and seeking the Contractor to market the


Minister’s Lifting Entitlement under this Article.








36


Petroleum Agreement


Government of Guyana - Orinduik PA A '





14.4 Subject to the provisions of Article 17 hereof, the Contractor shall have the right to export


at the export point chosen for this purpose all Petroleum to which it is entitled under this


Agreement free of any duty, tax or other financial impost, and to receive and retain abroad


all proceeds from the sale of such Petroleum.


14.5 The Contractor agrees to abide by the laws, regulations, orders, directives and notifications


of Guyana which shall also apply to its Affiliated Companies engaged in Petroleum


Operations in Guyana.














































































































37


Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 15 - Taxation and Royalty





15.1 Subject to Article 32, and except as provided in Article 15.2. 15.8, and except as otherwise


set forth in this Article 15.1, no tax, value-added tax, excise tax, duty, fee, charge or other


impost shall be levied at the date hereof or from time to time thereafter on the Contractor or


Affiliated Companies in respect of income derived from Petroleum Operations or in


respect of any property held, transactions undertaken or activities performed for any


purpose authorised or contemplated hereunder other than:





■1 (a) subject to the provisions of Article 21, import duties at the rates specified from time


1 to time in the Customs Act (Cap. 82:01);


Co) taxes, duties, fees or other imposts for income derived from specific services


performed by the Contractor for the public or commercial enterprises and which is


unrelated to income derived from Petroleum Operations under this Agreement;


L (c) rent due to Government in respect of any land rights granted or assigned to the


Contractor;


S': (d) annual licence rental charges due under Article 10;


L


r (e) subject to Article 15.7, local government rates or taxes (being rates or taxes not


L calculated by reference to income) under laws of general application and which are


non-discriminatory, are commercially reasonable, and do not result in a rate or tax


to Contractor in excess of those generally applicable in Guyana;


r (f) (i) stamp duties, (ii) registration fees, (iii) licence fees, and (iv) any other similar


duty, fee or other impost of a minor nature, provided the above-referenced


L categories are imposed under laws of general application.


r 15.2 Except as provided in this Article 15, Contractor, Affiliated Companies, Sub-Contractors


L and individuals who axe expatriates shall be subject to the income tax laws of Guyana,


including, the Income Tax Act of Guyana (Cap. 81:01) and the Corporation Tax Act of


Guyana (Cap. 81:03) and shall separately comply with the requirements of those laws, in


particular with respect to filing returns, assessment of tax, and keeping and showing of


books and records.


f i


15.3 The taxable income of the Contractor arising in each year of assessment under this


Agreement for purposes of the income tax laws of Guyana, (including the Income Tax Act


and the Corporation Tax Act referred to in Article 15.2) shall include the amounts of


- Contractor’s income tax and corporation tax paid pursuant to Article 15.4.


r]











38


Petroleum Agreement


Government of Guyana - Orinduik PA


i








 ( 15.4 The Minister hereby agrees:





(a) that a sum equivalent to the tax assessed pursuant to Article 15.2 and 15.3 will be


paid by the Minister to the Commissioner General, Guyana Revenue Authority on


f behalf of the Contractor and that the amount of such sum will be considered income


of the Contractor; and


(b) that the appropriate portion of the Government’s share of Profit Oil delivered in


accordance with the provisions of this Agreement shall be accepted by the Minister


as payment in full by the Contractor of Contractor’s share of each of the following


levies, whatsoever the applicable rate of such levies may be, which the Minister


shall then pay on behalf of the Contractor under Article 15.4 (a) to the


Commissioner General, Guyana Revenue Authority:


(i) the share of royalty payable by Contractor pursuant to Article 15.6;





(ii) the Contractor’s share of the income taxes imposed by the laws of Guyana,


including, but not limited to, income tax imposed by the Income Tax Act


and corporation tax imposed by the Corporation Tax Act and payable at the


date hereof, or from time to time thereafter, and any other levy or charge on


income or profits which may become payable from time to time under any


laws, acts, statutes, regulations or orders by the Government; and





(iii) any other similar charge imposed and payable in respect of Petroleum


Operations at the date hereof, or from time to time hereafter, except charges


of the type specified in Article 15.1 (a-b).





15.5 The Contractor shall provide the Minister with the Contractor’s income tax returns to be


submitted by the Minister to the Commissioner General, Guyana Revenue Authority so the


Minister can pay income tax on behalf of the Contractor as provided under Article 15.4 (a).


On such returns, the Minister shall note that he is paying the income taxes on behalf of the


Contractor, so that the Commissioner General, Guyana Revenue Authority can properly


prepare the receipts required under this Article 15.5. Within one hundred and eighty (180)


days following the end of each year of assessment, the Minister shall furnish to Contractor


proper tax certificates in Contractor’s name from the Commissioner General, Guyana


Revenue Authority evidencing the payment of the Contractor’s income tax under the


Income Tax Act and corporation tax under the Corporation Tax Act. Such certificates shall


state the amount of tax paid individually on behalf of Contractor or parties comprising the


Contractor and other particulars customary for such certificates.





15.6 The Government’s share of Profit Oil specified in Article 11 includes royalty payable by


the Contractor at the rate of one percent (1 %) of Crude Oil produced and sold, and delivery


to the Minister, pursuant to Article 14 of his share of Profit Oil equivalent to royalty shall


constitute payment of such royalty in kind. Within one hundred and eighty (180) days


following the end of each year of assessment receipts evidencing payment of Contractor’s


39


Petroleum Agreement


Government of Guyana - 0 rinduik PA


royalty shall be furnished by the Minister to the Contractor stating the amount and other


particulars customary for such receipts.


15.7 Subject to the conditions of section 49 of the Act, the Minister may remit in whole or in


part, or defer payment of any royalties’ payable by Contractor.


15.8 Nothing in this Agreement shall be construed to place an obligation on the Government to


file a tax return declaring its share of production or profit share or to regard such profit


share as income within the meaning of section 5 of the Income Tax Act (Cap 81:01) or


section 4 of the Corporation Tax Act (Cap 81:03).


15.9 The Minister hereby agrees that the Contractor shall be exempted from the Property Tax


Act pursuant to section 51 of the Act and any other act which amends or replaces in part or


in whole the Property Tax Act.


15.10 Notwithstanding any provision to the contrary in this Article, Contractor, Affiliated


Companies or Non-Resident Sub-Contractors shall be exempt from VAT during the


Exploration Period on services rendered.


15.11 The Minister agrees that for the duration of the Exploration Period, and for any area within


the Contract Area where exploration activity is in progress, the provisions of section 10(b)


of the Corporation Tax Act (Cap 81:03), including any successor provisions to section


10(b) of the Corporation Tax Act (Cap 81:03), shall not apply to the Contractor, with


respect to any payments made to any Affiliated Companies or Sub-Contractors.


Notwithstanding any provision to the contrary in this Article, Affiliated Companies or


Non-Resident Sub-Contractors shall not be subject to the provisions of the Income Tax Act


of Guyana (Cap. 81.01) and the Corporation Tax Act of Guyana (Cap 81:03) during the


Exploration Period on income earned in Guyana for any given tax year if the Affiliated


Company or Non-Resident Sub-Contractor has conducted business in Guyana for one


hundred eighty three (183) days or less on a cumulative basis in the tax year of assessment.


15.12 There shall be no tax, duty, fee, withholding, charge or other impost applicable on interest


payments, dividends, deemed dividends, transfer of profits or deemed remittance of profits


from Contractor, Affiliated Companies or Non-Resident Sub-Contractors in Guyana*


including branches, to a foreign office or to Affiliated Companies whether within or


outside of Guyana.


15.13 The Expatriate employee of the Contractor, Affiliate Companies and any Subcontractor


shall be liable to pay personal income tax in Guyana on income earned in Guyana. Guyana


(represented herein by the Minister) shall cause the proper authorities to issue appropriate


tax certificates to Expatriate Employees when required.


(i) If an Expatriate Employee is liable to pay income tax in Guyana on income


earned in Guyana, such Expatriate Employee shall pay such income tax at a


rate equal to the current income tax rate of Guyana;





40


Petroleum Agreement


Government of Guyana - Orinduik PA


(ii) Notwithstanding any provision to the contrary in this Article, Expatriate


Employees of Contractor, Affiliated Companies or Non-Resident


Sub-Contractors shall not be subject to the provisions of the Income Tax


Act of Guyana (Cap. 81.01) and shall not be liable for personal income tax


in Guyana on income earned in Guyana for any given tax year if the


expatriate is physically present in Guyana for one hundred eighty three


(183) days or less on a cumulative basis in the tax year of assessment.


15.14 An Order shall be made giving effect to the provisions of this Article in statutory form and


language as specified in section 51 of the Act.








































































































41


Petroleum Agreement


Government of Guyana - Orinduik PA


 Article 16 - Contracts and Assignments








16.1 The Contractor shall, upon request, provide to the Minister copies of:





L 1 (a) contracts with respect to the sale or disposal of Petroleum (including invoices


issued thereunder);


V


j£ (b) any deed of assignment of an interest of the Contractor under this Agreement


r : pursuant to Article 25;


i" (c) any instrument by which the Contractor pledges, mortgages, encumbers or


hypothecates its interest under this Agreement or the Contract Area.


i


16.2 Assignments of any kind between Contractor and Affiliated Companies, as well as any


assignment of any kind made in accordance with this Agreement (including one to an


unrelated party) shall be exempted from any duties or taxes, including capital gains taxes


payable in such respect and instead shall be subject to a fee payable to GGMC upon


approval of the assignment for the amount of one hundred thousand United States Dollars


(US$ 100,000).


























n


hi





















































42


Petroleum Agreement


Government of Guyana - Orinduik PA


Article 17 - Domestic Supply Obligation


17.1 Terms for Crude Oil.


(a) If the Crude Oil requirements of the domestic market in Guyana (the “Crude Oil


Domestic Demand”) exceed the Minister’s total entitlement from all Crude Oil


production in Guyana, then the Contractor shall be obliged together with all parties


which produce Crude Oil in Guyana, to supply and sell a volume of Crude Oil to be


used for such Crude Oil requirements in Guyana, calculated on the basis of the ratio


which the Contractor’s Lifting Entitlement to Crude Oil bears to the sum of


Contractor’s Lifting entitlement plus the total entitlement of all other producers in


Guyana subject to Article 17.1(c). The volume of Crude Oil which the Contractor


shall be required to sell under this Article shall not exceed the Contractor’s share of


Profit Oil. The Minister shall give the Contractor notice on or prior to April 1 of the


year preceding the Calendar Year in which the Government will have the said


requirement and the term of the supply shall be on a Calendar Year basis unless


otherwise agreed.


For the purpose of this Agreement, Crude Oil Domestic Demand shall consist of


those quantities of Crude Oil (i) used to produce refined products or petrochemicals


in Guyana for end use by business and residential consumers in Guyana, or (ii) used


to produce power in Guyana for end use by business and residential customers in


Guyana, the amounts for which shall be based upon independent, verifiable


Government statistics. Crude Oil, refined products, petrochemicals or fuel for


power generation that are exported from Guyana shall not be considered part of


Crude Oil Domestic Demand.


(b) The Contractor shall, in any Year, have a right to supply out of Contractor’s Lifting


Entitlement the proportion of the Crude Oil requirements of Guyana that the


quantity produced from the Contract Area bears to the total production at the time


in Guyana to the extent that such requirement is not satisfied from any contract


entered into prior to the date of commencement of production from the Contract


Area. For the purpose of this paragraph, the term “the Crude Oil requirements of


Guyana” means the amount by which, in any Year, Crude Oil Domestic Demand


exceeds the Minister’s total entitlement to all Crude Oil produced in Guyana. The


Contractor shall give the Minister notice on or prior to April 1 of the Calendar Year


preceding the Calendar Year in respect of which Contractor wishes to exercise the


aforesaid right and the term of the supply shall be on a Calendar Year basis unless


otherwise agreed. Notwithstanding the foregoing the Contractor shall have the right


to supply the total amount calculated pursuant to the foregoing provisions.


(c) The price payable for the sale of Crude Oil pursuant to this Article shall be paid in


United States dollars (or other currency as may be agreed) at a place specified by








43


Petroleum Agreement


Government of Guyana - Orinduik PA


the Contractor within thirty (30) days of receipt of the Contractor's invoice by the


Minister, and shall be determined in accordance with Article 13, failing which


Contractor’s obligations in respect of the Domestic Supply Obligations of this





Article 17 shall be suspended until payment is made good, at which time deliveries


shall be resumed subject to any alternative commitments that may have been


reasonably entered into by Contractor to dispose of the Crude Oil during the period


of default in payment. Contractor shall recover any amount due and unpaid by the


Government, plus interest at the Agreed Interest Rate, from the Governments


Lifting Entitlement of Crude Oil.


(d) Any sale of Crude Oil as provided for in Article 17.1(a) - (c) shall occur at the





Delivery Point or such other point as the Minister and the Contractor may mutually


agree.


