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Licence PEDL186



Petroleum Act 1998



PETROLEUM EXPLORATION AND DEVELOPMENT LICENCE

THE SECRETARY OF STATE FOR

BUSINESS, ENTERPRISE AND

REGULATORY REFORM



and



GREENPARK ENERGY LIMITED



MARATHON PETROLEUM WEST OF SHETLANDS LIMITED



Licence to search and bore for

and get petroleum in block(s)

SJ34



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Licence PEDL186



This Licence, made the

day of

between the Secretary of State for Business, Enterprise and Regulatory Reform, on

behalf of Her Majesty, of the one part and the companies listed in Schedule 4 of the

other part, witnesseth as follows:-



Part 1 – ‘Model Clauses’

Methane Drainage Licence or a

Supplementary Seismic Survey Licence;



Interpretation



“Production Period” means, in circumstances

governed by sub-paragraphs (2)(a)-(b)

inclusive of clause 5, a period of 20 years

and, in circumstances governed by subparagraph 2(c) or paragraph (3) of clause 5,

such period or periods of not more than 20

years in aggregate as the Minister shall

prescribe;



1.—(1) In the following clauses, the following

expressions have the meanings hereby respectively

assigned to them, that is to say—

“Act” means the Petroleum Act 1998;

“Block” means an area comprised in this

licence which is delineated on the reference

map deposited at the office of the Department

of Business, Enterprise and Regulatory

Reform, London, SW1;



“Seaward Area” means an area on the

seaward side of the baselines as set out in

the Territorial Waters Order in Council 1964

in respect of which the Minister may grant a

licence pursuant to Part I of the Act;



“Development Scheme” has the meaning

assigned thereto by clause 23;

“Half Year” means the period from 1st

January to 30th June in any year and the

period from 1st July to 31st December in any

year;



“Second Term” means the period of five

years following expiry of the Initial Term;

“Supplementary Seismic Survey Licence”

means a licence to search for Petroleum by

undertaking seismic surveys in an area

adjacent to an area to which a Principal

Licence relates;



“Initial Term” means the period of six years

beginning on 1 July 2008;

“Landward Area” means an area on the

landward side of the baselines set out in the

Territorial Waters Order in Council 1964;



“Well” includes borehole; and

“Work Programme” means the programme

set forth in Schedule 3 to this licence.



“the Licensed Area” means the area for the

time being in which the Licensee may

exercise the rights granted by this licence;



(2) Any obligations which are to be observed and

performed by the Licensee shall at any time at which

the Licensee is more than one person be joint and

several obligations.



“the Licensee” means the person or persons

to whom this licence is granted, his personal

representatives and any person or persons to

whom the rights conferred by this licence may

lawfully have been assigned;



Right to search and bore for and get

Petroleum



“the Minister” means the Secretary of State

for Business, Enterprise and Regulatory

Reform;



2. In consideration of the payments hereinafter

provided for and the performance and observance by

the Licensee of the terms and conditions herein

contained, the Minister, in exercise of the powers

conferred upon him by the Act, hereby grants to the

Licensee exclusive licence and liberty during the

continuance of this licence and subject to the

provisions hereof to search and bore for, and get,

Petroleum in the area described in Schedule 1 to this

licence provided that nothing in this licence shall affect

the right of the Minister to grant a Methane Drainage

Licence in respect of the whole or any part of the

Licensed Area or affect the exercise of any rights

granted under any such Methane Drainage Licence.



“Methane Drainage Licence” means a licence

to get natural gas in the course of operations

for making and keeping safe mines whether

or not disused;

“Official Journal” means the Official Journal of

the European Communities;

“Oil Field” has the meaning assigned thereto

by clause 23;

“Petroleum” includes any mineral oil or

relative hydrocarbon and natural gas existing

in its natural condition in strata but does not

include coal or bituminous shales or other

stratified deposits from which oil can be

extracted by destructive distillation;



Term of Licence

3. —(1) This licence unless sooner determined under

any of the provisions hereof shall be and continue for

the Initial Term.



“Principal Licence” means a licence of any

description under the Act other than a



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(2) Upon expiry of the Initial Term this licence shall,

provided always that its terms and conditions continue

to be performed and observed, be and continue in

force as follows:



herein contained, give notice in writing to the Minister

that he desires this licence to continue in force

thereafter.

(2) If such notice is given this licence shall continue in

force after the expiry of the Second Term as provided

by the following paragraphs of this clause in the event

that before such expiry—



(a) subject to clause 4, for the Second Term;

and

(b) subject to clause 5, for the Production

Period.



(a) the Minister has in pursuance of clause

13(4) of this licence approved a programme

submitted to him in pursuance of clause 13

(2) and such approval is still in force upon

expiry of the Second Term;



Option to continue Licence as to part

of the Licensed Area

4.—(1) At any time not later than 1 month before the

expiry of the Initial Term the Licensee may:



(b) the Minister has served a programme on

the Licensee in pursuance of clause 13 (6) of

this licence and such programme is still in

force upon expiry of the Second Term; or



(a) subject to payment of those sums

hereinafter provided for and to performance

of the terms and conditions herein contained

including, without limitation, those set forth in

paragraph (2) of this clause; and



(c) the Minister has with a view to securing

the maximum economic recovery of

Petroleum so directed in writing.



(b) conditional upon due performance by the

Licensee of the Work Programme on or

before expiry of the Initial Term



(3) Where the Minister has given a direction extending

the Second Term of this licence in pursuance of subparagraph (2)(c) of this clause he may, on notice in

writing being given to him by the Licensee not later

than three months before the expiry of such extension

or before the expiry of any subsequent extension

under this paragraph (3) that he desires the licence to

continue in force thereafter, give a further direction that

this licence shall so continue in force.



give notice in writing to the Minister in the manner

hereinafter provided that he desires this licence to

continue in force in relation to part of the Licensed

Area (hereinafter called “the Continuing Part”).

(2) Where the Licensee gives notice to the Minister in

accordance with paragraph (1) of this clause such

notice must indicate that he will determine this licence

in relation to such part of the Licensed Area as shall be

described by the Licensee in the notice (hereinafter

called “the Surrendered Part”) in accordance with the

requirements of paragraph (3) of this clause.



(4) Where this licence continues in force by virtue of

this clause it shall, subject to the provisions of clause 3

of this licence, so continue during the Production

Period.

(5) A direction given by the Minister in pursuance of

sub-paragraph (2)(c) of this clause or further direction

given by the Minister in pursuance of paragraph (3) of

this clause may be given subject to such conditions as

he may specify and (without prejudice to the generality

of the foregoing) such conditions may, subject to the

provisions of paragraph (4) of this clause, include

conditions as to the duration of the extension or further

extension (as the case may be) of the Second Term.



(3) Subject to paragraphs (4) and (5) of this clause the

Surrendered Part, when taken together with any one or

more areas previously surrendered in accordance with

clause 7 hereof, must consist of not less than half of

the Initial Licensed Area.

(4) The Licensee shall not be obliged to surrender so

much of the Licensed Area that following such

surrender the Licensed Area comprises less than 25

square kilometres.



Power further to extend term of

Licence



(5) The Licensee shall not be obliged to surrender

such part of the Licensed Area as the Minister

considers, on an application being made to him in that

regard by the Licensee, necessary to secure the

recovery of Petroleum from such area.



6. Where this licence has continued in force by virtue

of clause 5 of this licence for a total period of twenty

years after the expiry of the Second Term, the Minister,

on application being made to him in writing not later

than three months before the expiry of such period,

may agree with the Licensee that this licence shall

continue in force thereafter for such further period as

the Minister and the Licensee may agree in order to

secure the maximum economic recovery of Petroleum

from the Licensed Area and subject to such

modification of the terms and conditions of this licence

(which modification may include making provision for

any further extension of the term of this licence) as the

Minister and the Licensee may then agree is

appropriate.



