NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here








PETROLEUM PROSPECTING LICENCE



This Deed made this ..14.... day of...June 1999, between the Minister responsible for Petroleum, Her Excellency The President of The Co-operative Republic of Guyana, Janet Jagan, representing the Government o f the Co-operative Republic of Guyana (hereinafter referred

to as the “Minister”) of the One Part;



and



ESSO EXPLORATION AND PRODUCTION GUYANA LIMITED (hereinafter sometimes

referred to as “ESSO”), a company incorporated in the Commonwealth o f the Bahamas with its

registered office at 233 Benmar, Houston, Texas, 77060 United States o f America and registered in

Guyana under section 259 o f the Companies Act, 1991 chapter 89:01 with registered office at 80

Cowan Street, Kingston, Georgetown, Guyana o f the Other Part;



WHEREAS in accordance with the Petroleum (Exploration and Production) Act 1986, (Act No. 3

o f 1986) and the Regulations made thereunder (hereinafter referred to as the “Act”), the licensee has

by application dated the 14 day of Junbe 1999, applied to the Minister for the grant of a petroleum prospecting licence in respect of the area constituted by the blocks described and identified

in the First Schedule hereto and shown on the map thereto attached;

WHEREAS under authority conferred by section 10 o f the Act the Minister has entered into an

agreement o f even date herewith (hereinafter referred to as the “Petroleum Agreement”) with ESSO

for the grant to ESSO o f a petroleum prospecting licence subject to the terms o f the Petroleum

Agreement.



NOW THEREFORE in exercise o f the powers conferred upon the Minister by section 10 and 21 o f

the Act:



1.



I, the Minister, do hereby grant to ESSO for a period of four (4) years commencing six (6)

months after the effective date o f the Petroleum Agreement, this petroleum prospecting

licence in respect o f 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 the

“prospecting area”) conferring on Esso, by subject to the Act and the Regulations made

thereunder and to the conditions o f grant specified hereunder or to which Esso is otherwise

subject under the Petroleum Agreement, the exclusive right to explore in the prospecting area

for petroleum and the right to carry on such operations and execute such works therein as are

necessary for that purpose.



2. This petroleum prospecting licence is granted subject to the following conditions:



a) 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)(i), and 4.1(a)(ii) o f the Petroleum

Agreement.



2



(i) During phase 1 (having a term o f two (2) years commencing from six (6)

months from the effective date o f the Petroleum Agreement) the licensee shall

complete a minimum work programme consisting o f the following:

► during phase 1, acquire 2150 kilometres of 2D seismic, acquire

potential field data, conduct radar imagery and geological and

geophysical studies.



(ii) During phase 2 (having a term of two (2) years from the end of phase 1) the

licensee shall complete a minimum work programme consisting of the

following:

► during phase 2, acquire three thousand (3000) kilometres of 2D

seismic; conduct a sea-bottom geochemical sampling study and

conduct geological and geophysical studies.



b)



Within sixty (60) days after the effective date o f the Petroleum Agreement, the

licensee shall submit to the Minister details o f a work programme and budget (on the

basis o f the minimum work programme specified in (a) above) to be undertaken

during the remaining portion o f the calendar. Thereafter, for so long as this petroleum

prospecting licence remains in force, the licensee shall submit an annual work

programme and budget (on the basis o f the minimum work programme specified in

(a) above not less than one (1) month prior to the beginning of the calendar year.



3



c) Subject to the provisions o f the Act and the Petroleum Agreement and other

conditions o f this 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.



d) The licensee shall, before commencing any prospecting operations in the prospecting

area, furnish to the Minister the name and address o f the manager who at the time o f

commencement o f such prospecting operations shall have supervision over the

prospecting operations to be carried out. Thereafter, any change in name and/or

address o f 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 licensee 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 31 o f the

Petroleum Agreement.



e) The licensee 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 o f the

licensee under this petroleum prospecting license have been suspended by reason o f force

majeure, the period o f which this petroleum prospecting licence has been granted shall be

extended as specified in Article 24 o f the Petroleum Agreement.



4



The licensee shall pay to the Government during the term hereby granted an annual charge

in respect o f the prospecting area as specified in Article 10 o f the Petroleum Agreement.



The licensee shall be entitled to renew this petroleum prospecting licence as set forth in

Article 3.1 (b) o f the Petroleum Agreement.



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.



5



IN WITNESS WHEREOF, ........... ........, the Minister, do hereby grant this petroleum prospecting licence and set my hand and affix the seal o f the Co-operative Republic of Guyana and the licensee have set their respective seals, the month and year first herein above written.



The common seal o f the Government of the

Co-operative Republic of Guyana was hereto

affixed in the presence of the Minister



Responsible For Petroleum



The seal of Esso Exploration



And



Production Guyana Limited was hereto






Guyana Geology and Mines Commission



affixed in the presence of



2)



Esso Exploration and Production Guyana

x President, Esso Exploration and Production Guyana Limited


FIRST SCHEDULE


DESCRIPTION OF CONTRACT AREA

Description of area to be granted under petroleum prospecting licence pursuant to Article 3 of the

Petroleum Agreement.



The area comprising approximately 60,000 square kilometres described herein consisting of graticular

blocks identified herein and shown on the block reference map attached.



Longitude and Latitude measurements are West and North respectively.



POINT NO.



LATITUDE



LONGITUDE



1



9° 30.00' N



58° 25.00' W



2



9° 30.00' N



58° 20.00' W



3



9° 25.00' N



58° 20.00' W



4



9° 25.00' N



58°15.00'W



5



9° 20.00' N



58°15.00' W



6



9° 20.00' N



57° 30.00' W



7



9°15.00'N



57° 30.00' W



8



9° 15.00' N



57° 25.00' W



9



9° 10.00' N



57° 25.00' W



10



9° 10.00’ N



57° 20.00' W



11



9° 05.00'N



57° 20.00' W



12



9° 05.00' N



57° 15.00’ W



13



9° 00.00' N



57° 15.00' W



14



9° 00.00' N



57° 00.00' W



15



8° 55.00' N



57° 00.00' W



16



8° 55.00'N



56° 50.00' W



17



8° 50.00' N



56° 50.00' W



18



8° 50.00'N



56° 40.00' W



19



8° 45.00'N



56° 40.00' W



20



8° 45.00' N



56° 30.00' W



21



8° 40.00'N



56° 30.00' W



22



8° 40.00'N



56° 10.00' W



23



8° 35.00' N



56° 10.00' W



24



8° 3 5 .0 0 'N



5 6 ° 0 0 .0 0 ' W



25



* 8 ° 3 0 .0 0 ’ N



5 6 ° 0 0 .0 0 ' W



26



8 ° 3 0 .0 0 ' N



5 5 ° 5 0 .0 0 ' W



27



8° 2 5 . 0 0 ' N



5 5 ° 5 0 .0 0 ' W



28



8° 2 5 .0 0 ' N



5 5 ° 4 5 .0 0 'W



29



8° 2 0 . 0 0 ' N



5 5 ° 4 5 .0 0 ' W



Eastwards to

3 0 at the Guyana/

Suriname Boundary then southwards

along the Guyana/Suriname Boundary

to the intersection with the line drawn

eastwards from 3 2 below at..............



T 3 0 .0 0 ' N



5 6 ° 2 5 .0 0 ' W



32



7° 3 0 .0 0 'N



5 6 ° 2 5 .0 0 ' W



33



7 ° 3 5 .0 0 ’ N



5 6 ° 2 5 .0 0 ' W



34



T 3 5 .0 0 ' N



5 6 ° 3 5 .0 0 ' W



35



T 3 0 .0 0 ' N



5 6 ° 3 5 .0 0 ' W



36



7 ° 3 0 .0 0 ' N



5 6 ° 4 5 .0 0 ' W



37



7 ° 3 5 .0 0 ’ N



5 6 ° 4 5 .0 0 ' W



38



r



3 5 .0 0 ’ N



5 6 ° 5 5 .0 0 ' W



39



T 4 0 .0 0 ' N



5 6 ° 5 5 .0 0 ' W



40



7° 4 0 .0 0 ' N



5 7 ° 1 5 .0 0 'W



41



7° 4 5 . 0 0 ' N



5 7 ° 1 5 .0 0 ’ W



42



r



4 5 .0 0 ' N



5 7 ° 2 0 .0 0 ' W



43



8° 0 0 .0 0 ' N



5 7 ° 2 0 .0 0 ' W



44



8° 0 0 .0 0 ’ N



5 7 ° 2 5 .0 0 ' W



45



r



0 5 .0 0 ' N



5 7 ° 2 5 .0 0 ' W



46



8° 0 5 .0 0 ’ N



5 7 ° 3 0 .0 0 ' W



47



8 ° 1 5 .0 0 ’ N



5 7 ° 3 0 .0 0 ' W



48



8 ° 1 5 .0 0 ’ N



5 7 ° 4 0 .0 0 ' W



49



8 ° 2 0 .0 0 ' N



5 7 ° 4 0 .0 0 ’ W



50



8° 2 0 .0 0 'N



5 7 ° 5 0 .0 0 ' W



51



8° 2 5 .0 0 'N



5 7 ° 5 0 .0 0 ’ W



52



8 ° 2 5 .0 0 ' N



5 8 ° 0 5 .0 0 ' W



53



8 ° 3 0 .0 0 ' N



5 8 ° 0 5 .0 0 ' W



to



31



iM



rL



54



8 ° 3 0 .0 0 ' N



5 8 ° 1 5 .0 0 ' W



55



8 ° 3 5 .0 0 ' N



5 8 ° 1 5 .0 0 ’ W



56



8 ° 3 5 .0 0 ' N



5 8 ° 2 0 .0 0 ' W



57



8 ° 4 0 .0 0 ' N



5 8 ° 2 0 .0 0 ' W



58



8 ° 4 0 .0 0 ' N



5 8 ° 2 5 .0 0 ' W



Then northwest through 59 at.............

to intersect with the Guyana/

Venezuela boundary



9 ° 0 0 .0 0 ’ N



5 9 ° 0 0 .0 0 ' W



9 ° 3 0 .0 0 ' N



5 8 ° 2 5 .0 0 ' W



along the Guyana/Venezuela

boundary to intersect with the

Guyana/Trinidad boundary at

i



the Guyana/Trinidad boundary to



with the line drawn north from



1 which is at.......