(e) All terms and conditions for the sale of Crude Oil pursuant to this Article, shall be


specified in a contract of sale entered into between the Minister and Contractor.


17.2 Terms for Natural Gas.





(a) If the Natural Gas requirements of the domestic market in Guyana (the “Natural


Gas Domestic Demand”) exceed the Minister’s total entitlement from all Natural


Gas production in Guyana, then the Contractor shall be obliged together with am


third parties which produce Natural Gas in Guyana, to supply and sell a volume of


Natural Gas to be used for such Natural Gas Domestic Demand in Guyana,


calculated on the basis of the ratio which the Contractor’s Lifting Entitlement to


Natural Gas bears to the sum of Contractor’s Lifting entitlement plus the total


entitlement of all other producers in Guyana subject to Article 17.2(c). The volume


of Natural Gas which the Contractor shall be required to sell under this Article shall


not exceed the Contractor’s share of Profit Gas. The Minister shall give the


Contractor notice on or prior to April 1 of the year preceding the Calendar Year in


which the Government will have the said requirement and the term of the supply


shall be on a Calendar Year basis unless otherwise agreed.





For the purpose of this Agreement, Natural Gas Domestic Demand shall consist of


those quantities of Natural Gas used for domestic residential, commercial and


industrial consumption, including fuel used for domestic power generation.


Natural Gas liquefied or compressed in Guyana for export or used as feedstock for


petrochemical exports, such as methanol and fertilizer, shall not be considered part


of Natural Gas Domestic Demand.





Any sales of Natural Gas to the domestic market shall be priced at the net back


price of such Natural Gas in the production Field, which shall be calculated as the


market destination price, minus: transport, marketing, processing, compression,


liquefaction and any other fee or tariff paid to take Natural Gas from the Field to the


market of destiny. In the event of a failure to reach agreement on the price, volume /





44


Petroleum Agreement V


Government of Guyana - Orinduik PA ■ - e





 and/or terms of sale, either Party may submit the dispute for sole expert


determination pursuant to Article 26.3.


(b) The Contractor shall, in any Year, have a right to supply out of Contractor’s Lifting





Entitlement the proportion of the Natural Gas requirements of Guyana that the


quantity produced from the Contract Area bears to the total production at the time


in Guyana to'the extent that such requirement is not satisfied from any contract


entered into prior to the date of commencement of production from the Contract


Area. For the purpose of this paragraph, the term “the Natural Gas requirements of


Guyana” means the amount by which, in any Year, Domestic Demand exceeds the


Minister’s total entitlement to all Natural Gas produced in Guyana. The Contractor


shall give the Minister notice on or prior to April 1 of the Calendar Year preceding


the Calendar Year in respect of which Contractor wishes to exercise the aforesaid


right and the term of the supply shall be on a Calendar Year basis unless otherwise


agreed. Notwithstanding the foregoing the Contractor shall have the right to supply


the total amount calculated pursuant to the foregoing provisions.





(c) The price payable for the sale of Natural Gas pursuant to this Article shall be paid in


United States dollars (or other currency as may be agreed) at a place specified by


the Contractor within thirty (30) days of receipt of the Contractor’s invoice by the


Minister, and shall be determined in accordance with Article 17.2(a), failing which


Contractor’s obligations in respect of the Domestic Supply Obligations of this


Article 17 shall be suspended until payment is made good, at which time deliveries


shall be resumed subject to any alternative commitments that may have been


reasonably entered into by Contractor to dispose of the Natural Gas during the


period of default in payment. Contractor shall recover any amount due and unpaid


by the Government, plus interest at the Agreed Interest Rate, from the


Government’s Lifting Entitlement of Natural Gas.


(d) Any sale of Natural Gas as provided for in Article 17.2(a) - (c) shall occur at the





Delivery Point or such other point as the Minister and the Contractor may mutually


agree.


(e) All terms and conditions for the sale of Natural Gas pursuant to this Article, shall be


specified in a contract of sale entered into between the Minister and Contractor.



































45


Petroleum Agreement


Government of Guyana - Orinduik PA


Article 18 - Guyana Resources


18.1 In the conduct of Petroleum Operations pursuant to this Agreement the Contractor shall


require that the Operator give preference to:


(a) the purchase of Guyanese goods and materials, provided that such goods and


materials are available on a timely basis of the quality and in the quantity required


by Operator at competitive prices; and


(b) the employment of Guyanese Sub-Contractors in so far as they are commercially


competitive and satisfy the Operator’s financial and technical requirements and


meet the requirements of Article 18.1 (a).


18.2 The Contractor shall establish appropriate tender procedures for the acquisition of goods,


materials and services which shall ensure that Guyanese suppliers and Sub-Contractors are


given adequate opportunity to compete for the supply of goods and services.


18.3 Within ninety (90) days after the end of each Calendar Year the Contractor shall provide


the Minister with a report outlining its achievements in utilising Guyanese resources


during that Calendar Year.
























































46


Petroleum Agreement


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Article 19 - Employment and Training


19.1 Subject to the requirements of any law relating to immigration. Government shall provide


the necessary work permits and other approvals required by the Contractor for employment


of Expatriate Employees in Guyana for the purpose of Petroleum Operations.


19.2 Without prejudice to the right of the Contractor to select employees and determine the


number thereof in the conduct of Petroleum Operations, the Contractor shall, require the


Operator to employ and encourage Sub-Contractors to employ Guyanese citizens having


appropriate qualifications and experience whenever and wherever possible.


19.3 During each year of the term of the Petroleum Prospecting License, or any renewal


thereafter the Contractor shall pay to GGMC the amounts of:


Initial Period: US $25,000


First Renewal Period: US $25,000


Second Renewal Period: US $25,000


for one or more of the purposes mentioned in Article 19.3 (a-d). Payments under this


Article 19.3 shall be paid directly into bank accounts held and controlled by the GGMC.


Contractor shall verify such bank accounts and GGMC agrees to cooperate, assist and


provide Contractor any information it requires to conduct such verification.


*


(a) to provide Guyanese personnel nominated by GGMC with on-the-job training in


Contractor’s operations in Guyana and overseas and/or practical training at


institutions abroad, particularly in the areas of logistical planning for undertaking


Petroleum Operations, seismic acquisition and interpretation, economic analysis,


petroleum accounting and contract administration;


(b) to send qualified Guyanese personnel selected by GGMC on courses at


universities, colleges or other training institutions selected by GGMC;


(c) to send Guyanese personnel selected by GGMC to conferences and seminars


related to the petroleum industry;


(d) to purchase for GGMC advanced technical books, professional publications,


scientific instruments or other equipment required by GGMC.




















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Article 20 - Rights to Assets and Insurance


20.1 Rights to Assets





(a) The Contractor shall have the right to use free of charge assets previously installed


by the Contractor in relinquished areas which are required for its operations in the


remaining portion of the Contract Area provided that in the event of re-licencing of


the relinquished area, such licence shall exclude the aforesaid assets.





(b) Subject to Article 20.1 (c) upon expiry or termination of this Agreement in


accordance with the provisions hereof, the Contractor shall upon notification by


GGMC pursuant to Article 20.1 (d) (i):


(i) deliver to the Minister, free of charge, in good order and condition, (fair





wear and tear excepted) all installations, works, pipelines, pumps, casings,


tubings, engines and other equipment, machinery or assets of a fixed or


permanent nature constructed, used or employed by the Contractor or the


Operator in the Contract Area; where costs have not been fully recovered


the provisions of Article 20.1 (b)(iii) shall apply;


(ii) deliver to the Minister, free of charge, any fixed assets relating to Petroleum


Operations outside the Contract Area and movable assets owned by the


Contractor or Operator and used or employed in connection with Petroleum


Operations and located in Guyana for which costs have been fully


recovered in accordance with Annex C herein; where costs have not been


fully recovered the provisions of Article 20.1 (b)(iii) shall apply;





(iii) sell to the Minister any other assets owned by the Contractor or Operator


and used or employed by the Contractor or Operator in the Contract Area or


elsewhere in Guyana in connection with Petroleum Operations at a price


equivalent to the unrecovered cost of the assets.


The above provisions of Article 20.1 (b) shall not apply to:





(i) assets which are still required by the Contractor or Operator for use in


respect of an area in Guyana subject to another petroleum agreement at the


time of expiry or termination of this Agreement;


(ii) equipment and other assets rented or leased by Contractor in Guyana;


(iii) equipment and other assets rented or leased by Contractor and imported in





Guyana, for use in Petroleum Operations and subsequently exported


therefrom;





(iv) equipment and any other assets owned or leased by a Sub-Contractor;


48


Petroleum Agreement


Government of Guyana - Orinduik PA


 (v) household goods and vehicles which are the personal property of employees


of the Contractor and Sub-Contractor;


(vi) equipment and assets otherwise not owned by Contractor or Operator.





(d) The Contractor shall notify the Minister of all assets acquired as provided in section


4 of Annex C to this Agreement.


(i) At least six (6) Calendar Months before expiry of the term of this


Agreement, within three (3) Calendar Months following notice of


termination of this Agreement or promptly following cancellation of all


r Licences, GGMC shall notify the Contractor of the assets to be delivered or


sold to the Government.





(ii) Subject to the terms and the provisions of this Article, the Contractor shall


not, within one (1) year of the date upon which it estimates that termination


of this Agreement will occur, remove from the Contract Area or sell anv


assets of a fixed or permanent nature which might be deliverable to the


Government under this Article without the consent of the Minister, such


consent not to be unreasonably withheld.


l (iii) Abandonment Programme and Budget





(aa) Within sixty (60) days after the expiration of the term of this


Agreement or the sooner relinquishment of some or all of the


Contract Area, the Contractor shall carry out to the Minister’s


satisfaction an abandonment programme agreed with the Minister


for all installations and pipelines provided by Contractor under this


Agreement that the Minister elects not to have delivered up to him


in accordance with Article 20.1(b). With respect to the area being


relinquished and/or facilities thereon, such abandonment


programme shall comply with and be limited to internationally


accepted standards prevailing at the time of abandonment.


(bb) Concurrent with the submission of a Development Plan as provided


in Article 8.4, the Contractor shall submit for the Minister’s


approval a proposed abandonment programme and budget covering


all such installations and pipelines provided by Contractor under


this Agreement. The abandonment programme and budget may be


revised from time to time with the agreement of the Minister to


account for any changes in the Development Plan.


(cc) The Minister shall act without unreasonable delay in reaching a


decision on the Contractor’s proposal under Article 20.1 (d)(iii)(bb)


and may approve or modify or impose conditions thereon. Before


modifying or imposing conditions on the proposal, the Minister


shall notify the Contractor of the proposed modification


49


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L


 conditions and give the Contractor the opportunity to make written


representations within sixty (60) days thereafter about the proposed


modifications or conditions. After taking into consideration such


representations the Minister and the Contractor shall make their best


efforts to mutually agree on the proposed modifications or


conditions of the abandonment programme and budget. In the event


that the Minister and Contractor cannot mutually agree on the


proposed abandonment programme and budget, either Party may b\


written notice to the other Party propose that the dispute be referred


•for determination in accordance with the provisions of Article 26.





(dd) In the event that the Contractor does not present a timely proposal to


the Minister under Article 20.1(d)(iii)(bb) the Minister after giving


thirty (30) days’ notice to the Contractor of his intention to do so,


may prepare an abandonment programme and budget for the


Contract Area if the Contractor does not present a proposal by the


end of the thirty (30) day period. When the Minister has so prepared


the abandonment programme and budget, it shall have the same


effect as if it had been submitted by the Contractor and approved b\


the Minister.





(ee) Contractor shall have the right from time to time to propose a


revised abandonment programme and budget. Such proposal shall


be subject to the approval process in Article 20.1(d) (iii) (cc). Any


revisions to the abandonment programme and budget shall result in


a revision to the guarantee referred to in Article 20.1(d) (iii) (hh).


(ff) All funds required to carry out the approved abandonment





programme shall be made available by Contractor when the costs


for abandonment are incurred.





(gg) All costs included in the approved abandonment programme and





budget shall be recoverable as operating costs on a unit of


production basis commencing during the period when the


abandonment programme and budget is approved. The amount to


be recovered in a respective period shall be calculated by dividing


the approved abandonment budget by the estimated ultimate


recoverable reserves, which may be revised from time to time based


upon the actual performance of the Field(s) and multiplying the


result by the units produced in the period.





(hh) Contractor shall deliver to the Minister within seven (7) days after


the date the abandonment programme and budget are approved an


undertaking from Contractor’s immediate parent company stating


that such parent company shall ensure provision of financial and


technical resources necessary to conduct the approved abandonment





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 programme. The amount of the financial undertaking shall be equal


to the amount recovered under Article 20.1 (d)(iii)(gg) less any


amounts spent under the approved abandonment programme.


