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 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:















































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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


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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





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 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;








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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.





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


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


Agreement and any Licence issued to the Contractor.
























































































































































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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


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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.
































































































































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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.





























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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;





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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


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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


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 Article 7, Contractor shall be deemed to have fulfilled its expenditure obligation





for that phase or period.
















































































































































































15


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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.
























































































































































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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


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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.

































































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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


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