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PETROLEUM AGREEMENT
BETWEEN
THE MINISTER RESPONSIBLE FOR PETROLEUM
REPRESENTING
THE GOVERNMENT OF THE REPUBLIC OF GUYANA
AND
NABI OIL AND GAS INC.
TABLE OF CONTENTS
Article 1 - Definitions.......................................................................
Article 2 - Agreement, the Operator, Liabilities and Indemnities...... ....15
Article 3 - Petroleum Prospecting Licence and Guarantee................ ...17
Article 4 - Exploration Programme and Expenditure Obligation....... ..19
Article 5 - Relinquishment of Areas..................................................... .24
Article 6 - Delegation; Co-operation between Contractor and GGMC 27
Article 7 - Annual Work Programme and Budget................................ ............................30
Article 8 - Discovery and Development................................................. ...........................31
Article 9 - Records, Reports and Information; Confidentiality............... ...........................34
Article 10 - Annual Licence Rental Charge............................................. ..........................38
Article 11 - Cost Recovery and Production Sharing................................. .........................39
Article 12- Associated and Non - Associated Natural,Gas-«,............ ..............42
Article 13 - Valuation of Crude Oil.......................i.:L.: '.'.‘.':L.'.:..V.t.2..i..2..... .......48
i J - I
Article 14 - Disposal of Production.......................L.................................. .................• 52
aitn*0*+:vts!UVtMm*trt - a ---. >
Article 15 - Taxation and Royalty............................................................... ......................55
Article 16 - Contracts and Assignments........................................... ................60
Article 17 - Domestic Supply Obligation .................61
Article 18 - Guyana Resources................ ....................63
Article 19 - Employment and Training ...................64
Guyana Geology and Mines Commission
Assistant Commi iioner - Petroleum Division
■ Signature:
'ate:
r
TABLE OF CONTENTS (Cont.)
Article 20 - Rights to Assets and Insurance..................................................... 66
Article 21 - Import Duties................................ 74
Article 22 - Foreign Exchange Control................................. 76
F Article 23 - Accounting and Audits...............................................................................................78
'L
Article 24 - Force Majeure.............................................................................................................79
Article 25 - Assignment.................................................................................................................81
P Article 26 - Sole Expert, Conciliation and Arbitration..................................................................83
I:-
Article 27 - Applicable Law............................ 86
Article 28 - Protection of the Environment....................................................................................87
Article 29 - Termination and Cancellation....................................................................................89
Article 30 - Effective Date................................................................... 91
Article 31 - Miscellaneous........................................ 92
Article 32 - Stability of Agreement...................................................................................'.............94
Article 33 - Notices........................................................................................................................95
| Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
Signature:. . ft |
1 Date: - - g|||& M- loiA
PETROLEUM AGREEMENT
This Agreement is made on the 4 day of June 2012 between the Government of the
Republic of Guyana, represented herein by the Minister (hereinafter referred to as the ‘‘Minister or the “Government” as the case may be) of the One Part
and
Nabi Oil And Gas Inc. (hereinafter referred to as “Nabi” or “Licensee”) a Company incorporated
the Republic of Guyana with its registered office at Lot 63 Brickdam Stabroek, Lacytown,
Georgetown Guyana and registered in Guyana under the Companies Act 1991 with its registered
address in Guyana situated at Lot 63 Brickdam, Stabroek, Georgetown, Guyana of the Other Part
WHEREAS
(1) By virtue of the Petroleum (Production) Act, Cap. 65:05, Petroleum existing in its natural
condition in strata in Guyana is vested in the State; the Petroleum (Exploration and
Production) Act, No. 3 of 1986 (hereinafter referred to as the “Act” and the Petroleum
(Exploration and Production) Regulations 1986 (hereinafter referred to as the “Regulations”
make provision with res § ^L^TJpdpction of ?e.tr.Qleurn, and. for.matiers connected therewith
(2) The Guyana Geology and Mines Commission (hereinafter referred to as “GGMC”) a body
corporate established under the Guyana Geology and Mines Commission Act (No. 9 of 1979)
has been seized with the responsibility, inter alia, of planning and securing the development,
exploitation and management of Petroleum, as defined in the Act, in Guyana so as to ensure
for the people of Guyana the maximum benefits therefrom and for doing such things in
relation thereto;
t (3) With respect to prospecting for and producing Petroleum and for matters connected therewith
I the Act and Regulations, subject to certain limitations and conditions contained therein
authorize the Minister to grant Petroleum Prospecting Licences and Petroleum Production
Licences;
(4) Section 10 of the Act authorizes the Minister to enter into an agreement with any person with
respect to, inter alia, the. grant of a Licence, the conditions to be included in a Licence, the
procedure to be followed by the Minister while exercising any discretion conferred upon him
\
by or under the Act and the manner in which the discretion shall be exercised and any matter
incidental to or connected therewith;
(5) Nabi has submitted to the delegatee a proposal (“the proposal”) for a Production Sharing
3
[
(6) GGMC has been authorized by the Minister to negotiate this Agreement subject to the
provisions of the Act and Regulations and to the final written approval of the Minister of its
contents and execution thereof and to assist in the administration and implementation
thereof;
(7) Nabi will have, or will acquire, the financial resources, the managerial, technical and