(ii) Notwithstanding the provisions of Article 20.1 (d)(iii)(ff), in the


event the Minister elects to have all or a portion of the facilities


delivered up to him in accordance with Article 20.1(b), the


Contractor shall pay the Minister at the time of transfer the amounts


stipulated in the latest approved abandonment budget for the


transferred facilities. Upon transfer and receipt of the funds, the


Minister shall assume all responsibilities for the transferred


facilities and their abandonment and shall hold the Contractor


harmless against any liability with respect thereto accruing after the


date of such transfer to the Minister.


(iv) Subject to Article 20.1 (c), in the event that the Government acquires any





assets pursuant to this Article, the Government shall assume all liabilities,


with respect to such assets, arising from and after the date of acquisition and


shall not direct the Contractor to remove or abandon any such assets


pursuant to regulation 9 (l)(a) of the Regulations. The Government shall


indemnify and hold Contractor harmless for any and all costs and claims


which may arise from the use or abandonment of any asset from and after


the date of acquisition by the Government.


(v) Assets not acquired by the Government pursuant to this Article may be sold





or otherwise freely disposed of by the Contractor subject to Article 21.2 and


the Regulations.





20.2 Insurance





(a) The Contractor shall effect at all times during the term of this Agreement, insurance


as required by applicable laws, rules, and regulations and of such type and in such


amount as is customary in the international petroleum industry in accordance with


good oil field practice appropriate for Petroleum Operations in progress in respect


of but not limited to:


(i) loss or damage to all assets used in Petroleum Operations;





(ii) “Sudden and Accidental” pollution caused in the course of Petroleum


Operations for which the Contractor or the Operator may be held


responsible;


(iii) loss or damage to property or bodily injury suffered by any third party in the





course of Petroleum Operations for which the Contractor may be liable to


provide an indemnity pursuant to Article 2.4;








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 (iv) the Contractor’s and/or Operator’s liability to its employees engaged in


Petroleum Operations.


To the extent permitted by applicable laws, rules and regulations, such insurance


may be provided through Contractor’s affiliate insurance company.


(b) Subject to the Minister’s approval, which shall not be unreasonably withheld, the


Contractor, notwithstanding the provisions of Article 20.2(a), shall have the right to


self-insure all or part of the aforementioned insurances in Article 20.2(a).


(c) The Contractor shall require the Operator to carry and to endeavour to have its


Sub-Contractors carry insurance of such type and in such amount as is customary in


the international petroleum industry in accordance with good oil field practices.










































































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Article 21 - Import Duties





21.1 The Contractor, and the Sub-Contractors engaged in Petroleum Operations shall be


permitted to import, free of duty, VAT or all or any other duties, taxes, levies or imposts,


all equipment and supplies required for Petroleum Operations including but not limited to


drillships, platforms, vessels, geophysical tools, communications equipment, explosives,


radioactive sources, vehicles, oilfield supplies, lubricants, consumable items (other than


foodstuffs or alcoholic beverages or fuel), as well as all items listed on Annex D. The


aforementioned items, including but not limited to the items listed on Annex D, shall be


deemed approved and certified by the Chief Inspector to be for use in carrying out


Petroleum Operations. The Contractor shall give prior notification to the Minister of


Sub-Contractors engaged in Petroleum Operations.


Subject to Article 21.1, and for as long as this Petroleum Agreement remains in force the


Contractor and Sub-Contractors engaged in Petroleum Operations hereunder shall be


required to pay to the relevant authority a (ten per cent (10%) excise tax or the prevailing


rate, whichever is the lessor, on any fuel imports, where such imports have been certified


by the Chief Inspector to be used solely in carrying out Petroleum Operations in any area


within the Contract Area.


21.2 Subject to Article 20, any of the items imported into Guyana may, if no longer required for


Petroleum Operations hereunder, be freely exported at any time by the importing party,


without the payment of any export duty or impost; provided, however, that on the sale or


transfer by the importer of any such item to any person in Guyana (other than the


Government) import duty shall be payable by the importer on the value thereof at the date


of such sale or transfer as determined by the Customs and Excise Department in


accordance with their applicable rules.


21.3 Each Expatriate Employee of the Contractor (including any Affiliated Company) and of


Sub-Contractors, who have been assigned to work in Guyana for the Contractor, Affiliated


Companies or its or their Sub-Contractors shall be permitted, subject to the limitations and


conditions set out in the Customs Act, to import into Guyana free of import duty and taxes


within six (6) months on first arrival his personal and household effects provided, however,


that no property so imported by the employee shall be sold by him in Guyana except in


accordance with Government regulations and upon the payment of the prescribed customs


duties. Any importation or replacement of motor vehicles by Expatriate Employees of the


Contractor (including any Affiliated Company) and of Sub-Contractors, shall be a matter


for consultation with the Minister.


21.4 Each Expatriate Employee of the Contractor (including any Affiliated Company) and of


Sub-Contractors shall have the right to export from Guyana, free of all duties and taxes,


and at any time, all of the items imported under Article 21.3.











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Article 22 - Foreign Exchange Control


22.1 The Contractor shall, during the term of this Agreement have the right:








(a) to retain abroad all foreign exchange obtained from the export sales of Contractor’s


Petroleum and to remit and retain abroad all foreign exchange earned from sales of


Petroleum or assets in Guyana;


(b) to finance Petroleum Operations hereunder in any currency through any


combination of equity, inter-affiliate or third party loans, inter-company open


accounts, or production payments but no payments of principal or interest in


respect thereof shall be made from any source in Guyana other than the bank


accounts referred to in Article 22.1 (c);


(c) to open and maintain bank accounts denominated in Guyanese dollars and/or


United States dollars in Guyana and freely dispose of the sums deposited therein


without any restriction; provided the said accounts are credited only with sums


deposited in foreign currency or with the proceeds of the sale of foreign currency


being credits relating to or derived from Petroleum Operations;


(d) to open and maintain bank accounts in any foreign currency outside Guyana which


may be credited without restriction and freely dispose of any sums deposited


therein without restriction and without any obligation to convert into Guyana


currency any part of the said amounts, save that such accounts shall not be credited


with the proceeds of the sale of any Guyanese currency without the consent of the


Bank of Guyana;


(e) to purchase and, with the approval of the Bank of Guyana, to sell Guyanese


currency, through the authorized banks, without discrimination, at the rate of


exchange determined by the Bank of Guyana for authorized banks at the time of


purchase or sale.


22.2 Expatriate Employees of the Contractor or of Affiliated Companies and of Sub-Contractors


engaged in Petroleum Operations shall be subjected to all Exchange Control Regulations


that may be in effect from time to time. Expatriate Employees of the Contractor and


Sub-Contractors shall be entitled to remit freely abroad any portion of their salaries paid in


Guyana and any investment income that may be earned on the portion of their salaries paid


in Guyana.


22.3 Where Contractor, Affiliated Company or Sub-Contractor by notice in writing to the


Commissioner General, Guyana Revenue Authority has guaranteed the full and proper


discharge by an Expatriate Employee engaged in Petroleum Operations of his liability to


income tax under the laws of Guyana, that Expatriate Employee shall be entitled to receive


payment of the whole or any part of his remuneration in the country in which he is


normally resident.








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Article 23 - Accounting and Audits


23.1 The Contractor shall be responsible for maintaining accounting records relating to


Petroleum Operations under this Agreement in accordance with the Accounting


Procedures set out in Annex C hereto.


23.2 The Minister shall have the right to audit the accounting records of the Contractor in


respect of Petroleum Operations in accordance with Accounting Procedure.


23.3 Nothing in this Article shall be construed as limiting the right of Government or any officer


of Government pursuant to any statutory power to audit or cause to be audited the books of


the Contractor.













































































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Petroleum Agreement


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Article 24 - Force Majeure





24.1 Any non-performance or delay in performance, wholly or in part, by any Party hereto or


any of its obligations under this Agreement or in fulfilling any condition of any Licence


granted to such Party or in meeting any requirement of the Act or Regulations and any


Licence issued thereunder, shall, except for the payment of monies due by Government to


Contractor or monies due to Government (unless required under section 43(4) of the Act or


such failure to pay is prevented by any action of the Government, is due to any


international disputes affecting the extent of the Contract Area or is due to any event or


circumstance that prevents or hinders the production and sale of Crude Oil or Natural Gas),


not be a breach of this Agreement, the Licence or the Act and Regulations if and to the


extent that such non-performance or delay, wholly or in part, is caused by Force Majeure as


defined in this Article.





24.2 In this Article, the term “Force Majeure” shall mean any event beyond the reasonable


control of the Party claiming to be affected by such event which has not been brought about


at its instance and which has caused such non-performance or delay in performance and,


without limitation to the generality of the foregoing, includes acts of God, natural


phenomena or calamities, earthquakes, floods, tsunamis, epidemics, quarantines, fires,


wars declared, or undeclared, hostilities, invasions, blockades, riots, strikes, insurrection,


civil disturbances, mining of the seas, piracy, international disputes affecting the extent of


the Contract Area and any governmental action or inaction, that would prevent the


performance of an obligation or ability of the Contractor to export Petroleum.





24.3 Where any Party is claiming suspension of its obligations on account of Force Majeure,


such Party shall promptly notify the other Parties in writing of the occurrence thereof


giving particulars of the Force Majeure and obligations affected. Each Party shall promptly


notify the other Parties as soon as the Force Majeure has been removed or no longer


prevents it from carrying out its obligations hereunder.





24.4 Where a Party is prevented from exercising any rights or performing any obligations under


this Agreement due to a Force Majeure, the Minister hereby agrees pursuant to section 43


(3) of the Act, subject to the proviso therein, that a period of additional time necessary for


restoration of damages caused during a Force Majeure delay shall be added to the time


allowed under this Agreement for the performance of such obligation and for the


performance of any obligation or the exercise of any right dependent thereon and to the


term of any Licence issued pursuant to this Agreement. In the event the Parties cannot


agree on whether the occurrence of the event in question is considered a “force majeure”


event, or if the Minister does not agree an additional time period should be added, pursuant


to section 43(3) of the Act, then a Party may refer the dispute to Arbitration pursuant to


Article 26, to determine the nature of the “force majeure” event and its influence on the


contractual obligations of the Party concerned. The Contractor shall have the option of


terminating this Agreement without any further obligation if Force Majeure exceeds one


(1) year.


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Petroleum Agreement


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24.5 Without prejudice to the other provisions of this Article, the Parties shall meet to discuss


the consequences of the Force Majeure and the course of action to be adopted in the


circumstances.


24.6 The Government shall not invoke Force Majeure due to any order, regulation or written


directive of the Government which affects the Government’s performance of its


obligations under this Agreement.














































































































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Petroleum Agreement


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Article 25 - Assignment


25.1 Subject to the regulation 20 of the Regulations, the Contractor shall not assign, or transfer


in whole or in part, any of its rights, privileges, duties or obligations under this Agreement,


or any Licence issued pursuant to this Agreement, to any person, firm or corporation,


without the prior written consent of the Minister.


25.2 The Minister shall give his consent under Article 25.1 where:


(a) the assignment or transfer will not adversely affect the performance or obligations


under this Agreement;


(b) the assignment is not contrary to the interests of Guyana; or


(c) subject to (a) above, the assignment or transfer is to an approved Affiliated


Company.





25.3 In the event that the Minister does not give his consent or does not refuse a request for an


assignment or transfer by Contractor within sixty (60) days of receipt of such request,


consent shall be deemed to have been given by the Minister.


25.4 .Any assignment made pursuant to this Article shall bind the assignee to all the terms and


conditions hereof and the terms and conditions of any Licence issued pursuant to this


Agreement unless otherwise agreed, and as a condition to any assignment, the assignee


shall provide an unconditional undertaking to the Minister to assume all obligations by the


Contractor under this Agreement or any Licence issued pursuant to this Agreement.


25.5 An application for assignment or transfer of a Licence shall be made in accordance with


Form E of the schedule specified in the Regulations. The applicant shall submit such


additional information relating to the intended assignee which the Minister may reasonably


require to enable him to dispose of the application.



































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Petroleum Agreement


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Article 26 - Sole Expert Determination and Arbitration





26.1 The Parties shall make reasonable efforts to resolve amicably all Disputes by negotiation.


A notice of the existence of a Dispute shall be given by a Party to another Party in


accordance with Article 33. In the event that no agreement is reached within sixty (60)


days after the date on which a Party notifies the other that a Dispute exists, or such longer


period as specifically agreed by the Parties, any Party shall have the right to have such


Dispute determined by arbitration or a sole expert as provided for in this Article 26.


26.2 Any claim, demand, cause of action, dispute, or controversy arising out of or in connection


with this Agreement, including any question regarding its formation, existence, validity,


enforceability, performance, termination, or alleged breach (“Dispute”) which cannot be


settled amicably by negotiation shall be resolved by binding arbitration or by a sole expert


pursuant to Article 26.3, Article 26.4 or Article 26.6, whichever applies. When a Dispute


arises, the obligations related to the subject-matter of such Dispute shall be tolled pending


final resolution or settlement pursuant to this Article 26.