TABLE OF CONTENTS

Article 1 - Definitions 4

Article 2 - Agreement, the Operator, Liabilities and Indemnities

Article 3 - Petroleum Prospecting Licence and Guarantee



15



Article 4 - Exploration Programme and Expenditure Obligation

Article 5 - Relinquishment of Areas



13



17



23



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

Article 7 - Annual Work Programme and Budget

Article 8 - Discovery and Development



30



31



Article 9 - Records, Reports and Information; Confidentiality

Article 10 - Annual Licence Rental Charge 39

Article 11 - Cost Recovery and Production Sharing 40

Article 12 - Associated and Non-Associated Natural Gas

Article 13 - Valuation of Crude Oil 49

Article 14 - Disposal of Production 54

Article 15 - Taxation and Royalty



57



Article 16 - Contracts and Assignments



63



Article 17 - Domestic Supply Obligation



64



43



34



26



Article 18 - Guyana Resources



66



Article 19 - Employment and Training



67



Article 20 - Rights to Assets and Insurance 69

Article 21 - Import Duties



77



Article 22 - Foreign Exchange Control.



79



Article 23 - Accounting and Audits 81

Article 24 - Force Majeure



82



Article 25 - Assignment



84



Article 26 - Sole Expert, Conciliation and Arbitration

Article 27 - Applicable Law



90



Article 28 - Protection of the Environment



93



Article 29 - Termination and Cancellation



95



Article 30 - Effective Date



96



Article 31 - Miscellaneous



98



Article 32 - Stability of Agreement

Article 33 - Notices



99



86



1

PETROLEUM AGREEMENT

This Agreement is made on the J<^f..day



1999, between the Government of the



Cooperative 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

and

ESSO EXPLORATION AND PRODUCTION GUYANA Ltd. (hereinafter referred to as "ESSO"

or “Licensee”) a Company incorporated in the Commonwealth of the Bahamas with its registered

office at 233 Benmar, Houston, Texas, 77060, United States of America and registered in Guyana

under the Companies Act 1991 with its registered address in Guyana situated at 80 Cowan Street,

Kingston, Georgetown, Guyana of the Other Part

WHEREAS

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

in strata in Guyana is vested in the State; the Petroleum (Exploration and Production) Act, No. 3

of 1986 (hereinafter referred to as the “Act”) and the Petroleum (Exploration and Production)

Regulations 1986 (hereinafter referred to as the “Regulations” make provision with respect to

prospecting for and production of petroleum, and for matters

connected therewith.



2

The Guyana Geology and Mines Commission (hereinafter referred to as "GGMC") a body

corporate established under the Guyana Geology and Mines Commission Act (No. 9 of 1979) has

been 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;

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;

Section 10 of the Act authorises the Minister to enter into an agreement with any person with

respect to, inter alia, the grant of a licence, the conditions to be included in a licence, the procedure

to be followed by the Minister while exercising any discretion conferred upon her by or under the

Act and the manner in which the discretion shall be exercised and any matter incidental to or

connected therewith;

ESSO has submitted to the delegatee a proposal ("the Proposal") for a Production Sharing

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

specified in the Proposal.



3

GGMC has been authorised 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;

ESSO will have, or will acquire, the financial resources, the managerial, technical and industrial

competence and the experience to carry out petroleum operations and will provide an affiliate

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

Pursuant to the aforesaid recitals, ESSO 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

ESSO 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:



4

Article 1 – Definitions



1.1 In this agreement, unless the context otherwise



“accounting procedure” means the procedure set out on Annex C;



“Act” means the Petroleum (exploration and Production) Act 1986 (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 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 votes of fifty per cent (50%)

or more of all the voting shares;



“agreed interest rate” means interest compounded daily (1/365 x rate) at an annual rate equal to

the average London Interbank Offer Rate (LIBOR) for six (6) months United States dollars quoted



at 11:00 hours (11.00 a.m.) London time on the first business day of such month by the London

Office of the Bank of America or as the Parties may agree, plus three (3) percentage points;

5

"Agreement" means this Agreement and the Annexes hereto attached and made a part hereof;

"appraisal programme" means a programme carried out following a discovery of petroleum in the

contract area for the purpose of delineating the petroleum reservoir, as defined in the Act, to which

that discovery relates in terms of thickness and lateral extent and estimating the quantity of

recoverable petroleum therein prior to declaration of its 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 the predominant

production of which is with crude oil and includes gas-cap gas 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 1 Kg/sq. cm. absolute and corrected to a temperature of sixty (60) degrees Fahrenheit

or fifteen (15) degrees Celsius);

"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;



6

"calendar year" or "year" means a period of twelve (12) consecutive months commencing on

January 1 and ending on the succeeding December 31 provided however that a year of a term of a

licence shall be the period specified in section 2 (2) (b) of the Act;

“commercial discovery” means any discovery which the Contractor in its sole judgement,

considers economic to develop and produce pursuant to the terms of the Agreement;

"contract area" means:

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 licences granted to the Contractor under Article 8;

"contract costs" means exploration costs, development costs, operating costs, service costs, general

and administrative costs and annual overhead charge;

"Contractor" means ESSO and includes its successors and assignees;

"cost oil" has the meaning assigned in Article 11;



7

"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, whether in their liquid state

at the well head or field separator or liquified from produced natural gas by chemical treatment,

condensation or extraction;

"delivery point" means the fob point of export in the Co-operative Republic of Guyana, either

offshore or onshore, which shall be agreed to by the Contractor and the Minister;

"development costs" means the expenditure so categorised in Annex C;

"development plan" means the plan referred to in Article 8.4;

"development well" means any well drilled as part of a development plan;

"discovery area" means an area which is part of a prospecting area consisting of a discovery block

or blocks in respect of which the Minister has been informed under section 30 of the Act;

"discovery block" means that as defined in the Act;

“discovery of petroleum” means that as defined in the Act;

"effective date" means the date on which this Agreement comes into force pursuant to Article

30;



8

"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 or the first renewal period, or both; or the first renewal

period; or the second renewal period, or both; or the initial and all renewal periods, referred to in

Article 4.1, as the case may be;

"exploration well" means a well drilled, which is not a development well, with the objective of

exploring for petroleum on a geological entity (be it of structural, stratigraphic, facies or pressure

nature) to a depth or stratigraphic level specified in the work programme for the exploration work

programme;

"field" means an area within the contract area consisting of a petroleum reservoir or multiple

petroleum reservoirs all grouped on, or related to, the same individual geological structural features

or stratigraphic conditions from which petroleum may be produced commercially;

"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.



9

the properties necessary for the accumulation of petroleum in commercial quantities and which

reflects the maximum depth at which any such accumulation can be reasonably expected;

"Government" means the Government of the Co-operative Republic of Guyana and its ministries

and agencies;

"GGMC" means the Guyana Geology and Mines Commission established under section 3 of the

Guyana Geological and Mines Commission Act 1979;

"licence" means the petroleum prospecting licence or the petroleum production licence or; both as

the context requires;

"lifting entitlement" means the quantity of crude oil to which a Party shall be entitled in any given

period pursuant to Article 11;

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

Minister, the President;

"natural gas" or “gas” means all hydrocarbons which at standard conditions of temperature

and pressure (60 degrees Fahrenheit or 15 degrees Celsius and 14.7 lbs/sq. in or 1 Kg/sq. cm)

is in a gaseous state including but not limited to wet mineral gas, dry mineral gas and casing



10

head gas, all substances contained therein including helium, which are produced from an oil or gas

well, in their natural state or residue gas remaining after extraction of liquid crude oil from wet

gas;



"non-associated gas" means natural gas or gas other than associated gas;

"operating costs" means those costs so categorized in Annex C;

"operator" shall have the meaning assigned to it in Article 2.2 (a);

"Parties" means the Government, ESSO and includes its successors and assign, and a Party shall

mean any of the Parties;

"petroleum operations" means prospecting operations, or production operations, as defined in the

Act, or both;

"petroleum prospecting licence" means a licence issued by the Government under the Act and the

Regulations to ESSO for carrying out prospecting operations and as set forth in Form C of the

Schedule to the Regulations;

“petroleum production licence” means a licence to be issued by the Government under the Act and

the Regulations to ESSO for carrying out production operations and as set forth



11

in Form D of the Schedule to the Regulations;

"profit oil" has the meaning assigned in Article 11;

"recoverable contract costs" has the meaning assigned in Article 11;

"Regulations" means the Petroleum (Exploration and Production) Regulations 1986;

"service costs" means the expenditures so categorized in Annex C;

"sub-contractor" means any company or entity which provides services to the Contractor in

connection with petroleum operations;

“third party sales” means third party arms length sales transacted in foreign exchange;

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

been assigned to them under the Act, have for the purposes of this Agreement, the same meanings.

