NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here
PETROLEUM AGREEMENT
BETWEEN
THE MINISTER RESPONSIBLE FOR
PETROLEUM
REPRESENTING
THE GOVERNMENT OF THE
REPUBLIC OF GUYANA
AND
RATIO ENERGY LIMITED
AND
RATIO GUYANA LIMITED
TABLE OF CONTENTS
Article 1 - Definitions........................................................................-...........................................3
Article 2 - Agreement, the Operator, Liabilities and Indemnities...........................................9
Article 3 - Petroleum Prospecting Licence and Guarantee......................................................11
Article 4 - Exploration Programme and Expenditure Obligation...............-..........................12
Article 5 - Relinquishment of Areas.....................................................................................-16
Article 6 - Delegation; Co-operation between Contractor and GGMC.................................18
Article 7 - Annual Work Programme and Budget...................................................................21
Article 8 - Discovery and Development.....................................................................................22
Article 9 - Records, Reports and Information; Confidentiality.............................................25
Article 10 - Annual Licence Rental Charge..............................................................................28
Article 11 - Cost Recovery and Production Sharing................................................................ 29
Article 12 - Associated .and Non - Associated Gas................................................... 31
Article 13 - Valuation of Crude Oil or Natural Gas................................................................36
Article 14 - Disposal of Production............................ 39
Article 15 - Taxation and Royalty.............................................................................................41
Article 16 - Contracts and Assignments....................................................................................45
Article 17 - Domestic Supply Obligation..................................................................................46
Article 18 - Guyana Resources...................................................................................................50
Article 19 - Employment and Training................................................................ 51
Article 20 - Rights to Assets and Insurance..............................................................................52
Article 21 - Import Duties ..........................................................................................................57
Article 22 - Foreign Exchange Control.......................................... 58
Article 23 - Accounting and Audits...........................................................................................59
Article 24 - Force Majeure................. 60
Article 25 - Assignment..............................................................................................................62
Article 26 - Sole Expert Determination and Arbitration ........................................................63
Article 27 - Applicable Law........................................................................... 66
Article 28 - Protection of the Environment..............................................................................67
Article 29 - Termination and Cancellation.............................. 68
Article 30 - Effective Date................................................. .........................69
Article 31 - Miscellaneous ...................................X./.T,^ ............... 70
Article 32 - Stability of Agreement...........................................71
Article 33 - Notices......................................................;....................73
\ ;
Annex A - Description of Contract Area \'&\
Annex B - Map of Contract Area x '
Annex C - Accounting Procedure
Annex D -Pre-Approved and Certified Petroleum Operar--- -
Petroleum Prospecting Licence
PETROLEUM AGREEMENT
This Agreement is made on the^o day of nPM , 2013*. between the Government of the
Republic of Guyana (the “Government”), represented herein by the Minister Responsible
for Petroleum (hereinafter referred to as the “Minister”) of the One Part
and
Ratio Energy Limited (hereinafter referred to as “Ratio Energy”) a company incorporated
in Gibraltar with its registered office at Suites 7B & 8B, 50 Town Range, Gibraltar and
registered in Guyana under the Companies Act 1991 with its registered address in
Guyana situated at 83,.Premniranjan Place, Prashad Nagar, Georgetown, Guyana of the
Second Part
and
Ratio Guyana Limited (hereinafter referred to as “Ratio Guyana”) a company
incorporated in Gibraltar with its registered office at Suites 7B & 8B, 50 Town Range,
Gibraltar and registered in Guyana under the Companies Act 1991 with its registered
address in Guyana situated at 83, Premniranjan Place, Prashad Nagar, Georgetown,
Guyana, of the Third Part and who together with Ratio Energy may from time to time be
referred to as the “Licensees”
WHEREAS
By virtue of the Petroleum (Production) Act, Cap. 65:05, Petroleum existing in its
.tural condition in strata in Guyana is vested in the State; the Petroleum
loration and Production) Act, No. 3 of 1986 (hereinafter referred to as the
and the Petroleum (Exploration and Production) Regulations 1986
after referred to as the ccRegulations” make provision with respect to
cting for and production of Petroleum, and for matters connected therewith;
Guyana Geology and Mines Commission (hereinafter referred to as
MC”) a body corporate established under the Guyana Geology and Mines
ommission Act (No. 9 of 1979) has been seised 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
Petroleum Agreement
Government of Guyana - Ratio
person with respect to, inter alia, the grant of a Licence, the conditions to be
included in a Licence, the prbcedtasrto be^fbllowed -by fee Minister while
exercising any discretion conferred 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) Ratio Energy has submitted to the delegate a proposal (“fee 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) Ratio Energy 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 a guarantee, in accordance with section 13 of the Act;
(8) Pursuant to the aforesaid recitals, Ratio Energy 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 Ratio
Energy 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:
2
Petroleum Agreement
Government of Guyana - Ratio
Article 1 - Definitions
I. I In this Agreement, unless the context otherwise requires:
“Accounting Procedure” means die procedure .set out in Annex C;
“Act” means the Petroleum (Exploration and Production) Act No.3 of 1986;
“Affiliated Company” in relation to the Contractor means, a company or
corporation;
(i) which is, directly or indirectly controlled by the Contractor; or
(ii) which directly or indirectly, controls the Contractor; or
(iii) which is, directly or indirectly, controlled "by a company or
corporation that also, directly or indirectly, controls the Contractor. 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 (3) percentage
points;
t^Weement” means this Agreement and the Annexes hereto attached and made a
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 lbs/sq. inch absolute or I Kg/sq. cm. absolute and corrected to a
temperature of sixty (60) degrees Fahrenheit or fifteen 05) degrees-Celsius):
Petroleum Agreement
Government of Guyana - Ratio
“Business Day” means a day on which the banks in Geo^etown, 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” ox “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
judgement 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
thereafter any areas which at any particular time are subject to the
Petroleum Prospecting Licence or Petroleum Production Licence(s)
anted to the Contractor under Article 8;
Contract Costs” means Exploration Costs. Development Costs. Operating Costs.
Costs, General and Administrative Costs and Annual Overhead Charge:
Contractor means Ration Energy and Ratio Guyana and includes its 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 Ibs/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 flange for the LNG tanker. In the case of pipeline
deliveries, the Delivery Point shall be the inlet flange to buyer's pipeline or
4
Petroleum Agreement
Government of Guyana - Ratio
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 ftut^plS§j^HpipeIme
transporting buyer's LPGs; or in any case, such other economically viable point
for export of Petroleum in the Republic Of Guyana which shall be agreed to by
the Contractor arid 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 infonned
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
ant 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 or such other depth
or stratigraphic level resulting from information encountered during the drilling of
such well;
“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
5
Petroleum Agreement
Government of Guyana---Ratio
Petroleum may be produced commercially;
“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 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;
atural Gas” or “Gas” means all hydrocarbons which at standard conditions of
erature and pressure (60 degrees Fahrenheit or 15 degrees Celsius and 14.7
. in or 1 Kg/sq. cm) is in a gaseous state including but not limited to wet
al gas, dry mineral gas and casing head gas, all substances contained therein
ing helium, which are produced from an oil or gas well, in their natural state
sidue gas remaining after extraction of NGLs from wet gas. For purposes of
Agreement, Natural Gas shall also include liquefiable hydrocarbons obtained
i 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;
6
Petroleum Agreement
Government of Guyana - Ratio
“Operator” shall have the meaning assigned to it in Article 2.2(a);
“Parties” means the Government, Ratio Energy and Ratio Guyana and includes
their successors and permitted assignees, and a Party shall mean any of the
Parties;
“Petroleum Operations” mean 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 Licensee 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 Licensee 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;
\?2?fgulations” means the Petroleum (Exploration and Production) Regulations
ce 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.
7
Petroleum Agreement
Government of Guyana --- Ratio
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.
8
Petroleum Agreement
Government of Guyana - Ratio
Article 2 - Agreement, the Operator, LiafeHfties 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) Ratio Guyana 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 being one of the Parties 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 not being one of
the Parties comprising the Contractor in writing.
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.
2.5 Liability
The duties, obligations and liabilities of the Parties comprising the Operator and
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 undeT 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
9
Petroleum Agreement
Government of Guyana - Ratio
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 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.
10
Petroleum Agreement
Government of Guyana - Ratio
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 commencing three (3) months 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 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 Affiliated Company
guarantee or other form of guarantee acceptable to the Minister in the amount of
ten (10%) of the budget submitted by the Contractor, pursuant to Article 7.1, for
each specific work commitment period, but not more than for one year each time.
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 for any subsequent period 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 Affiliated 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.
11
Petroleum Agreement
Government of Guyana --- Ratio
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 commitments, 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 ph&se shall consist of twenty four (24) months duration.