industrial competence and the experience to carry out Petroleum Operations and will provide
an affiliate company guarantee, in accordance with section 13 of the Act;
(8) Pursuant to the aforesaid recitals, Nabi 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 Nabi 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 covenant
contained, IT IS HEREBY AGREED between the Parties as fol
\ Guyana Geology and Mines Commission ]
, | Assistant Commissioner
■Signature
Article 1 - Definitions
1.1 In this Agreement, unless the context otherwise requires:
“Accounting Procedure” means the procedure set out in Annex C;
“Act” means the Petroleum (Exploration and Production) Act No.3 of 1986;
“Affiliated Company” in relation to the Contractor means, a company or corporation;
(i) which is, directly or indirectly controlled by the Contractor; or
(ii) • which directly or indirectly, controls the Contractor; or
(iii) which is, directly or indirectly, controlled by a company or corporation that also,
directly or indirectly, controls the Contractor. For the purpose of this definition
“control” means the right to exercise a vote of fifty per cent (50%) or more of ail 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; _
“Appraisal Programme” means a programme carried out following a discovery of Petroleum
in the Contract Area for the purpose of delineating the Petroleum Reservoir, as defined in the
Act, to which that discovery relates in terms of thickness and lateral extent and estimating the
quantity of recoverable Petroleum therein prior to declaration of commerciality;
“Appraisal Well” means a well drilled for the purpose of an Appraisal Programme:
“Article” means an Article of this Agreement;
“Associated Gas” means all Natural Gas produced from any Petroleum Reservoir of which
the predominant production is Crude Oil and includes the gas-cap which overlies and is in
contact with Crude Oil;
fBUfirel” means a quantity consisting of forty-two (42) United States gallons, liquid measure,
C;' ri Ah./jneasured at standard conditions of atmospheric pressure and temperature (14.7 lbs/sq. inch
or 1 Kg/sq. cm. absolute and corrected to a temperature of sixty (60) degrees
leit or fifteen (15) degrees Celsius) ;
GlJYA^^>^enc*ar Month” or “Month” means any of the twelve months of the Calendar Year;
"Calendar Quarter” or “Quarter” means a period of three (3) consecutive months beginning
on the first day of January, April, July or October;
“Calendar Year” or “Year” means a period of twelve (12) consecutive Months commencing
. • y; ■' vf.
on January l and ending on the succeeding December 31 provided howeverJih«t3Hifg3?*if a
term of a Licence shall he the ncrirnd Iwnecified in section -of tl
* ■' • •'
•A.
j Assistant Comn^sioner^P' roleum D Wlslon
1 Signature:
1 Date:
“Commercial Discovery” means any discovery, which the Contractor in its sole judgement,
considers economic to develop and produce pursuant to the terms of the Agreement;
“Contract Area” means:
(i) on the Effective Date the area described in Annex A and shown on the map in
Annex B and the subject of the Petroleum Prospecting Licence granted to the
Contractor pursuant to Article 3; and
(ii) thereafter any areas which at any particular time are subject to the Petroleum
Prospecting Licence or Petroleum Production Licence(s) granted to the Contractor
under Article 8;
“Contract Costs” means Exploration Costs, Development Costs, Operating Costs, Service
Costs, General and Administrative Costs and Annual Overhead Charge;
I
“Contractor” means Nabi and includes its successors and permitted atstih
“Cost Oil” has the meaning assigned in Article 11;
“Crude Oil” or "Oil" means crude mineral oil, asphalt, ozokerite, distillates, condensates
and all kinds of hydrocarbons and bitumens, both in solid and liquid forms, whether in their
liquid state at the well head'or field separator or liquefied from produced Natural Gas by
chemical treatment, condensation or extraction;
“Delivery Point” means a point that shall be in the Discovery' Area if the parties
Guyana Geology and Mines Commission bi'ic
Assistant Commissioner ^Petroleum Division rioirivid !uu.»ioO:S • '»nbtJ*imrnbu
Signature: t .......■ _________•, Vjjr\
Dafr:
other economically viable point for export of Petroleum in the Cooperative Republic Of
Guyana which shall be agreed to by the Contractor and the Minister;
“Development Costs” means the expenditure so categorized in Annex C;
“Development Plan” means the plan referred to in Article 8.4;
“Development Well” means any well drilled as part of a Development Plan;
“Discovery Area” means an area which is part of a Prospecting Area consisting of a
Discovery-Block or Blocks in respect of which the Minister has been informed under section
30 of the Act;
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“Discovery Block” means that as defined in the Act; 4^7%, >v,
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. “Discovery of Petroleum” means that as defined in the Act;
“Effective Date” means the date on which this Agreement comes into forcepursuant to
Article 30;
“Expatriate Employee” means any employee (other than a Guyanese citizen) not permanently
resident in Guyana who is engaged under a contract of service for the purpose of Petroleum
Operations;
“Exploration Costs” means those expenditures so categorized in Anne:
Jnyana Geology and Mine? Commission UP ”
Assistant Commissioner - Petroleum Division
9pm---
?ate
“Exploration Period” means the initial period, and/or the first renewal period and/or the
second renewal period referred to in Article 4.1, as the case may be;
“Exploration Well” means a well drilled, which is not a Development Well, with the
objective of exploring for Petroleum on a geological entity (be it of structural, stratigraphic,
facies or pressure nature) to a depth or stratigraphic level specified in the work programme
for the exploration work programme;
“Field” means an area within the Contract Area consisting of a Petroleum Reservoir or
multiple Petroleum Reservoirs all grouped on, or related to, the same individual geological
structural features or stratigraphic conditions from which Petroleum may be produced
commercially;
‘General and Administrative Costs” and “Annual Overhead Charge'
so categorised in Annex C;
9
“Geologic Basement” means any igneous or metamorphic rock or any:
which the geological structure or physical characteristics of the rock-sequence do not have
the properties necessary for the accumulation of petroleum in commercial quantities and