(6) Any notice served in accordance with paragraph (1)

of this clause shall specify a date not later than expiry

of the Initial Term on which the Surrendered Part is to

be surrendered.

(7) This licence shall, upon the option conferred by this

clause being duly exercised but subject to the

provisions of clause 3 of this licence, continue in

respect of the Continuing Part for the Second Term.



Continuance of Licence after the

Second Term



Right of Licensee to determine Licence

or surrender part of Licensed Area



5.—(1) At any time not later than three months before

the expiry of the Second Term the Licensee may,

subject to payment of those sums hereinafter provided

for and to performance of the terms and conditions



7.—(1) Without prejudice to any obligation or liability

imposed by or incurred under the terms hereof, the



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Licensee may, at any time, determine this licence or

surrender any part of the Licensed Area as is

mentioned in paragraph (2) of this clause by giving to

the Minister not less than one month’s notice in writing

to that effect.



duty to measure or weigh Petroleum included a duty to

ascertain its quality or composition or both; and where

a direction under this paragraph is in force, the

following provisions of this clause shall have effect as if

references to measuring or weighing included

references to ascertaining quality or composition.



(2) Any area to be surrendered in accordance with

paragraph (1) of this clause shall be a clearly defined

area whose surrender will leave a retained area the

boundaries of which—



(4) The Licensee shall not make any alteration in the

method or methods of measuring or weighing used by

him or in any appliances used for that purpose without

the consent in writing of the Minister and the Minister

may in any case require that no alteration shall be

made save in the presence of a person authorised by

the Minister.



(a) run north, south, east and west; and

(b) each extend for 100 metres or a multiple

of 100 metres;



(5) The Minister may from time to time direct that any

weighing or measuring appliance shall be tested or

examined in such manner, upon such occasions or at

such intervals and by such persons as may be

specified by the Minister's direction and the Licensee

shall pay to any such person or to the Minister such

fees and expenses for any such tests or examinations

as the Minister may specify.



provided that the Minister may agree in writing prior to

the date notice is given by the Licensee under

paragraph (1) of this clause to accept a surrender of

part of the Licensed Area which does not comply with

the requirements of this paragraph.



Consequences of determination or

surrender by Licensee



(6) If any measuring or weighing appliance shall upon

any such test or examination as is mentioned in

paragraph (5) of this clause be found to be false or

unjust the same shall, if the Minister so determines

after considering any representations in writing made

by the Licensee, be deemed to have existed in that

condition during the period since the last occasion

upon which the same was tested or examined

pursuant to paragraph (5) of this clause.



8. Upon the date on which any determination of this

licence or any surrender of part of the Licensed Area in

the manner provided by either clause 4 or clause 7 of

this licence is to take effect, the rights granted by this

licence shall cease in respect of the Licensed Area or

of the part so surrendered as the case may be but

without prejudice to any obligation or liability imposed

upon the Licensee or incurred by him under the terms

of this licence prior to that date.



Keeping of accounts

Payment of consideration for Licence



11.—(1) The Licensee shall keep in the United

Kingdom full and correct accounts in a form from time

to time approved by the Minister of—



9.—(1) The Licensee shall make to the Minister as

consideration for the grant of this licence payments in

accordance with Schedule 2 to this licence.



(a) the quantity of Petroleum in the form of

gas won and saved;



(2) The Licensee shall not by reason of determination

of this licence or surrender of any part of the Licensed

Area be entitled to be repaid or allowed any sum

payable to the Minister pursuant to this licence before

the date of determination or surrender.



(b) the quantity of Petroleum in any other

form won and saved;

(c) the name and address of any person to

whom any Petroleum has been supplied by

the Licensee, the quantity so supplied, the

price or other consideration therefor and the

place to which the Petroleum was conveyed

pursuant to the agreement for such supply;

and



Measurement of Petroleum obtained

from the Licensed Area

10.—(1) The Licensee shall measure or weigh by a

method or methods customarily used in good oilfield

practice and from time to time approved by the Minister

all Petroleum won and saved from the Licensed Area.



(d) such other particulars as the Minister may

from time to time direct.



(2) If and to the extent that the Minister so directs, the

duty imposed by paragraph (1) of this clause shall be

discharged separately in relation to Petroleum won and

saved—



(2) The quantities of Petroleum stated in such

accounts may exclude any water separated from the

Petroleum and shall be expressed as volumes in cubic

metres measured at, or calculated as if measured at, a

temperature of 15° Celsius and a pressure of 1.0132

bar but if the Minister serves notice in writing on the

Licensee determining any other manner in which any

quantity of Petroleum or any quantity of any form of

Petroleum is to be expressed that quantity shall be so

expressed.



(a) from each part of the Licensed Area which

is an Oil Field for the purposes of the Oil

Taxation Act 1975;

(b) from each part of the Licensed Area which

forms part of such an Oil Field extending

beyond the Licensed Area; and



(3) Such accounts shall state separately the quantities

of Petroleum used for the purposes of carrying on

drilling and production operations and pumping to field

storage and the quantities not so used, and in the case

of Petroleum not in the form of gas shall state the

specific gravity of the Petroleum and, if Petroleum of



(c) from each Well producing Petroleum from

a part of the Licensed Area which is not

within such an Oil Field.

(3) If and to the extent that the Minister so directs, the

preceding provisions of this clause shall apply as if the



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different specific gravities has been won and saved,

the respective quantities of Petroleum of each specific

gravity.



(b) if he is of opinion that the programme

does not satisfy the Relevant Requirements

he may serve a notice in writing on the

Licensee stating his opinion and the reasons

for it.



(4) The Licensee shall within two months after the end

of each Half Year in which this licence is in force and

within two months after the expiration or determination

of this licence deliver to the Minister an abstract in a

form from time to time approved by the Minister of the

accounts for that Half Year or for the period prior to

such expiration or determination as the case may be.



(6) Where notice in respect of a programme is served

on the Licensee in pursuance of paragraph (5) of this

clause he shall either—

(a) within 28 days beginning with the date of

service of the notice refer to arbitration, in the

manner provided by clause 37 of this licence,

the question whether the programme satisfies

the Relevant Requirements; or



Working obligations

12.—(1) The Licensee shall during the Initial Term of

this Licence carry out with due diligence the Work

Programme.



(b) within a reasonable period beginning with

the date of service of such notice submit to

the Minister a further programme which

satisfies the Relevant Requirements;



(2) The Licensee shall give the Minister at least 21

days' written notice of any proposed seismic survey,

during the term of this licence, of any area which is not

wholly on the seaward side of the low water line in

such a form as shall from time to time be approved by

the Minister. Such notice shall include evidence that

the planning authorities for the area to be surveyed

have been consulted about the proposed survey and,

in a case where any planning permission under the

Town and Country Planning Act 1990 or the Town and

Country Planning (Scotland) Act 1972 is required for

the survey in question, evidence that such permission

has been granted.



and where it is determined in consequence of any

reference to arbitration in pursuance of sub-paragraph

(a) of this paragraph that the programme in question

does not satisfy the Relevant Requirements the

Licensee shall submit to the Minister, as soon as

possible after the date of the determination, a further

programme

which

satisfies

the

Relevant

Requirements.

(7) The Licensee shall carry out any programme

submitted by him in pursuance of this clause as to

which either—



(3) The Licensee shall not carry out any seismic survey

during the term of this licence of any such area as is

mentioned in paragraph (2) of this clause if notice has

not been given as required by that paragraph or if the

Minister indicates to the Licensee within 14 days of the

receipt of such notice that the survey is not to be

carried out.