Phase One - (24 months)
(i)
During phase one (1) of the initial period, the Contractor shall
acquire all available 2D seismic data from previous surveys
conducted over the Contract Area, process and/or reprocess as
necessary and interpret same.
At the end of phase one (1) of the initial period, the Contractor
shall either elect to relinquish the entire Contract Area except for
any Discovery Area in respect of which the Minister is informed
under section 30 of the Act and the area contained in any
Petroleum Production Licence or subject to Article 5. relinquish
twenty five (25) percent of the Contract Area and commit to the
Work Programme in phase two (2).
Phase two - (24 months)
During phase two (2) of the initial period, the Contractor shall
conduct a survey to acquire a minimum one thousand (1,000) line
kilometers of new marine 2D seismic and/or five hundred square
kilometers (500 sq. 1cm) of new 3D seismic over the Contract Area,
process and interpret same.
At the end of the initial period of four (4) years, the Contractor shall elect either to
relinquish the entire Contract Area ox, subject to Article 5, relinquish twenty
percent (20%) of the Contract Area except for any Discovery Area in respect of
which the Minister is infoimed under section 30 of the Act and the area contained
in any Petroleum Production Licence and renew the Petroleum Prospecting
Licence for a further period of three (3) years.
(b) The first renewal period of three (3) years shall be considered a single
phase.
(i) During the first renewal period, the Contractor shall drill one ( 1;
12
Petroleum Agreement
Government of Guyana - Ratio
exploration well in accordance with Article 4.2 within the Contract
Area.
At the end of the first renewal period of three (3) years, the Contractor
shall elect either to relinquish the entire Contract Area except for any
Discovery Area in respect of which the Minister is informed under section
30 of the Act and the area contained in any Petroleum Production Licence
or subject to Article 5, relinquish twenty percent (20%) of the Contract
Area and renew the Petroleum Prospecting Licence for a second period of
three (3) years.
(c) Second renewal period of three (3) years.
The second renewal period of three (3) years shall be divided into two (2)
phases. Phase one (1) will consist of twelve (12) months duration while
phase two (2) will consist of twenty-four (24) months duration
(i) Phase one (1) - (12 months)
During phase one, the Contractor shall review the outcome from
the Exploration Well drilled in the previous period, analyze all data
therefrom and determine the merits for drilling .a second
Exploration Well in the Contract Area, for which planning to drill
shall commence where sound merit for such drilling is established.
(At the end of phase one (1) of the second renewal period, the Contractor
shall elect either to relinquish the entire Contract Area except for any
Discovery Area in respect of which the Minister is informed under section
30 of the Act and the area contained in any Petroleum Production Licence
or commit to the Work Programme in phase two (2).
(ii) Phase two (2) - (24 months)
During phase two (2) of the second renewal period, the Contractor
shall drill one (1) Exploration Well in accordance with Article 4.2,
within the Contract Area.
At the end of the second renewal period of three (3) years, (he Contractor
shall relinquish the entire Contract Area except for: (ij am Discovery
Area in respect of which the Minister is informed under section 30 of the
Act, and (ii) the area contained in any Petroleum Production Licence 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 refen*ed to in
Article 4.1(a), (b) and (c) may be undertaken in an earlier phase or period
13
Petroleum Agreement
Government of Guyana - Ratio
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. «*►
(e) 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 an\
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,
provided however that:
(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
(c) a Discovery is made and the Minister is informed thereof; or
if 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 id) is satisfied
and the Contractor shall be entitled to a reasonable extension of time,
considering the availability of drilling equipment, manpower and materials
to complete the minimum work commitment accordingly in order to drill
the substitute Well.
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 obiigation(s) for an amount less than the
amount specified in an annual work programme and budget submitted under
14
Petroleum Agreement
Government of Guyana - Ratio
Article 7, Contractor shall be deemed to have fulfilled its expenditure obligation
for that phase or period.
15
Petroleum Agreement
Government of Guyana - Ratio
Article 5 - Relinquishment of Areas
5.1 If prior to the end of the first phase of the initial period of the Petroleum
Prospecting Licence issued to the Contractor under Article 3.1, the Contractor
elects not to. relinquish the entire Contract Area, Contractor shall relinquish
twenty-five (25) percent of the Contract Area, less the exclusions provided for in
Article 5.4
5.2 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 relinquish at the end of the initial period an area equal to at least
twenty percent (20%) of the Contract Area less the exclusions provided for in
Article 5.4
5.3 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
Contract Area less the exclusions provided for in Articles 5.4
5.4 The areas to be relinquished pursuant to Articles 5.1, 5.2 and 5.3 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 Production Area;
be selected by Contractor so that:
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;
the Blocks to be retained for and during the remainder of the initial
period and the first renewal period pursuant to Articles 5.1, 5.2 and
5.3 shall constitute one (1) discrete area unless otherwise agreed to
by the Minister.
5.5 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
16
Petroleum Agreement
Government of Guyana - Ratio
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.
5.6 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 Minister 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.
5.7 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.
5.8 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 5.5 and 5.6. 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.
17
Petroleum Agreement
Government of Guyana - Ratio
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 the Minister's 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 has delegated GGMC (the "Delegate") to perform, inter alia the
following functions:
(a) to monitor, in consultation and coordination with the Operator and/or the
Contractor, the Petroleum G^er^kms earned 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:
to ensure the maintenance and availability for inspection of operating
records and reports for Petroleum Operations maintained in accordance
with good oilfield practice ;
:) I to ensure the accounting procedures specified in Annex C of this
^ /Agreement are followed;
to ensure the Parties compliance with the provisions of this Agreement,
Petroleum Act and Regulations.
6.3 The Contractor and the Delegate shall cooperate in good faith in order to enable
the Delegate the exercise of the Minister's functions delegated pursuant to this
Article and the Contractor shall keep the Delegate- advised periodically of all
relevant activities taking place during the course of Petroleum Operations and
shall provide the Delegate with all available relevant 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 year, 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 6.3, should the
Delegate wish to make any specific proposals or revisions thereto, the Delegate
shall so notify the Contractor in writing specifying its reasons therefor; within
18
Petroleum Agreement
Government of Guyana - Ratio
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 exploration
work programme and budget .jJn^^lf^S. 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 written notice of any delegation shall be given promptly to the
Contractor.
6.6 Any approvals required by the Minister ox delegates of the Minister shall not be
unreasonably withheld or delayed. 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. In the
event, due to operational constraints, an approval is required within less than sixty
(60) days, the Delegate, upon the request of the Contractor, will make ever\
reasonable effort so that the Minister will favorably consider granting such
approval within the required (shortened) timetable.
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 the
following approvals and/or permits to facilitate the Contractor to fulfill
requirements of the contract including but not limited to the following:
all approvals to be issued by Government agencies or local government
institutions which are required to conduct Petroleum Operations
including, without derogating from the generaliu of the aforesaid,
chartering supply boats and allowing them to sail to and from the License
Area, hiring helicopters and allowing them to fly to and from the License
Area, use of explosives, as well as approvals necessary to import goods
and services free from duties and taxes;
approvals for easements and right-of-way to enable Contractors to conduct
operations;
approvals for security for field operations and personnel;
19
Petroleum Agreement •
Government of Guyana - Ratio
(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;
(f) approvals to export hydrocarbons, and use essential infrastructure
necessary for the economic export of hydrocarbons at normal commercial
terms.
(g) Environmental approvals required in order to conduct Petroleum
Operations in the License area or which are required to conduct operations
elsewhere that are associated with said Petroleum Operations;
(h) Communications permits to allow for international communications from
the License area, including mobile phones, land line phones, high-speed
internet connections, facsimile transmissions, etc.;
(i) Permits to erect refining facilities, laying pipes lor transporting oil and gas
and erecting LNG facilities;
G) In the event, pursuant to Section 59 of the Act, the Minister grants any
person the right to carry on geological, geophysical surveys and
investigations in any block included in the License area, the raw data of
those surveys and investigations will promptly after their completion be
made available, without any charge, to the Contractor.
20
Petroleum Agreement
Government of Guyana - Ratio
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.
21
Petroleum Agreement
Government of Guyana - Ratio
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 maybe made by the Contractor for a Petroleum Production License.
8.4 Where the Contractor has made an application to the Minister for a Petroleum
Production 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)
pnths after the grant of the first Petroleum Production Licence, the Contractor
in consultation with GGMC, prepare and implement a programme for
g and employment of Guyanese nationals in each phase and level of
Pitrolbum Operations and for the development of management and technical
or the safe and efficient conduct of Petroleum Operations.
:e the Minister considers that the application has not met the requirements of
8.4, he shall so notify the Contractor within sixty (60) days of receipt of
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 {6Ui 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.