26.3 Any matter required to be referred to a sole expert for determination under this Agreement,


including under Articles 5.4, 8.5, 12.2(a)(i), 13.4, and any other matter which the Parties


expressly agree in writing to refer to a sole expert, shall be referred to a sole expert for


determination, by a Party giving notice to such effect pursuant to Article 33. The sole


expert shall be appointed by agreement between the Parties, and in the event the Parties fail


to agree on the sole expert within thirty (30) days after receipt of the written notice from


any Party proposing the appointment of a sole expert, such expert shall be appointed by the


International Centre for Expertise of the International Chamber of Commerce (“ICC”). A


sole expert shall be an independent and impartial person of international standing with


relevant qualifications and experience. The expert, once appointed, shall have no ex parte


communications with any of the parties to the Dispute concerning the expert determination


or the underlying Dispute. The Parties shall cooperate fully in the expeditious conduct of


such expert determination and to provide the expert with access to all facilities, books,


records, documents, information and personnel necessary to make a fully informed


decision in an expeditious manner. The sole expert shall act as an expert and not as an


arbitrator or mediator, and shall endeavor to resolve the Dispute within thirty (30) days of


his appointment, but no later than sixty (60) days after his appointment. The sole expert


shall decide the manner in which any determination is made, but in any event shall accept


oral and/or written submissions and arguments from the Parties. All correspondence,


documentation and information provided by a Party to the sole expert shall be copied to the


other Party, and any oral submissions to the sole expert shall be made in the presence of all


Parties and each Party shall have a right of response. The decision of the sole expert on


matters referred to him shall be final and binding on the Parties. The Parties shall refer any


Dispute arising out of or relating to such expert decision, including enforcement thereof, to


arbitration pursuant to Article 26.4 or Article 26.6, whichever applies.








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26.4 Subject to the provisions herein, the Parties hereby consent to submit to the International


Centre for the Settlement of Investment Disputes (ICSID) any Dispute relating to or arising


out of this Agreement to arbitration pursuant to the rules of the Convention on the


Settlement of Investment Disputes between States and Nationals of Other States


(hereinafter referred to as the “Convention”). It is hereby stipulated that the transaction to


which this Agreement relates is an investment within the meaning of the Convention. The


Government hereby irrevocably waives any claim to immunity for itself, its agencies, its


enterprises, and any of its assets with regard to any sole expert determination or arbitration


pursuant to this Article 26, and to any proceedings to recognise or to enforce this Article 26


or any proceeding to recognise or enforce a sole expert determination, or an arbitral award


rendered in an arbitration thereunder. Without prejudice to the generality of the foregoing,


the waiver of immunity shall include immunity from service of process and immunity from


jurisdiction of any competent court or any arbitration tribunal, and immunity' of any of the


Government’s, its agencies’, or its enterprises' property from execution of any sole expert


determination or arbitration award or judgment entered thereon.


26.5 If the Secretary-General of ICSID refuses to register a request for arbitration or if a tribunal


of arbitrators constituted pursuant to Article 26.4 above determines that a dispute is outside


of ICSID’s jurisdiction, either Party may request arbitration of the dispute before three


arbitrators pursuant to the Arbitration Rules of the United Nations Commission on


International Trade Law (UNCITRAL). The American Arbitration Association shall


administer the arbitration under the UNCITRAL Arbitration Rules and shall act as the


appointing authority when the UNCITRAL Arbitration Rules call for an appointing


authority.


26.6 The seat of the arbitration proceedings pursuant to this Article 26 shall be Washington DC,





United States of America, however, hearings may be held at such other place as the Parties


may agree to in writing. The arbitration proceedings shall be conducted in the English


language.


26.7 The fees and expenses of a sole expert (as well as the charges for the use of ICSID or other


facilities) shall be borne equally by the Contractor and the Government. Each Party shall


bear any other expenses it incurs in connection with expert or conciliation proceedings. In


the case of arbitration proceedings, the arbitrators shall assess the expenses incurred by the


Parties, the fees and expenses of the arbitrators, the charges for the use of the facilities and


any other costs related to the arbitration and shall decide by whom such costs shall be paid


in their award. The arbitral award shall be made and payable in dollars of the United States


of America, free of any tax or other deduction. The award shall include interest, unless the


arbitration tribunal determines that it is not appropriate. Interest shall run from the date of


any breach or violation of this Agreement. Interest shall continue to run from the date of


award until the award is paid in full. Interest shall be calculated at the Agreed Interest


Rate. The arbitrator(s) shall render a decision within six (6) months after having been


confirmed, or such other time as the Parties may agree.


26.8 The decision of a majority of the arbitrators shall be final and binding on all the Parties and /


judgment on the award may be entered by any court of competent jurisdiction.





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26.9 Any award ordered shall be binding on the Parties and shall not be subject to any appeal or


to any other remedy except those provided in the Convention. Each Party shall abide by


and comply with the terms of the award except to the extent that enforcement shall have


been stayed pursuant to the relevant provisions of the Convention.









































































































































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Article 27 - Applicable Law


27.1 This Agreement shall be governed by, interpreted and construed in accordance with the


laws of the Co-operative Republic of Guyana, and, consistent with such rules of


international law as may be applicable or appropriate, including the generally accepted


customs and usages of the international petroleum industry and rules and principles as have


been applied by international tribunals.

























































































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Article 28 - Protection of the Environment





28.1 In accordance with the Environmental Protection Act. 1996. the Contractor shall obtain an


environmental authorization as required from the Environmental Protection Agency and


comply with the provisions of that Environmental Protection Act in relation to any activity


of this Agreement that is governed by that Environmental Protection Act.





28.2 The Contractor is precluded from initiating any exploration or development activity on


those areas outside of the Contract Area which the Environmental Protection Agency may


determine to be sensitive or protected.


28.3 In furtherance of regulation 6 of the Regulations in the conduct of Petroleum Operations


the Contractor shall take necessary and adequate precautions, in accordance with good


international petroleum industry practice, against pollution and for the protection of the


environment and the living resources of the rivers and sea.


28.4 If the Contractor’s failure to comply with the provisions of Article 28.1 results in pollution


or damage to the environment, riverain or marine life or otherwise, the Contractor shall


take all reasonable measures in accordance with good international petroleum industry


practice to remedy the failure and the effects thereof and shall where pollution occurs treat


or disperse it in an environmentally acceptable manner. The Contractor shall not be


obligated to remedy or clean up pollution or environmental damage of any type that existed


prior to the commencement of Petroleum Operations by the Contractor or arises as a


consequence of pre-existing environmental conditions.


28.5 The Contractor shall notify the Minister forthwith in the event of any emergency or


accident arising from Petroleum Operations affecting the environment and shall take such


action as may be prudent and necessary in accordance with good international petroleum


industry practice in such circumstances.


28.6 If the Contractor does not act promptly pursuant to Article 28.4 so as to control or clean up


any pollution within a reasonable period specified by the Minister, the Minister may, after


giving the Contractor reasonable notice in the circumstances, take any actions which are


necessary in accordance with good international petroleum industry practice and the


reasonable costs and expenses of such actions shall be borne by the Contractor.


























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\^LSC_





Article 29 - Termination and Cancellation





29.1 This Agreement shall be deemed to have been terminated if the Petroleum Prospecting


Licence granted to the Contractor pursuant to Article 3 and every Petroleum Production


Licence granted to the Contractor under Article 8 has either expired or, under and in


accordance with the Act and any relevant provision of this Agreement, been surrendered


by the Contractor or lawfully cancelled by the Minister pursuant to section 42 of the Act


but save as aforesaid, shall continue in full force and effect so long as the Contractor


continues to hold any of the said Licences.


29.2 Should any issue arise between the Parties as to whether the Contractor is in default and


such issue cannot be amicably settled by consultation between the Parties and a dispute


thereon is referred for resolution pursuant to Article 26, this Agreement and the said


Licences shall continue in force pending resolution of such dispute.


29.3 Pursuant to section 42 of the Act, the Minister shall not cancel a Licence on the basis of


default unless the Minister has, by notice served on the licensee, given not less than thirty


(30) days’ notice of such intention and the basis of default. In the notice the Minister shall


specify a reasonable date, not less than sixty (60) Business Days, before which the licensee


may submit a written response or remedy the default.


29.4 On termination of this Agreement, or cancellation of any Licence as aforesaid, the rights


and obligations of the Parties shall cease by the termination or cancellation, but such


termination, or cancellation shall not affect any right of action existing or liabilities


incurred by a Party before the date of termination or cancellation, and any legal


proceedings that might have been commenced or continued against a Party may be


commenced or continued against it.


















































64


Petroleum Agreement


Government of Guyana - Orinduik PA


Article 30 - Effective Date


30.1 The Effective Date shall be the date on which this Agreement is duly signed.




























































































65


Petroleum Agreement


Government of Guyana - Orinduik PA


Article 31 - Miscellaneous





31.1 The Government assures the Contractor that the Contract Area lies entirely within the


territorial limits of Guyana and that Guyana has sovereignty over such area. The


Government shall continue to assert its right to the entire Contract Area and seek to resolve


current or future claims, if any, by other States that impugn any portion of the Contract


Area. The Government shall also use its best efforts to permit due observance of the terms


and conditions of this Agreement by both Parties. Both Parties undertake not to take any


action inconsistent with the terms and conditions of the Agreement.


31.2 This Agreement shall not be amended or modified in any respect except by written


agreement entered into by all the Parties which shall state the date upon which the


amendment or modification shall become effective.


31.3 In the event of any conflict between any provisions in the main body of this Agreement and


any provisions in the Annexes, the provision in the main body shall prevail.


31.4 The headings of this Agreement are for convenience of reference only and shall not be


taken into account in interpreting the terms of this Agreement.


31.5 A reference to the singular in this Agreement includes a reference to the plural and vice





versa.


31.6 The provisions of this Agreement shall inure to the benefit of and be binding upon the


Parties and their permitted assignees and successors in interest.


31.7 No waiver by any Party of any one or more obligations or defaults by any other Party shall


be construed as a waiver of any other obligations or defaults whether of a like or of a


different character.


31.8 This Agreement supersedes and replaces any previous Agreement or understanding


between the Parties whether oral or written on the subject matter hereof, prior to the date of


this Agreement.





























66


Petroleum Agreement


Government of Guyana - Orinduik PA





V^SLVC.


Article 32 - Stability of Agreement


32.1 Except as may be expressly provided herein, the Government shall not amend, modify,


rescind, terminate, declare invalid or unenforceable, require renegotiation of, compel


replacement or substitution, or otherwise seek to avoid, alter, or limit this Agreement


without the prior written consent of Contractor.


32.2 After the signing of this Agreement and in conformance with Article 15, the Government


shall not increase the economic burdens of Contractor under this Agreement by applying to


this Agreement or the operations conducted thereunder any increase of or any new


petroleum related fiscal obligation, including, but not limited to, any new taxes


whatsoever, any new royalty, duties, fees, charges, value-added tax (VAT) or other


imposts.


32.3 If at any time after the signing of this Agreement there is a change in the laws of Guyana


whether through the amendment of existing laws (including the hydrocarbons law, the


customs code or tax code) or the enactment of new laws or a change having the force of law


in the interpretation, implementation or application thereof (whether the change is specific


to the Agreement, the Contractor or of general application) and such change has a


materially adverse effect on the economic benefits, including those resulting from the


fiscal regime provided by this Agreement, accruing to the Contractor hereunder during the


term of this Agreement, the Government shall promptly take any and all affirmative


actions to restore the lost or impaired economic benefits to Contractor, so that Contractor


receives the same economic benefit under the Agreement that it would have received prior


to the change in law or its interpretation, application, or implementation. The foregoing


obligation shall include the obligation to resolve promptly by whatever means may be


necessary any conflict or anomaly between this Agreement and any such new or amended


legislation, including by way of exemption, legislation, decree and/or other authoritative


acts.


32.4 In the event that Contractor’s overall economic benefits have been materially and


adversely affected by actions or changes as set forth above in Section 32.3, whether


directly or indirectly, Contractor may notify the Government in writing. The Parties shall


then meet within thirty (30) days after such notification with the objective of reaching


agreement on a remedial action to be taken by the Government, whether by exemption,


legislation, decree and/or other authoritative acts or by amendment to the terms of the


Agreement. If the Parties are unable to resolve their differences within one hundred twenty


(120) days after Contractor has issued the aforementioned notification, then the Contractor


may refer the matter to arbitration in accordance with Article 26. In such case, the arbitral


tribunal is authorized to modify the Agreement to re-establish the economic benefits under


the Agreement to Contractor described in Article 32.3, or in the event this is not possible,


including for example where such dispute would not qualify or constitute a legal dispute


under Article 25 of the ICSID Convention, to award damages to Contractor that fully


compensate it for the loss of economic benefits under the Agreement, both historical and


future losses.