(a) the Minister serves notice in writing on the

Licensee stating that the Minister approves

the programme; or

(b) it is determined in consequence of any

reference to arbitration in pursuance of

clause 37 of this licence that the programme

satisfies the relevant requirements;



(4) If at any time during the term of this licence the

Minister serves a notice in writing on the Licensee

requiring him to submit to the Minister, before a date

specified in the notice, an appropriate programme for

exploring for Petroleum in the Licensed Area during a

period so specified, the Licensee shall comply with the

notice; and for the purposes of this paragraph an

appropriate programme is one which any person who,

if he—



and any programme approved by the Minister in

pursuance of this paragraph shall be deemed for the

purposes of this licence to satisfy the Relevant

Requirements.

(8) Where, in consequence of any breach or nonobservance by the Licensee of any provision of

paragraph (4), (6) or (7) of this clause, the Minister has

power by virtue of paragraph (1) of clause 36 of this

licence to revoke this licence, he may if he thinks fit

exercise that power in relation to such part only of the

Licensed Area as he may specify; and where he does

so the rights granted by this licence shall cease in

respect of the specified part of that area without

prejudice to any obligation or liability imposed upon the

Licensee or incurred by him under the terms of this

licence.



(a) were entitled to exploit the rights granted

by this licence;

(b) had the competence and resources

needed to exploit those rights to the best

commercial advantage; and

(c) were seeking to exploit those rights to the

best commercial advantage,

could reasonably be expected to carry out during the

period specified in the notice, being a period within the

term of this licence.



(9) Where the Licensee has a duty by virtue of this

clause to carry out a programme during a part of the

term of this licence, the Minister may serve notice in

pursuance of paragraph (4) of this clause in respect of

another part of that term.



(5) If a programme is submitted to the Minister in

consequence of a notice served by him in pursuance

of paragraph (4) of this clause, then—



Development and production

programmes



(a) he shall not be entitled to revoke this

licence on the ground that the programme

does not satisfy the requirements of that

paragraph (hereafter in this clause referred to

as “the Relevant Requirements”); but



13.—(1) The Licensee shall not—

(a) erect or carry out any Relevant Works,

either in the Licensed Area or elsewhere, for

the purpose of getting Petroleum from that



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area or for the purpose of conveying to a

place on land Petroleum got from that area;

or



shall not be used before the expiration of the

period so specified in relation to the works or

shall not be used without the consent in

writing of the Minister; or



(b) get Petroleum from that area otherwise

than in the course of searching for Petroleum

or drilling Wells,



(c) that the Minister rejects the programme on

one or both of the following grounds,

namely—



except in accordance with a programme which the

Minister has approved or served on the Licensee in

pursuance of the following provisions of this clause.



(i) that the carrying out of any

proposals included in the

programme in pursuance of

paragraph (2) of this clause would

be contrary to good oilfield practice;



(2) The Licensee shall prepare and submit to the

Minister, in such form and by such time and in respect

of such period during the term of this licence as the

Minister may direct, a development programme

specifying—



(ii) that the proposals included in the

programme in pursuance of subparagraph (c) of the said paragraph

(2) are, in the opinion of the

Minister, not in the national interest;



(a) the Relevant Works which the Licensee

proposes to erect or carry out during that

period for either of the purposes mentioned in

paragraph (1)(a) of this clause;



and a notice in pursuance of sub-paragraph (a) or (b)

of this paragraph may contain different conditions in

respect of different works but shall not be given unless

the Minister is satisfied that the condition mentioned in

the notice is required in the national interest.



(b) the proposed locations of the works, the

purposes for which it is proposed to use the

works and the times at which it is proposed to

begin and to complete the erection or

carrying out of the works; and



(5) Where the Minister gives notice of rejection of a

programme in pursuance of sub-paragraph (c) of

paragraph (4) of this clause, then—



(c) the maximum and minimum quantities of

Petroleum in the form of gas and the

maximum and minimum quantities of

Petroleum in other forms which:



(a) if the grounds of the rejection consist of or

include the ground mentioned in paragraph (i)

of that sub-paragraph he shall include in the

notice a statement of the matters in

consequence of which he rejected the

programme on that ground;



(i) in each calendar year; or

(ii) in each such period of more or

less than one calendar year as may

be specified by the Minister



(b) if the grounds of the rejection consist of or

include the ground mentioned in paragraph

(ii) of that sub-paragraph he shall include in

the notice a statement of the rates at which

he considers that, in the national interest,

Petroleum should be got from the area to

which the programme relates; and



the Licensee proposes to get as mentioned in subparagraph (1)(b) of this clause.

(3) If the Minister directs the Licensee—

(a) to prepare different programmes in

pursuance of paragraph (2) of this clause in

respect of Petroleum from such different parts

of the Licensed Area as are specified in the

direction; or



(c) the Licensee shall prepare and submit to

the Minister, before the time specified in that

behalf in the notice,—



(b) where a programme approved or served

in pursuance of this clause relates to a

particular period during the term of this

licence, to prepare a programme or

programmes in pursuance of paragraph (2) of

this clause in respect of a further period or

further periods during that term,



(i) where the notice contains such a

statement as is mentioned in subparagraph (a) above, modifications

of the programme which ensure that

the carrying out of the programme

with those modifications would not

be contrary to good oilfield practice;



the Licensee shall comply with the direction.



(ii) where the notice contains such a

statement as is mentioned in subparagraph (b) above, modifications

of the programme which ensure the

getting of Petroleum from the area

to which the programme relates at

the rates specified in the statement

and which (except so far as may be

necessary in order to get Petroleum

at those rates) are not such that the

carrying out of the programme with

those modifications would be

contrary to good oilfield practice;



(4) It shall be the duty of the Minister expeditiously to

consider any programme submitted to him in

pursuance of paragraph (2) of this clause and when he

has done so to give notice in writing to the Licensee

stating—

(a) that the Minister approves the programme

subject to such conditions as may be

specified in the notice as the Minister

considers necessary to secure the maximum

economic recovery of Petroleum from the

Licensed Area;



but the Licensee shall not be required by

virtue of paragraph (i) of this sub-paragraph

to submit modifications if it is determined in



(b) that the Minister approves the programme

subject to the condition that such of the

Relevant Works as are specified in the notice



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consequence of any reference to arbitration

in the manner provided by clause 37 of this

licence that the carrying out of the

programme without modifications would not

be contrary to good oilfield practice.



this licence or serves a programme in

pursuance of the said paragraph (6); or

(b) it is determined in consequence of any

reference to arbitration in the manner

provided by clause 37 of this licence that the

Licensee is not required by virtue of

paragraph (i) of clause 13(5)(c) of this licence

to submit modifications of a programme in

respect of which notice of rejection containing

such a statement as is mentioned in the said

paragraph (i) was given by the Minister in

pursuance of clause 13(4)(c) of this licence,



(6) If the Minister gives notice in writing to the Licensee

that the Minister approves the modifications of a

programme which have been submitted to him in

pursuance of sub-paragraph (c) of paragraph (5) of this

clause, the programme with those modifications shall

be deemed to be approved by the Minister; but if the

Licensee fails to perform the duty imposed on him by

that sub-paragraph the Minister may, if he thinks fit,

instead of revoking this licence in consequence of the

failure, serve on the Licensee such a programme as

the Minister considers that the Licensee should have

submitted to him in respect of the area and period to

which the rejected programme related.



the Minister may give to the Licensee, with the notice

given or the programme served as mentioned in subparagraph (a) of this paragraph or, in a case falling

within sub-paragraph (b) of this paragraph, within the

period of three months beginning with the date of the

arbitrator's or arbiter's determination, a notice

(hereafter in this clause referred to as a “Limitation

Notice”) authorising the Minister, by a further notice

given to the Licensee from time to time after the

expiration of the period specified in that behalf in the

Limitation Notice, to provide that the programme to

which the Limitation Notice relates shall have effect

while the further notice is in force with the substitution

for any quantity of Petroleum or any period specified in

the programme in pursuance of clause 13(2)(c) of this

licence of a different quantity of Petroleum or a

different period specified in the further notice.