8.6 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
22
Petroleum Agreement
Government of Guyana - Ratio
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 be, 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. In the event the
Minister imposes 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 shall be granted as long as
the Contractor is in good standing under the Licence.
Natural Gas. In the event of any Non-Associated Gas discovery within the
Contract Area, in recognition of the fact that Natural Gas projects
enerally have much longer lead times from discovery to first commercial
[reduction than is the case for Crude Oil projects, the Minister shall grant
ontractor’s request for the maximum ten (10) year Petroleum Production
icence renewal so long as Contractor is in good standing under the
Licence.
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;
Notice stating the grounds of the intended refusal; and
23
Petroleum Agreement
Government of Guyana - Ratio
(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.
24
Petroleum Agreement
Government of Guvana - Ratio
Article 9 - Records, Reports and Information;
Confidentiality
9.1 Records, Reports and Information
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.
The Contractor may freely export for processing or laboratory
(c)
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.
(<0 Petroleum Data shall be the joint property of the Minister and the
Contractor but shall become file 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 expiry7, 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.
The Minister, through duly appointed representatives, upon providing the
Contractor with at least seven (7) days written 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.
25
Petroleum Agreement
Government of Guyana - Ratio
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 essential to work for Contractor;
(cc) to a bank or other financial institution where disclosure is
essential to obtain financing for Contractor or 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, b\
applicable law, 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 Licence or 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
Operator or 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
26
Petroleum Agreement
Government of Guyana - Ratio
Contractor or Affiliated Company;
(ii) 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
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, generall) known to the
public.
(b) Any petroleum data, information or reports disclosed by the Operator or
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 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 (except if
Contractor was granted a Petroleum Production Licence with respect to
part of such Licence area), the Contractor shall deliver to the Minister
originals of all petroleum data and other information relating lo 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
Article 10 - Annual Licence Rental Charge
The Contractor shall pay to the Government without demand on the Effective Date of this
Agreement in the first assistance and in each subsequent year thereafter, on the anniversary
date of the Petroleum Prospecting Licence or the date of grant of any Petroleum
Production Licence as the case may be, so long as the said Licence remains in force, an
annual Licence rental charge of two hundred thousand United States Dollars
(US$200,000.) 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.
28
Petroleum Agreement
Government of Guyana - Ratio
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 b\ 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 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 ol
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
-j- ■ 12, the unrecoverable amount shall be carried forward and, subject to the
N; limitation stipulated in Article 11.2. shall be recoverable in the immediately
• \'^mceeding Month, and to the extent not then recovered, in the subsequent Month
\or Months.
? ‘ -A. ‘ Cg;*' [hi balance of Crude Oil and/or Natural Gas available in any Month after
ecoverable Contract Costs have been satisfied to the extent aforesaid
hereinafter referred to as “Profit Oil” and/or "Profit Gas" as the case may be)
QuyaHK shall be shared between the Government and the Contractor for each Field in the
following proportions: Contractor -fifty percent (50%) and Minister -fifty percent
(50%).
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
costs and be calculated as specified in Section 11.9 below.
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 Monthh basis according u-
their respective entitlements as set out in Article 11.4.
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:
29
Petroleum Agreement
Government of Guyana - Ratio
(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.
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.
30
Petroleum Agreement
Government of Guyana - Ratio
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, insofar as practical from technical or environmental
considerations, 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, provided
that such utilisation is commercially viable, 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. If 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
or such utilisation and the production of excess Associated Gas shall be
arried out while a Petroleum Production Licence continues in force.
f the Contractor believes that excess Associated Gas of an Oil Field has
commercial value, the Contractor shall be entitled, but noi 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 friendly 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 ha\ e commercial
value, the Government may utilise 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
31
Petroleum Agreement
Government of Guyana - Ratio
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 cost recoverable.
(f) If the Parties agree that the excess Associated rGas 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 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:
For a period of six (6) months from the date of the notice delivered
(i)
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 an annual
rate of return of not less than eighteen percent (18%). 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 discover) provided for in
section 31(1) of the Act and the application for grant of a
Petroleum Production Licence shall be extended pursuant to
32
Petroleum Agreement
Government of Guyana - Ratio-
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 pursuant to sub-paragraph (aj
above, 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 review pursuant to
Article 6.4. The Contractor shall carry out the Appraisal Programme
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
cost recoverable 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 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 friendly negotiations but which shall
be no less than Twenty-five thousand United States Dollars (US$25,000).
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.
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 Saies principles. The
Contractor will pursue markets both within and outside Guyana and seek
[0 market Natural Gas to the highest realization outlets after deduction ot
development, production and transportation costs. Insofar as possible,
depending upon the market for natural gas and the cost of development,
production and processing thereof 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.
(b) The Contractor shall have the right, but not the obligation, to' process
33
Petroleum Agreement
Government of Guyana - Ratio
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 Platt’s 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 onshore and offshore fixtures and installations
necessary to conduct the Petroleum Operations, including but not limited
to, storage tanks, trunk pipelines, shipment installations, pipelines, floating
or fixed platforms, 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, for a price to be agreed
upon, from time to time, by the Contractor. Where the Minister and
Contractor agree that a mutual economic benefit can be aehiesed 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 partially 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
34
Petroleum Agreement
Government of Guyana - Ratio
described in sub-clause 12.4(a) above that are built by the Government or
by any wholly or partially owned state enterprises or by any third parties
on terms no less favorable than those of any other party participating
therein.
jo
Petroleum Agreement
Government of Guyana - Ratio
Article 13 - Valuation of Crude Oil or Natural Gas
13.1 Where one hundred percent (100%) of the sales of Crude Oil or Natural Gas made
by the Contractor during a Calendar Month are Third Party Sales then the price
shall be determined as the net realized price (i.e.: after deducting commissions
and brokerages) for that sale at the F.O.B. point of delivery.
Wheie Crude Oil ot Natural Gas is sold by the Contractor other than in one
hundred percent (100%) Third Party Sales during a Calendar Month then that
Crude Oil or Natural Gas shall be valued at the following applicable price:
(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:
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 b> 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 Platt's Crude Oil
Market Wire daily publication. In the event that Platt's
36
Petroleum Agreement
Government of Guyana - Ratio
ceases to be published or is not published for a period of
thirty (30) 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.
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 the calorific value of alternative fuels in the
end user market of the buyers, 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.
(iv) for the purposes of this Article Third Parts Sales of Crude Oil or
Natural Gas made by the Contractor shall include any Third Party
Sales made by the Contractor or an Affiliated Company of
Contractor on the Minister's behalf pursuant to Article 14 but shall
exclude:
(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 the Minister;'
37
Petroleum Agreement
Government of Guvana - Ratio
(bb) Crude Oil or Natural Gas exchanges, barter deals or
restricted. ^-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
(cc) Government to government sales.
13.2 Contractor shall be responsible for determining the relevant prices for sales of
Crude oil or Natural Gas that are not Third Party Sales, 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 annually 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" oi a Crude Oil
regard shall be given to all relevant characteristics including but noi limited iu
gravity, sulphur and metai content, pour point and product yield. In the case of
Natural Gas, quality of the Natural Gas shall be determined based on its
composition.
38
Petroleum Agreement
Government of Guyana - Ratio
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. Unless the Government
requests the Contractor to sell the Government's share of Profit Oil or Profit Gas
as provided in Section 14.3 below, 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 off taking 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:
Lifting shall be carried out so as to avoid interference with Petroleum
Operations.
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 Party 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 v rude Oil not
so lifted, to a later period.
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 jifovide-the Contractor with at least
39
Petroleum Agreement
Government of Guyana - Ratio
(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.
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.
40
Petroleum Agreement
Government of Guyana - Ratio
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 (other than tax on income and
corporate tax, which shall be paid for by the Minister in accordance with Section
15.4 below), 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, any of
its' shareholders, members, partners, parties comprising 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-
subject to the provisions of Article 21, import duties at the rates specified
from time to time in the Customs Act (Cap. 82:01);
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;
rent due to Government in respect of any land rights granted or assigned to
the Contractor;
annual licence rental charges due under Article 10;
subject to Article 15.7, local government rates or taxes (being rates or
taxes not 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;
(i) stamp duties, (ii) registration fees, (iii) licence fees, and tiv) any other
similar duty, fee or other impost of a minor nature, provided the above-
referenced categories are imposed under laws of general application.
15.2 Except as provided in this Article 15, Contractor, Affiliated Companies, Sub-
Contractors and individuals who are 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.'
15.3 The taxable income of the Operator and the Contractor arising in each year or
assessment under this Agreement for purposes or the income tax law > uf t my ana,
(including the Income Tax Aci and the Corporation Tax Act referred to in .Article
15.2) shall include the amounts of Contractor's income tax and corporation tax
41
Peiroleum Agreement
Government of Guyana - Ratio
paid pursuant to Article 15.4.