67


Petroleum Agreement


Government of Guyana - Orinduik PA T


Article 33 - Notices





33.1 All notices and other communications to be given under this Agreement shall be deemed to


have been made properly if delivered in person in writing, mailed with charges prepaid or


sent by facsimile, by one Party to the other at their respective addresses in Guyana as set


forth below and copied to their overseas addresses. Any such notice or communication


given as aforesaid shall be deemed to have been given and received at the time of delivery


(if delivered by hand or by courier) or at the time of receipt (if transmitted by facsimile):





The Minister Responsible for Petroleum


c/o Guyana Geology And Mines Commission


Upper Brickdam, Stabroek,


P.O. BOX 1028, Georgetown, GUYANA.


Attention: Commissioner, GGMC


Telephone 592-225-3047


Facsimile: 592-223-5223








Eco (Atlantic) Guyana Inc. and to


c/o Edward A. Luckhoo, L.L.B. Colin Kinley


Whitehall


Lot 1 Croal Street Suite 800


Georgetown, Guyana 7400 West 132nd Street


luckhoo@solutions2000.net Overland Park, Kansas 66213


mailto: luckhoo@solutions2000.net United States of America


luckhoo.luckhoo@gmail.com Email: Colin@ecooilandgas.com


Telephone: 592-225-9232 Fax: +1 888-788-2734


Facsimile: 592-225-6301








Tullow Guyana B.V. and to


c/o Tullow Oil Pic Tullow Guyana B.V.


9 Chiswick Park c/o Tullow Oil Pic


566 Chiswick High Road No 1 Central Park, Leopardstown,


London W4 5XT, United Kingdom Dublin, Ireland


Attn: General Counsel Attn: Exploration Manager


Telephone: +44 203 249 9000 Telephone:+353 (1) 213 7300


Facsimile: +44 208 249 8801 Facsimile: +353 (1) 293 0400











33.2 Any Party may, by notice as provided hereunder to the other Parties and GGMC change its


address and other particulars for notice purposes.








68


Petroleum Agreement


Government of Guyana - Orinduik PA xJCUr








 IN WITNESS whereof the Parties have caused their duly authorized representatives to set their hands at


the City of Georgetown, in the Co-operative Republic of Guyana in the presence of on


Signed by the Minister Responsible For Petroleum





Representing the Co-operative Republic of Guyana.














Minister, Natural Resources


(Minister Responsible For Petroleum)











Signed By Eco (Atlantic) Guyana Inc.








Eco (Atlantic)


Guyana Inc.





Date : Initial

















By:





Nam aLaw


Title


BUY AN A B.v.


















































Petroleum Agreement 69


Government of Guyana-Orinduik PA


 ANNEX A





DESCRIPTION OF CONTRACT AREA


“Description of area to be granted under Petroleum Prospecting License pursuant to





Article 3 of the Petroleum Agreement.


The area comprises approximately 1,801 square kilometres described herein


consisting of graticular blocks identified herein and shown on the Block Reference


Map at Annex B.”





Latitude and Longitude Measurements are West and North respectively.








Point No. Latitude (DMS) Longitude (DMS)


1 8° 10' 00" N 57° 45' 00" W


2 8° 10' 00" N 57° 30' 00" W


3 8° 15' 00" N 57° 30' 00" W


4 8° 15' 00" N 57° 25' 00" W


5 8° 10' 00" N 57° 25'00"W


6 8° 10' 00" N 57° 15' 00" W


7 8° 05' 00" N 57° 15' 00" W


8 8° 05' 00" N 57° 10' 00" W


9 7° 50' 00" N 57° 10' 00" W


10 7° 50' 00" N 57° 15' 00" W


11 8° 00' 00" N 57° 15' 00" W


12 8° 00' 00" N 57° 25' 00" W


13 7° 50' 00" N 57° 25' 00" W


14 7° 50' 00" N 57° 30' 00" W


15 7° 55' 00" N 57° 30' 00" W


16 7° 55' 00" N 57° 45' 00" W


























70


Petroleum Agreement ?)


Government of Guyana - Orinduik PA





'LL,





 ANNEX A (Cont’d)





Description of Contract Area


The following five (5) minute by five (5) minute square graticular blocks describe


the area. The bolck as described are shown on the Block Reference Map at Annex


B.





Block K 115, 124- 129. 136 - 142


Block Q 4-7, 10, 19, 22













































































71


Petroleum Agreement


Government of Guyana - Orinduik PA


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72





Petroleum Agreement





Government of Guyana - Orinduik PA


ANNEX C - ACCOUNTING PROCEDURE





This Annex is part of this Petroleum Agreement (hereinafter referred to as “the Agreement”)


SECTION 1 - GENERAL PROVISIONS


1.1 Definitions





For the purpose of this Accounting Procedure the terms used herein which are defined in


the Agreement or in the Act shall have the same meaning when used in this Accounting


Procedure.


1.2 Documentation Required to be Submitted by the Contractor


(a) The Contractor shall keep the accounts, operating records, reports and statements


relating to the Petroleum Operations:


(i) in accordance with the terms of the Agreement and this Accounting


Procedure; and


(ii) in such form as may be agreed from time to time between the Parties which


shall identify the categories of costs, expenses, expenditures and credits


classified in Sections 2 and 3 of this Annex.


(b) Pursuant to (a) above, the Contractor shall make quarterly Statements relating to


the Petroleum Operations including:


(i) Production Statement (see Section 5 of this Annex).


(ii) Value of Production and Pricing Statement (see Section 6 of this Annex).


(iii) Statement of Expenditures and Receipts (see Section 7 of this Annex).


(iv) Cost Recovery Statement (see Section 8 of this Annex).


(v) End-of-Year Statement (see Section 9 of this Annex).


(vi) Budget Statement (see Section 10 of this Annex).


1.3 Language, Units of Account and Exchange Rates


(a) Accounts shall be maintained in Guyanese dollars and United States dollars;


however, the United States dollars accounts will prevail in case of conflict. Barrels


shall be employed for measurements of production of Crude Oil required under the


Agreement and this Annex. Standard cubic feet (scf) shall be employed for





73


Petroleum Agreement


Government of Guyana - Orinduik PA 1>





r





r


measurements of production of Natural Gas required under the Agreement and this


Annex. The language employed shall be English.


r


(b) Should there be any gain or loss from exchange of currency, it will be credited or





r charged to the accounts under the Agreement.





(c)


i--- (i) Amounts received and costs, expenses and expenditures made in currencies


other than United States dollars or Guyanese dollars shall be converted into


t United States dollars by using the relevant foreign exchange rate published


r in the Wall Street Journal on the first business day following the Month in


which the relevant transaction occurred.





(ii) Amounts received and costs, expenses and expenditures made in Guyanese


dollars or in United States dollars shall be converted from Guyanese dollars


into United States dollars or from United States dollars into Guyanese


dollars on the basis of the average of the buying and selling exchange rates


r between the currencies in question as determined and published by the


Bank of Guyana, prevailing on the last Business Day of the Calendar Month


preceding the Calendar Month that the relevant transaction occurred.


r


! (iii) The actual exchange rates applied in accordance with sub-section 1.3 (c) (ii)


i-





above and, where relevant, sub-section 1.3 (c) (i) above, shall be identified


in the relevant Statements required under sub-Section 1.2 (a) of this Annex.


1.4 Payments








(a) All payments between the Parties under the Agreement shall, unless otherwise


r agreed, be made in United States dollars and through a bank designated by the


receiving Party.


L


(b) All sums due under the Agreement during any Calendar Month shall, for each day


r-~


\. such sums are overdue bear interest at the Agreed Interest Rate.


L





f 1.5 Audit and Inspection Rights of Government





(a) The Minister shall have the right to audit upon ninety (90) days written notice, at


his sole cost and expense, accounts and records of the Contractor, maintained


hereunder with respect to each Calendar Year within two (2) years from the end of


each such Year. For purposes of auditing, the Minister may audit, examine and


verify, at reasonable times during normal business hours but not more than once per


Calendar Year, all charges and credits relating to the Contractor’s activities under


the Agreement and all books of accounts, 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. During such


annual audit, examination and verification in respect of each Calendar' Year the


74


Petroleum Agreement


Government of Guyana - Orinduik PA


I





 Minister may'review items previously subjected to audit in earlier Years but such


review shall:


(i) only be carried out in conjunction with the annual audit for any given Year;





and





(ii) subject to Section 1.5 (b), no sooner than twelve (12) months following the


previous audit thereof; and


(iii) only be for the purposes of verifying a matter arising in a later period, which


relates to the earlier Year(s) in question or as specified in Section 1.5 (b).





In conducting such audits, the auditors may physically examine at the sole cost and


expense of the Minister, property, facilities and stocks used in Petroleum


Operations wherever located. Such examinations shall take place at reasonable


times during normal business hours upon fifteen (15) days prior notice.





(b) At the conclusion of each audit, the Parties shall endeavour to settle outstanding


matters and a written report will be issued to the Contractor within sixty (60) days


of the conclusion of such audit. The report shall include all claims arising from


such audit.





The Contractor shall reply to the report in writing as soon as possible and in any


event not later than sixty (60) days following receipt of the report indicating


acceptance or rejection of the audit claim and in the case of a rejection showing


explanations thereof.





Should the Minister consider that the report or reply requires further investigation


on any item therein, the Minister shall have the right to conduct further


investigation in relation to such matter within sixty (60) days of its receipt of


Contractor’s reply. If within sixty (60) days of the Minister’s further investigation,


the Parties are unable to agree to the disposition of the Minister’s audit claim, the


claim shall be submitted to arbitration in accordance with Article 26 of the


Agreement.


All adjustments resulting from an audit agreed to by the Contractor and the


Minister conducting the audit shall be reflected promptly in the accounts by the


Contractor and any consequential adjustments in Crude Oil entitlements shall also


be made promptly.


In the event that an audit claim by the Minister is not settled to his satisfaction by


the Contractor’s reply as provided for above, the Contractor shall be entitled to


recover any disputed amounts pending final resolution of the claim. However, any


subsequent adjustments in the Minister’s share of Profit Oil following resolution of


the claim shall be repaid with interest, at the Agreed Interest Rate as a first claim





75


Petroleum Agreement


Government of Guyana - Orinduik PA


 from Contractor’s share of future Profit Oil. In the event that the Contractor’s share


of Profit Oil is insufficient to provide for the Minister’s extra entitlement including


interest, the Contractor shall promptly make an equivalent payment in United


States dollars to the Minister.


(c) Without prejudice to the finality of matters as described in sub-sections 1.5 (a) and





1.5 (b) all documents referred to in those sub-sections shall be maintained and


made available for inspection by the Minister for two (2) years following their date


of issue providing, however, that where issues are outstanding with respect to an


audit, the Contractor shall maintain documents for a longer period until the issues


are resolved.


(d) The Contractor may require that audits hereunder of accounts and records





maintained by Affiliated Companies of the Operator, other than any Affiliated


Company of the Operator which is conducting a substantial part of the Petroleum


Operations on behalf of the Contractor be conducted either by the Operator’s


statutory auditors working under the instruction of the Minister (provided such


appointment is accepted by the statutory auditors), failing which, by an


independent firm of auditors of international standing to be approved by the


Minister.


(e) Nothing herein above provided shall entitle the Minister or his auditors to have


access to data and records which:


(i) are subject to statutory restrictions on disclosure; or





(ii) do not relate to Petroleum Operations; or





(iii) are not customarily disclosed in auditing practice in the international


petroleum industry; provided however, that where the Minister or his


auditors seek confirmation that charges subject to restricted access under


(a), (b) and (c) above have been properly charged under this Agreement and


Accounting Procedure, they shall be entitled to seek (at their sole cost) from


the statutory auditors of the Contractor or its Affiliated Companies, as the


case may be, certification that such charges have been levied on a fair and


reasonable basis.


























76


Petroleum Agreement


Government of Guyana - Orinduik PA


 SECTION 2 - CLASSIFICATION, DEFINITION AND ALLOCATION OF COSTS,


EXPENSES AND EXPENDITURES





All costs, expenses and expenditures relating to the Petroleum Operations referred to in Section 3


shall be classified, defined and allocated as follows:


2.1 Exploration Costs are all direct and allocated indirect expenditures incurred in the search


for Petroleum in an area which is or was, at the time when such costs were incurred, in the


Contract Area, including:


(a) Aerial, geophysical, geochemical, paleontological, geological, topographical and


seismic surveys and studies and their interpretation provided the data relates to the


Contract Area.


(b) Core hole drilling and water well drilling.


(c) Labour, materials or equipment, and services used in drilling Exploration and


Appraisal Wells with the object of finding Petroleum or for the purposes of


appraising the extent of producible reservoirs already discovered provided such


wells are not completed as producing wells.


(d) Facilities or allocated portions thereof used solely in support of the purposes


described in (a) (b) and (c) above.


(e) All General and Administrative Costs, Annual Overhead Charges and all Service


Costs allocated to Exploration Costs.


(f) Any other Contract Costs incurred in the search for and appraisal of Petroleum after


the Effective Date.


(g) Annual amounts set forth and paid to GGMC pursuant to Article 19.3 of the


Agreement.