1.4 The provision of this Agreement relating to the petroleum prospecting licence shall be read

as part of the provisions of such licence.



13

Article 2 - Agreement, the Operator. Liabilities and Indemnities



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.

The operator.- (a) ESSO shall be the operator charged with conducting the day to day activities of

the Contractor under this Agreement. No transfer of operatorship to another not comprising the

Contractor shall take effect unless it has been approved by the Minister which approval shall not

be unreasonably withheld, (b) The Minister shall be notified of any change of operatorship to

another Party comprising the Contractor, (c) 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.

Liability.- The duties, obligations and liabilities of the Parties (including an assignee of ESSO)

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



14

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 by reckless disregard of harmful

consequences which results in damage to a third party) by the Contractor or the operator in

the exercise or purported exercise of the rights of the Contractor under the Act or the licence,

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

indemnity for any claim or demand in respect of petroleum taken by the Minister pursuant to

Article 11 after title has passed to the Minister at the delivery point or in respect of assets

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

Liability by the Contractor to the Government for damages in respect of petroleum

operations under this Agreement is limited to insurance required in accordance with Article

(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.



15

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 six (6) 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 three (3) years each in accordance with the provisions of the Act and the

Regulations.

Guarantee.- The Contractor shall on or before the sixtieth (60th) day prior to the commencement

of data compilation, review and reprocessing during year one (1) of phase one (1) of the initial

period in accordance with Article 4.1 (a) (i) hereunder, and thereafter, no later than ninety (90)

days after the commencement of all subsequent work commitment periods as specified in Article

4.1, provide an affiliate company guarantee or other form of guarantee acceptable to the Minister

in the amount of ten percent (10%) of the budget submitted by the Contractor, pursuant to Article

7.1, for each specific work commitment period. Notwithstanding the foregoing, if the Contractor

exceeds its minimum work commitment in any phase specified in Article 4.1, the completion of

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

guarantee by the

Minister which is the equivalent of the excess work previously done but which is applicable to the



subsequent work commitment phase.



16

If the guarantees are of affiliate company guarantees they shall be in lieu of and satisfy any

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

Agreement on the part or on behalf of the Contractor



17

Article 4 - Exploration Programme and Expenditure Obligation



4.1 Exploration Programme.- Subject to the provisions of this Agreement, in discharge of its

obligations to carry out prospecting operations in the contract area, the Contractor shall carry out

the minimum work described herein, during the periods into which prospecting operations are

divided hereunder After the preparation period of six (6) months from the effective date, the initial period of four (4)

years shall commence. The initial period shall be divided into two (2) phases, each phase consisting

of two (2) years duration.

(i) Phase One - (2 years)

(aa) During phase one of the initial period, the Contractor shall acquire

2,150 kilometres of 2D seismic, acquire potential field data and

conduct radar imagery and geological and geophysical studies.

(bb) At the end of phase one of the initial period, the Contractor shall elect

either to relinquish the contract area or to enter phase two of the

initial period.



18

(ii) Phase Two - (2 years)

(aa) Subject to Article 5, during phase two of the initial period, the Contractor shall acquire 3,000

kilometres of 2D seismics, conduct a sea-bottom geochemical sampling study and conduct

geological and geophysical studies.

(bb) At the end of the initial period of four (4) years, the Contractor shall elect either to relinquish

the entire contract area or to renew the petroleum prospecting licence for a three (3) year period.

The first renewal period of three (3) years shall be divided into two (2) phases, with phase one

consisting of two (2) years duration and phase two consisting of one (1) year duration.

(i) Phase One - (2 years)

(aa) Subject to Article 5, during phase one of the first renewal period, the Contractor shall posses

the option to either acquire 1,250 square kilometres of 3D seismic or alternatively drill one (1)

exploration well to depth of 3,600 metres sub-sea or to test the Tertiary age deep water reservoir

section, whichever depth is lesser.



19

(bb) At the end of phase one of the first renewal period, the Contractor shall elect either to

relinquish the contract area except for any discovery areas in respect of which the Minister is

informed under section 30 of the Act and the area contained in any petroleum production licence

or to enter phase two of the first renewal period.



(ii) Phase Two - (1 year)

(aa)



Subject to Article 5, during phase two of the first renewal period, the



Contractor shall drill one (1) exploration well to depth of 3,600 metres sub-sea or test the Tertiary

age deepwater reservoir section, which ever depth is lesser.

(bb) At the end of the first renewal period of three (3) years, the Contractor shall elect either to

relinquish the contract area except for any discovery in respect of which the Minister is informed

under section 30 of the Act and the area contained in any petroleum production licence or to renew

the petroleum prospecting licence for a second three (3) year period.

The second renewal period of three (3) years shall be divided into two (2) phases, each phase

consisting of one and one-half (1 ½ ) years in duration.



20

Phase One - (1 ¼ years)

(aa) Subject to Article 5, during phase one of the second renewal period,

the Contractor shall drill one (1) exploration well to depth of 3,600

metres sub-sea or to test the Tertiary age deepwater reservoir section,

which ever depth is lesser.

(bb) At the end of phase one of the second renewal period, the Contractor

shall elect either to relinquish the 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 to enter phase two of the second renewal

period.

Phase Two - (1 ¼ years)

(aa) Subject to Article 5, during phase two of the second renewal period,

the Contractor shall drill one (1) exploration well to depth of 3,600

metres sub-sea or test the Tertiary age deepwater reservoir section,

which ever depth is lesser.



21

(bb) At the end of the second renewal period of three (3) years, the Contractor shall relinquish the

entire contract area except for any discovery area in respect of which the Minister is informed

under section 30 of the Act, 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.

The minimum work commitment for a given phase or period referred to in Article 4.1

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

in such a case the work commitment with respect to the subsequent period shall be

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

The Minister may extend any exploration period pursuant to a showing of good cause

by the Contractor.

No exploration well drilled by the Contractor shall be treated as discharging any obligation

of the Contractor to drill such exploration well unless either it has been drilled to the depth

or formation agreed with the Minister and specified in the annual work programme, or before

reaching such depth or formation -



22

the Contractor has expended on such well and any substitute well drilled pursuant to

Article 4 (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

the geologic basement is encountered; or

a discovery is made and the Minister is informed thereof; or

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 (a) less any amounts actually expended on the abandoned well is reached or one of

the criteria listed at Articles 4 (b) to (d) is satisfied.

Expenditure Obligation.- The sum actually spent in fulfilment 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.



23

Article 5 - Relinquishment of Areas



Prior to the end of phase one of the initial period of the petroleum prospecting licence issued to

the Contractor under Article 3.1, the Contractor shall relinquish at least twenty-five percent

If prior to the end of the second phase of the initial period of the petroleum prospecting

licence, 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-five percent (25%) of the original contract area less the exclusions provided

for in Article 5.4 (b) and (c).

If prior to the end of the second phase 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 - five percent (25%) of the original

contract area less the exclusions provided for in Articles 5.4 (b) and (c).

The areas to be relinquished pursuant to Articles 5.1, 5.2 and 5.3 shall comprise of blocks, as defined in the Act;

exclude any discovery area together with a reasonable area of protective ac

(25%) of the contract area less the exclusions provided for in Article 5.4 (b) and (c).

surrounding the discovery area;



24

exclude any production area;

be selected by Contractor so that - (i) the area relinquished shall comprise not more than three

discrete areas, having regard to any representations made by the Minister with respect to location,

shape and size; (ii) the blocks to be retained for and during the first and second phase of the initial

period pursuant to Articles 5.1 and 5.2 shall constitute not more than two (2) discrete areas unless

otherwise agreed to by the Minister.

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 unlicenced areas

then the Minister and Contractor shall consult together with a view to agreeing on the area(s)

to be relinquished in the light of the circumstances then prevailing. If after sixty (60) days

from receiving notice of the Contractor’s proposed relinquishments the Parties cannot agree

on a proposed relinquishment, the Parties shall refer the matter to a sole expert pursuant to

Article 26.

For the purpose of this Article, a discovery area shall not include any discovery block which

relates to a discovery in respect of which the Contractor has notified the 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.



25

If a petroleum prospecting licence ceases to have effect pursuant to section 32 (1) of the Act with

respect to discovery blocks, reduction in size of the contract area shall be treated as an advance

relinquishment under this Article and consequently shall reduce the area next required to be

relinquished.

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 5.4 and

5.5. Any such relinquishment shall count towards any subsequent mandatory relinquishments

required under Articles 5.1, 5.2 or 5.3, as the case may be.