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 grossed up (so that Operator and the Contractor will not be liable
to pay any tax in excess of the tax paid on their behalf by the Minister
hereunder) and the grossed up amount will be paid by the Minister to the
Commissioner General, Guyana Revenue Authority on 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
and such levies shall be deemed paid 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;
the Contractor’s and Operator'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
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 Operator and the Contractor shall provide the Minister with the Operator’s
and 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 Operator and 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 Operator and 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 Operator and the
Contractor proper tax certificates in the Operator's and the Contractor’s name from
the Commissioner General, Guyana Revenue Authority evidencing the payment
42
Petroleum Agreement
Government of Guyana - Ratio
of the Operator's and 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 Operator, 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 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)
be
e Minister hereby agrees that the Contractor and the Operator shall
mpted from the Property Tax Act pursuant to section 51 of the Act and an\
jr act which amends or replaces in part or in whole the Property Tax Act.
.inister agrees that for the duration of the Exploration Period, and for any
within the Contract Area where exploration activity- is in progress, the
isions 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 He subject tu 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 not more than one hundred
eighty three (183) days on a cumulative basis in the tax year of assessment.
15.11 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’s, or parties comprising the Contractor,
Affiliated Companies' or Non-Resident Sub-Contractors’ branch in Guyana to its
foreign or head office or to Affiliated Companies
43
Petroleum Agreement
Government of Guyana - Ratio
15.12 The Expatriate employees of the Operator, the Contractor, Affiliate companies
and the 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;
(ii) Notwithstanding any provision to the contrary in this Article, expatriate
employees of Operator, 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 not more than one hundred
eighty three (183) days on a cumulative basis in the tax year of
assessment,
15.13 Notwithstanding any provision to the contrary in this Article, 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 exempt from any duty or taxes, including Capital Gains Tax
payable in such respect, and shall be subject to a fee payable to die GGMC upon
approval of the assignment for the amount of one hundred thousand United States
Dollars (US$100,000).
15.14 An Order shall promptly be made giving effect 10 the provisions of this Article in
statutory form and language as specified in section 51 of the Act.
44
Petroleum Agreement
Government of Guyana - Ratio
Article 16 - Contracts and Assignments
16.1 The Contractor shall, upon request, provide to the Minister copies of*.
(a) contracts with respect to the sale or disposal of Petroleum (including
invoices issued thereunder);
(b) any deed of assignment of an interest of the Contractor under this
Agreement pursuant to Article 25;
(c) any instrument by which the Contractor pledges, mortgages, encumbers or
hypothecates its interest or any of its rights under this Agreement or the
Contract Area.
45
Petroleum Agreement
Government of Guyana - Ratio
Article 17 - Domestic Supply Obligation
*71 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 any third 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 Lifdng 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.
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 iota! 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.
46
Petroleum Agreement
Government of Guyana - Ratio
(c) The price payable for the sale of Crude Oil pursuant to this Article shall be
paid to Contractor in freely transferrable 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 by agreement between the Minister and the
Contractor, or failing such agreement within thirty (30) days of the
Minister's notice of Crude Oil Domestic Demand, the price shall then be
determined in accordance with Article 13. Should the Minister fail to pay
within thirty (30) days of receipt of the Contractor's invoice by the
Minister, the Contractor’s obligations in respect of the Domestic Supply-
Obligations of this Article 17 shall be suspended until payment is made
good, after which time deliveries shall be resumed subject to an>
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
Government’s 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.
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.
s for Natural Gas.
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 any 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,
47
Petroleum Agreement
Government of Guyana ~ Ratio
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
international value of alternative fuels in the end user market of the
buyers, plus freight to Georgetown. In the event of a failure to reach
agreement on the price, volume 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.
The price payable for the sale of Natural Gas pursuant to this Article shall
be paid to Contractor in freely transferable 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 by agreement between the Minister and the Contractor
pursuant to Article 17.2 (a). Should the Minister fail to pay within thirty
(30) days of receipt of the Contractor's invoice by the Minister, the
determined amount in accordance with Article 17.2(a). Contractor'
obligations in respect of the Domestic Supply Obligations of this Article
17 shall be suspended until payment is made good, after 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) - «e) shall occur
48
Petroleum Agreement
Government of Guyana - Ratio
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.
49
Petroleum Agreement
Government of Guyana - Ratio
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 and professionally 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, when relevant, 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.
50
Petroleum Agreement
Government of Guyana - Ratio
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 Licence, or any
renewal thereafter the Contractor shall pay to GGMC the amounts of:
Initial Period: US$60,000
First Renewal Period: US$60,000
Second Renewal Period: US$60,000
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
operate, assist and provide Contractor any information it requires to conduct
^verification.
o provide Guyanese personnel nominated by GGMC with on-the-job
raining in Contractor's operations in Guyana and overseas and-'or practical
.raining 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 and approved by
the Contractor, on courses at universities, colleges or other training
institutions selected by GGMC and approved by Contractor;
(c) to send Guyanese personnel selected by GGMC and approved by the
Contractor, to conferences and seminars related to the petroleum indusuy:
(d) to purchase for GGMC advanced technical books, professional
publications, scientific instruments or other equipment required by GGMC
and approved by the Contractor,.
51
Petroleum Agreement
Government of Guyana - Ratio
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):
deliver to the Minister, free of charge, in good order and condition,
(i)
(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
for which costs have been folly recovered in accordance with
Annex C herein. Where costs have not been fully recovered the
provisions of Article 20.1 (b)(iii) shall apply:
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, and the Minister will purchase from the
Contractor, 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 depreciated
unrecovered cost of the assets.
(c) 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 h> Contractor in
Guyana;
52
Petroleum Agreement
Government of Guyana - Ratio
(iii) equipment and othei 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;
(v) household goods and vehicles which are the personal property o!
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 o!
termination of this Agreement or promptly following cancellation
of all 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 any 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 or delayed.
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
53
Petroleum Agreement
Government of Guyana - Ratio
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 or 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 by written notice to the other Party propose that the
dispute be referred for determination in accordance with the
provisions of Article 26.
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 by the Minister.
(ee) Contractor shall have the right on an annual basis 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) (iiu i'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.
54
Petroleum Agreement
Government of Guyana - Ratio
(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
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 latesi 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 nm direct rhe Contractor u*
remove or abandon any such assets pursuant to regulation v i ] nai
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.
55
Petroleum Agreement
Government of Guyana - Ratio
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) 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;
(iv) the Contractor's and/or Operator's liability to its employees
engaged in Petroleum Operations.
To the extent permitted by applicable laws, rules ami 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.
56
Petroleum Agreement
Government of Guyana - Ratio
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 drill ships, aircraft, 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 solely in carrying out
Petroleum Operations. The Contractor shall give prior notification to the Minister
of Sub-Contractors engaged in Petroleum Operations.
Subject lo 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 the
prevailing excise tax rate or ten percent (10%) excise tax, whichever is
less, 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.
)ject to Article 20, any of the items imported into Guyana may, if no longer
equired for Petroleum Operations hereunder, be freely exported at any time by
importing party, without the payment of any export duty or impost: presided,
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 or its 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 household goods, clothing, for
their personal consumption and vehicles all of which are the personal property oi
employees of the Contractor and Sub-Contractor 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 a!!
duties and taxes, and at any time, all uf the items imponed under A nick 2 ' •
y 7
Petroleum Agreement
Government of Guyana - Ratio
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:
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;
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 w Petroleum
Operations of his liability to income tax under the laws ol 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.
58
Petroleum Agreement
Government of Guyana - Ratio
Article 23 - Accounting and Audits
23.] 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.
ov
Petroleum Agreement
Government of Guyana --- Ratio
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 under
section 43 (4) of the Act (unless such failure to pay is prevented by any action of
the Government), 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
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, terrorist acts, invasions, blockades, riots,
strikes, lockouts, 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 Party in writing of the
occurrence thereof giving particulars of the Force Majeure and obligations
affected. Each Party shall promptly notify the other Party as soon as the Force
Majeure has been removed or no longer prevents it Irom carrying nut u-
obligations hereunder.
£DS Where a Party is prevented from exercising any rights or performing any
•Co ^/Obligations under this Agreement due to a Force Majeure, the Minister hereby
*■ ^\ees pursuant to section 43 (3) of the Act, subject to the proviso therein, that a
,od of additional time necessary for restoration of damages caused during a
dsSSr a orte Majeure delay shall be added to the time allowed under this Agreement for
^ -ne performance of such obligation and for the performance of any obligation or
/thyexercise of any right dependent thereon and to the term of any Licence issued
rsuant to this Agreement. In the event the Parties cannot agree on whether the
ccurrence of the event in question is considered a “force majeure" event, ur il 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.