(h) Rentals.


(i) Licenses and other fees.


2.2 Development Costs shall consist of all expenditures incurred in:


(a) Drilling wells, which are completed as producing wells and drilling wells for


purposes of producing from a producible reservoir whether these wells are dry or


producing, and drilling wells for the injection of water or gas to enhance recovery


of Petroleum.





77


Petroleum Agreement


Government of Guyana - Orinduik PA


(b) Completing wells by way of installation of casing or equipment or otherwise after a


well has been drilled for the purpose of bringing the well into use as a producer or


as a well for the injection of water or gas to enhance recovery of petroleum.


(c) Intangible drilling costs such as labour, consumable material and services having


no salvage value which are incurred in drilling and deepening of wells for


production purposes.


(d) The costs of field facilities such as pipelines, flow lines, production and treatment


units, wellhead equipment subsurface equipment, enhanced recovery systems,


offshore platforms, petroleum storage facilities, export terminals and piers,


harbours and related facilities and access roads for production activities.


(e) Engineering and design studies for field facilities.


(f) All General and Administrative Costs, Annual Overhead Charges and all Service


Costs allocated to Development Costs.


2.3 Operating Costs are all expenditures incurred in the Petroleum Operations, which are other


than Exploration Costs, Development Costs, General and Administrative Costs and Annual


Overhead Charge and Service Costs. The balance of General and Administrative Costs


and Service Costs not allocated to Exploration Costs or Development Costs shall be


allocated to Operating Costs.


2.4 Service Costs


(a) These are direct and indirect expenditures in support of the Petroleum Operations


including but not limited to warehouses, piers, marine vessels, vehicles, motorised


rolling equipment, aircraft, fire and security stations, workshops, water and sewage


plants, power plants, housing, community and recreational facilities and furniture,


tools and equipment used in these activities and safety and security services.


Service Costs in any Calendar Year shall include the total costs incurred in such


Year to purchase and/or construct said facilities as well as the annual costs to


maintain and operate the same.


(b) All Service Costs will be allocated to Exploration Costs, Development Costs and


Operating Costs in accordance with standard industry accounting practice or on an


equitable basis otherwise agreed between the Minister and the Contractor.


2.5 General and Administrative Costs and Annual Overhead Charge


(a) General and Administrative Costs are all general and administrative costs in respect


of the local office or offices including but not limited to supervisory, accounting


and employee relations services, but which are not otherwise recovered.





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 (b) An Annual Overhead Charge for services rendered outside Guyana and not


otherwise charged under this Accounting Procedure, for managing the Contractor’s


activities under the Agreement and for staff advice and assistance including but not


limited to financial, legal, accounting and employee relations services. For the


period from the Effective Date until the date on which the first Petroleum


Production Licence under the Agreement is granted by the Minister this annual


charge shall be five percent (5%) of the Contract Costs including those covered in


sub-sections 2.1 through 2.5(a), incurred during the Calendar Year. From the date


of grant of the Petroleum Production Licence the Annual Overhead Charge will be:


First US$ 10,000,000 of Contract Costs: 5%





Next US$10,000,000 of Contract Costs: 3%


In excess of US$20,000,000 of Contract Costs 1.5%





All General and Administrative Costs and Annual Overhead Charge will be


allocated to Exploration Costs, Development Costs and Operating Costs in


accordance with standard industry accounting practice or on an equitable basis


otherwise agreed between the Minister and the Contractor.




































































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 SECTION 3 - COSTS. EXPENSES, EXPENDITURES AND CREDITS OF THE


CONTRACTOR





3.1 Costs Recoverable Without Further Approval of the Minister


Subject to the provisions of the Agreement, the Contractor shall bear and pay the following


costs and expenses in respect of the Petroleum Operations. These costs and expenses will


be classified under the headings referred to in Section 2. They are all recoverable as


Recoverable Contract Costs by the Contractor under the Agreement.


(a) Surface Rights


This covers all costs attributable to the acquisition, renewal or relinquishment of


surface rights acquired and maintained in force for the Contract Area including any


amounts payable pursuant to Article 10 of the Agreement.


(b) Labour and Associated Labour Costs





(i) Gross salaries and wages including bonuses of the employees of the Parties


comprising the Contractor directly engaged in the Petroleum Operations,


irrespective of the location of such employees, it being understood that in


the case of those personnel only a portion of whose time is wholly dedicated


to Petroleum Operations, only that pro-rata portion of applicable wages and


salaries will be charged.


(ii) Costs regarding holiday, vacation, sickness and disability payments


applicable to the salaries and wages chargeable under (i) above.


(iii) Expenses or contributions made pursuant to assessments or obligations


imposed under the laws of the Co-operative Republic of Guyana which are


applicable to cost of salaries and wages chargeable under (i) above.


(iv) Cost of established plans for employees’ life insurance, hospitalisation,


pensions, and other benefits of a similar nature customarily granted to the


employees of the Parties comprising the Contractor.


(v) Reasonable travel and personal expenses of such employees including those


made for travel and relocation of the Expatriate Employees assigned to the


Co-operative Republic of Guyana all of which shall be in accordance with


the normal practice of the Parties comprising the Contractor.


(vi) Any personal income taxes owing to the Co-operative Republic of Guyana


by employees of the Parties comprising Contractor and paid or reimbursed


by a Party comprising the Contractor.





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Petroleum Agreement


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 (c) Transportation





The cost of transportation of employees, equipment, materials and supplies


necessary for the conduct of the Petroleum Operations.


(d) Charges for Services





(i) Third Party Contracts


The actual costs of contracts for technical and other services entered into b\





the Contractor for the Petroleum Operations, made with third parties other


than Affiliated Companies of the Contractor are recoverable; provided that


the prices paid by the Contractor are competitive with those generally


charged by other international or domestic suppliers for comparable work


and services.





(ii) Affiliated Companies


Without prejudice to the charges to be made in accordance with sub-section





2.5, in the case of services rendered to the Petroleum Operations by an


Affiliated Company, the charges will be based on actual costs without


profits. The charges will be no higher than the usual prices charged by the


Affiliated Company to third parties for comparable services under similar


terms and conditions elsewhere and will be fair and reasonable in the light


of prevailing international oil industry practice and conditions.





The salaries, wages and related costs of employees of an Affiliated


Company that are temporarily or permanently assigned in Guyana and are


directly engaged in Petroleum Operations shall be chargeable to the project


at their actual documented cost. The salaries, wages and related costs of


employees of an Affiliated Company that are temporarily or permanently


outside of Guyana and are directly engaged in Petroleum Operations shall


be chargeable to the project at their actual documented cost. Costs for


salaries, wages and related costs shall be charged to the project on an actual


basis or at a rate based upon the average cost in accordance with the


Affiliated Company’s usual practice. The methodology of determining


rates based on average cost shall be provided to the Government upon their


request. Such rates may be reviewed at least annually with the Minister.


Reasonable actual documented expenses (including travel costs) of those


employees whose salaries and wages are chargeable to the project and are


reimbursed by the Contractor under their usual practice shall also be


charged to the project.








/





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 (e) Material





(i) So far as is practicable and consistent with efficient and economical


operation, only such material or equipment shall be purchased or furnished


by the Contractor for use in the Petroleum Operations as may be required


for use in the reasonably foreseeable future and the accumulation of surplus


stocks shall be minimized.


(ii) The Contractor does not warrant material beyond the supplier’s or


manufacturer’s guarantee express or implied, and in case of defective


material or equipment, any adjustment received by the Contractor from the


suppliers/manufacturers or their agents will be credited to the accounts


under the Agreement.


(iii) (a) Except as provided in (b) below, material purchased by the





Contractor for use in the Petroleum Operations shall be valued to


include invoice price less trade and cash discounts (if any), purchase


and procurement fees plus freight and forwarding charges between


point of supply and point of shipment, freight to port of destination,


insurance, taxes, custom duties, consular fees, other items


chargeable against imported material and, where applicable,


handling and transportation expenses from point of importation to


warehouse or operating site, and cost of the material in question


should not exceed those prevailing in normal arms length


transactions on the open market for material of similar quality and


supplied on similar terms at the time of procurement.





(b) Material purchased from Affiliated Companies of the Parties


comprising Contractor shall be charged at the prices specified at (1)


and (2) hereof.


(1) New Material (Condition “A”)





Shall be valued and invoiced at a price, which should not


exceed the price prevailing in normal arms length


transactions on the open market at the time of procurement.


(2) Used Material (Conditions “B” and “C”)





(i) Material which is in sound and serviceable condition


and is suitable for reuse without reconditioning shall


be classified as Condition “B” and priced at not more


than seventy-five percent (75%) of the price of new


material defined in (1) above.








Petroleum Agreement


Government of Guyana - Orinduik PA V








 (ii) Material, which cannot be classified as Condition


“B” but which:


(a) after reconditioning will be further





serviceable for original function as good


second-hand material (Condition “B”), or


(b) is serviceable for original function but not





suitable for reconditioning; shall be classified


as Condition “C” and priced at not more than


fifty percent (50%) of the current price of


new material (Condition “A”) as defined in


(1) above. The cost of reconditioning shall


be charged to the reconditioned material


provided that the Condition “C” material


value plus the cost of reconditioning does not


exceed the value of Condition “B” material.





(iii) Material, which cannot be classified as Condition


“B” or Condition “C”, shall be priced at a value


commensurate with its use.


(iv) When the use of material is temporary and its service





to the Petroleum Operations does not justify the


reduction in price as provided for in (2) (ii) hereof,


such material shall be priced on a basis that will


result in a net charge to the accounts under the


Agreement consistent with the value of the service


rendered.





(f) Rentals. Duties and Other Assessments





All rentals, taxes, levies, charges, fees, contributions and any other assessments and


charges levied by the Government in connection with the Petroleum Operations


and paid directly by the Contractor.





(g) Insurance and Losses





Insurance premium and cost incurred for insurance pursuant to Article 20 provided


that if such insurance is wholly or partly placed with an Affiliated Company of the


Parties comprising the Contractor, such premium and costs shall be recoverable


only to the extent generally charged by competitive insurance companies other than


an Affiliated Company of a Party comprising the Contractor. Costs, losses and


damages incurred to the extent not made good by insurance, are recoverable,


including costs, losses or damages resulting from the indemnities in Article 2 of the





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Petroleum Agreement


Government of Guyana - Orinduik PA


Agreement, unless such costs, losses or damages have resulted solely from an act of


willful misconduct or gross negligence of the Contractor.


(h) Legal Expenses


All costs and expenses of litigation and legal or related services necessary or


expedient for the procuring, perfecting, retention and protection of the Contract and


Contract Area and in defending or prosecuting lawsuits or Disputes hereunder or


involving the Contract or Contract Area or any third party claim arising out of


activities under the Agreement or sums paid in respect of legal services necessary


or expedient for the protection of the interest of the Parties are recoverable. Where


legal services are rendered in such matters by salaried lawyers of the Contractor or


an Affiliated Company of the Parties comprising Contractor, such compensation


will be included instead under sub-section 3.1(b) or 3.1(d) above as applicable.


(i) Training Costs


All costs and expenses incurred by the Contractor in training of Guyanese


personnel and such other amounts as may be expended on training under Article 19


of the Agreement.


(j) General and Administrative Costs and Annual Overhead Charge


The costs described in sub-section 2.5(a) and the charge described in sub-section


2.5(b).


(k) Pre-Contract Costs


The sum of (Three Hundred Thousand Dollars (US$300,000) in respect of all costs


incurred by Contractor prior to the Effective Date.


(l) Interest and Financing Costs


Interest, expenses and related fees incurred on loans raised by the Parties


comprising the Contractor for Petroleum Operations and other financing costs


provided that such expenses, fees and costs are consistent with market rates.


(m) Abandonment Costs


Amortized abandonment costs calculated pursuant to Article 20.1(d)(iii).


3.2 Costs Recoverable only with Approval of the Minister





(a) Donations and contributions to organisations in Guyana.








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Petroleum Agreement


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(b) Expenditure on research into and development of new equipment, material and


techniques for use in searching for developing and producing petroleum which will


be of benefit to Petroleum Operations.


3.3 Costs not Recoverable under the Agreement


(a) With the exception of the sum specified in sub-section 3.1 (k), costs incurred before


the Effective Date.


(b) Petroleum marketing or transportation costs of Petroleum beyond the Delivery


Point.


(c) Amounts paid under Article 3.2 of the Agreement, if any, and, other amounts paid


with regard to non-fulfillment of contractual obligations, subject to Section 3.1(g).


(d) Costs of arbitration and the sole expert in respect of any dispute under the


Agreement.


(e) Fines and penalties imposed by Courts of Laws of the Co-operative-Republic of


Guyana.


(f) Payments made in accordance with Article 15.4 of the Agreement.


(g) Costs incurred as a result of willful misconduct or gross negligence of the


Contractor or failure to insure where insurance is required pursuant to Article


20.2(a) of the Agreement.