(7) Where the Minister proposes to approve a

programme subject to a condition in pursuance of

paragraph (4)(a) or (b) of this clause or to reject a

programme in pursuance of paragraph (4)(c) of this

clause or to serve a programme on the Licensee in

pursuance of paragraph (6) of this clause he shall

before doing so—

(a) give the Licensee particulars of the

proposal and an opportunity to make

representations to the Minister about the

technical and financial factors which the

Licensee considers are relevant in connection

with the proposal; and



(2) A quantity or period specified in such a further

notice as that to be substituted for a quantity or period

which is specified in the programme in question shall

be such as to secure that the expenditure to be

incurred by the Licensee in complying with the further

notice, in a case where an effect of the notice is to

increase the quantity of Petroleum which the Licensee

is required to get from the Licensed Area in any period,

is less than the cost of drilling a new Well in the

Licensed Area at the time when the further notice is

given.



(b) consider any such representations then

made to him by the Licensee.

(8) The Licensee shall carry out any programme

approved or served on him by the Minister in

pursuance of this clause or, if such a programme is

varied in pursuance of clause 14 of this licence, the

programme as so varied, except in so far as the

Licensee is authorised in writing by the Minister to do

otherwise or is required to do otherwise by such a

condition as is mentioned in paragraph (4)(a) or (b) of

this clause; but if it is necessary to carry out certain

works in order to comply with provisions included in a

programme by virtue of paragraph (5)(c) of this clause

or provisions of a programme served on the Licensee

in pursuance of paragraph (6) of this clause or

provisions of a programme as varied in pursuance of

clause 14 of this licence, then, notwithstanding

anything in the programme as to the time when those

provisions are to be complied with, the Licensee shall

not be treated as having failed to comply with those

provisions before the expiration of the period

reasonably required for carrying out the works.



(3) Where the Minister proposes to give a Limitation

Notice or any such further notice as aforesaid he shall

before doing so—

(a) give the Licensee particulars of the

proposal and an opportunity to make

representations to the Minister about the

technical and financial factors which the

Licensee considers are relevant in connection

with the proposal; and

(b) consider any such representations then

made to him by the Licensee;



(9) In this clause “Relevant Works” means any

structures and any other works whatsoever which are

intended by the Licensee to be permanent and are

neither designed to be moved from place to place

without major dismantling nor intended by the Licensee

to be used only for searching for Petroleum.



and the Minister shall not give such a further notice of

which an effect is to increase the quantity of Petroleum

which the Licensee is required to get from the

Licensed Area during any period unless the Minister is

satisfied that the notice is required by reason of a

national emergency and shall not give any other such

further notice as aforesaid unless he is satisfied that

the notice is required in the national interest.



Provisions supplementary to clause 13



(4) A Limitation Notice or any such further notice as

aforesaid may—



14.—(1) Where—



(a) specify any quantity or period by

reference to such factors as the Minister

thinks fit; and



(a) the Minister gives notice in respect of a

programme in pursuance of sub-paragraphs

(4)(a) or (b) or paragraph (6) of clause 13 of



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Licence PEDL186



(b) in the case of such a further notice,

contain provisions as to—



such part only of the Licensed Area as he

may specify; and



(i) the date when the notice is to

come into force,



(b) in a case where by virtue of the said

paragraph (7) he has power to revoke it in

respect of part only of the Licensed Area,

exercise the power in relation to such portion

only of that part as he may specify;



(ii) the date when the notice is to

cease to be in force,

and specify different dates in pursuance of

this sub-paragraph for different provisions of

the notice;



and where in consequence of the said paragraph (7) or

by virtue of the preceding provisions of this paragraph

the Minister revokes this licence in respect of a part or

portion of the Licensed Area, the rights granted by this

licence shall cease in respect of that part or portion

without prejudice to any obligation or liability imposed

upon the Licensee or incurred by him under the terms

of this licence.



and the Minister may revoke such a further notice at a

particular time by serving on the Licensee a notice in

writing stating that the further notice is revoked at that

time.

(5) Any question arising under clause 13 of this licence

or this clause as to what is, is not or is required in the

national interest or as to what is, is not or is required

by reason of, a national emergency shall be

determined by the Minister.



Commencement and abandonment and

plugging of Wells

15.—(1) The Licensee shall not commence or

recommence the drilling of any Well without the

consent in writing of the Minister.



(6) The Licensee shall ensure that any conditions to

which an approval is subject in pursuance of clause

13(4)(a) or (b) of this licence are complied with.



(2) The Licensee shall not abandon any Well without

the consent in writing of the Minister.



(7) If in respect of part of the Licensed Area—

(a) an approval has been given in pursuance

of paragraph (1) of clause 13 of this licence;

or



(3) The Licensee shall ensure compliance with any

conditions subject to which any consent under either of

the foregoing paragraphs is given.



(b) the Licensee has submitted to the

Minister, in accordance with a direction given

by virtue of sub-paragraph (3)(a) of that

clause, a programme in pursuance of

paragraph (2) of that clause—



(4) If any such condition under paragraph (1) of this

clause relates to the position, depth or direction of the

Well, or to any casing of the Well or if any condition

under either paragraph (1) or paragraph (2) of this

clause relates to any plugging or sealing of the Well,

the Minister may from time to time direct that the Well

and all records relating thereto shall be examined in

such manner, upon such occasions or at such intervals

and by such person as may be specified by the

Minister's direction and the Licensee shall pay to any

such person or to the Minister such fees and expenses

for such examination as the Minister may specify.



(i) as respects which the Minister

has served notice in pursuance of

sub-paragraphs (4)(a) or (b) or

paragraph (6) of that clause,

(ii) in consequence of which the

Minister has served a programme

on the Licensee in pursuance of the

said paragraph (6), or



(5) The plugging of any Well shall be done in

accordance with a specification approved by the

Minister applicable to that Well or to Wells generally or

to a class of Wells to which that Well belongs and shall

be carried out in an efficient and workmanlike manner.



(iii) in respect of which it has been

determined in consequence of any

reference to arbitration in the

manner provided by clause 37 of

this licence that the Licensee is not

required by virtue of sub-paragraph

(5)(c)(i) of that clause to submit

modifications,



(6) Subject to paragraphs (7) and (7A) of this Clause,

any Well drilled by the Licensee pursuant to this

licence shall be plugged and sealed in accordance with

paragraphs (2), (3), (4) and (5) of this Clause, not less

than one month before the expiry or determination of

the Licensee's rights in respect of the area or part

thereof in which that Well is drilled.



paragraph (1) of clause 36 of this licence shall not

authorise the Minister to revoke this licence in relation

to that part of the Licensed Area in consequence of

any breach or non-observance, during the period to

which the programme relates, of any provision of the

said clause 13 in connection with a different part of the

Licensed Area.



(7) A direction by the Minister may be given by notice

in writing to the Licensee not less than one month

before the Licensee’s rights in respect of the area or

part thereof in which the Well is situate, expire or

determine so as to relieve the Licensee of the

obligation imposed by paragraph (6) of this Clause to

plug and seal the Well.



(8) Where in consequence of any breach or nonobservance by the Licensee of any provision of clause

13 of this licence the Minister has power by virtue of

paragraph (1) of clause 36 of this licence to revoke this

licence or, in consequence of paragraph (7) of this

clause, to revoke it in respect of part only of the

Licensed Area, he may if he thinks fit—



(7A) Where the Minister revokes this licence, any Well

drilled by the Licensee pursuant to this licence shall:

(a) be plugged and sealed in accordance with

paragraphs (2), (3), (4) and (5) of this clause,

as soon as reasonably practicable; or



(a) in a case where he has power to revoke

this licence, exercise the power in relation to



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Licence PEDL186

“Development Well” means a Well which the

Licensee uses or intends to use in connection

with the getting of Petroleum in the Licensed

Area, other than a Well which for the time

being he uses or intends to use only for

searching for Petroleum.



(b) if the Minister so directs at the time of

revocation, be left in good order and fit for

further working together with all casings and

any Well head fixtures the removal whereof

would cause damage to such Wells.