which reflects the maximum depth at which any such accumulation can be reasonably
expected;
u
“GGMC” means the Guyana Geology and Mines Commission, established under section 3 of
the Guyana Geology and Mines Commission Act 1979;
“GGMC Act” means the Guyana Geology and Mines Commission Act 1979;
“Licence” means the Petroleum Prospecting Licence and/or the Petroleum Production
Licence(s) or both as the context requires;
“Lifting Entitlement” means the quantity of Crude Oil to which a Party' shall be entitled in
any given period pursuant to Article 11;
“Minister” means the Minister assigned responsibility for Petroleum or where there is no
such Minister, the President;
*
“Natural Gas” or “Gas” means all hydrocarbons which at standard conditions of temperature
and pressure (60 degrees Fahrenheit or 15 degrees Celsius and 14.7 lbs/sq. in or 1 Kg/sq. cm)
\
is in a gaseous state including but not limited to wet mineral gas, dry mineral gas and casing
head gas, all substances contained therein including helium, which are produced from an oil
px 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);
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
i rw- 4 -1^7_
“Parties” means the Government, Nabi and includes its successors and permitted assignees,
and a Party shall mean any of the Parties;
“Petroleum Operations” means Prospecting Operations and/or Production Operations, as
defined in the Act;
“Petroleum Prospecting Licence” means a Licence issued by the Government under the Act
and the Regulations to Nabi for carrying out Prospecting Operations arid set forth in Form (
of the schedule as specified in the Regulations;
“Petroleum Production Licence” means a Licence to be issued by .the Government under the
Act and the Regulations to Nabi for carrying out Production Operations and i
D of the schedule as specified in the Regulations; fS^S aNaiSskw* 'K'P'
“Profit Oil” has the meaning assigned in Article 11; _.
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“Recoverable Contract Costs” has the meaning assigned in Article 11;
ioninrd::P?oHucEoh)’:ReguiSSm^^6"y
‘Regulations” means the Petroleum (Exploration
‘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 ex^J; ^5 ^
.’A/am Geology and Mines Commission
Assistant Commissioner - Petroleum Division 13 \ ... '■ *f Jt i'
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filature
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1.2 The words and terms used in this Agreement but not defined herein shall, if meanings have
been assigned to them under section 2 of the Act, have, for the purposes of this Agreement,
the same meanings.
1.3 The provision of this Agreement relating to the Petroleum Prospecting Licence shall be read
as part of the provisions of such Licence.
1.4 The provision of this Agreement relating to any Petroleum Production Licence shall be read
as part of the provisions of such Licence. ;
The provisions in the Act and Regulations dealing with rights and obligations of the
COmraCt°r ^ be ™ * Pan of !«»&&&££<>
_ gions of this Agreement and any
Licence issued to the Contractor. Cy
Guyana Geology and Mines Commbsion
Assistant Commissioner • Petroleum Division
j Signature: •
ipatei
Article 2 - Agreement, the Operator, Liabilities and Indemnities
2.1 Agreement
This Agreement constitutes an agreement made under section 10 of the Act consis tent with
the Act and the Regulations, and is a production sharing agreement, the objective of which is
the exploration for development and production of Petroleum in the Contract Area by the
Contractor subject to the terms hereof and the provisions of the Act and Regulations under
which the Contractor shall have an economic interest in the development of Petroleum from
the Contract Area.
2.2 The Operator
(a) Nabi shall be the Operator charged with conducting the day to day activities of the
Contractor under this Agreement. No transfer of operatorship to another Party not
comprising the Contractor shall take effect unless it has been approved by the
Minister which approval shall not be unreasonably withheld. The Minister shall be
notified of any change of operatorship to another Party comprising the Contractor in
writing.
(b) The Contractor shall provide the Minister with a memorandum summarizing the
operating arrangements between the Operator and the Contractor, including any Party
prising the Contractor for the conduct of Petroleum Operations which will
, inter alia, api^vi^kjQwhereby ,the Operator agrees ^conduct, the Petroleum
lions /fepp?da^avm^^w4.greement. the Licences and any applicable laws
Guyana. , , //M !
r.Tna °eoloW»"« Commissi,"
Assistant
Signature;
■-’Isvft?-'.
I
2.3 Liability
The duties, obligations and liabilities of the Parties comprising the Contractor under this
Agreement and under any Licence issued pursuant hereto shall be joint and several.
.4 Indemnity
The Contractor shall, at all times, keep Government indemnified against all actions, claims
and the demands that may be brought or made against Government by a third party by reason
of negligence (any act or omission or reckless disregard of harmful consequences which
results in damage to a third party) by the Contractor'or the Operator in the exercise or
purported exercise of the rights of the Contractor under the Act or the Licence, provided
however, that nothing in this Article shall require the Contractor to give the said indemnity
for any claim or demand in respect of Petroleum taken by the Minister pursuant to Article 11
after title has passed to the Minister at the Delivery Point or in respect of assets acquired by
the Minister pursuant to Article 20 from and after the date of acquisition. Liability by the
Contractor to the Government for damages in respect of Petroleum Operations under this
Agreement is limited to insurance required in accordance with Article 20.2 (a), provided
however, that the Contractor shall not be liable to the Government for indirep^iSSsp
consequential damages, including but not limited to, production or loss
Guyana G and Mines Commission
Assistant issioner • Petroleum Division
Signature:
Date: \J UtX-
16 ---
1
Article 3 - Petroleum Prospecting Licence and Guarantee
3.1 Petroleum Prospecting Licence
(a) On the date of this Agreement, the Minister, in accordance with the Act, the
Regulations and the terms of this Agreement, shall grant to the Contractor the
Petroleum Prospecting Licence for an initial period of four (4) years from the
Effective Date over the area described in Annex A and shown on the map attached as
Annex B hereto. •• \*.....?