26

Article 6 - Delegation: Co-operation between Contractor and Delegate



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

to exercise and perform any of his functions under this Agreement and anything done by the

delegatee in pursuance of the delegation shall have the same validity and effect as it would have if

done by the Minister.

The delegatee shall perform, inter alia the following functions to monitor the petroleum operations carried out by the Contractor;

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;

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 in accordance with this Agreement;

to ensure the accounting procedures specified in Annex C of this Agreement are followed;

to ensure compliance with the provisions of this Agreement, Act and Regulations.



27

The Contractor and the delegatee shall co-operate in good faith in the exercise of the Minister’s

functions delegated pursuant to this Article and the Contractor shall keep the delegatee advised of

all activities taking place during the course of petroleum operations and shall provide the delegatee

with all available information relating to petroleum operations as the Minister or the delegatee may

reasonably require. Towards this end the delegatee and the Contractor shall meet at regular

intervals, but at least once every six (6) months, to review the progress and results of the petroleum

operations and to discuss the work programme and other activities to be undertaken in the ensuing

months.

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

make any specific proposals or revisions thereto, the delegatee shall so notify the Contractor

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

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

take into account the proposals of the delegatee and shall attempt in good faith to reach agreement

on such proposals. If the Contractor and the delegatee fail to agree within sixty (60) days of

submission by the Contractor, the exploration work programme and budget (including as

appropriate any minimum work programme to be undertaken pursuant to Article 4) submitted

pursuant to Article 7 and the appraisal programme (except in the case of gas to which the provision

of Article 12 shall apply) submitted pursuant to Article 8 (revised in accordance with any

amendments or additions thereto agreed by the delegatee and the Contractor) shall be deemed

adopted.



28

Any approvals required by the Minister or delegatees shall not be unreasonably withheld. If

the Contractor requests a requisite approval from the Minister or delegatees, such approval shall

be deemed as granted if no response is provided within sixty (60) days of making the request.

The Minister or the delegatee shall, upon request, either provide to the Contractor or assist the

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

including but not limited to the following approvals required from the Government agencies or provincial or local government for

conducting hydrocarbon operations, including 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;

approval relating to security for field operations and personnel;

permission for entry and exit visas and working permits for Contractor’s employees, subcontractors and their dependents;

supply of reports, analyses, samples, geological, geophysical and production data necessary to

Contractor from areas inside and outside the contract area; and



29

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

economic export of hydrocarbons at normal commercial terms.



30

Article 7 - Annual Work Programme and Budget



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.

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.



31



Article 8 - Discovery and Development



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.

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.

Where an appraisal programme has been adopted by the Contractor pursuant to Article 8.2, the

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

reasons therefor, extend the period within which application may be made by the Contractor for a

petroleum production licence.

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) months

after the grant of the first petroleum production licence, the Contractor shall in consultation with



delegatee, prepare and implement a programme for training and



32



employment of Guyanese nationals in each phase and level of petroleum operations and for the

development of management and technical skills for the safe and efficient conduct of petroleum

operations.

Where the Minister considers that the application has not met the requirements of Article 8.4, he

shall so notify the Contractor within sixty (60) days of receipt of the application, and delegatee

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

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

application to meet such requirements within sixty (60) days from the date of aforesaid application

(or such longer period as the Parties shall agree), or where the Minister fails to respond to or act

on the aforesaid application within sixty (60) days, the Contractor may refer the matter to a sole

expert pursuant to Article 26 for determination within sixty (60) days of appointment of such

expert or such other time period as may be

agreed between the Contractor and the Minister.

Where the Minister considers that the aforesaid application has met the requirements of Article 8.4

he shall, within sixty (60) days of receipt thereof, so notify to the Contractor. In such an event or

where in the event of a dispute it is determined by the sole expert pursuant to Article 26 that the

Contractor has made an application which meets the requirements of Article 8.4, provided the

Contractor is not in default under this Agreement, the Minister shall grant, within sixty (60) days

of such notification or determination as the case may be, to Contractor, a petroleum production

licence (in the Form D of the Schedule to the Regulations) over the area for which the application

has been made on terms and conditions



33

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.

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.

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.

The Contractor may apply for a renewal of a petroleum production licence for a maximum period

of ten (10) years. 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 a notice stating the grounds of the intended refusal; and

a reasonable period to respond to or remedy the stated grounds for refusal.



34



Article 9 - Records. Reports and Information; Confidentiality



Records, Reports and Information.- (a) The Contractor shall, at all times while this Agreement is

in force, maintain and submit to the Minister in accordance with the provisions of the Act and the

Regulations, the petroleum production licence and this Agreement, full and accurate reports,

records, returns and accounts of petroleum operations in the contract area.

All data, well logs, maps, magnetic tapes, cuts of core 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 examination or analysis samples or

other original materials constituting petroleum data, provided that samples equivalent in size and

quality or, where such material is capable of reproduction, copies of equivalent quality have first

been delivered to the Minister.- (d) Petroleum data shall be the joint property of the Minister and

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

ceases to be part of the contract area, whether as result of relinquishment, or expiry, surrender or

termination of a licence or otherwise in accordance with the Act, from the date on which such area

ceases to be part of the contract area.- (e) The Minister, through duly appointed representatives,

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

petroleum operations conducted by the Contractor at his sole cost and expense and at all reasonable

times to inspect all assets, records and data kept by the Contractor relating to such petroleum



35

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.

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 for the purpose of carrying out petroleum operations;

(bb) to consultants, professional advisers, data processing centres, laboratories and sub-contractors

in connection with the petroleum operations;



36

(cc) to a bank or other financial institution in connection with financing for petroleum operations;

(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;

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

in connection with a sale of stock of the Contractor or an affiliated company thereof; or

(ff) in connection with data trades;

(gg) of data information and reports already known to the Contractor prior to the effective date;

(hh)



of data, information and reports acquired independently from a third



party that represents that it has the right to disseminate such data at the time it is acquired by the

Contractor;

prevent disclosure pursuant to section 4 of the Act, provided however that

neither the Minister nor Contractor shall disclose petroleum data relating to



37

any area subject to a licence to a competitor of the Contractor, without the prior written consent of

the other Party; or

be construed as imposing on any Party any obligation hereunder with respect to any petroleum

data, information or reports which are, without disclosure by such Party, generally known to the

public.

Any petroleum data, information or reports disclosed by the Contractor pursuant to this Article

shall be disclosed on terms which ensure that the data, information or reports aforesaid are treated

as confidential by the recipient (except for disclosures made pursuant to Article 9.2 (a) (i) (dd))

and prompt notice of all disclosures shall be given to the Minister.

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).

Where a licence ceases to be in force with respect to any area, the Contractor shall deliver to the

Minister originals of all petroleum data and other information relating to such area pursuant to

regulation 26 of the Regulations provided however that, on



(d)



38

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 Contractor proprietary technology, except

technology for which the cost of development has been approved as recoverable contract cost

under this Agreement, shall remain the property of the Contractor.



39

Article 10 - Annual Licence Rental Charge



The Contractor shall on the effective date of the petroleum prospecting licence or the date of grant

of any petroleum production licence as the case may be and, thereafter, so long as the said licence

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

annual licence rental charge in respect of the contract area as provided below for the entire

exploration period and such payments shall apply to those areas remaining after taking into account

any relinquishments pursuant to Article 5 Period

Initial



Phase

1



Rental Fee - U.

120,000.



Initial



2



180,000.



First Renewal



1



240,000.



First Renewal



2



240,000.



Second Renewal



1



240, 000.



Second Renewal



2



240,000.



40

Article 11 - Cost Recovery and Production Sharing



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 as herein provided.

All recoverable contract costs incurred by the Contractor shall, subject to the terms and conditions

of any agreement relating to Non-Associated gas made pursuant to Article 12, be recovered from

the value, determined in accordance with Article 13, of a volume of crude oil (hereinafter referred

to as "cost oil") 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 used in petroleum operations or which is lost. "Recoverable contract

costs" means such costs as the Contractor is permitted to recover, as from the date they have been

incurred, pursuant to the provisions of Annex C.

To the extent that in any month, recoverable contract costs exceed the value of cost oil determined

in accordance with Article 13, the unrecovered amount shall be carried forward and, subject to the

limitation stipulated in Article 11.2, shall be recoverable in the immediately succeeding month,

and to the extent not then recovered, in the subsequent month or months.



41

The balance of crude oil available in any month after recoverable contract costs have been satisfied

to the extent aforesaid (hereinafter referred to as "profit oil") 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%).

The quantity of cost oil actually utilized in satisfying the recoverable contract costs may be

allocated by the Contractor to production from any field or fields.

Subject to the provision of Article 14, the profit oil shall be shared between the Government and

Contractor on a monthly basis according to their respective entitlements as specified in Article

11.4.

To the extent that the actual quantities and costs required to determine cost oil and profit oil for

the month in question are not known, crude oil sharing shall be calculated on an interim basis each

month taking the following factors into account - unrecovered recoverable contract cost;

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;

estimated production for the month in question; and



42

crude oil price from the previous month calculated.

Retroactive adjustments shall be made to the crude oil entitlements and shall be agreed with the

Minister based on recalculations utilizing actual quantities of crude oil 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.

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 profit oil entitlement.



43

Article 12 - Associated and Non - Associated Gas.