3.4 Other Costs and Expenses


Other costs and expenses not covered or dealt with in the provisions of this Section 3 and


which are incurred by the Contractor in the conduct of the Petroleum Operations are


recoverable subject to the approval of the Minister.


3.5 Credits under the Agreement


The net proceeds of the following transactions will be credited to the Accounts under the


Agreement and shall reduce the amount of Contract Costs, which the Contractor is entitled


to recover from Cost Oil, by a corresponding amount:


(a) The net proceeds of any insurance or claim in connection with the Petroleum


Operations or any assets charged to the accounts under the Agreement when such


operation or assets were insured and the premium charged to the accounts under the


Agreement.


(b) Revenue received from third parties for the use of property or assets the cost of


which has been charged to the accounts under the Agreement.


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Petroleum Agreement


Government of Guyana - Orinduik PA


 (c) Any adjustment received by the Contractor from the suppliers/manufacturers or


their agents in connection with defective material the cost of which was previous!)


charged to the accounts under the Agreement.


(d) Rentals, refunds or other credits received by the Contractor which apply to any


charge which has been made to the accounts under the Agreement, including any


costs and expenses previously charged to the accounts pursuant to sub-section


3.1(h) and which have been successfully recouped from legal proceedings but


excluding any award granted to the Contractor under arbitration or sole expert


proceedings referred to in sub-section 3.3(d) above.





(e) The value at the time of export of inventory materials subsequently exported from


the Co-operative Republic of Guyana without being used in the Petroleum


Operations, the acquisition costs of which have been charged to the accounts under


the Agreement.


(f) The proceeds from the sale or exchange by the Contractor of materials, equipment,





plant or facilities, the acquisition costs of which have been charged to the accounts


under the Agreement, including such items sold to the Government;





(g) The proceeds from the sale of Petroleum Data which relates to the Contract Area


provided that the acquisition costs of such rights and information have been


charged to the accounts under the Agreement;


(h) The proceeds derived from the sale or licence of any intellectual property the


development costs of which have been charged to the accounts under the


Agreement.


3.6 Duplication of Charges and Credits


Notwithstanding any provision to the contrary in this Accounting Procedure, it is





the intention that there shall be no duplication of charges or credits to the accounts


under the Agreement.
































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Petroleum Agreement


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SECTION 4 - RECORDS AND VALUATION OF ASSETS





The Contractor shall maintain detailed records of property in use for the Petroleum Operations in


accordance with normal practice in exploration and production activities of the international


petroleum industry. The Contractor shall notify the Minister annually in writing of all assets


valued in excess of One Hundred Thousand United States Dollars (US$100,000) acquired and all


such assets disposed of during the preceding twelve (12) months. At reasonable intervals but at


least once a year with respect to moveable assets and once every three (3) years with respect to


immovable assets, inventories of the property under the Agreement shall be taken by the


Contractor. The Contractor shall give the Minister at least thirty (30) days written notice of its


intention to take such inventory and the Minister shall have the right to be represented when such


inventory is taken. The Contractor will state clearly the principles upon which valuation of the


inventory has been based. When an assignment of rights under the Agreement takes place a


special inventory may be taken by the Contractor at the request of the assignee provided that the


costs of such inventory are borne by the assignee.


































































































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Petroleum Agreement


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SECTION 5 - PRODUCTION STATEMENT





5.1 Upon commencement of production of Petroleum from the Contract Area, the Contractor


shall submit a monthly Production Statement to the Minister showing the following


information separately for each Field and in aggregate for the Contract Area.


(a) The gross quantity of Crude Oil and Natural Gas produced.


(b) The quantities of Crude Oil and Natural Gas used for the purpose of carrying on


Petroleum Operations including drilling and Production Operations and pumping


to Field storage.


(c) Quantities of Crude Oil and Natural Gas lost.


(d) The quantities of Natural Gas flared.


(e) The quantity of’Crude Oil produced and saved.


(f) The quantity of Natural Gas produced and saved.


(g) The quantity of stocks of Crude Oil held at the beginning of the Calendar Month in


question.


(h) The quantity of stocks of Crude Oil held at the end of the Calendar Month in


question.


(i) The number of days in the Month during which Petroleum was produced from each


Field.





O’) The average daily production rate for each Field, calculated in accordance with


Article 11.6 of the Agreement.


5.2 The Production Statement for each Calendar Month shall be submitted to the Minister not


later than sixty (60) days after the end of such Calendar Month.


























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Petroleum Agreement


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SECTION 6 - VALUE OF PRODUCTION AND PRICING STATEMENT





6.1 The Contractor shall, for the purposes of Article 13 of the Agreement prepare a statement


providing calculations of the value of Crude Oil and the value of the Natural Gas produced


and saved during each Calendar Month for each Field. This statement, which shall be


prepared for each quality of Crude Oil and the Natural Gas produced from the Contract


Area, shall contain the following information:


(a) The quantities, prices and receipts realised therefor by the Contractor as a result of


Third Party Sales of Crude Oil and the Natural Gas made during the Calendar


Month in question.


(b) The quantities, prices and receipts realised therefor by the Contractor as a result of


sales of Crude Oil and the Natural Gas made during the Calendar Month in


question, other than Third Party Sales.


(c) The percentage of total volume of Crude Oil sales which were Third Party Sales.


(d) The percentage of total volume of Natural Gas sales which were Third Party Sales.


(e) Information supplied to the Minister by Contractor for the purposes of Article 13.2


of the Agreement.


6.2 The Value of Production and Pricing Statement for each Calendar Month shall be


submitted to the Minister not later than thirty (30) days after the end of such Calendar


Month.















































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Petroleum Agreement


Government of Guyana - Orinduik PA


SECTION 7 - STATEMENT OF EXPENDITURE AND RECEIPTS





7.1 The Contractor shall prepare with respect to each Calendar Quarter, or on a monthly basis


if requested by the Minister in writing, a Statement of Expenditure and Receipts under the


Agreement. The Statement will distinguish between Exploration Costs, Development


Costs and Operating Costs consistent with the individual categories specified in Sections 2


and 3 herein and will separately identify major items of expenditures within these


categories. The statement will show the following:


(a) Actual expenditures and receipts on a monthly basis for the period in question.





(b) Cumulative expenditure and receipts for the budget year in question.


(c) Cumulative expenditures and receipts since the Effective Date.





(d) Latest forecast of cumulative expenditures to year end.


(e) Variations between budget forecast and latest forecast, with explanations thereof.





7.2 Subject to 7.1, the Statement of Expenditure and Receipts shall be submitted to the


Minister no later than sixty (60) days after the end of such Calendar Quarter or Month as


the case may be.


















































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Petroleum Agreement


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SECTION 8 - COST RECOVERY STATEMENT





8.1 The Contractor shall prepare with respect to each Calendar Month a Cost Recover)


Statement containing the following information:


(a) Recoverable Contract Costs carried forward from the previous Month, if any.


(b) Recoverable Contract Costs for the Month in question.


(c) Total Recoverable Contract Costs, which is that cost at sub-section 8.1 (a) plus that


cost at sub-section 8.1 (b).


(d) Quantity and value of Cost Oil taken and disposed of by the Contractor for the


Month in question.


(e) Contract Costs recovered for the Month in question.


(f) Total cumulative amount of Contract Costs to be carried forward into the next


Month.


8.2 The information to be submitted under Section 8.1 (d) and (e) above shall be given in


separate statements for each Field, so as to indicate together, the Contractor’s total


allocation of Cost Oil as required under Article 11 of the Agreement.


8.3 The Cost Recovery Statement to be submitted under sub-section 8.1 shall identify the


unrecovered cost of assets for the purpose of Article 20.1 (b)(iii) of the Agreement.


8.4 The Cost Recovery Statement for each Month shall be submitted to the Minister no later


than sixty (60) days after the end of such Month.
































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Petroleum Agreement 'd


Government of Guyana - Orinduik PA





SECTION 9 - END-QF-YEAR STATEMENT





9.1 The Contractor shall prepare an End-of-Year Statement. The Statement will contain


aggregated information for the Year in the same format as required in the Value of


Production and Pricing Statement, Cost Recovery Statement and Statement of


Expenditures and Receipts but will be based on actual quantities of Petroleum produced


and expenses incurred. The End-of-Year Statement for each Calendar Year shall be


submitted to the Minister within one hundred and twenty (120) days of the end of such


Calendar Year.


(a) Crude Oil


(i) In the event the domestic supply obligations under Article 17 are effected


by the Government as to Crude Oil, not later than one hundred and twenty


(120) days after the end of each Calendar Year, the Minister, acting on


behalf of the Government, shall make available to Contractor an annual


summary (the “Domestic Supply Report”) describing (a) the Government’s


total entitlement from all Crude Oil production in Guyana during the prior


Calendar Year, (b) the quantity of Crude Oil actually provided to the


Government by Contractor and all third parties which produce Crude Oil in


Guyana during the prior Calendar Year, and (c) a description of the


quantities and use of all Crude Oil provided to the Government by


Contractor and all third parties which produce Crude Oil in Guyana,


including without limitation, domestic power supply from power plant


facilities, refined products for domestic consumption from refineries, etc.,


and any quantities of Crude Oil, refined products, petrochemicals or fuel for


power generation that are exported from Guyana.


(b) Natural Gas


(i) In the event the domestic supply obligations under Article 17 haw been


effected by the Government as to Natural Gas, not later than one hundred


and twenty (120) days after the end of each Calendar Year, the Minister,


acting on behalf of the Government, shall make available to Contractor an


annual summary (the “Domestic Supply Report”) describing (a) the


Government’s total entitlement from all Natural Gas production in Guyana


during the prior Calendar Year, (b) the quantity of Natural Gas actually


provided to the Government by Contractor and all third parties which


produce Natural Gas in Guyana during the prior Calendar Year, and (c) a


description of the quantities and use of all Natural Gas provided to the


Government by Contractor and all third parties which produce Natural Gas


in Guyana, including without limitation, domestic residential, commercial


and industrial consumption, fuel used for domestic power generation, etc.,


or, and any quantities of Natural Gas liquefied or compressed in Guyana for


export or used as feedstock for petrochemical exports, such as methanol and


fertilizer.


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Petroleum Agreement


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L


SECTION 10 - BUDGET STATEMENT





10.1 The Contractor shall prepare an annual budget pursuant to Article 7 of the Agreement (the


“Budget Statement”). The Budget Statement will distinguish between Exploration Costs,


Development Costs and Operating Costs consistent with the individual categories specified


in Sections 2 and 3 and will show the following:


(a) Forecast expenditures and receipts under the Agreement for the Calendar Year.





(b) Cumulative expenditures and receipts to the end of the said Year.





























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 L.









































































































































r


i





ANNEX D - Pre-Approved and Certified Petroleum Operations Items


A


Acids (stimulation) - chemicals used downhole or injected in oil/gas formations


Acoustical survey equipment - including sonar, side scanning sonar, full wave form sonic loggers


Aeromagnetic recording survey systems


Air slips also known as tubing slips


All terrain vehicles (ATVs)


Automated equipment at the well head, processing plant or refinery used to monitor and control


production


B


Bags (cloth) with printed tags - used in well testing


Bails (links)


Barrel - chemical mixing when used at the well head


Batteries - for production machinery and equipment


Batteries - geophysical when used exclusively for seismic prospecting in blasting and recording


systems


Bits - drill includes PDCs, tricones


Blasting systems - used for seismic prospecting


Blowout ignition system


Blowout preventers (BOPs)


Boxes - shipping (used in well testing), core


Building - portable


Building - support - when used as weather-related protective covering for equipment such as


electrical generators or instrumentation


Buildings - that provide office or dwelling space; geologist lab trailers; skid-mounted living


trailers


Bulldozers - earth moving equipment


C


Cable - electrical


Cable - wire rope


Cables - electrical (integrated into machinery)


Cables used for seismic prospecting


Calibration gas - for H2S monitors and H2S analyzers


Casing


Casing accessories


Catwalks - see Scaffolding


Cement - oilwell


Cementing equipment


Centralizers - casing attachment


Centrifuge - used to remove fine drill solids from mud systems


Chemical mixing barrel - when used at the well head


Chemical storage drums - when used at the manufacturing or processing site


1


Petroleum Agreement


Government of Guyana - Orinduik PA


Chemicals used in drilling and production operations


Chemicals used in refining operations


Choke manifold and valves


Circulating system - includes discharge and return lines


Circulating systems - includes mud tanks, mud mixers, discharge and return lines and separators


Cleaners/degreasers - includes oilfield equipment


Cloth bags with printed tags - used in well testing


Coil tubing


Coil tubing reel


Collars - drilling


Communication equipment - includes satellite communications equipment


Compressors - for compression of air or natural gas


Computers - to monitor production/drilling machinery and equipment


Consumables - consumable equipment used in drilling and production operations


Control panels - used to run generators at a well head


Core boxes


Corrosion inhibitors - added to upstream installations for preventative maintenance