(b) f •' ‘ ’ v’’ .J v;... .'-
Subject to Article 4 and, the other terms of this Agreement,' such Petroleum
Prospecting Licence may'be eenewed but not more than twice at the eleciiefi-«£lhe
Contractor for consecutive periods of up to four (4) years each in
provisions of the Act and the Regulations.
3.2 Guarantee
The Contractor shall on or before the sixtieth (60th) day from the Effective Date'!
one (l) of phase one (l) 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 (l 0%) 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
by the Minister which is the equivalent of the excess work previously compl N&\
17
Guyana beulogy and Mines Commistio^
Assistant Commoner - Petroleum Division
I Signature; .---‘V "
Y ----- ' v Ahfyy M
Pate JiAu. Zp(^
applicable to the subsequent work commitment phase.
If the guarantees are Affiliate Company guarantees they shall be in lieu of and satisfy any r
obligation to provide a guarantee and/or bond pursu^^Sfe^^>^gblations or this
Agreement on the part or on behalf of the Contractor
Guyana Geology and Mines Commission
int Comn^ssioner • Petrc Assistant Comniissioner • Petroleum Division r ■
Signature:
! Date:
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
i hereunder
(a) The initial period of four (4) years shall be divided into three (3) phases. Phase one
(1) will consist of twelve (12) months duration while phase two (2) will consist of
eighteen (18) months duration and phase three(3) will consist of eighteen months
duration
(i) Phase One - (12 months)
During phase one of the initial period, the Contractor shall drill one (1)
Exploration Well to basement in the Contract Area.
At the end of phase one (1) of the initial period the Contractor shall either
relinquish Contract Area except for any discovery Area in respect of which the
y Minister is informed under section 30 of the Act, the area contained in any
0 Petroleum Production License and any other portion of the Contract Anea
Minister agrees to permit the Contractor to conduct
pa. [ration activity
or the enter phase two (2) of the initial perm
:A
Commoner- Petroleum Division | 'iotcao fiw,\1
| Signature: •
Date: ... y-'-v-r.
T"
( ii) Phase Two - (18 months)
During phase two (2) of the initial period, the Contractor shall conduct
studies to determine the cause(s) for any dry holes encountered during
exploration drilling in phase 1, as well as either conduct a survey to acquire a
minimum of two hundred (200) line kilometers of 2D seismic data or conduct
a stress field detection survey in the minimum amount of three hundred (300)
line kilometers or drill an Exploration Well to a minimum depth of 1500m.
At the end of phase two (2) of the initial period, the Contractor shall either
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 License and any other portions of the
Contract Area on which the Minister agrees to permit the Contractor to
conduct further exploration activity, or enter phase three (3) of the initial
period.
(iii) Phase three - (18 months)
During phase three (3) of the initial period the Contractor shall drill one (1)
Exploration Well to a minimum depth of 1500m. At the end of the initial
period of four (4) years, the Contractor shall elect either to relinquish the
entire Contract Area or subject to Article 5 relinquish (25%) twenty five
percent of the Contract Area and renew the ting Licence
for a further period of up to, three (3) year:
Guyana Geology and Mines Commission
Assistant Commissioner ■ Petroleum Division 20
Signature: ---/■
! .Date: Ra¬
(b) The first renewal period of up to three (3) years shall constitute phases agreed to
from friendly discussions between the Contractor and Minister, in each of which
the Contractor shall conduct a programme of work as agreed to from discussions
between the Contractor and Minister but which must include as a minimum, the
drilling of one (1) Exploration Well within the first eighteen months of the first
renewal period.
the end of the first renewal period of up to three (3) years, the Contractor shall
either to relinquish the Contract Area except for any Discovery- Area in
'ect of which the Minister is informed under section 30 of the Act and the area
ontained in any Petroleum Production Licence or subject to Article 5, relinquish
twenty percent (25%) of the Contract Area and renew the Petroleum Prospecting
Licence for a second period of up to three (3) years.
(c) The second renewal period of up to three (3) years, shall be divided into phases as
agreed to from friendly discussions between the Contractor and the Minister in
each of which the Contractor shall conduct a programme of work as agreed to
from discussions between the Contractor and Minister.
At the end of the second renewal period of up to 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
Guyana Geology and Mines Commission 21
Assistant Commissioner -JWoleum Division
Signatures
'JU If *3( 3>
exploration activities.
(d) 1 he minimum work commitment for a given phase or period referred to in Article
4.1 (a), (b) and (c) may be .undertaken in an earlier.phase or period in whole or in
part and in such a case the work commitment with respect to the subsequent
period shall be deemed to be satisfied accordingly in whole or in part as the case
may be.
(e) Subject to Article 24 herein and section 43 of the Act, the Minister may extend any
Exploration Period pursuant to a showing of good cause by the Contractor.