12.1 Associated Gas.- (a) The associated gas produced from any oil field within the contract area

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

enhancement of oil fields, such as gas injection, gas lifting and power generation.- (b) Based on

the principle of full utilization of the associated gas, and with no impediment to normal production

of crude oil, a plan of utilization 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 utilization pursuant to

Article 12.1 (a), the Contractor shall carry out a feasibility study regarding the utilization 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 utilization of the excess associated gas of

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

discussion. If the excess associated gas in any oil field is utilized, the construction of facilities for

such utilization and the production of excess associated gas shall be carried out while a petroleum

production licence continues in force.- (c) If the Parties agree that the excess associated gas of an

oil field has no commercial value, then such gas shall be disposed of by the Contractor, provided

that there is no impediment to normal production of the crude oil, in the most economic manner

consistent with good international petroleum industry practice (including flaring pursuant to

regulation 6 (3) of the Regulations).- (d) If either Party to the Agreement considers unilaterally

that the excess associated gas of an oil field has commercial value, such associated gas may be

utilized by that Party, 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



45

sole risk and expense of the Party utilizing such associated gas and will not affect the amount of

cost oil and profit oil due to the other Party to the Agreement.- (e) If the Parties agree that excess

associated gas of an oil field has commercial value, Contractor shall be entitled, but not required,

to make further investment to utilize 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 Contractor believes improved terms are necessary, the Parties shall

carry out friendly negotiations in a timely manner to find a new solution to the utilization of the

said excess associated gas and reach an agreement in writing.- (f) Expenses incurred by the

Contractor in the production and use of the associated gas of an oil field as stipulated in Article

12.1 and those incurred in carrying out any feasibility study on the utilization of the excess

associated gas shall be charged to the development cost of the oil field.

The time period between the notice of discovery provided for by section 31(1) of the Act and the

application for grant of a petroleum production licence may be extended pursuant to section 31(2)

of the Act, if necessary, to provide reasonable time to conduct an appraisal programme and to

develop a gas market.

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 Parties shall promptly carry out friendly negotiations to reach agreement

on the additional terms necessary for commercial development and production of the discovery.

The agreement, which shall form an annex to this Agreement, shall be based on and include the

following principles-



45

The petroleum production licence shall be extended as may be required to allow for commitment

of the reserves for the life of the gas project and consistent with the terms for marketing that may

be negotiated with the buyers of the gas.

The cost recovery rate and the Contractor’s profit gas share shall be negotiated by the Parties taking

into consideration the actual conditions in the gas field and the markets for such gas so that the

Contractor shall be able to obtain an economic benefit acceptable to the Contractor.

If the Parties fail to reach an agreement within three (3) years after the date of commencement of

negotiations, the Government shall have the right unilaterally to put up the gas field for bidding

but shall keep as confidential the substance of any previous and future negotiations undertaken

with Contractor. In such case, Contractor shall be entitled to participate in the bidding.

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

programme for the discovered gas field according to the terms and conditions determined in the

said agreement and submit it to the GGMC for review pursuant to Article 6.4. The Contractor shall

carry out the appraisal programme



46

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.

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 Contractor decides that a

gas field is non - commercial, the corresponding area covered by the gas field may be retained in

the contract area during the exploration period. However, at the expiration of the exploration

period, if Contractor still considers the said gas field non - commercial, the area covered by the

said gas field shall be excluded from the contract area. With respect to a gas field which has

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

facilities are not available, the period during which the gas field is retained in the contract area

shall be extended at the request of the Contractor. Such extended period, however, shall not be

more than five (5) consecutive contract years after the date of expiration of the exploration period

hereunder. In case the time necessary for the market to develop and for the consuming facilities to

be constructed for the gas field exceeds such extended period, Contractor shall then have the right

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

Prior to expiration of the exploration period, if the Parties agree that any commercial gas field

needs to be reappraised because of some favourable factors, the Contractor shall work out and

submit a new evaluation report on the gas field and submit it to



47

the GGMC for its review pursuant to Article 6.5 and any expenses incurred in doing so shall be

cost recoverable.

D) If the Contractor retains a gas field beyond the expiration of the exploration period pursuant to

Article 12.2 (c), 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 two hundred thousand United States Dollars (U.S.$200,000.). The holding fee shall

be applied 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 the such year.

12.3 General Conditions Applicable to Natural Gas.- (a) The Contractor shall have the primary

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. The Contractor will pursue markets both within and outside Guyana and seek

to market natural gas to the highest realization outlets after deduction of transportation costs. The

Contractor will seek to recognize natural gas’s 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 natural gas for conversion to liquids, chemicals or similar gas

utilization 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 and such liquids sold shall be treated as crude oil. The Parties shall carry out

friendly negotiations to reach



48

an agreement on the valuation of such liquids when the Contractor submits a proposal for such

development. The agreement shall be based on principles for valuation of crude oil provided

in Article 13, taking into consideration the specific components of the liquids recovered from

the natural gas.- (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.

Hi-



49

Article 13 - Valuation of Crude Oil



13.1 For the purpose of this Agreement the value of a barrel of crude oil shall be the average fair

market price determined as follows as soon as practicable after the end of each calendar month in which crude oil

has been produced and sold from any field pursuant to this Agreement, an average

price (in terms of United States dollars per barrel, fob, delivery point) for each field

shall be determined in respect of production during that calendar month. It is

understood that production from different fields may be of different quality and that

separate average prices may accordingly be determined for any calendar month in

respect of production from each field;

the prices aforesaid shall be determined as follows 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 of a given quality

produced hereunder from a field were third party sales, as hereinafter defined,

the price of all crude oil 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 sold from such field in such sales;



50

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 of a given quality

produced hereunder from a field were third party sales, the price of all crude

oil 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 the delivery point by the total number of

barrels of crude oil sold in such sales from such field; and

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

crude oils of similar quality to the crude oil are being sold, such price

being determined by calculating the average for the month in which

production takes place of the mean of the high and low fob price or

prices for each day of those crude oils as quoted in Platts Crude Oil

Market Wire daily publication. In the event that Platt's ceases to be

published or is not published for a period of thirty (30) consecutive

days then the Parties shall agree on an appropriate alternative

publication.



51

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.

all such prices will be adjusted to fob delivery point.

for the purposes of this Article third party sales of crude oil made by the Contractor shall include

any third party sales made by the Contractor on the Minister's behalf pursuant to Article 14 but

shall exclude -



52

(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;

(bb) crude oil exchanges, barter deals or restricted or distress transactions, or any crude oil

transaction which is motivated in whole or in part by considerations other than the usual economic

incentives for commercial arms length crude oil sales;

(cc) Government to government sales.

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

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

Minister and shall be subject to agreement by the Minister before it is finally determined. Pending

final determination the last established average crude oil price shall be used.

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). This selection will be reviewed

annually and modified if necessary.

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

concerning selection of the crude oils, 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.



53

For the purposes of this Article, in determining the "quality" of a crude oil regard shall be given to

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

point and product yield.



54



Article 14 - Disposal of Production



Each of the Parties shall have the right to take in kind at the delivery point and separately dispose

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

shall have the right to use as much production as may be needed in any petroleum operations within

the contract area and also within the transportation and terminal system. In the event of third party

usage of the transportation terminal systems the quantities so used or lost outside the contract area

shall be proportionate to aggregate use of that transportation and terminal system. All quantities

so used or lost shall be excluded from any calculations of entitlement pursuant to Article 11. The

quantity of production to which the Minister is entitled pursuant to Article 11 shall be measured

and delivered to the Minister at the delivery point and the Minister shall be responsible for all costs

and risks associated with the Minister's lifting entitlement from and after the delivery point.

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 offtake

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.



55



in the event that any Party shall find itself unable for any reason to lift such quantities of

crude oil as are to be lifted in accordance with procedures it shall forthwith notify the other

Parties to that effect. Such procedures shall include such deterrents as the Parties may

agree, to prevent a Party from delaying the lifting of any quantities of crude oil not so lifted,

to a later period; and

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.

The Contractor shall, if requested by the Minister, use reasonable efforts to market abroad

on competitive terms all or part of the Minister's lifting entitlement subject to payment by

Minister of costs normally borne by a seller in such transactions and on other terms to be

agreed including an agreed marketing fee in respect thereof. The Minister shall provide the

Contractor with at least six (6) months notice before changing between receiving payment

in kind as provided under Article 14.1 and seeking the Contractor to market the Minister’s

lifting entitlement under this Article.

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 All Guyana’s export laws, regulations, orders, directives and notifications of the

Minister will apply, as these relate to export destinations. The Contractor agrees to

abide by the said laws, regulations, orders, directives and notifications which shall

also apply to its affiliated companies engaged in petroleum operations in Guyana.



In connection with the above, the Minister shall concurrently with the effective date

and thereafter from time to time advise the Contractor of these destinations to which

exports of crude oil, shall be contrary to the said regulations, orders, directives and

notifications.



The Contractor shall be free always to sell, or deliver, or sell and deliver petroleum

to third parties in the United States of America. Contractor's terms of sale to third

parties shall contain a stipulation that the regulations, orders, directives and

notifications as set forth in this Article shall apply.