60
Petroleum Agreement
Government of Guvans - Puuio
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
J' ■written directive of the Government which affects the Government’srperformance
of its obligations under this Agreement.
61
Petroleum Agreement
Government of Guyana - Ratio
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 of the assignor under this Agreement or any
Licence issued or renewed 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.
Petroleum Agreement
Government of Guyana - Ratio
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, ox 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.
26.2 Any matter required to be referred to a sole expert for determination under this
Agreement, including under Articles 5.5, 8.5. I2.2(a)(i), 13.4. 17 and any other
matter provided for herein or 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
pointed by the International Centre for Expertise of the International Chamber
Commerce (“ICC”). A sole expert shall be an independent and impartial
$£sbn of international standing with relevant qualifications and experience. The
i^pent, once appointed, shall have no ex parte communications with any of the
.rues to the Dispute concerning the expert determination or the underlying
ispite. The Parties shall cooperate fully in the expeditious conduct of such
sfeprt determination and to provide the expert with access to all facilities, books.
ords, 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 expen shall be copied ' • hu .»the-
Party, and any oral submissions to the sole expen shall be made in the presence oi
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. Oral
63
Petroleum Agreement
Government of Guvana-- Ratio
submissions to the sole expert shall be made in London, England and shall be
made in the English language. All correspondence, documentation and
information provided by a Party to the sole expert shall be submitted in the
English language.
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 deteimination 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
ations Commission on Internationa! Trade Law < UNCITRAL). 1 he American
;bitration Association shall administer the arbitration under the UNCITRAL
Arbitration Rules and shall act as the appointing authority when the UNCITRAL
[itration Rules call for an appointing authority.
seat of the arbitration proceedings pursuant to this Article 26 shall be
ashington 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 ot a sole expen (as well a* the charges tor thu use ;>[
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
64
Petroleum Agreemen*
Government of Guyana - Ratio
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.
65
Petroleum Agreement
Government of Guyana - Ratio
Article 27 - Applicable Law
27.1 This Agreement shall be governed by, interpreted and construed in accordance
with the laws of the 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.
66
Petroleum Agreement
Government of Guyana - Ratio
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 ox 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 result m
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 maimer. 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.
Petroleum Agreement
Government of Guyana - Ratio
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.
68
Petroleum Agreement
Government of Guyana - Ratio
Article 30 - Effective Date
30.1 The Effective Date shall be the date on which this Agreement is duly signed by
the last to sign of the Parties.
69
Petroleum Agreement
Government ofGuvana - Ratio
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 b\
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 15Io 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 an\ previous Agreement
understanding between the Parties whether oral or written on the subject maru-r
hereof, prior to the date of this Agreement.
70
Petroleum Agreement
Government of Guyana - Ratio
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, or any of the terms hereof, directly or indirectly, including b>
way of legislation, without the prior written consent of Contractor.
32.2 After the signing of this Agreement and in conformance with Article 15,. "to.
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.
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 taws (including the
hydrocarbons law. the customs code or tax code) or the enactment of new law^ 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
ovided by this Agreement, accruing to the Contractor hereunder during the term
is Agreement, the Government shall promptly take any and all affirmative
to restore the lost or impaired economic benefits to Contractor, so that
.ctor receives the same economic benefit under the Agreement that it would
lihive Received prior to the change in law or its interpretation, application, or
implementation. The foregoing obligation shall include the obligation to resolve
ptly by whatever means may be necessan am conflict or anomafy between
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 term* of the Agreement. If the Panics arc unable m
resolve their differences within one hundred twenty 1120) days atter 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
71
Petroleum Agreement
Government of Guyana - Ratio
award damages to Contractor that fully compensate it for the loss of economic
benefits under the Agreement, both historical and future losses.
RSgX
72
Petroleum Agreement
Government of Guyana - Ratio
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: 592-227-0084
Email:
Contractor: The General Partner
Ratio Energy Limited
83. Premniranjan Place, Prashad Nag;
Georgetown, Guyana
Attention: Ryan Pereira
Telephone: 592-227-7220
Facsimile: 592-227-7223
Email: rvanfSgoldeneruption.i
ryan@goldeneruption.com
With a simultaneous copy to:
Ratio Oil and Gas Ltd., Attention: Ligad Rotlevy, Owner and CEO
85 Yehuda Halevi Street,
Tel Aviv, Israel
Telephone: 972-544452948
Email: lrotlevy@netvision.net.il
Operator: The Company Secretary/Director
Ratio Guyana Ltd.
83 Premniranjan Pi ace Prashad Nagar
Georgetown. Guyana
Attention: Eitan Aizenberg
Telephone: 592-227-7220
Facsimile: 592-227-7223
With a simultaneous copy to:
Ratio Oil and Gas Ltd. Attention: Ligad Rotlevy1, Owner and CEO
85 Yehuda Halevi Street.
Tel Aviv Israel
Petroleum Agreement
Government of Guyana - Ratio
Telephone: 972-544452948
Email: lrotlevy@netvision.net.il
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.
IN WITNESS whereof the Parties have caused their duly authorised representatives to set
their hands at the City of Georgetown, in the Republic of Guyana in the presence of one
another the day and year first above written.
Signed by The Minister Responsible For Petroleum
Representing the Government of the Republic of Guyana.
President of the Republic of Guyana
Signed by The President of Ratio Energy Limited
Compan;
RATIO ENERGY LIMITED
Signed by t] ted
Company President
RATIO GUYANA LIMITED
A TRUE COPY bf the ci.y..u» wmcn
was regist -redan the Deeds Registi £st !red|n the Deeds Registry of
GeraiatoV r. Hpmar3gaJ, Guyana on toU r rLmaraesj Guyana on the
ssisiant Sworn Clerk
' 5 -21
74
Petr.ol^um Agreement
Government of Guyana - Ratio
ANNEX A
DESCRIPTION OF PROSPECTING AREA
Description of area to be granted under Petroleum Prospecting License pursuant to
Article 3 of the Petroleum Agreement.
The area comprises approximately 13,535 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 LONGITUDE
1 10° 40.00' N 57° 25.00' W
2 10° 40.00’ N 57° 15.00’W
10° 35.00’N 57° 15.00'W
4 10° 35.00’N 57° 05.00’ W
5 10° 30.00'N 57° 05.00' W
! 57° 00.00' W
o
o
LO
p
o
O
6 | %
7 10° 25.00’N 57° 00.00’ W
8 10° 25.00’N 56° 55.00’W
9 10° 20.00’ N 56° 55.00’W
10 10° 20.00’N 56° 50.00' W
11 10° 15.00'N 56° 50.00’ W
12 10° 15.00'N 56° 45.00’ W
13 10° 10.00’N 56° 45.00' W
14 10° 10.00’ N 56° 40.00' W
15 8° 50.00'N 56° 40.00’ W
16 8° 50.00’ N 56° 50.00’ W
17 8° 55.00’ N 56° 50.00’ W
8° 55.00’N 57° 00.00’ W
18
19 9° 00.00’N 57° 00.00' W
20 9° 00.00' N 57° 15.00’W
21 9° 05.00’N 57° 15.00'W
22 9° 05.00’N 57° 20.00' W
r 23 9° 10.00’N 57° 20.00’W
24 9° 10.00’N 57° 25.00'W
Petroleum Agreement
Government of Guyana- Ratio
Annex A (cont’d)
Description of Contract Area
The following five (5) minute by five (5) minute square graticular blocks describe the
area. The blocks as described are shown on the Block Reference Map at Annex B
Block Gg 56, 57, 68-71, 80-84, 92-96,104-108, 116-120,128-132, 140-144
Block Hh 85, 97, 98, 109-111, 121-124, 133-136
Block C 8-12, 20-24, 32-36, 44-48,'56-60, 68-72, 80-84, 92-96, 104-108.116-120.
129-132, 142-144
Block D 1-4, 13-16,25-28. 37-40. 49-52. 61-64. 73-76. 85-88. 97-IUU. ]()0_] n.
121-124, 133-136
Block L 1-4, 15, 16
* denotes part block
Pen-oleum Agreemem
Government of Guyana- Ratio
. 3
1
■J
1
ANNEX B
]
r
ANNEX C - ACCOUNTING PROCEDURE
This Annex is part of this Petroleum Agreement (hereinafter referred to as "the
Agreement")
1
Petroleum Agreement
Government of Guyana • Ratio
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 bv 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
in such form as is common practice in accordance with good
oilfield practice or 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.
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).
(in) 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 he employed for measurements of production of Natural
jL,
Petroleum Agreement
Government of Guyana - Rar»'»
Gas required under the Agreement and this Annex. The language
employed shall be English.