4.2 No Exploration Well drilled by the Contractor shall'be treated as discharging any obligation
of the Contractor to drill such Exploration Well unless either it has been drilled to the depth
W'.^c-C S qfXvOr formation agreed with the Minister and specified in the annual work programme, or before
A\
fe%4iing such depth or formation:
the Contractor has expended on such well and any substitute well drilled pursuant to
Article 4.2 (d) below the amount for such work commitment in the budget submitted
by the Contractor and approved by the Minister as specified in Article 7.1; or
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(c) a Discovery is made and the Minister is informed thereof; or
(d) insurmountable technical problems are encountered which, in accordance with good
oilfield practice, make further drilling impractical, provided that
abandoned owing to the said problems before reaching the Geolc
rf
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
I Signature:
i Date ■AAA.
Contractor shall drill a substitute well in the Contract Area to the same minimum
depth as aforesaid unless otherwise agreed with the Minister or until the amount in
Article 4.2 (a) less any amounts actually expended on the abandoned well is reached
r or one of the criteria listed at Articles 4.2 (b) to (d) is satisfied.
L
4.3 Expenditure Obligation
The sum actually spent in-fulfillment of the work obligation in a specific phase or period
Article 5 - Relinquishment of Areas
5.1 If prior to the end of the initial period of the Petroleum Prospecting Licence issued to the
Contractor under Article 3.1, an application is made by the Contractor for renewal of the
Licence under section 24 (1) of the Act, the Contractor shall relinquish at the end of the
initial period an area equal to at least twenty percent (25%) of the original Contract Area less
the exclusions provided for in Article 5.
5.2 If prior to the end of the first renewal period of the Petroleum Prospecting Licence an
.....application is made by the Contractor for a second renewal of the Licence under section
24(1) of the Act, the Contractor shall then relinquish at the end of this first renewal period an
kea equal to at least twenty (25%) of the original Contract Area less the exclusions provided
in Articles, 5.3-r.....
The. areas to be relinquished pursuant to Articles 5.1, and 5.2 shall:
, -Jia)-r:-.ue»..eoiflprise Blocks, as defined in the Act;
exclude any Discovery Area together with a reasonable area of protective acreage
(b)
surrounding the Discovery Area;
(C)
exclude any Production Area;
(d) be selected by Contractor so that:
(i) the area relinquiske^Lsh^ll comprise one (1) discrete area, having regard to
any repr ^Minister with respect to location, shape and
size;
ouyana Geology and Mines Commission
1 Assistant Corjfmissioner^- Petroltum DMsIon
5-vv-- | Signature:
1 Date: j ut (i d
(ii) the Blocks to be retained for and during the first renewal period pursuant to
Articles 5.1 and 5.2 shall constitute one (1) discrete area unless otherwise
agreed to by the Minister.
5.4 In the event that an area or areas cannot be identified for reiinquishnient 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-
. . . _ , bfiJsysoloeO hr..
receiving notice of the Contractor s|progo§qdre^mqmshnaepts,](qe Eqrj,ie^ gannot agree on a
proposed relinquishment, the Partie| shall-refer- the matter to a sole expert pursuant to Article
26. <==•.■ ~ ' -• - ~ - ■ ■ " • -
5.5 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 extentj/^^^hd^stj^isting
Discovery Area. /K /
5.6 If a Petroleum Prospecting Licence ceases to have effect with respect rh^Discdvep/BlQ^Ks
pursuant to section 32 (l)-of the Act, such reduction in size of the Cont:
treated as an advance relinquishment under this Article and shall reduGedb&'mre‘ &
v-C
Guyana Geology and Mines Commission
Commissioner * Petrc Assistant ComnySsloner * Petroleum Division 25 >. f
Signature
i Date:
required to be relinquished accordingly.
5.7 Without prejudice to the obligations undertaken in Article 4, the Contractor may at any time
during the period of the Petroleum Prospecting Licence, on giving the Minister no less than
three (3) months notice in writing of its intention to do so, relinquish any Block or Blocks in
the Contract Area pursuant to section 28 of the Act and in accordance with Articles 5.4 and
5.5. Any such relinquishment shall count towards any subsequent mandatory
relinquishments required under Articles 5.1, 5.2 or 5.3 above as the i
i \ r
\ A / * /
Guyana Geology and Mines Commission Gijy^AA
: Assistant Commissioner - Petroleum Division
1 Signature:
---r !■ Vb YgfdwALe.ttsyup -{
'nos i ammo
noirMO mualo c 1
Article 6 - Delegation; Co-operation between Contractor and GGMC
6.1 The Minister may, subject to the provisions of the Act, or any other law delegate any person
to exercise and perform any of his functions under this Agreement and anything done by the
delegate in pursuance of the delegation shall have the same validity and effect as it would
have if done by the Minister.
6.2 The Minister also hereby authorizes GGMC to perform, inter alia the following functions:
(a) to monitor the Petroleum Operations carried out by the Contractor;
-(b)' to review any proposed exploration work programme and budgets presented by
Contractor under Article 7 and any Appraisal Programme presented by the Contractor
under Article 8;
to review any Development Plan submitted by the Contractor in connection with an
plication for a Petroleum Production Licence pursuant to section 34 of the Act;
to ensure the maintenance and availability for inspection of operating records and
ports for Petroleum Operations in accordance with this Agreement;
to ensure the accounting procedures specified in Annex C of this Agreement are
followed;
(f) to ensure compliance with the provisions of this Agreement, Petroleum Act and
Regulations.
delegate advised of all activities taking place during the course of Petroleum Operations and
shall provide the delegate with all available information relating to Petroleum Operations as
the Minister or the delegate may reasonably require. Towards this end the delegate and the
Contractor shall meet at regular intervals, but at least once every six (6) months, to review
the progress and results of the Petroleum Operations and to discuss the work programme and
other activities to be undertaken in the ensuing months.