(8) Any well that, pursuant to a direction by the Minister

under paragraph (7) of this Clause, has not been

plugged and sealed, shall be left in good order and fit

for further working together with all casings and any

Well head fixtures the removal whereof would cause

damage to such wells.



Provision of storage tanks, pipes,

pipelines or other receptacles

18. The Licensee shall use methods and practice

customarily used in good oilfield practice for confining

the Petroleum obtained from the Licensed Area in

tanks, gasholders, pipes, pipe-lines or other

receptacles constructed for that purpose.



(9) All casings and fixtures forming part of a Well and

left in position at the expiry or determination (whether

by revocation or otherwise) of the Licensee's rights in

respect of the area or part thereof in which that Well is

drilled, or at the completion of any works required of

the Licensee under paragraph (7A) of this clause

(whichever is the later), shall be the property of the

Minister.



Avoidance of harmful methods of

working

19.—(1) The Licensee shall maintain all apparatus and

appliances and all Wells in the Licensed Area which

have not been abandoned and plugged as provided by

clause 15 of this licence in good repair and condition

and shall execute all operations in or in connection

with the Licensed Area in a proper and workmanlike

manner in accordance with methods and practice

customarily used in good oilfield practice and without

prejudice to the generality of the foregoing provision

the Licensee shall take all steps practicable in order—



Distance of Wells from boundaries of

Licensed Area

16. No Well shall except with the consent in writing of

the Minister be drilled or made so that any part thereof

is less than one hundred and twenty-five metres from

any of the boundaries of the Licensed Area.



Control of Development Wells



(a) to control the flow and to prevent the

escape or waste of Petroleum discovered in

or obtained from the Licensed Area;



17.—(1) The Licensee shall not suspend work on the

drilling of a Development Well, or having suspended it

in accordance with this paragraph shall not begin it

again, except with the consent in writing of the Minister

and in accordance with the conditions, if any, subject

to which the consent is given.



(b) to conserve the Licensed Area for

productive operations;

(c) to prevent damage to adjoining

Petroleum-bearing strata;



(2) When work on the drilling of a Development Well is

suspended in accordance with paragraph (1) of this

clause, the Licensee shall forthwith furnish the Minister

with such information relating to the Well as the

Minister may specify.



(d) to prevent the entrance of water through

Wells to Petroleum-bearing strata except for

the purposes of secondary recovery; and

(e) to prevent the escape of Petroleum into

any waters in or in the vicinity of the Licensed

Area.



(3) The Licensee—

(a) shall not do any Completion Work in

respect of a Well in the Licensed Area except

in accordance with a programme of

Completion Work approved by the Minister in

respect of the Well;



(2) The Licensee shall comply with any instructions

from time to time given by the Minister in writing

relating to any of the matters set out in the foregoing

paragraph. If the Licensee objects to any such

instruction on the ground that it is unreasonable he

may, within fourteen days from the date upon which

the same was given, refer the matter to arbitration in

manner provided by clause 37 of this licence.



(b) shall furnish to the Minister, in accordance

with the provisions of such a programme,

particulars of any Completion Work done by

him in respect of a Well in the Licensed Area;

and



(3) Notwithstanding anything in the preceding

provisions of this clause, the Licensee shall not—



(c) shall not remove or alter any casing or

equipment installed by way of Completion

Work in respect of a Well except with the

consent in writing of the Minister and in

accordance with the conditions, if any,

subject to which the consent is given.



(a) flare any gas from the Licensed Area; or

(b) use gas for the purpose of creating or

increasing the pressure by means of which

Petroleum is obtained from that area,

except with the consent in writing of the Minister and in

accordance with the conditions, if any, of the consent.



(4) In this clause—

“Completion Work”, in relation to a Well,

means work, by way of the installation of a

casing or equipment or otherwise, after the

Well has been drilled, for the purpose of

bringing the Well into use as a Development

Well; and



(4) Before deciding to withhold consent or to grant it

subject to conditions in pursuance of paragraph (3) of

this clause, the Minister shall give the Licensee an

opportunity to make representations in writing to the

Minister about the technical and financial factors which



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the Licensee considers are relevant in connection with

the case and shall consider any such representations

then made to him by the Licensee.



Fishing and navigation

21. The Licensee shall not carry out any operations

authorised by this licence in or about the Licensed

Area in such manner as to interfere unjustifiably with—



(5) Consent in pursuance of paragraph (3) of this

clause shall not be required for any flaring which, in

consequence of an event which the Licensee did not

foresee in time to deal with it otherwise than by flaring,

is necessary in order—



(a) navigation in any navigable waters; or

(b) fishing in, or conservation of the living

resources of any waters in or in the vicinity of

the Licensed Area.



(a) to remove or reduce the risk of injury to

persons in the vicinity of the Well in question;

or



Training



(b) to maintain a flow of Petroleum from that

or any other Well;



22.—(1) The Minister may from time to time give to the

Licensee instructions in writing as to the training of

persons employed or to be employed, whether by the

Licensee or by any other person, in any activity which

is related to the exercise of the rights granted by this

licence and the Licensee shall ensure that any

instructions so given are complied with.



but when the Licensee does any flaring which is

necessary as aforesaid he shall forthwith inform the

Minister that he has done it and shall, in the case of

flaring to maintain a flow of Petroleum, stop the flaring

upon being directed by the Minister to do so.



(2) The Minister shall not give instructions in

pursuance of paragraph (1) of this clause unless he

has consulted as to the provisions proposed to be

included in such instructions the Offshore Petroleum

Industry Training Organisation Limited or such other

body of a like nature as may from time to time be

carrying on activities of a substantially similar kind to

those performed by the said Organisation.



(6) The Licensee shall give notice to the Minister of

any event causing the escape or waste of Petroleum,

damage to Petroleum-bearing strata or the entrance of

water through Wells to Petroleum-bearing strata

except for the purposes of secondary recovery

forthwith after the occurrence of that event and shall,

forthwith after the occurrence of any event causing the

escape of Petroleum into the sea, give notice of the

event to the Chief Inspector of Her Majesty's

Coastguard.



(3) The Licensee shall furnish the Minister with such

information relating to the training of persons referred

to in paragraph (1) of this clause as the Minister may

from time to time request.



(7) The Licensee shall comply with any reasonable

instructions from time to time given by the Minister with

a view to ensuring that funds are available to discharge

any liability for damage attributable to the release or

escape of Petroleum in the course of activities

connected with the exercise of rights granted by this

licence; but where the Minister proposes to give such

instructions he shall before giving them—



Unit development

23.—(1) If at any time at which this licence is in force

the Minister shall be satisfied that the strata in the

Licensed Area or any part thereof form part of a single

geological Petroleum structure or Petroleum field

(hereinafter referred to as “an Oil Field”) other parts

whereof are formed by strata in areas in respect of

which other Licences granted in pursuance of the Act

are then in force, and the Minister shall consider that it

is in the national interest in order to secure the

maximum ultimate recovery of Petroleum and in order

to avoid unnecessary competitive drilling that the Oil

Field should be worked and developed as a unit in cooperation by all persons including the Licensee whose

licences extend to or include any part thereof, the

following provisions of this clause shall apply.



(a) give the Licensee particulars of the

proposal and an opportunity to make

representations to the Minister about the

proposal; and

(b) consider any representations then made

to him by the Licensee about the proposal.



Appointment of operators

20.—(1) The Licensee shall ensure that another

person (including, in the case where the Licensee is

two or more persons, any of those persons) does not

exercise any function of organising or supervising all or

any of the operations of searching or boring for or

getting Petroleum in pursuance of this licence unless

that other person is a person approved in writing by the

Minister and the function in question is one to which

that approval relates.