(b) Should there be any gain or loss from exchange of currency, it will be
credited or charged to the accounts under the Agreement.
Amounts received and costs, expenses and expenditures made in
(c)
(i)
currencies other than United States dollars or Guyanese dollars
shall be converted into United States dollars by using the relevant
foreign exchange rate published in the Wall Street Journal on the
first business day following the day in which the relevant
transaction occurred.
(ii) Amounts received and costs, expenses and expenditures made in
Guyanese dollars or currencies other than 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
between the currencies in question as determined and published by
the Bank of Guyana, prevailing on the next Business Day after the
relevant transaction occurred.
The actual exchange rates applied in accordance with sub-section
1.3 (c) (ii) 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.
Payments
(a) All payments between the Parties under the Agreement shall, unless
otherwise agreed, be made in United States dollars and through a bank
designated by the receiving Party.
(b) All sums due under the Agreement during any Calendar Month shall, tor
each day such sums are overdue bear interest at the Agreed Interest Rate.
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 a time coordinated
in advance with the Contractor, during normal business hours but not more
than once per Calendar Year, all charges and credits relating to the
Petroleum Agreement
Government of Guyana - Ratio
Contractor's activities under the -Agreement and all books of accounts,
accounting entries, material recoms^BSafenventories, 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 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 coordinated in advance with the Contractor,
during normal business hours upon fifteen (15) days prior notice.
At the conclusion of each audit, the Parties shall endeavour io 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 t
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, frte 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.
Petroleum Agreemem
Government of Guyana - Ratio
In the event that an audit claim by the Minister is not settled to the
satisfaction by die Contractor's rejjly as provided for above, the Contractor
shall be entitled to recover ^y. 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 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
axe 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.
Nothing herein above provided shall entitle the Minister or his auditors to
access to data and records which:
are subject to statutory restrictions on disclosure; or
do not relate to Petroleum Operations; or
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
Petroleum Agreement
Government of Guyana - Ratio
'■to?
SECTION 2 - CLASSIFK:ATION. PEgmaaQNtA^AlJOtation of
COSTS, EXPENSES igSS^H!^TfOiRfiS
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
Sendee Costs allocated to Exploration Costs.
(f) Any other Contract Costs incurred in the search for and appraisal of
Petroleum after the Effective Date.
Annual amounts set forth and paid to GGMC pursuant to Article 19.3 of
the Agreement.
kentals, including the Annual Licence Rental Charge payable pursuant to
ction 10 of the Agreement;.
icenses and other fees,
.opment 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, abandoned or producing, and drilling wells for the injection of
water or gas to enhance recovery of Petroleum.
(b) Completing wells by way of installation of casing or equipment or
otherwise after a weli has been drilled for the purpose of bringing the well
9
Petroleum Agreement
Govemmenr of Guyana - Rauo
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 including blow-out preventers,
subsurface equipment, enhanced recovery systems, offshore platforms,
petroleum storage facilities, export terminals and piers, harbours and
related facilities and access roads for production activities and any other
similar or dissimilar field facilities which are typical of good international
oilfield practice,
(e) Engineering and design studies for field or onshore facilities.
(f) All General and Administrative Costs, Annual Overhead Charges (defined
in Section 2.5 below) 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 any other similar or dis-similar operations facilities and
expenses connected thereto and safety and security services which are
typical of good international oilfield practice. 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.
7
Petroleum Agreement
Government of Guv-ana - Ratio
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 axe
not otherwise recovered.
(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 $5,000,000 (Five Million US Dollars) of 5%
Contract Costs:
Next $10,000,000 (Ten Million US Dollars) of 4%
Contract Costs:
In excess of $ 15,000,000 (Fifteen Million US 2%
Dollars) of Contract Costs
(c) 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.
8
Petroleum Agreemen!
Government of Guyana - Ratio
SECTION 3 - COSTS, EXPENSES. EXPIMMCTTOES AND CREDITS OF THE
Cd^fltR^CTOR
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 Seciion 2. The>
axe all recoverable as 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
Gross salaries and wages including bonuses of the employees of
the Parties comprising the Operator and/or 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.
Costs regarding holiday, vacation, sickness and disability
payments applicable to the salaries and wages chargeable under (i)
above.
Expenses or contributions made pursuant to assessments or
obligations imposed under the laws of the Republic of Guyana
which axe applicable to cost of salaries and wages chargeable
under (i) above.
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.
Reasonable travel and personal expenses of such employees
including those made for travel and relocation of the Expatriate
Employees assigned to the Republic of Guyana, housing
accommodations for such personnel and any per diem allowances
payable by the Operator or the Contractor to employees or service
providers, all of which shall be in accordance with the normal
9
Government of Guyana - Ratio
practice of the parties comprising the Contractor.
(vi) Any personal income taxes owing to the Republic of Guyana by
employees of the parties comprising Contractor and paid or
reimbursed by a party comprising the Contractor.
(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 by 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
ooyahK 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
10
Petroleum Agreement
Government of Guyana - Ratio
documented expenses (including travel costs) offthose 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.
(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, except as required in order to avoid delays in supplying
such materials to the Area of Operations or to preclude a shut¬
down of operations as aresult of lack of inventory on hand.
(ii) The Contractor does not warrant material. Supplier's or
manufacturer’s guarantee express or implied, will to the extent
provided, will be the only source of recourse in case of defective
material or equipment, and any adjustment, compensation or rebate
received by the Contractor from the suppliers/manufacturers or
their agents will be credited to the accoun.ts..under the Agreement.
(m)
(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
height 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 aims
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 ot the
Parties comprising Contractor shall be charged ai 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
11
Petroleum Agreement
Government of Guyana - Ratio
time of procurement.
Used Material (Conditions "B" and "C")
(2)
(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
-v seventy-five percent (75%) of the price of
new material defined in (1) above.
(ii) Material, which cannot be classified as
Condition "B11 but which:
(a) after reconditioning will be farther
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.
Material, which cannot be classified as
Condition ::B5' 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.
12
Petroleum Agreement
Government of Guyana - Ratio
(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 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 negotiating and drafting of this Agreement which are
not included in Pre-Contract Costs as defined in sub-section (k) below) or
for procuring, perfecting, retention and protection of the Contract Area
and in defending or prosecuting lawsuits involving the 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 fox the protection
of the interest of the Parties are recoverable. Where legal services are
rendered in such matters by salaried or regularly retained 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.
Training Costs
All costs and expenses incurred by the^ohtractor 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).
Petroleum Agreement
Government of Guyana • fUtiu
(k) Pre-Contract Costs
The sum of One Hundred and Fifty Thousand United States Dollars
(US$150,000.) 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) Commission paid to intermediaries by the Contractor.
(b) Donations and contributions to organisations in Guyana
(c) 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.
(d) Petroleum marketing costs
3.3 Costs not Recoverable under the Agreement
With the exception of the sum specified in sub-section 3.1 (k), costs
incurred before the Effective Date.
Transportation costs of Petroleum beyond the Delivery Point.
Amounts paid paid with regard to non-fulfillment of contractual
obligations, subject to Section 3.1(g) below.
Costs of arbitration and the sole expert in respect of any dispute under the
A.greement.
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.
14
Petroleum Agreemenr
Government of Guyana - Ratio
(g) Costs incurred as a result of wMuUmisGond^^^gossm^li'gence of the
Contractor or failure-TO msure^iiere^msiirance isareqmred pursuant to
Article 20.2(a) of the Agreement.
3.4 Other Costs and Expenses
1 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
.1 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
1 cost of which has been charged to the accounts under the Agreement, less
any taxes payablelhereon.
(c) Any adjustment received by the Contractor from the
suppliers/manufacturers or their agents in connection with defective
material the cost of which was previously charged to the accounts under
the Agreement.
Rentals (less any taxes payable thereon), 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.
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
15
Petroleum Agreemem
Government of Guyana Ratio
wiiMgr17''
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.
16
Petroleum Agreement
Government of Guyana ~ Ratio
SECTION 4 - RECOBPS AND^ALUATO3iNSQ3^^ls
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 acquired and all 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.
17
Petroleum Agreement
Government of Guyana - Ratio
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.
0) 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.
18
Petroleum Agreement
Government of Guyana - Ratio
SECTION 6- VALUE OF PRODUCTION
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
Crude Oil and 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.
19
Petroleum Agreement
Government of Guyana Ram-
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 wiil 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
thg-Mrnrstgr no later than thirty (30) days after the end of such Calendar Quarter
or Month as the case may be.
2a
Petroleum Agreement
Government of Guyana - Ratio.1
SECTION 8- COST RECOVERY STATEMENT
8.1 The Contractor shall prepare with respect to each Calendar Month a Cost
Recovery 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 Torward 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 thirty (30) days after the end of such Month.