6.4 With respect to the matters to be reviewed pursuant to Article 6.2, should the delegate wish
to make any specific proposals or revisions thereto, the delegate shall so notify the Contractor
specifying its reasons therefor; within reasonable time thereafter the Contractor and the
delegate shall meet and endeavour to agree on the proposals or revisions. The Contractor
'ftvjhall consider and take into account the proposals of the delegate and shall attempt in good
ith to reach agreement on such proposals. If the Contractor and the delegate fail to agree
J”thin 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 delegate and
the Contractor) shall be deemed adopted.
6.5 Nothing herein above provided shall preclude the right of the MinisterAe^d'elegate any
additional function to the delegate or subject to Article 6.1 to delega^f^r^tj^^^tTfafydux
Guyana Geology and Mine? Commission 28
Assistant Commissioner - Pej^oleumDMslon
Signatures--- ’ ' "/ A
1 --- u ---
functions, including those herein contained, to any other agency of Government. A
delegation shall not increase the obligations or liabilities of the Contractor and notice of any
delegation shall be given promptly to the Contractor.
6.6 Any approvals required by the Minister or delegates of the b linister shall not be unreasonably
withheld. If the Contractor requests required approval from the Minister or delegates of the
Minister, such approval shall be deemed as granted if no response is provided within sixty
■(60) days of the request.
6.7 The Minister and the delegate shall, upon request, either provide to the Contractor or assist
the Contractor in obtaining the assistance required for Contractor to fulfill requirements of
the contract including but not limited to the following:
(a) approvals issued by Government agencies or local government institutions which are
required to conduct hydrocarbon operations, including approvals necessary to import
goods and services free from duties and taxes;
(b) approvals for easements and right-of-way to enable Contractors to conduct
operations;
approvals for security for field operations and personnel;
V^\
l \ Permission for entry and exit visas and working permits for Contractor’s employees,
ibcontractors and their dependents;
supply reports, analyses, samples, geological, geophysical and production data
Article 7 - Annual Work Programme and Budget
7.1 Within sixty (60) days after the Effective Date, the Contractor shall prepare and submit to the
Minister in detail a work programme and budget, setting forth the Prospecting Operations,
which the Contractor proposes to carry out (including, as appropriate, any minimum work
obligations to be undertaken pursuant to Article 4) during the remaining portion of the
Calendar Year. In subsequent years no less than one (1) month before the beginning of the
Calendar Year, the Contractor shall prepare and submit to the Minister a work programme
and budget setting forth Petroleum Operations which the Contractor proposes to conduct
during the upcoming Calendar Year.
7.2 The Contractor may, for good cause, amend the details of any work programme or budget
submitted to the Minister pursuant to Article 7.1 provided that:
(a) notice of the details of the reasons for the amendments is given to the Minister;
(b) such amendments shall .not have the effect of reducing the minimum work
obligations undertaken under Article 4 without the prior consent in writing of the
Minister;
30
Article 8 - Discovery and Development
8.1 Where, pursuant to section 30 of the Act, notice has been given to the Minister of a
Discovery in the Contract Area, the Contractor shall forthwith inform the Minister of the
steps it proposes to take te- satisfy the requirements of section 30 (1) (a) (iii) of the Act.
8.2 Where the Contractor, pursuant to section 31 (1) of the Act, has informed the Minister that,
in its opinion, the Discovery is of potential commercial interest, the Contractor shall, as soon
as practicable thereafter, submit, for the consideration of the Minister, its proposals for an
Appraisal Programme to meet the requirements of section 30 (1) (b) of the Act.
8.3 Where an Appraisal Programme has been adopted by the Contractor pursuant to Article 8.2,
the Minister may, on application by the Contractor pursuant to section 31 (2) of the Act,
stating reasons therefor, extend the period within which application may be made by the
Contractor for a Petroleum Production 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 Produc^ ontractor
shall in consultation with GGMC, prepare and implement
r****V»»*. .ua>
| esniN
; Guyana Geology and Mines Commission I r55'viO mus.'otjss ,
31
1 Assistant Commissioner - Petroleum Division
; Signature:
>*te; TA >4
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
GGMC and Contractor shall meet to discuss the application with a view to ensuring that the
requirements of Article 8.4 are met. In the event that the Parties are unable to agree on
amendments to the application to meet such requirements within sixty (60) days from the
of aforesaid application (or such longer period as the Parties shall agree), or where the
ster fails to respond to or act on the aforesaid application within sixty (60) days, the
ractor may refer the matter to a sole expert pursuant to Article 26 for determination
:hin sixty (60) days of appointment of such expert or such other time period as may be
agreed between the Contractor and the Minister.
Where the Minister considers that the aforesaid application has met the requirements of
Article 8.4 he. shall, within sixty (60) days of receipt thereof, so notify the Contractor. In
such event or where in the event of a dispute it is determined by the sole expert pursuant to
Article 26 that the Contractor has made an application which meets the requirements of
Article 8.4, provided the Contractor is not in default under this Agreement, the Minister shall
grant, within sixty (60) days of such notification or determination as the case may be, to
. Contractor, a Petroleum Production Licence (in the Form D of the schedule as specified in
the Regulations) over the area for which the application has been mac
*and Mines Commit"1
SJWtt
i
conditions consistent with this Agreement and the Act and Regulations which will enable the
Contractor to'carry on Petroleum Operations in the Production Area in accordance with the
Development Plan wherein the level of production set shall be consistent with the maximum
efficient rate of production which conforms to sound reservoir engineering principles in
accordance with good international petroleum industry practice.