(2) Upon being so required by notice in writing by the

Minister the Licensee shall co-operate with such other

persons, being persons holding licences under the Act

in respect of any part or parts of the Oil Field

(hereinafter referred to as “the other Licensees”) as

may be specified in the said notice, in the preparation

of a scheme (hereinafter referred to as “a Development

Scheme”) for the working and development of the Oil

Field as a unit by the Licensee and the other

Licensees in co-operation, and shall, jointly with the

other Licensees, submit such scheme for the approval

of the Minister.



(2) The Minister shall not refuse to give his approval of

a person in pursuance of paragraph (1) of this clause if

that person is competent to exercise the function in

question, but where an approved person is no longer

competent to exercise that function the Minister may,

by notice in writing given to the Licensee, revoke his

approval.



(3) The said notice shall also contain or refer to a

description of the area or areas in respect of which the

Minister requires a Development Scheme to be

submitted and shall state the period within which such

scheme is to be submitted for approval by the Minister.



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(4) If a Development Scheme shall not be submitted to

the Minister within the period so stated or if a

Development Scheme so submitted shall not be

approved by the Minister, the Minister may himself

prepare a Development Scheme which shall be fair

and equitable to the Licensee and the other Licensees,

and the Licensee shall perform and observe all the

terms and conditions thereof.



(b) the number and name (if any) assigned to

each Well, and in the case of any Well the

drilling of which was begun or the number of

which has been changed during the period to

which the return relates, the site thereof,



(5) If the Licensee shall object to any such

Development Scheme prepared by the Minister he

may within 28 days from the date on which notice in

writing of the said scheme shall have been given to

him by the Minister refer the matter to arbitration in the

manner provided by clause 37 of this licence.



(d) a statement of any Petroleum, water,

mines or workable seams of coal or other

minerals encountered in the course of the

said operations; and



(c) a statement of the depth drilled in each

Well;



(e) a statement of all Petroleum won and

saved.

(2) Within two months after the end of each calendar

year which falls wholly or partly within the period during

which this licence is in force and within two months

after the expiration or determination of this licence or

any renewal thereof the Licensee shall furnish to the

Minister an annual return in a form from time to time

approved by the Minister of the operations conducted

in the Licensed Area during that year or the period

prior to such expiration or determination as the case

may be together with a plan upon a scale approved by

the Minister showing the situation of all Wells. The

Licensee shall also indicate on the said plan all

development and other works executed by him in

connection with searching, boring for or getting

Petroleum.



Licensee to keep records

24.—(1) The Licensee shall keep accurate records in a

form from time to time approved by the Minister of the

drilling, deepening, plugging or abandonment of all

Wells and of any alterations in the casing thereof. Such

records shall contain particulars of the following

matters—

(a) the site of, number and name (if any)

assigned to every Well;

(b) the subsoil and strata through which the

Well was drilled;

(c) the casing inserted in any Well and any

alteration to such casing;



(3) The Licensee shall furnish the Minister with such

information as the Minister may from time to time

request about any aspect of the activities of the

Licensee which are attributable directly or indirectly to

the grant of this licence, except that the Licensee shall

not by virtue of this paragraph be required to furnish

information in respect of his activities in connection

with any crude oil after he has appropriated it for

refining by him.



(d) any Petroleum, water, mines or workable

seams of coal encountered in the course of

such activities; and

(e) such other matters as the Minister may

from time to time direct.

(2) The Licensee shall keep in the United Kingdom

accurate geological plans and maps relating to the

Licensed Area and such other records in relation

thereto as may be necessary to preserve all

information which the Licensee has about the geology

of the Licensed Area.



(4) The Licensee shall comply with any request for

information made in accordance with paragraph (3)

above either—

(a) within any time limit specified in the

request; or



(3) The Licensee shall deliver copies of the said

records, plans and maps referred to in the two

foregoing paragraphs to the Minister when requested

to do so either—



(b) if there is no time limit specified, within

four weeks of the request.

(5) For the purposes of paragraph (3) of this clause

any reference to the Minister shall be construed as if it

included a reference to the Chancellor of the

Exchequer.



(a) within any time limit specified in the

request; or

(b) if there is no time limit specified, within

four weeks of the request.



Licensee to keep samples



Returns



26.—(1) As far as reasonably practicable the Licensee

shall correctly label and preserve for reference for a

period of five years samples of the strata encountered

in any Well (including, where the site of such Well is on

land covered by water, the surface of such land) and

samples of any Petroleum or water discovered in any

Well in the Licensed Area.



25.—(1) The Licensee shall furnish to the Minister not

later than 6 weeks after the end of each calendar year

which falls wholly or partly within the period during

which this licence is in force a return in a form from

time to time approved by the Minister of the progress

of his operations in the Licensed Area. Such return

shall contain—



(2) The Licensee shall not dispose of any sample

unless—



(a) a statement of all geological work,

including surveys and tests, which has been

carried out and the areas in which and the

persons by whom the work has been carried

out and the results thereof,



(a) he has at least six months before the date

of the disposal given notice in writing to the

Minister of his intention to dispose of the

sample; and



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(b) the Minister or any person authorised by

him has not within the said period of six

months informed the Licensee in writing that

he wishes the sample to be delivered to him.



data in pursuance of this subparagraph.



Inspection of records, etc.



(3) The Minister or any person authorised by him shall

be entitled at any time—



28. The Licensee shall—

(a) permit any person in the service or

employment of the Crown who is appointed

by the Minister for the purpose to inspect, and

to take copies of and make notes from, all

books, papers, maps and other records of

any kind kept by the Licensee in pursuance of

this licence or in connection with activities

about which the Minister is entitled to obtain

information in pursuance of clauses 22(3) and

25(3) of this licence; and



(a) to inform the Licensee in writing that he

wishes the whole or any part of any sample

preserved by the Licensee to be delivered to

him; or

(b) to inspect and analyse any sample

preserved by the Licensee.

(4) The Licensee shall forthwith comply with any

request for the delivery of the whole or any part of any

sample which is made in accordance with the

preceding provisions of this clause.



(b) furnish that person at reasonable times

with such information and provide him at

reasonable times with such reasonable

assistance as he may request in connection

with or arising out of an inspection in

pursuance of this clause.



Reports to be treated as confidential

27. All records, returns, plans, maps, samples,

accounts and information (in this clause referred to as

“the specified data”) which the Licensee is or may from

time to time be required to furnish under the provisions

of this licence shall be supplied at the expense of the

Licensee and shall not (except with the consent in

writing of the Licensee which shall not be

unreasonably withheld) be disclosed to any person not

in the service or employment of the Crown:



Rights of access

29. Any person or persons authorised by the Minister

shall be entitled at all reasonable times to enter into

and upon any land for the time being possessed or

occupied by the Licensee in the Licensed Area or to

enter into and upon any of the Licensee's installations

or equipment used or to be used in connection with

searching, boring for or getting Petroleum in the

Licensed Area for the purposes hereinafter

mentioned—



Provided that—

(a) the Minister shall be entitled at any time to

make use of any of the specified data for the

purpose of preparing and publishing such

returns and reports as may be required of the

Minister by law;



(a) to examine the installations, Wells, plant,

appliances and works made or executed by

the Licensee in pursuance of the Licence and

the state of repair and condition thereof, and



(b) the Minister shall be entitled at any time to

furnish any of the specified data to the

Natural Environment Research Council and

to any other body of a like nature as may

from time to time be carrying on activities of a

substantially similar kind to the geological

activities at present carried on by the said

Council;



(b) to execute any works or to provide and

install any equipment which the Minister may

be entitled to execute or provide and install in

accordance with the provisions hereof.



Power to execute works



(c) the Minister, the said Council and any

such other body shall be entitled at any time

to prepare and publish reports and surveys of

a general nature using information derived

from any of the specified data;



30. If the Licensee shall at any time fail to perform the

obligations arising under the terms and conditions of

any of clauses 10, 15, 18 or 19 of this licence, the

Minister shall be entitled, after giving to the Licensee

reasonable notice in writing of his intention to do so, to

execute any works and to provide and install any

equipment which in the opinion of the Minister may be

necessary to secure the performance of the said

obligations or any of them and to recover the costs and

expenses of so doing from the Licensee.