21
Petroleum Agreement
Government of Guyana - Ratio
SECTION 9 - END OF YEAR STATEMENT,
9.1 The Contractor shall prepare an End-of-Yeai 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 have
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
22
Petroleum Agreement
Government of Guyana - Rauo
domestic power generation,-etc., or, arid}aiiy|q^mSties of Natural
Gas liquefied or compressed in Guyana’ for export or used as
feedstock for petrochemical exports, such as methanol and
fertilizer.
23
Petroleum Agreement
Government of Guyana - Ratio
SECTION 10 - BUDGET STATEMENT
10.1 Hie 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.
24
Petroleum Agreement
Government of Guyana - Ratio
... J
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
B3s - 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 soiids from mud systems
Chemical mixing barrel - when used at the well head
Chemical storage drums - when used at the manufacturing or procel&iftSLsfte'
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
Annex D Page I
Petroleum Agreement
Government of Guyana - Ratio
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 (Poiycrystaliine 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
Drilling fluid - chemicals used to create drilling fluid (see mud)
Drills - all drills used exclusively for seismic prospecting includes heli,
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
Annex D Page 2
Petroleum Agreement
Government of Guyana - Rati*'*
~'S3S>5r
Electrical generating^systemWi^qrateS) " “ * " ~ ’
Electrical subrirereiti^pijmpW'- ESP -'for arfificilFiiftof 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
Field potentiometers
Filter bags-for the production machinery and-equipment
i 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
' FlaFe stacks - includes mobile flare stacks used during the production testing phase
Flare tank systems, located at the wellsite, that are directiy 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
1 Full wave form sonic loggers
. J
Gamma-ray spectrometers
- J 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
. i 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
Annex 0 Page ?
Petroleum Agreement
Government of Olivary • Kano
Global positioning systems used for seismic prospecting; used for-crUfnQt^al^less surveys
---, . ... - ¥rr- ■ i *
Graders •.
Gradiometers - includes potassium gradiometers for radioactive meth'ods 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-driils for seismic prospecting
Hoisting equipment
Hooks and swiveis - drill pipe handling equipment
Hydraulic tank
Hydraulic winches
Hydrogen sulfide - used for gas scrubbing
Hyperspectral spectrometers used for remote sensing
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 fortesting drilling fluids
Lab testing equipment - used for testing production fluids
Labels - for vials used in well testing
Laptop computers (see entry under Computers)
UDAR (Light Detection and Ranging) mapping equipment used for remote sensing
Light towers or light piants
Lighting - industrial explosion proof
Annex D Page 4
Petroleum Agreemem
Government of Guyana - Ratio-
Lights
Lignite - drilling mud or fluid
Line heaters - located at the well head to preheat gas, but noi 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 viscos'rfiers
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
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, manifoid, motors
Mud logging equipment and supplies
MWD (Measurement While Drilling) equipment and supplies
N
Navigation systems used for seismic prospecting; used for creai
Nitrogen - used to stimulate production
Non-polarizing electrodes used for making measurements in drii
0
Optical sensors
P
Packers
\nnex D Page *
Petroleum Agreement
Government of Guvana - Ratio
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
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
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
hyperspectra! 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
Petroleum Agreement
Government of Guyana - Ratio
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
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
Travelling blocks
Annex D Page 7
Petroleum Agreement
Government of Guyana - Ratio
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 irr the transportation and distribution system, for example, gathering
lines
Valves - safety - used for well togging, 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
Viscosifiers - 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
Annex D Page 8
Petroleum Agreement
Government of Guyana - Ratio
N.N.O ‘ft?'-?*,/
Att. Fees:_S©
Reg Fee: 'L*
Stamp Duty
PETROLEUM PROSPECl 'ING LICENCE s". t donu^) ^
.j. ^ no is. * dP ft
Theis Deed made the 2JS day of between the Government of
the Republic of Guyana, represented herein by the Minister (hereinafter referred to as
“the Minister” or the “Government” as the case may be) of the One Part; ^jrLf
And
Ratio Energy Limited (hereinafter referred to as “Ratio Energy”) a company incorporated
in Gibraltar, with its registered office at Suites 7B & 8B, 50 Town Range, Gibraltar, and
registered in Guyana under the Companies Act 1991 with its registered address in
Guyana situated at 83, Premniranjan Place, Prashad Nagar, Georgetown, Guyana of the
Second Part;
And
Ratio Guyana Limited (hereinafter referred to as “Ratio Guyana”) a company limited by
shares, incorporated in Gibraltar, with its registered office at Suites 7B & 8B, 50 Town
Range, Gibraltar, and registered in Guyana under the Companies Act 1991 with its
registered address in Guyana situated at 83, Premniranjan Place, Prashad Nagar,
Georgetown, Guyana hereafter referred to as (“Ratio Guyana”) of the Third Part.
WHEREAS in accordance with file Petroleum (Exploration and Production) Act
1986 (Act No. 3 of 1986) and the Regulations made thereunder (hereinafter referred to as
the “Act” and “Regulations” respectively), the Licensee has by application dated day
of applied to the Minister for the grant of a petroleum prospecting licence in
respect of the area constituted by blocks described and identified in the First Schedule
hereto and shown on a map thereto attached; ^
WHEREAS under authority conferred by section 10 of the Act the Minister has
entered into an agreement made the of 1 '=ua>v5-i gfrB- (hereinafter referred
to as the “Petroleum Agreement”) with Ratio Energy and Ratio Guyana for the giant to
Ratio Energy and Ratio Guyana of a petroleum prospecting licence subject to the terms of
the Petroleum Agreement.
NOW, THEREFORE, in exercise of the powers conferred upon the Minister by
section 10 and 21 of the Act:
1. I, the Minister, do hereby grant to Ratio Energy and Ratio Guyana for a period of
four (4) years commencing on the date above mentioned (with two (2) optional
renewal periods of three (3) years each), this petroleum prospecting licence in
respect of the area constituted by the blocks described in the First Schedule hereto
and identified and shown on the map attached thereto (hereinafter referred to as
^he “prospecting area”) conferring on Ratio Energy and Ratio Guyana, by subject
.e Act and the Regulations made thereunder and to the conditions specified
der or to which Ratio Energy and Ratio Guyana are otherwise subject
.e Petroleum Agreement, the exclusive right to explore in the prospecting
f
Petroleum Prospecting License - Page 1
?■■■
works therein as are necessary for that purpose.
2. This petroleum prospecting licence is granted subject to the following conditions:
In accordance with Article 4.1 of the Petroleum Agreement, during the
term of this petroleum prospecting licence, the Licensee shall, in or in
relation to, the prospecting area, carry out the work in Article 4.1(a) and
4.1(b) and 4.1(c) of the Petroleum Agreement.
B) Within sixty (60) days after the Effective Date of the Petroleum
Agreement, the Licensees shall submit to the Minister details of the work
programme and budget (on the basis of the minimum work programme
specified in (A) above) to be undertaken during the remaining portion of
the calendar year. Thereafter, for so long as this petroleum prospecting
licence remains in force, the Licensees shall submit an annual work
programme and budget (on the basis of the minimum work programme
L specified in (A) above) not later than one (1) month prior to the beginning
of the calendar year.
C) Subject to the provisions of the Act and the Petroleum Agreement and
1 other conditions of the petroleum prospecting licence, the Licensee shall
conduct prospecting operations hereunder in accordance with the annual
work programme and budget submitted pursuant to clause 2(B) herein.
The Licensees shall, before commencing any prospecting operations in the
prospecting area, furnish to the Minister the name and address of the
manager who at the time of commencement of such prospecting
operations shall have supervision over the prospecting operations to be
carried out. Thereafter, any change in name and/or address of the manager
shall be forthwith notified to the Minister. Any notice which the Minister
or any person authorized by the Minister is required or entitled to serve
upon the Licensees shall be sufficiently served if the same shall be
delivered or sent by post to such manager at such address and served in
accordance with Article 33 of the Petroleum Agreement.
E) The Licensees shall observe and give effect to the terms of the Petroleum
Agreement.
3. Where during any period covered by this petroleum prospecting licence the
obligations of the Licensees under this petroleum prospecting licence have been
suspended by reason of force majeure pursuant to the Petroleum Agreement, the
period for which this petroleum prospecting licence has been granted shall be
extended as specified in Article 24 of the Petroleum Agreement.
L 4. The Licensees shall pay to the Government during the term hereby granted an
annual charge in respect of the prospecting area as specified in Article 10 of the
Petroleum Agreement.
l 5. The Licensees shall be entitled to renew this petroleum prospecting licence as set
1 Petroleum Prospecting License - Page 2
forth in Article 3.1(b) of the Petroleum Agreement.
6. Unless the context otherwise requires, terms and expressions used in this
petroleum prospecting licence shall have the same meaning as in the Act or the
Petroleum Agreement.