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
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
Article 9 - Records. Reports and Information: Confidentiality
9.1 Records, Reports and Information
(a) The Contractor shall, at all times while this Agreement is in force, maintain and
submit to the Minister in accordance with the provisions of the Act and the
Regulations, the Petroleum Production Licence and this Agreement, full and accurate
reports, records, returns and accounts of Petroleum Operations in the Contract Area.
(b) All data, well logs, maps, magnetic tapes, cuts of cores and cutting samples and all
other geological and geophysical information obtained by the Contractor in the
course of carrying out Petroleum'Operations hereunder and all geological, technical,
financial and economic reports, studies and analyses generated in relation thereto
(hereinafter referred to as “Petroleum Data”) shall be submitted to the Minister in
accordance with the Regulations.
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 appoirited-represerifatives, upon provi^j ib&wtoi'
Guyana Geology and Mines Commission
i Assistant Commissioner ^-P^roleum DMsion ,
j Signature:---
1
with at least seven (7) days notice, shall be entitled to observe the Petroleum
Operations conducted by the Contractor at his sole cost and expense and at all
reasonable times to inspect all assets, records and data kept by the Contractor relating
to such Petroleum Operations. In the exercise of such rights under this paragraph the
Minister shall not unduly interfere with the Contractor's Petroleum Operations under
this Agreement.
(f) Nothing in this Article shall be construed as requiring the Contractor or any of the
Parties comprising the Contractor to disclose any of its proprietary technology or that
of its Affiliated Companies which is not acquired in the course of Petroleum
Operations under this Agreement.
9.2 Confidentiality
(a) All Petroleum Data, information and reports obtained or prepared by the Contractor
hereunder shall, so long as they relate to any part of the Contract Area, be treated as
• <* *
confidential and each of the Parties undertakes not to publish, reproduce or otherwise
eal with such Petroleum Data or to disclose the same or the contents thereof to any
er person without the consent in writing of the other Parties, such consent not to
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: ^__---
//JOS
(bb) to consultants, professional advisers*.,,,data proc^h^AmiBds/^v..
"***"""*^
; Guyana Geology and Mines Commission 3S / ----\
Assistant Comnfissroner • Petroleum DM*lon
Signature: ±
jWSrjq. 3 .y /
Pate: . v
laboratories and Sub-Contractors in connection with the Petroleum
Operations;
(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;
fee) 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;
(ff) in connection with data trades;
(gg) of data information and reports already known to the Contractor prior
to the Effective Date; or
(hh) of data, information and reports acquired independently from a third
party that represents that it has the right to disseminate such data at
the time it is acquired by the Contractor;
(ii) prevent disclosure pursuant to section 4 of the Act, provided however that
neither the Minister nor Contractor shall disclose Petroleum Data relating to
any area subject to a Licence to a competitor of the Contractor, without the
prior written consent of the other Party; or
(iii) be construed as imposing on any Party any obligati
to any petroleum data, information or report;
Guyana Geology and Mines ColWnls^f generally known to the publi
Assistant Commissioner - Petroleum Division
Signature:
■ Date:
(b) Any petroleum data, information or reports disclosed by the Contractor pursuant to
this Article shall be disclosed on terms which ensure that the data, information or
■ reports aforesaid are treated as confidential by the recipient (except for disclosures
made pursuant to Article 9.2 (a) (i) (dd) and prompt notice of all disclosures shall be
given to the Minister.
p*?:,
V (c) All petroleum data which becomes the sole property of the Minister pursuant to
Article 9.1 (d) shall continue to be treated as confidential by the Contractor for a
L 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
r subject however to Article 9.2 (b). - -------------------------------
| flCfcfeMO ;,,,r
r (d) Where a Licence ceases to be in force with respect to any area, the Contractor shall
f ~ ”* '....... ' " '>.
deliver to the Minister originals of all petroleum data and other information relating
to such area pursuant to regulation 26 of the Regulations provided however that, on
application duly made to him pursuant to regulation 28 of the Regulations, the
Minister shall permit the Contractor to retain copies of petroleum data and
information relating to the Contract Area subject to Article 9.2 (b).
(e) Notwithstanding the provisions of Article 9.1 (d), all the Contractor’s proprietary
technology, except technology for which the cost of development has been approved
37
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 of ten thousand United States of America Dollars(US$ 10,000) in
each year in respect of the Contract Area for the entire Exploration Period and such payments shall
apply to those areas remaining after taking into account any relinquishments
... Geology and Mines Commission
sustant Commissioner * Petroleum Division
ignature:
‘•ntc: A T-€> '•>
] noii^'nfwK-
i wirtvW -i.c-: '■ ' • "•'S'.
1
1. ____________________
I
38
Article 11 - Cost Recovery and Production Sharing
11.1 ■ Subject to the terms and conditions of this Agreement, the Contractor shall bear and pay all
Contract Costs incurred in carrying out Petroleum Operations and shall recover Contract
Costs only from Cost Oil as herein provided.