57

Article 15 - Taxation and Royalty



15.1



Except as provided in Article 15.2 and 15.8 and except as otherwise set forth in this

Article 15.1, no tax, duty, fee, charge or other impost shall be levied at the date hereof

or from time to time thereafter on the Contractor in respect of income derived from

petroleum operations or in respect of any property held or thing done for any purpose

authorised or contemplated hereunder other than -



a) subject to the provisions of Article 21, import duties at the rates specified

from time to time in the Customs Act (Cap. 82:01);



b) taxes, duties, fees or other imposts for specific services rendered on request

or to the public or commercial enterprises generally;



c) rents due to Government in respect of any land rights granted or assigned to

the Contractor;



d) annual licence rental charges due under Article 10;



e) subject to Article 15.7, local government rates or taxes (being rates or taxes

not calculated by reference to income) not in excess of those generally

applicable in Guyana; and



58

(f) stamp duties, registration fees, licence fees and any other tax, duty, fee or other

impost of a minor nature.



15.2



The 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 Contractor arising in each year of assessment under this

Agreement for purposes of the income tax laws of Guyana, (including the Income

Tax Act and the Corporation Tax Act referred to in Article 15.2) shall include the

amounts of Contractor's income tax and corporation tax paid pursuant to Article 15.4.

Based on the thirty-five percent (35%) income tax rate, the amount (gross-up) that

shall be included as the additional taxable income of the Contractor shall be the

amount resulting from multiplying the Contractor’s taxable income (based on fifty

percent (50%) of the production subject to the profit share computed without regard

to any gross-up), by a factor of 0.53846, where such gross-up factor is computed as

follows -



The gross-up factor equals: Applicable Guyana tax rate ÷ ( - Applicable Guyana tax rate)

or; 0.35 ÷ (1-0.35)



59

The above can be illustrated by the following example. Assuming the taxable income

of the Contractor (before application of Article 15.3) equals $1,000, the Contractor’s

grossed-up taxable income under Article 15.3 shall be equal to $1538.46. That is

$1,000 plus the Contractor’s taxable income multiplied by the gross-up factor of

0.53846 (or $538.46). Likewise, the Contractor’s tax burden (under the income Tax

Act and the Corporate Tax Act referred to in Article 15.2) which shall be payable by

the Minister shall be equal to $538.46, or 35% of the Contractor’s grossed-up taxable

income (i.e. $1538.46 x 0.35).



15.4



The Minister hereby agrees -



a) that the appropriate portion of the Government's share of profit oil delivered in

accordance with 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 and in respect of Article 15 .4

(a) (ii), which the Minister shall then pay on behalf of the Contractor to the

Commissioner of Inland Revenue -



i.



the share of royalty payable by Contractor pursuant to Article 15.6;



ii.



the Contractor's share of the income taxes imposed by the laws of Guyana,

including, but not limited to, income tax imposed by the Income Tax Act and

corporation tax imposed by the Corporation Tax Act and payable at the date

hereof, or from time to time thereafter, and any other levy or charge on



60

income or profits which may become payable from time to time under any laws, acts,

statutes, regulations or orders by the Government; and



iii.



any other similar charge imposed and payable in respect of petroleum

operations at the date hereof, or from time to time hereafter, except charges

of the type specified in Article 15.1 (a-d).



15.5



The Contractor shall provide the Minister with the Contractor’s income tax returns,

who shall submit same on his behalf to the Commissioner of Inland Revenue. On

receipt of notice of assessment issued by the Commissioner of Inland Revenue, the

Minister shall pay corporation tax on behalf of the Contractor as provided under

Article 15.4 (a)(ii) and shall be entitled to receive on behalf of the Contractor from

the Commissioner of Inland Revenue properly prepared receipts required under this

Article 15.5. Within one hundred and eighty (180) days following the end of each

year of assessment, the Minister shall furnish to Contractor proper tax certificates in

the Contractor's name issued by the Commissioner of Inland Revenue acting in

accordance with the Income Tax Act and the Corporation Tax Act respectively. Such

certificates shall state the amount of tax paid 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



61

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).



15.9



The Minister hereby agrees that the Contractor shall be exempt from the Property

Tax Act pursuant to section 51 of the Act and any other act which amends or replaces

in part or in whole the Property Tax Act.



15.10



The Minister agrees that for the duration of the exploration period, and for any area

within the contract area where exploration activity is in progress, the provisions of

section 10 (b) of the Corporation Tax Act (Cap. 81:03) shall not apply to the

Contractor with respect to payments made any affiliated companies or subcontractors. The affiliated companies and sub-contractors shall however, be subject

to withholding tax in accordance with the provisions of section 39 (8) of the Income

Tax Act (Cap. 81:01), with respect to profits remitted or deemed remitted to its head

office.



62

15.11



The expatriate employees of 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.



If an expatriate employee is liable to pay income tax in Guyana on income earned in

Guyana he shall pay such income tax at a rate equal to the lesser of - (i) the rate of

income tax currently prevailing for individuals under the Income Tax Act (Cap.

81:01) being a maximum effective rate of 26.67% - and (ii) the rate of tax prevailing

at the relevant time. Likewise, the amount of tax payable shall be calculated in

accordance with the rules set forth in the Income Tax Act (Cap.81:01) as they apply

as of the effective date of this Agreement, to the exclusion of such rules less

favourable to the taxpayer as may be enacted in the future. However, should any

subsequent amendment to the Income Tax Act result in the enactment of any rule or

rules regarding the calculation of taxes payable which are more favourable to the

taxpayer than that which is or those which are in effect on the effective date of this

Agreement, the taxpayer shall be entitled to invoke such amended rule or rules for

the purpose of calculating his income tax liability hereunder.



15.12



An order shall be made giving effect to the provisions of this Article in statutory form

and language as specified in section 51 of the Act.



63

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 under this Agreement or the contract area.



64

Article 17 – Domestic SUDDIV Obligation



17.1



If the requirements of the domestic market in Guyana exceed the Minister's total

entitlement from all crude oil production in Guyana, then the Contractor if requested

by the Minister, shall sell crude oil in Guyana on the basis of the ratio which the

Contractor’s lifting entitlement bears to the sum of Contractor's lifting entitlement

plus the total entitlement of all other producers in Guyana subject to Article 17.3. 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.



17.2



The Contractor shall, in any year, have a right to supply out of Contractor 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, domestic demand exceeds the Minister's total entitlement to

all crude oil produced in Guyana. The Contractor shall give the Minister notice on or

prior to April 1 of the calendar year preceding the calendar year in respect of which

Contractor wishes to exercise the aforesaid right and the term of the supply shall be

on a calendar year basis unless otherwise agreed. Notwithstanding the foregoing the

Contractor shall have the right to supply the total amount calculated pursuant to the

foregoing provisions.



65

17.3



The price payable for the sale of crude oil pursuant to this Article shall be paid in

United States dollars (or other currency as may be agreed) at a place specified by the

Contractor within thirty (30) days of receipt of the Contractor's invoice by the

Minister, and shall be determined in accordance with Article 13. All sums overdue

shall bear interest at the agreed interest rate



17.4



Any sale of crude oil as provided for in Article 17.1 and 17.2 shall occur at the

delivery point or such other point as the Minister and the Contractor may mutually

agree.



17.5



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 the Contractor.



66

Article 18 - Guyana Resources



18.1



In the conduct of petroleum operations pursuant to this Agreement the Contractor

shall 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 the Contractor at competitive prices; and



b) the employment of Guyanese sub-contractors in so far as they satisfy the

Contractor's financial and technical requirements and meet the requirements

of Article 18.1(a).



18.2



The Contractor shall establish appropriate tender procedures for the acquisition of

goods, materials and services which shall ensure that Guyanese suppliers and subcontractors 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 utilizing Guyanese

resources during that calendar year.



67

Article 19 - Employment and Training



19.1



Subject to the requirements of any law relating to immigration, the Government shall

provide 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, to

the maximum extent practicable, employ, and encourage sub-contractors to employ

Guyanese citizens having appropriate qualifications and experience.



19.3



During each year of the term of the petroleum prospecting licence, or any renewal

thereof, the Contractor shall make available to the delegatee the following amounts -



Period



Phase



Training Fee. U.S$



Initial



1



30,000



Initial



2



35,000



First Renewal



1



40,000



First Renewal



2



40,000



Second Renewal



1



45,000



Second Renewal



2



45,000



for one or more of the following purposes



68

a) to provide a mutually agreed number of Guyanese personnel nominated by

the delegatee with on-the-job training in Contractor's operations in Guyana

and overseas or practical training at institutions abroad, or with on-the-job

training in Contractor's operations in Guyana and overseas and practical

training at institutions abroad, particularly in the areas of logistical planning

for undertaking petroleum operations, seismic acquisition and interpretation,

economic analysis, petroleum accounting and contract administration;



b) to send qualified Guyanese personnel selected by the delegatee on courses not

exceeding one year at universities, colleges or other training institutions

mutually selected by Contractor and the delegatee;



c) to send Guyanese personnel selected by the delegatee to conferences and

seminars related to the petroleum industry;



d) to purchase advanced technical books, professional publications, scientific

instruments or other equipment required by the delegatee.