IN WITNESS WHEREOF, I Dcn&lA IWusW' the Minister, do
hereby grant this petroleum prospecting licence and-set my hand and affixed the seal of
the Government of the Republic of Guyana and the Licensees have set their seal, the day,
month and year first herein above written.
Witnesses Signed By:
The Minister Responsible For Petroleum
1) Representing the Government of the
Republic
of Guyana
2) J> As\---
His Excellency Donald Ramotar
President of die Republic of Guyana
Witnesses Signed By:
The President of Ratio Energy Limited
1)
Company President, Ratio Energy Limited
^pnblhKRGtlJMITEP
Signed By:
The President of Ratio Guyana Limited
Company President, Ratio Guyana Limited
RATIO GUYANA LIMITED
GEEf&A
NlptsPtfBlic
REPUBLIC OF GUYANA ktoiip f^nQYofftU rffnion
21 ATRUtS^kiJloDeetiaReaistry of
fela-aiaJSttgana on the
.20J&L
Petroleum ProsDectine License - Pace 3 ^aus
FIRST SCHEDULE
DESCRIPTION OF PROSPECTING AREA
Description of area to be granted under Petroleum Prospecting License pursuant to
Article 3 of the Petroleum Agreement.
The area comprises approximately 13,535 square kilometres described herein
consisting of graticular blocks identified herein and shown on the Block Reference Map
attached
Latitude and Longitude Measurements are West and North respectively.
Point No. LATITUDE LONGITUDE
1 10° 40.00'N 57° 25.00' W
2 10° 40.00* N 57° 15.00' W
3 10° 35.00'N 57° 15.00' W
4 10° 35.00* N 57° 05.00' W
5 10° 3O'.O0N 57° 05.00' W
6 10° 30'.00 N 57° 00.00' W
7 10° 25.00’N 57° 00.00' W
8 10° 25.00'N 56° 55.00’ W
9 10° 20.00’N 56° 55.00’W
10 10° 20.00'N 56° 50.00' W
11 10° 15.00'N 56° 50.00' W
12 10° 15.00'N 56° 45.00’ W
13 10° 10.00'N 56° 45.00’W
14 10° 10.00'N 56° 40.00'W
15 8° 50.00'N 56° 40.00' W
16 8° 50.00'N 56° 50.00' W
17 8° 55.00' N 56° 50.00’ W
18 8° 55.00* N 57° 00.00’ W
19 9° 00.00’ N 57° 00.00’ W
20 9° 00.00’N 57° 15.00’W
9° 05.00’ N 57° 15.00’ W
21
22 9° 05.00'N 57° 20.00’W
23 9° 10.00’ N 57° 20.00' W
24 9° 10.00’N 57° 25.00'W
Petroleum Prospecting Licence
Government of Guyana-Ratio
FIRST SCHEDULE (cont’d)
Description of Contract Area
The following five (5) minute by five (5) minute square graticuiar blocks describe the
area. The blocks as described are shown on the Block Reference Map attached.
Block Gg 56, 57, 68-71, 80-84, 92-96,104-108,116 -120,128-132,140-144
Block Hh 85, 97,98,109-111,121-124,133-136
Block C 8-12,20-24,32-36,44-48, 56-60, 68-72, 80-84, 92-96,104-108, 116-120,
129-132,142-144
Block D 1-4,13-16,25-28, 37-40, 49-52, 61-64,73-76, 85-88, 97-100,109-112,
121-124, 133-136
Block L 1-4,15,16
.* denotes part block
Petroleum Prospecting Licence
Government of Guyana-Ratio
57°
-1-i-i-i-i-1--- icGg 11Gg 12Gg 1Hh ZHh 3Hh i SHh 6HD
7Gg 8Gg 9Gg dHh ;
Coyaoa CultQ and Mines Coiomisjioo 226g 23Gg 24Gg 13Hh 14Hh 15Hh 16Hh 17Hh 18Hh
Uep 9Gg 20Gg 2lGg
T *'
PemhanEiplenttsa «Pro4ocdn :1Gg 32Gg 33Gg 34Gg SSGg 36Gg 2SHh 26Hh 27Hh 28Hh 29Hh SOHh
Ltmw
pw»o«»i»p»tt2«ta)pujoie»Mn»aM'»a‘««»»*a*--- 4Gg 44Gg 45Gg 46Gg 47Gg 4BGg 37Hh 38Hh 39Hh 40Hh 4lHh 42Hh
Mu llUIUN IkplM
tMHikaiu n^Haa
22 0 22 :$6g S6Gg 57Gg SSGg SSGg GOGg 49Hh SOHh 51 Hh 52Hh 53Hh 54Hh
Kile jmeters :7Gg 6BGg 69Gg 70Gg 7lGg 72Gg 81Hh 62Hh 63Hh 64Hh 65HI) 66Hh
84FI 73Gg 74Gg 75Gg 76Gg 77Gg 78Gg 79Gg 80Gg 8iGg 82Gg 83Gg B4Gg 73Hh 74Hh 75Hh 76Hh 77H6 78Hh
96Ff SSGg 89Gg 87Gg >8Gg 89Gg 90Gg 91Gg 92Gg 93Gg 94Gg 95Gg 96Gg SSHh I 86Hh 87Hh 88Hh 89Hh 90Hh
10SFf 97Gg 98Gg 99Gg 10QGg 101Gg 102Gg 103Gg 104Gg 105Gg 106Gg 1076g io8Gg 97Hh 98HI) 99Hh 100HH 101Hh 102Hh
120Ff 109Gg 1XQg niGg 112Gg 113Gg 1i4Gg 115Gg 116Gg 117Gg 118Gg 119Gg 120Gg 109Hh 110Hh 111Hh 112Hh 113Hh 114Hh
132Ff 121Gg 122Gg 123Gg 124Gg 125Gg 126G9 127Gg 128Gg 129Gg 130Gg 131Gg 132Gg 121Hh 122Hh 123Hh 124Hh 125Hh 12$Hh
133Gg 134Gg 13SGg 136Gg 137Gg 138Gg 139Gg 140Gg 141Gg 142Gg 143Gg 144Gg 133Hh 134Hh 135Hh 136Ht) 137Hh
128 1C 2C 3C 4C 5C 6C 7C ec 9C 10C 11C 12C 10 2D 30 40 $0
248 13C 14C 15C 16C 17C 18C 19C 20C 21C 22C 23C 24C 130 140 15D 160 170 180
268 dfig 1|g 2SC 30C 31C 32C 33C 34C 36C 36C 2SD 26D 270 280 290 300
M V/ VV • \ 42C 43C 44C 4SC 46C 47C 48C 370 38D 390 400 410 420
yn7Cv **C „n il me ■N
IvA J
[608 53C 54C SEC S6C 57C 58C 5SC soc 49D SOD 510 520 $30 54D
A-
\ kJc
T v-ffig fptSSE esc S7C 66C 5SC TOC 71C 72C 810 620 830 840 660 660
\
84B S^3C^ TIC 78C 79C 80C 81C 82C 83C 84C 730 740 750 760 770 780
968 65C 8SC 87C BSC 89C 90C 91C 92C 93C 94C 9SC 96C BSD S60 870 8SD 990 900
1068 97C SBC 99C 100C 101C 102C 103C 104C 106C 106C 107C 1Q8C 970 980 990 1000 1010 1020
120B 114C 115C 116C 117C 118C 119C 120C 109D 110D 1110 112D 113D 1140
1328 tux mren nw«fiim
Rlckforri VkW eemmUilenerAft
o»yan« 4*el*ar a MlnMOwiunlulan 126C 127C 12SC 129C 130C 131C 132C 1210 122D 1230 1240 126D 120D
Upper ariekdn. Oearoetnm. auyana, *eve> *mv|a
HU
UuiiMlinton
me (sqzffieeat 13SC 139C 140C 141C 142C 143C 144C 1330 1340 1350 1360 1370
•Ha comiiU»lan»f®5gmc.jo».g/
•tmmx vwvr.gjrao.Bov.ffy co
12J 6K 7K 8K 9K 10K 11K 12K M 21. 31 4L 5L o
L ----!-1_1_!--- J
Promotion:- uniyernl Tnnivarce Merc ilof Projection
24J Spheroid International
UnltofMeMur«»*nt Meter 18K 19K 20K 21K 22K 23K 24K 131 14L 151 16L 17L 181.
-Meridian afOrlgh 63 w" tel Greenwich
Latitude s/Ori^e- Eqtnior ---
" isssasffo* «»» 0J9B6
Matera Easdn 3qr 31K 32K 33K 34K 3SK 38K 2SL 26L 27L 281 29L 301
atsa NnUtg
58° 57°