(d) the Minister, the said Council and any

such other body shall be entitled to publish

any of the specified data of a geological,

scientific or technical kind either—

(i) after the expiration of the period

of four years beginning with the date

when the data were due to be

supplied to the Minister in

accordance with clause 24 or 25 of

this licence, or if earlier, the date

when the Minister received those

data; or



Right of distress

31.—(1) This clause applies in respect of any part of

the Licensed Area situated in England or Wales.

(2) If and whenever any of the payments mentioned in

clause 9(1) of this licence or any part thereof shall be

in arrear or unpaid for 28 days next after any of the

days whereon the same ought to be paid (whether the

same shall have been legally demanded or not) then

and so often as the same may happen the Minister

may (as an additional remedy and without prejudice to



(ii) after the expiration of such

longer period as the Minister may

determine after considering any

representations made to him by the

Licensee about the publication of



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any other rights and remedies to which he would be

entitled) enter into and upon any land which shall for

the time being be possessed or occupied by the

Licensee for the purposes of the Licence or the

exercise of any of the rights thereby granted or into

and upon any of the Licensee's installations and

equipment used or to be used in connection with

searching, boring for or getting Petroleum in the

Licensed Area and may seize and distrain and sell as

a landlord may do for rent all or any of the stocks of

Petroleum, engines, machinery, tools, implements,

chattels and effects belonging to the Licensee which

shall be found in or upon or about the land installations

and equipment so entered upon and out of the moneys

arising from the sale of such distress may retain and

pay all the arrears of the said payments and also the

costs and expenses of and incident to any such

distress and sale rendering the surplus (if any) to the

Licensee.



formation or otherwise one in which Petroleum is likely

to be obtainable.



Restrictions on assignment, etc.

35.—(1) The Licensee shall not, except with the

consent in writing of the Minister and in accordance

with the conditions (if any) of the consent do anything

whatsoever whereby, under the law (including the rules

of equity) of any part of the European Union or of any

other place, any right granted by this licence or derived

from a right so granted becomes exercisable by or for

the benefit of or in accordance with the directions of

another person.

(2) The Licensee shall not enter into any agreement

providing for a person other than the Licensee to

become entitled to, or to any proceeds of sale of, any

Petroleum which, at the time when the agreement is

made, has not been but may be won and saved from

the Licensed Area unless the terms of the agreement

have been approved in writing by the Minister either

unconditionally or subject to conditions, but the

preceding provisions of this paragraph do not apply

to—



Diligence

32.-(1) This clause applies in respect of any part of the

Licensed Area situated in Scotland.

(2) If and whenever any of the payments mentioned in

clause 9(1) of this licence or any part thereof shall be

in arrear or unpaid for 28 days next after any of the

days whereon the same ought to be paid (whether the

same shall have been legally demanded or not), then

and so often as the same may happen the Minister

may (as an additional remedy and without prejudice to

any other rights and remedies to which he would be

entitled) do diligence in respect thereof in like manner

as a landlord may do diligence in respect of unpaid

arrear of rent and such diligence shall be effectual to

attach all or any of the stocks of Petroleum, engines,

machinery, tools, implements and other effects

belonging to the Licensee which shall be found on or

about any of the Licensee’s installations and

equipment used or to be used in connection with

searching, boring for or getting Petroleum in the

Licensed Area, and where in pursuance of such a

diligence a sale of such effects as shall have been

attached thereby takes place the Minister may out of

the proceeds thereof retain and pay all the arrears of

the said payments and also the expenses of and

incident to such diligence and sale and shall pay the

surplus thereof (if any) to the Licensee.



(a) an agreement for the sale of such

Petroleum under which the price is payable

after the Petroleum is won and saved; and

(b) an agreement in so far as it provides that,

after any Petroleum has been won and saved

from the Licensed Area, it shall be exchanged

for other Petroleum.

(3) The Licensee shall not, without the consent of the

Minister, dispose of any Petroleum won and saved in

the Licensed Area or any proceeds of sale of such

Petroleum in such a manner that the disposal does, to

the knowledge of the Licensee or without his knowing

it, fulfil or enable another person to fulfil obligations

which a person who controls the Licensee, or a person

who is controlled by a person who controls the

Licensee, is required to fulfil by an agreement which, if

the person required to fulfil the obligations were the

Licensee, would be an agreement of which the terms

require approval by virtue of paragraph (2) of this

clause.

(4) Whether for the purposes of paragraph (3) of this

clause a person has control of another person shall be

determined as if subsections (2) and (4) to (6) of

section 416 of the Income and Corporation Taxes Act

1988 applied subject to the following modifications,

namely—



Indemnity against third party claims

33. The Licensee shall at all times keep the Minister

effectually indemnified against all actions, proceedings,

costs, charges, claims and demands whatsoever which

may be made or brought against the Minister by any

third party in relation to or in connection with this

licence or any matter or thing done or purported to be

done in pursuance thereof.



(a) for the words “the greater part” wherever

they occur in the said subsection (2) there

were substituted the words “one-third or

more”; and

(b) in the said subsection (6), for the word

“may” there were substituted the word “shall”,

the words from “and such attributions”

onwards were omitted and in the other

provisions of that subsection any reference to

an associate of a person fell to be construed

as including only a relative of his (as defined

by section 417(4) of that Act), a partner of his

and a trustee of a settlement (as defined by

section 681(4) of that Act) of which he is a

beneficiary.



Advertisements, prospectuses, etc.

34. No statement shall be made either in any notice,

advertisement, prospectus or other document issued

by or to the knowledge of the Licensee or in any other

manner claiming or suggesting whether expressly or

by implication that Her Majesty or any Government

Department or any person or body acting on behalf of

Her Majesty has or have formed or expressed any

opinion that the Licensed Area is from its geological



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Licence PEDL186



(5) Where the Licensee is two or more persons, then,

without prejudice to the preceding provisions of this

clause, none of those persons shall enter into an

agreement with respect to the entitlement of any of

them to—



(i) its operations under the Licence;

or

(ii) any commercial activities in

connection with those operations

from a fixed place within the United Kingdom;



(a) the benefit of any right granted by this

licence;

(b) any Petroleum won and saved from the

Licensed Area; or



(h) any breach of a condition subject to which

the Minister gave his approval in pursuance

of clause 35(2) of this licence;



(c) any proceeds of sale of such Petroleum,



(i) any breach of clause 35(5) of this licence;

and where two or more persons are the Licensee any

reference to the Licensee in sub-paragraphs (c) to (g)

of this paragraph is a reference to any of those

persons.



unless the terms of the agreement have been

approved in writing by the Minister, but the preceding

provisions of this paragraph do not apply to an

agreement for the sale of such Petroleum under which

the price is payable after the Petroleum is won and

saved and an agreement in so far as it provides that,

after any Petroleum has been won and saved from the

Licensed Area, it shall be exchanged for other

Petroleum.



(3) The Minister may revoke this licence, with the like

consequences as are mentioned in paragraph (1) of

this clause, if—

(a) the Licensee is a company;



Power of revocation



(b) there is a change in the control of the

Licensee;



36.—(1) If any of the events specified in the following

paragraph shall occur then and in any such case the

Minister may revoke this licence and thereupon the

same and all the rights hereby granted shall cease and

determine but subject nevertheless and without

prejudice to any obligation or liability incurred by the

Licensee or imposed upon him by or under the terms

and conditions hereof.



(c) the Minister serves notice in writing on the

Licensee stating that the Minister proposes to

revoke this licence in pursuance of this

paragraph unless such a further change in

the control of the Licensee as is specified in

the notice takes place within the period of

three months beginning with the date of

service of the notice; and



(2) The events referred to in the foregoing paragraph

are—



(d) that further change does not take place

within that period.