69

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 relicencing 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

the delegatee pursuant to Article 20.1 (d)(i) -



i.



deliver to the Minister, free of charge, in good order and condition, (fair wear

and tear excepted) all installations, works, pipelines, pumps, casings, tubings,

engines and other equipment, machinery or assets of a fixed or permanent

nature constructed, used or employed by the Contractor or the operator in the

contract area;



ii.



deliver to the Minister, free of charge, any fixed assets relating to petroleum

operations outside the contract area and movable assets owned by the

Contractor or the operator and used or employed in connection with

petroleum operations and located in Guyana for which costs have been fully

recovered in accordance with Annex C herein; where costs have not been

fully recovered the provisions of Article 20.1 (b)(iii) shall apply;



iii.



sell to the Minister any other assets owned by the Contractor or operator and



70

used or employed by the Contractor or operator in the contract area or

elsewhere in Guyana in connection with petroleum operations at a price

equivalent to the unrecovered cost of the assets.



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 by Contractor in Guyana;



iii.



equipment and other assets rented or leased by Contractor and imported in

Guyana for use in petroleum operations and subsequently exported therefrom;



iv.



equipment and any other assets owned or leased by a sub-contractor;



v.



household goods which are the personal property of employees of the

Contractor;



vi.



equipment and assets otherwise not owned by Contractor.



71

d) The Contractor shall notify the Minister of all assets acquired as provided in section 4

of Annex C to this Agreement.



i.



At least six (6) calendar months before expiry of the term of this Agreement,

within three (3) calendar months following notice of termination of this

Agreement or promptly following cancellation of all licences, the delegatee

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.



iii.



Abandonment Programme and Budget.- (aa) Within sixty (60) days after the

expiration of the term of this Agreement or the sooner relinquishment of some

or all of the contract area, the Contractor shall carry out to the Minister’s

satisfaction an abandonment programme agreed with the Minister for all

installations and pipelines provided by Contractor under this Agreement that

the Minister elects not to have delivered up to him in accordance with Article



72

20.1(b). With respect to the area being relinquished or with respect to the area being

relinquished and facilities thereon, such abandonment programme shall comply with

and be limited to internationally accepted standards prevailing at the time of

abandonment.- (bb) Concurrent with the submission of a development plan as

provided in Article 8.4, the Contractor shall submit for the Minister’s approval a

proposed abandonment programme and budget covering all such installations and

pipelines provided by Contractor under this Agreement.- (cc) The Minister shall act

without unreasonable delay in reaching a decision on the Contractor’s proposal under

Article 20. l(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.- (dd) In the event that the Contractor

does not present a timely proposal to the Minister under Article 20.1(d)(iii)(bb) the

Minister after giving thirty (30) days notice to the Contractor of his intention



73

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) The 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. l(d)(iii)(cc). Any revisions to the abandonment

programme and budget shall result in a revision to the guarantee referred to in Article

20.1(d)(iii)(hh).- (ff) All funds required to carry out the approved abandonment

programme shall be made available by Contractor when the cost for abandonment

are incurred.- (gg) All cost 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 units of production to

be produced and sold by the Contractor between the date of the Minister’s approval

and the anticipated date of abandonment and multiplying the result by the units

produced in the period.- (hh) The 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 latest approved abandonment budget for the

transferred facilities. Upon transfer and receipt of the funds, the Minister shall assume

all responsibilities for the transferred facilities and their abandonment and shall hold

the Contractor harmless against any liability with respect thereto accruing after the

date of such transfer to the Minister.



iv.



Subject to Article 20.1 (c), in the event that the Government acquires any assets

pursuant to this Article, the Government shall assume all liabilities, with respect

to such assets, arising from and after the date of acquisition and shall not direct

the Contractor to remove or abandon any such assets pursuant to regulation 9

(1) (a) of the Regulations. The Government shall indemnify and hold Contractor

harmless for any and all costs and claims which may arise from the use or

abandonment of any asset from and after the date of acquisition by the

Government.



75

v.



Assets not acquired by the Government pursuant to this Article may be sold or

otherwise freely disposed of by the Contractor subject to Article 21.2 and the

Regulations.



20.2



Insurance.- (a) The Contractor shall effect and, at all times during the term of this

Agreement, maintain for petroleum operations hereunder 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 in respect of but not limited to -



i.



any loss or damage to all assets used in petroleum operations;



ii.



any pollution caused in the course of petroleum operations for which the

Contractor or the operator may be held responsible;



iii.



any 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 liability to its employees engaged in petroleum operations.



The insurance may be provided, to the extent permitted by applicable laws, rules and

regulations, through Contractor’s affiliate insurance company.



76

b) 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.



77

Article 21 - Import Duties



27.1



The Contractor, affiliated companies and the sub-contractors engaged in petroleum

operations, subject to Article 21.1(a) hereunder, shall be permitted to import, free

of duty or other taxes or imposts, machinery, equipment, vehicles, materials,

supplies, consumable items (other than foodstuffs or alcoholic beverages or fuel),

and movable property, where imports in any of the said categories have been

certified by the Chief Inspector designated as such under section 3 of the Act 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.



a) Subject to Article 21.1, and for as long as this petroleum Agreement remains

in force the Contractor, affiliated companies and sub-contractors engaged in

petroleum operations hereunder shall be required to pay to the relevant

authority a ten percent (10%) consumption tax on any fuel imports, where

such imports have been certified by the Chief Inspector designated as such

under section 3 of the Act to be used solely in carrying out petroleum

operations in any area within the contract area.



21.2



Subject to Article 20, any of the items imported into Guyana may, if no longer

required for petroleum operations hereunder, be freely exported at any time by the

importing party, without the payment of any export duty or impost; provided,

however, that on the sale or transfer by the importer of any such item to any person

in Guyana (other than the Government) import duty shall be payable by the

importer



78

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.



Each expatriate employee of the Contractor (including any affiliated company) and

of 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 within six (6) months

on first arrival his personal and household effects including one (1) motor vehicle;

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 shall be a matter for consultation with the Minister.



79

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, United

States dollars or both in Guyana and freely dispose of the sums deposited

therein without any restriction, provided that the said accounts are credited

only with sums deposited in foreign currency or with the proceeds of the sale

of foreign currency being credits relating to or derived from petroleum

operations;



d) to open and maintain bank accounts in any foreign currency outside Guyana

which may be credited without restriction and freely dispose of any sums

deposited therein without restriction and without any obligation to convert



80

into Guyana currency any part of the said amounts, save that such accounts

shall not be credited with the proceeds of the sale of any Guyanese currency

without the consent of the Bank of Guyana;



e) to purchase and, with the approval of the Bank of Guyana, to sell Guyanese

currency, through the authorized banks, without discrimination, at the rate of

exchange determined by the Bank of Guyana for authorized banks at the time

of purchase or sale.



22.2



The expatriate employees of the Contractor or of affiliated companies and of subcontractors engaged in petroleum operations shall be subject to all Exchange

Control Regulations that may be in effect from time to time. The expatriate

employees of the Contractor, affiliated companies and sub-contractors should 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 the Contractor, affiliated company or sub-contractor by notice in writing to

the Commissioner of Inland Revenue has guaranteed the full and proper discharge

by an expatriate employee engaged in petroleum operations of his liability to

income tax under the laws of Guyana, that expatriate employee shall be entitled to

receive payment of the whole or any part of his remuneration in the country in

which he is normally resident.



81

Article 23 - Accounting and Audits



23.1



The Contractor shall be responsible for maintaining accounting records relating to

petroleum operations under this Agreement in accordance with the accounting

procedures set out in Annex C hereto.



23.2



The Minister shall have the right to audit the accounting records of the Contractor in

respect of petroleum operations in accordance with accounting procedure.



23.3



Nothing in this Article shall be construed as limiting the right of Government or any

officer of Government pursuant to any statutory power to audit or cause to be audited

the books of the Contractor.



82

Article 24 - Force Majeure



24.1



Any non-performance or delay in performance by any Party hereto on 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 nonperformance or delay is caused by force majeure as defined in this Article.



24.2



In this Article, the term "force majeure" shall mean any event beyond the reasonable

control of the Party claiming to be affected by such event which has not been brought

about at its instance and which has caused such non-performance or delay in

performance and, without limitation to the generality of the foregoing, includes

natural phenomena or calamities, epidemics, fires, wars declared or undeclared,

hostilities, invasions, blockades, riots, strikes, insurrection, civil disturbances, mining

of the seas, international disputes affecting the extent of the contract area and any

governmental action that would prevent the performance of an obligation or ability

of the Contractor to export petroleum (except as provided in Article 14.5).



24.3



Where any Party is claiming suspension of its obligations on account of force

majeure, such Party shall promptly notify the other Parties in writing of the

occurrence thereof giving particulars of the force majeure and obligations affected.

The Parties shall promptly carry out friendly discussions regarding the impact of the

force majeure and possible remedies to the force majeure. If any Party then

determines that on account of the force majeure in a portion of the contract area they



83

are unable to perform their obligations in the remaining portion of the contract area,

in a manner consistent with good oil field practices, the force majeure shall apply to

the entire contract area. Each Party shall promptly notify the other Parties as soon as

the force majeure has been removed or no longer prevents it from carrying out its

obligations hereunder.