Couplings


Custom software - designed for and integrated into drilling and production machinery or


equipment


D


Data processing units used for seismic prospecting


DC electric motors (integrated) used to drive the drawworks mud pumps, or top drives, also


commonly called traction motors


Deflocculants - used in fresh water mud systems


Dehydration chemicals


Dehydrators - including mole sieve used at the well head; used during the production testing phase


Demulsifiers - used in production operations to remove water from crude oil


Density counters - spectral gamma-gamma


Detectors - flame, when used'during the production testing phase as an alternative to a flare stack


Diesel power generating systems


Discharge and return lines


Dispersants - production chemicals


Distribution panel - electrical that controls the electrical distribution for the entire rig package


Dope - pipe


Drifts - for casing, tubing, and line pipe


Drill bits, includes tricone, PDCs (Polycrystalline Diamond Compact)


Drill collar handling equipment


Drill collars - used in exploration and development drilling


Drill line spool - wire rope


Drill pipe --- used in exploration and development drilling


Drill pipe handling equipment


Drill stem testing equipment - includes instrumentation


Drilling - detergent; muds; surfactants


Drilling Rigs and associated equipment - Onshore and Offshore


2


Petroleum Agreement


Government of Guyana - Orinduik PA


7B


Drilling fluid - chemicals used to create drilling fluid (see mud)


Drills - all drills used exclusively for seismic prospecting includes heli, enviro, LIS, track, truck,


buggy


Drives - top, rotary and pump


Drums - for chemical storage when used at the manufacturing or processing site





E


EDR system (only an EDR and the embedded dedicated computer equipment that is integrated into


the unit) used at the drilling site


Electric generators and alternators


Electric logging equipment


Electrical cable - distribution panel, electrical generating systems


Electrical distribution panel


Electrical generating systems (integrated)


Electrical submersible pumps - ESP - for artificial lift of petroleum


Electrical surveying equipment


Electrical thermostats


Electromagnetic surveying equipment - includes time and frequency domain induced polarization


equipment


Emergency gas shut off devices


Engine oils


Engines - used for oilfield service


Equipment - hoisting





Explosives - includes those used in seismic, coring, construction


F





Field potentiometers


Filter bags - for the production machinery and equipment


Fishing tools for retrieving tools lost downhole


Fittings - includes those used in the transportation and distribution system, for example, on


gathering lines


Flame detectors - when used during the production testing phase as an alternative to a flare stack


Flare stacks - includes mobile flare stacks used during the production testing phase


Flare tank systems, located at the wellsite, that are directly connected to the drilling rig and are


used to control polluting emissions


Flare tanks and lines


Float equipment


Fluids - fracturing, stimulating, well servicing


Foamers - used downhole to enhance production


Forklifts


Fracturing chemicals


Fracturing equipment


Fuel gas lines - for oil and gas production machinery


Fuel storage tanks - see Tanks


Full wave form sonic loggers


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Petroleum Agreement


Government of Guyana - Orinduik PA








G


Gamma-ray spectrometers


Gas - welding, acetylene, argon - when used as an inert welding gas or in repair jobs; calibration


gas for H2S monitors and H2S analyzers


Gas dehydration equipment used in processing plants or refineries up to the point where the


petroleum or natural gas is a marketable product


Gas detection monitors that detect hazardous gas and provide a warning


Gas flow equipment - when used downhole to monitor gas flow


Gas lift lines - located at a production wellsite to encourage the flow or transport of gas from the


reservoir to the surface


Gas shut off devices (emergency) - that are attached to a gas line and automatically shut off gas


supply


Gauges - engine


Generating systems - diesel power, electrical


Gensets/generators - portable, mobile or standby alternators generators/gensets)


Geophones


Geophysical batteries - when used exclusively for seismic prospecting in blasting and recording


systems


Geronimo and escape lines


Global positioning systems used for seismic prospecting; used for creating stakeless surveys


Graders


Gradiometers - includes potassium gradiometers for radioactive methods of geophysical


prospecting


Gravel - for well pads, processing plant on-site roads


Gravitational recording survey systems


Gravity meters


Grease


Ground penetrating radar equipment


Gunny sacks


Guns - perforating that are used during the production testing phase


H


Hammer wrenches


Hand held tools


Heat exchangers


Heaters - line, located at the well head to preheat gas but not line heaters on pipeline; used during


the production testing phase


Heli-drills for seismic prospecting


Hoisting equipment


Hooks and swivels - drill pipe handling equipment


Hydraulic tank


Hydraulic winches


Hydrogen sulfide - used for gas scrubbing


Hyperspectral spectrometers used for remote sensing








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I


Imaging equipment - seismic


Incinerator - when used during the production testing phase in place of a flare stack to bum off


excess natural gas


Indicator - weight


Inductive conductivity probes used for electrical or electromagnetic surveying


infrared and hyperspectral spectrometers


Infrared spectrometers used for remote sensing


Inhibitors - corrosion added to upstream installations for preventative maintenance


Injector head that runs or retrieves the coil tubing


Instruments -


instruments or equipment for seismic prospecting





Integrated diesel power generating systems


Integrated electrical operating systems


Integrated fuel tanks - see Tanks


Integrated navigation systems used for seismic prospecting


Integrated pump units


Integrated steam heaters





L


Lab testing equipment - used for testing drilling fluids


Lab testing equipment - used for testing production fluids


Labels - for vials used in well testing


Laptop computers (see entry under Computers)


LIDAR (Light Detection and Ranging) mapping equipment used for remote sensing


Light towers or light plants


Lighting - industrial explosion proof


Lights


Lignite - drilling mud or fluid


Line heaters - located at the well head to preheat gas, but not line heaters on the pipeline


Line heaters - used on pipelines, but not line heaters located at the well head for preheating gas


Industry)


Line pipe


Liners used on the ground


Lines - catline, drill, flare, loadline, geronimo and escape, sandline, spool, tong


Lines - discharge, return, flare


Links (bales)


Liquefaction equipment - used in a processing plant or refinery to liquefy C02 so that it can be


transported and marketed


Liquid viscosifiers


Loaders - includes loaders used to move drill pipe to and from the drilling rig


Logging equipment - electric wireline


Lubricants - specialty





M


Machinery and equipment used to inject substances into a reservoir


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Magnetic susceptibility meters


Magnetometers


Main - drum (also known as a drill drum)


Main drum also known as drill drum - part of the drawworks


Maintenance tools - includes cheater bars


Manifold - choke, valve that is an integral piece of the high pressure pumping system


Manifold - choke; mud


Manufactured proppant


Measurement while drilling equipment (MWD) - used to monitor the drill bit’s downhole position


Meter skids - used in the transportation of natural gas or petroleum from the well head as they are


part of the distribution system


Mobile radios


Molecular sieve (Mole sieve pellets) - when used as a part of exempt dehydrator equipment


Monitoring equipment - that monitors or controls the operation of machinery and equipment


Monitors - hazardous gas detection monitors that provide a warning


Mooring systems - for storage vessels


Motors - includes mud motors


Motors - traction, mud


Motors - used in the production testing phase; mud motors used downhole in the drilling process


Mud - chemicals used in the creation of drilling fluid


Mud - mixers, tank, manifold, motors


Mud logging equipment and supplies


MWD (Measurement While Drilling) equipment and supplies





N


Navigation systems used for seismic prospecting; used for creating stakeless surveys


Nitrogen - used to stimulate production


Non-polarizing electrodes used for making measurements in drill holes








O


Optical sensors





P





Packers


Paint supplies


Perforating guns - used during the production testing phase


Pipe dope


Pipeline installation equipment


Pipeline coatings - cement or otherwise


Piping systems - used downhole in the production and testing phase


Pit volume totalizer (PVT) - used for monitoring the bore hole


Polarization equipment - time and frequency domain induced


Portable building


Potentiometers - field


Power-tongs and jaws (also see Tongs)


Power plants - includes diesel, electrical i


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Power tongs


Power washers


Pressure piping systems and its components - used during the production testing phase


Preventers - blowout (BOP)


Probes - inductive conductivity used for electrical or electromagnetic surveying


Production processing equipment - includes separators, compressors, tanks, flow lines, pumps and


valves


Prospecting, seismic - see seismic prospecting


Protectors - thread


C Pump lines and valves that run from the mud pump to well


Pump units - includes submersible trash or sump


Pumpjacks


Pumps - explosion proof


Pumps and motors - used in the production testing phase


R


Racks - pipe used in the drilling process


Radar equipment - ground penetrating, side looking aperture


Radio - phone, mobile, VHF, two-way


Radio antenna - MDS


Radioactive prospecting - scintillometers, spectral gamma-gamma density counters, geiger muller


counters, gamma-ray spectrometers, potassium gradiometers


Radioactive sources - used in wireline logging


Ram thread protectors - telescoping


Reactive welding gases - when used in a repair service


Recorder box used for seismic prospecting


Recording system used for seismic prospecting


Reel for coil tubing


Reflectance equipment used for remote sensing


Regulators - includes when used in the transportation and distribution system, for example,


gathering lines


Remote sensing equipment - includes ultraviolet lamps and reflectance, infrared and hyperspectral


spectrometers


Resistivity survey equipment used for electrical or electromagnetic surveying


Return and discharge lines of a circulating system


Rod basket


Rotary and pump drives


Rotary and pump drives


Rotary table





S


Safety valves - used for well control that are a part of the equipment on the service rig


Sand - includes sand used to stimulate well production


Satellite communications equipment


SCADA equipment - (Supervisory Control and Data Acquisition) used at the well head,


processing plant or refinery


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Petroleum Agreement


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i


Scintillometers


Seismic - instrumentation, drilling equipment, imaging equipment


Seismic explosives


Seismic prospecting - recording system, seismic instrumentation, geophones, cables, data


processing units


Seismic vessels and associated equipment


Self-potential meters used for electrical or electromagnetic surveying


Sensors - optical


Separator vessels - used during the production testing phase


Snubbing unit - composed of a blowout preventor stack, a hydraulic jack and a power unit to run


the hydraulics


Solids control equipment


Sonar - includes side scanning


Sonic loggers - full wave form


Spectral gamma-gamma density counters


Spectrometers - infrared or hyperspectral used for remote sensing, gamma ray


Spools - includes drill line spool


Spools (specialized pieces that adapt tubing to BOPs or for spacing requirements between BOP


and wellhead)


Stabbing guides - used in the drilling process


Stimulating fluids


Stimulation acids - chemicals used downhole or injected in oil/gas formations


Storage tanks - (see Tanks)


Submersible trash pump unit - used to pump drilling fluids, mud/water


Sulphur recovery equipment - used in processing plants and refineries


Survey equipment (see Global positioning systems and Navigation systems)


T


Tank battery


Tanks - flare, integrated fuel, mud or water, stand-alone fuel tank fully integrated with drilling rig


that serves as the direct fuel supply for the rig


Tanks - storage - used at a refinery or processing plant


Tanks - water storage


Telecommunication equipment


Thermostats - electrical designed for use with any of the machinery or equipment on this list


Thread protectors - used in the drilling process


Time and frequency domain induced polarization equipment used for electrical or electromagnetic


surveying


Tongs - backup and integral tongs, power tongs and jaws


Tongs - power also called rotary or casing tongs, power tongs and jaws, backup and integral tongs


Tools - fishing tools for retrieving tools lost downhole


Tools - hand


Top drives - Drill Rig


Torque gauges - used in the drilling process


Towers - light


Traction motors


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Travelling blocks


Tricones - drill bits


Tubing - includes coil


Tubing slips also known as air slips


Two-way radios





U


Ultraviolet lamps used for remote sensing





V


Vacuum and wash pump used to clean up around rig and wash equipment


Vacuum tanks or systems - truck- or trailer-mounted


Vacuum units


Valve - outlet, manifold (integral part of the high pressure pumping system)


Valve manifold (integral part of the high pressure pumping system)


Valves - includes those used in the transportation and distribution system, for example, gathering


lines


Valves - safety - used for well logging, drill stem testing or the production testing phase


Vehicles


Vessels - separator - used during the production testing phase


Vessels - supply and anchor handling for offshore petroleum operations


Vessels - for storage of crude oil (FPSO)


Vessels - Mobile Offshore Drilling Units


Vibrators used for seismic prospecting


Viscosifters - liquid; dry polymer; concentrated





W


Walkways - see Scaffolding





Waste gas transmission - see Pipes


Waste management bins


Waste water treatment units - mobile


Water clarifiers - used to remove residual oil in produced water prior to disposal or re-use


Water disposal lines - includes associated machinery and equipment that are located within the


processing plant


Water storage tanks


Welding equipment and supplies


Well flow lines transporting raw product from a well to a satellite, battery, line pipe or processing


plant


Well logging equipment - includes surface and downhole tools


Well testing equipment - includes surface and downhole tools


Wellhead equipment


Winches


Wireline (or slickline) unit - skid- or truck-mounted











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Petroleum Agreement ^5


Government of Guyana - Orinduik PA


Petroleum Agreement


Government of Guyana - Orinduik PA