(4) There is a change in the control of the Licensee for

the purposes of sub-paragraph (3)(b) of this clause

whenever a person has control of the Licensee who

did not have control of the Licensee when this licence

was granted; and subsections (2) and (4) to (6) of

section 416 of the Income and Corporation Taxes Act

1988 shall apply, for the purpose of determining

whether for the purposes of this paragraph a person

has or had control of the Licensee with the

modifications specified in clause 36(4) of this licence.



(a) any payments mentioned in clause 9(1) of

this licence or any part thereof being in arrear

or unpaid for two months next after any of the

days whereon the same ought to have been

paid;

(b) any breach or non-observance by the

Licensee of any of the terms and conditions

of this licence;

(c) in Great Britain, the bankruptcy or

sequestration of the Licensee;



(5) Where two or more persons are the Licensee and

any of them is a company, paragraphs (3) and (4) of

this clause shall have effect as if—



(d) in Great Britain, the making by the

Licensee of any arrangement or composition

with his creditors;



(a) sub-paragraph (a) of paragraph (3) were

omitted;



(e) in Great Britain, if the Licensee is a

company, the appointment of a receiver or

administrator or any liquidation whether

compulsory or voluntary;



(b) in sub-paragraph (b) of that paragraph,

after the word “of” there were inserted the

words “any company included among the

persons who together constitute”; and



(ee) in a jurisdiction other than Great Britain,

the commencement of any procedure or the

making of any arrangement or appointment

substantially corresponding to any of those

mentioned in sub-paragraphs (c) to (e) of this

paragraph;



(c) for the word “Licensee” in any other

provision of those paragraphs there were

substituted the word “company”.



Arbitration



(f) any breach or non-observance by the

Licensee of the terms and conditions of a

Development Scheme;



37.—(1) If at any time any dispute, difference or

question shall arise between the Minister and the

Licensee as to any matter arising under or by virtue of

this licence or as to their respective rights and liabilities

in respect thereof then the same shall, except where it

is expressly provided by this licence that the matter or

thing to which the same relates is to be determined,

decided, directed, approved or consented to by the



(g) if the Licensee is a company, the

Licensee's ceasing to direct and control

either—



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Licence PEDL186

(b) for the words “the Lord Chief Justice of

England” in paragraph (2) there were

substituted the words “the Lord President of

the Court of Session”;



Minister, be referred to arbitration as provided by the

following paragraphs.

(2) The arbitration referred to in the foregoing

paragraph shall be by a single arbitrator who, in default

of agreement between the Minister and the Licensee

and, in the case of arbitration in relation to a

Development Scheme, other Licensees affected by

that scheme, as to his appointment, shall be appointed

by the Lord Chief Justice of England for the time being.



(4) To the extent that this clause applies to any part of

the Licensed Area situated in Northern Ireland this

clause shall have effect as if for the words “the Lord

Chief Justice of England”, in paragraph (2) there were

substituted the words “the Lord Chief Justice of

Northern Ireland”.



(3) To the extent that this clause applies to any part of

the Licensed Area situated in Scotland, this clause

shall have effect as if:



(5) In the case of any such arbitration which relates to

a Development Scheme the Licensee shall, unless the

arbitrator otherwise determines, perform and observe

the terms and conditions of the Development Scheme

pending the decision of the arbitrator.



(a) for the word “arbitrator”, wherever it

occurs in paragraphs (2) and (5) of this

clause there were substituted the word

“arbiter”; and



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SCHEDULE 1



CLAUSE 2



Description of Licensed Area

Block SJ34 is the area bounded by straight lines joining the following co-ordinates:

SJ 3000 5000

SJ 4000 5000

SJ 4000 4000

SJ 3000 4000

SJ 3000 5000.

These co-ordinates were specified using "United Kingdom National Grid (Transverse

Mercator Projection, Airy Spheroid, OSGB (1936) Datum)".



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Licence PEDL186



SCHEDULE 2



CLAUSE 9



Consideration for Licence

Periodic minimum

payments



(1)

On the date on which the Initial Term begins (“the said date”) or upon the grant of this

Licence, whichever is the later, and on subsequent anniversaries of the said date during the term of

the Licence, the Licensee shall pay the Minister sums (in this Schedule referred to as "periodic

payments") calculated as follows:

(a) on the said date, £25 multiplied by the area factor;

(b) on the 1st anniversary of the said date, £25 multiplied by the area factor;

(c)



2nd



£25



(d)



3rd



£25



(e)



4th



£25



(f)



5th



£25



(g)



6th



£50



(h)



7th



£100



(i)



8th



£150



(j)



9th



£200



(k)



10th



£250



(l)



11th



£300



(m)



12th



£400



(n)



13th



£500



(o)



14th



£600



(p)



15th



£700



(q)



16th



£800



(r)



17th



£900



(s)



18th



£1,000



(t)



19th



£1,100



(u) on the 20th and every subsequent anniversary of the said date, £1,200 multiplied by the area

factor.

(2) The periodic payments specified falling due after the sixth anniversary shall be subject to

variation in accordance with the following provisions:

(a) subject to sub-paragraph (d) below, the periodic payments shall be increased or

reduced at two-yearly intervals in line with movements in the Index of the Price of Crude Oil

acquired by Refineries (published in the Digest of UK Energy Statistics) if the Minister so

determines. The Minister shall give notice of any such determination (“biennial

determination”) not less than one month preceding the date on which such payment falls

due, and shall specify in the notice the increase or reduction in the amount payable.

Movements in the Index shall be calculated by reference to a comparison between the

arithmetic mean of the Index levels for the two latest calendar years for which figures are

available at the time when the determination is made, and the arithmetic mean of the Index

levels for 2003 and 2004. In the event that the Index of the Price of Crude Oil acquired by

Refineries ceases to be published, the Minister may substitute arrangements for

redetermination of periodic payments having substantially similar effect to those set out

above based on such other comparable Index as he may determine;

(b)

The increase or reduction specified in a biennial determination shall be payable

or take effect on the anniversary of the date of commencement of this Licence next

following the date of the relevant determination.

(c)

No biennial determination shall have effect so as to reduce the periodic

payments below the levels set out in sub-paragraph (1) above.

(d)

The Minister shall not make a biennial determination increasing or reducing the

amounts payable where that increase or reduction would be 5% or less of the levels set

following the previous biennial determination.

(3)

In this Schedule “the area factor” means the number of square kilometres comprised in the

Licensed Area at the date upon which the periodic payment in question becomes due.



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SCHEDULE 3

Work Programme

Firm commitment

The Licensee shall:

obtain and reprocess 140km of 2D seismic data; and

drill two wells to a depth of 1300m.



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SCHEDULE 4

Companies

GREENPARK ENERGY LIMITED (registered number: 04557422) of 20-22 BEDFORD

ROW, LONDON, WC1R 4JS,

MARATHON PETROLEUM WEST OF SHETLANDS LIMITED (registered number:

04105025) of CAPITAL HOUSE, 25 CHAPEL STREET, LONDON, NW1 5DQ,



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Licence PEDL186



Execution Page

In witness whereof, these presents typewritten on this and the preceding pages are

executed follows:-



THE CORPORATE SEAL OF THE

SECRETARY OF STATE FOR

BUSINESS, ENTERPRISE AND

REGULATORY REFORM

hereunto affixed is authenticated by:

___________________________ ________________________________,

an official in the Department of Business, Enterprise and Regulatory Reform.

Signed for and on behalf of GREENPARK ENERGY LIMITED by:

___________________________ (full name) _______________________(signature), (Secretary/Director)

___________________________ (full name) _______________________(signature), (Director)

Signed for and on behalf of MARATHON PETROLEUM WEST OF SHETLANDS LIMITED by:

___________________________ (full name) _______________________(signature), (Secretary/Director)

___________________________ (full name) _______________________(signature), (Director)



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