24.4



Where a Party is prevented from exercising any rights or performing any obligations

under this Agreement due to a force majeure, the Minister hereby agrees pursuant to

section 43 (3) of the Act, subject to the proviso therein, that a period equivalent to

the period of such force majeure and any additional time necessary for restoration of

damages caused during a force majeure delay shall be added to the time allowed

under this Agreement for the performance of such obligation and for the performance

of any obligation or the exercise of any right dependent thereon and to the term of

any licence issued pursuant to this Agreement. The Contractor shall have the option

of terminating this Agreement without any further obligation if force majeure exceeds

one (1) year.



24.5



Without prejudice to the other provisions of this Article, the Parties shall meet to

discuss the consequences of the force majeure and the course of action to be adopted

in the circumstances.



24.6



The Government shall not invoke force majeure due to any order, regulation or

written directive of the Government which affects the Government’s performance of

its obligations under this Agreement.



84

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;



c) subject to (a) above, the assignment or transfer is to an approved affiliated

company.



25.3



In the event that the Minister does not give his consent or does not refuse a request

for an assignment or transfer by Contractor within sixty (60) days of receipt of such

request, consent shall be deemed to have been given by the Minister.



25.4



Any assignment made pursuant to this Article shall bind the assignee to all the terms

and conditions hereof and the terms and conditions of any licence issued pursuant

to this Agreement unless otherwise agreed, and as a condition to any assignment,

the assignee shall provide an unconditional undertaking to the Minister to assume

all obligations by the Contactor under this Agreement or any licence issued

pursuant to this Agreement.



85

25.5



An application for assignment or transfer of a licence shall be made in accordance

with Form E of the Schedule to 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.



86

Article 26 - Sole Expert. Conciliation and Arbitration



26.1



The Parties shall use their best efforts to settle amicably all disputes arising out of

or relating to this Agreement.



26.2



Except for matters referred to in Articles 8,12, and 13 and any other matter which

the Parties agree to refer to a sole expert, any dispute arising out of or relating to

this Agreement which cannot be settled amicably may be submitted by any Party

to arbitration pursuant to Article 26.4 or Article 26.6, whichever applies.



26.3



The sole expert referred to in Article 26.2 shall be appointed by agreement between

the Parties, and in the event the Parties fail to agree on the sole expert within sixty

(60) days after receipt of the written notice from any Party proposing the

appointment of a sole expert, such expert shall be appointed by the Minister of the

Institute of Petroleum of the United Kingdom. The decision of the sole expert on

matters referred to him shall be final and binding on the Parties. The Parties shall

refer any dispute arising out of or relating to such expert decision, including

enforcement thereof, to arbitration pursuant to Article 26.4 or Article 26.6,

whichever applies.



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 for settlement by 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"). The

Government hereby irrevocably waives any claim to immunity with regard to any

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 an arbitral award



87

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, and immunity of any of the

Government’s property from execution of any arbitration award or judgement entered

thereon.



26.5



Subject to Article 26.6, prior to submitting a dispute for arbitration a Party may

submit the dispute to conciliation under the Convention by a sole conciliator to be

appointed by agreement of the Parties. If the Parties fail to agree on a conciliator in

accordance with the Convention the dispute may be submitted for arbitration. No

arbitration proceedings shall be instituted while conciliation proceedings are

pending.



26.6



If the Secretary-General of the International Centre for the Settlement of Investment

Disputes refuses to register a request for conciliation or arbitration or if a tribunal

of arbitrators constituted pursuant to Article 26.4 above determines that a dispute

is outside of the jurisdiction of the International Centre for the Settlement of

Investment Disputes, either Party may request arbitration of the dispute before three

arbitrators pursuant to the Arbitration Rules of the United Nations Commission on

International Trade Law (UNCITRAL). The American Arbitration Association

shall administer the arbitration under the Arbitration Rules of the United Nations

Commission on International Trade Law and shall act as the appointing authority

when the Rules of the United Nations Commission on International Trade Law call

for an appointing authority.



88

26.7



If the Secretary-General of the International Centre for the Settlement of Investment

Disputes refuses to register a request for conciliation and neither Party has requested

arbitration under the Arbitration Rules of the United Nations Commission on

International Trade Law pursuant to Article 26.6 above, either Party may request

conciliation pursuant to the Conciliation Rules of the United Nations Commission on

International Trade Law prior to submitting the dispute to arbitration.



26.8



Conciliation or arbitration proceedings pursuant to this Article 26 shall be held in

Washington DC, United States of America, or Port-of-Spain, Trinidad, and

conducted in the English language. The Parties shall select the location from

between the above mentioned options, and failing agreement between them, the

arbitrator(s) shall make such selection in their stead.



26.9



The fees and expenses of a sole expert or conciliator (as well as the charges for the

use of the International Centre for the Settlement of Investment Disputes or other

facilities) shall be borne equally by the Contractor and the Minister. 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



89



to the arbitration and shall decide by whom such costs shall be paid. The arbitrator(s)

shall render a decision within six (6) months after having been appointed.



26.10



The decision of a majority of the arbitrators shall be final and binding on all the

Parties and shall be enforceable in any court of competent jurisdiction.



90



Article 27 - Applicable Law



27.1



This Agreement shall be governed by, interpreted and construed in accordance with

the laws of the Co-operative Republic of Guyana.



91

Article 28 - Protection of the Environment



28.1



In accordance with the Environmental Protection Act 1996, (No. 11 of 1996), the

Contractor shall obtain an environmental authorization as required from the

Environmental Protection Agency established under section 3 of the Environmental

Protection Act 1996, (No. 11 of 1996) and comply with the provisions of that

Environmental Protection Act 1996 in relation to any activity of this Agreement

that is governed by that Environmental Protection Act 1996, (No. 11 of 1996)



28.2



The Contractor is precluded from initiating any exploration or development activity

on those areas outside of the contract area which the Environmental Protection

Agency may determine to be sensitive or protected.



28.3



In furtherance of regulation 6 of the Regulations in the conduct of petroleum

operations the Contractor shall take necessary and adequate precautions, in

accordance with good international petroleum industry practice, against pollution

and for the protection of the environment and the living resources of the sea.



28.4



If the Contractor's failure to comply with the provisions of Article 28.1 results in

pollution or damage to the environment or marine life or otherwise, the Contractor

shall take all reasonable measures in accordance with good international petroleum

industry practice to remedy the failure and the effects thereof and shall where

pollution occurs treat or disperse it in an environmentally acceptable manner. The

Contractor shall not be obligated to remedy or clean up pollution or environmental



damage of any type that existed prior to the commencement of petroleum

operations by the Contractor or arises as a consequence of pre-existing

environmental conditions.



28.5



The Contractor shall notify the Minister forthwith in the event of any emergency or

accident arising from petroleum operations affecting the environment and shall take

such action as may be prudent and necessary in accordance with good international

petroleum industry practice in such circumstances.



28.6



If the Contractor does not act promptly pursuant to Article 28.3 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 in accordance with good international petroleum

industry practice and the necessary reasonable costs and expenses of such actions

shall be borne by the Contractor.



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 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 aforesaid 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 before which the licensee may submit

a written response or remedy the default.



94



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,

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.



95



Article 30 - Effective Date

30.1



The effective date shall be the date on which this Agreement is duly signed.



96

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 this Agreement.



31.2



This Agreement shall not be amended or modified in any respect except by written

agreement entered into by all the Parties which shall state the date upon which the

amendment or modification shall become effective.



31.3



In the event of any conflict between any provisions in the main body of this

Agreement and any provisions in the Annexes, the provision in the main body shall

prevail.



31.4



The headings of this Agreement are for convenience of reference only and shall not

be taken into account in interpreting the terms of this Agreement.



31.5



A reference to the singular in this Agreement includes a reference to the plural and

vice versa.



31.6



The provisions of this Agreement shall inure to the benefit of and be binding upon

the Parties and their permitted assigns and successors in interest.



97

31.7



No waiver by any Party of any one or more obligations or defaults by any other

Party shall be construed as a waiver of any other obligations or defaults whether of

a like or of a different character.



31.8



This Agreement supersedes and replaces any previous Agreement or understanding

between the Parties whether oral or written on the subject matter hereof, prior to

the date of this Agreement.



98

Article 32 - Stability of Agreement



32.1



The Government shall not, after the effective date, unilaterally increase the

contractual obligations of the Contractor under this Agreement or diminish the

contractual rights of the Contractor hereunder as such obligations and rights exist

as of the effective date. If the Government promulgates new or amended laws,

makes orders or regulations, which negatively impacts the Contractor’s economic

benefits, the Parties shall promptly make revisions and adjustments to this

Agreement as necessary to maintain the Contractor’s economic entitlements at the

level existing as of the effective date.



99

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 telex or tele-copier 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 do Guyana

Geology And Mines Commission,

Upper Brickdam, Stabroek,

P.O.BOX 1028, Georgetown,

GUYANA.

Attention: Commissioner, GGMC

Facsimile: 02 53047

ESSO EXPLORATION AND PRODUCTION GUYANA Ltd 233

Benmar,

Houston, Texas 77060 UNITED STATES of AMERICA.

Attention: President



Facsimile: 281-423-7381

100



Address in Guyana:

80 Cowan Street,

Kingston, Georgetown,

GUYANA.

Attention: Melinda Janki Facsimile: 2-62522

33.2



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 Co-operative 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

Co-operative Republic of Guyana.