11.2 All Recoverable Contract Costs incurred by the Contractor shall, subject to the terms and
conditions of any agreement relating to Non-Associated Gas made pursuant to Article 12, be
recovered Rom 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 percent (70%) of the total
production from the Contract Area for such Month excluding any Crude Oil used in
Petroleum Operations or which is lost. Pursuant to Article 13 herein, where the fair market
price for Crude Oil has been valued below US$100 per barrel, the Cost Oil in any month
shall be seventy five percent (75%), all other conditions pertaining to the Article 11.2
remaining the same. “Recoverable Contract Costs” means such costs as the Contractor is
permitted to recover, as from the date they have been incurred, pursi
Annex C.
11.3 To the extent that in any Month, Recoverable Contract Costs exce<
determined in accordance with Article 13, the unrecoverable amo;
forward and, sub tipulated in Article 11.2, shall be recoverable in the
immediately sue td extent not then recovered, in the subsequent
Month or Month
39
11.4 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%). Profit Oil shall be shared
between Government and Contractor for each field in the proportion Contractor forty five
percent (45%) and Minister fifty five percent (55%) whenever, the production rate of Crude
Oil is equal to or exceeds fifty thousand (50,000) barrels of oil per day.
11.5 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.
11.6 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 set out in
Article 11.4.
fo the extent that the actual quantities and costs required to determine Cost Oil and Profit
pihfor the Month in question are not known, Crude Oil sharing shall be calculated on an
basis each Month using the following:
unrecovered Recoverable Contract Cost;
(b) estimated current Recoverable Contract Cost by reference to the agreed
work programme and budget supplemented by any c
information which are accepted by Contractor and
r- ’". . ;ndicfltw?-qf tbc actual position for the Month in quest
Guyana Geology and Mines Commission
40
1
< ---* -■•(e) estimated production for the Month in question;
1 _ ....______ . _______---
........ ““ “ (d).........Crude Oil price from the previous Month calculated.
11.8 Retroactive adjustments shall be made to the Crude Oil entitlements and shall be agreed with
the Minister based on recalculations utilizing ac'ual 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.
r- 11.9 The Contractor shall have the right to use in any Petroleum Operations as much of the
os ,c?£. v...
production as may reasonably be required by it therefor and the quar^jfs
shall be excluded from any calculations of Cost Oil and Profit Oil <£nti^le|
\
r
I Ass,Jtant Cw"(^s/oner vPetmU ?kSl°n 1
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41
Guyana Geology and Mines Commb$k>n
Article 12 - Associated and Non - Associated Gas. Assistant Ccrtimissioner • Petnoltum Division
■ilru......B'M
Ue: LoCF
12.1 Associated Gas
(a) The Associated Gas produced from any Oil Field within the Contract Area shall be
with priority used for the purposes related to the operations of production and
production enhancement of Oil Fields, such as Gas injection, Gas Lifting and power
generation.
(b) Based on the principle of full utilisation of the Associated Gas, and with no
impediment to normal production of Crude Oil, a plan of utilisation of the
Associated Gas shall be included in the Development Plan of each Oil Field. If
there is any excess Associated Gas in the Oil Field after utilisation pursuant to
Article 12.1 (a) the Contractor shall carry out a feasibility study regarding the
utilisation of such excess Associated Gas of such Oil Field. Such feasibility study, if
carried out before submission of the Development Plan of an Oil Field, shall be
included in the Development Plan. In the event that the,Contractor conducts a
further feasibility studybf the utilisation of the excess Associated Gas of such Oil.
.......
Field, such further feasibility .study shall be submitted to the G.GMC for review and
discussion. If the excess' Associated Gas in any Oil Field is utilized, the
construction of facilities for such utilisation and the production of excess Associated
Gas shall be carried out while a Petroleum Production Licence continues in force.
(c) If the 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.
(d) If either Party to the Agreement considers unilaterally that
42
of an Oil Field has commercial value, such Associated Gas may be utilised 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 sole risk and
expense of the Party utilising 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,
the Contractor shall be entitled, but not required, to make further investment to utilise
such excess Associated Gas subject to terms at least as attractive as those established
for Crude Oil in Article 11 including, but not limited to, cost recovery for such
further investment. If the Contractor believes improved terms are necessary, the
Parties shall carry out friendly negotiations in a timely manner to find a new solution
to the utilisation of the said excess Associated Gas and reach an agreement in writing.
Expenses incurred by the Contractor in the production and use of the Associated Gas
an Oil Field as stipulated in Article 12.1 and those incurred in carrying out any
asibility study on the utilisation of the excess Associated Gas shall be charged to
the development cost of the Oil Field.
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 i^^jj^t^ntial^
commercial interest, the Parties shall promptly
1 Guyana Geblogy-and Mines Commission 43 noteMO tnusl
/ Assistant Commissioner -
i Aweffy 1
/ 67 ... ('i’V i - -
r>ate:
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:
(i) The time period between the notice of disco very provided for in section 31(1)
of the Act and the application for grant of a Petroleum Production Licence
shall be extended pursuant to section 31 (2) of the Act, if necessary, to provide
reasonable time to conduct an Appraisal Programme and to develoo a Gas
market.
(ii) 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.
(iii) 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 four (4) 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 unde. with
Contractor. In such case, Contractor shall be entitled
jyana Geology and Mines Commission I
ssistant Commissioner • Petroleum DWWon 44
xgnature: •
Oate: id^ygig.
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
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.
(c) After completion of the Appraisal Programme of a Gas Field, the Contractor shall
submit a report on the Appraisal Programme to GGMC for its review and discussion.
If the Contractor decides that a Gas Field is non - commercial, the corresponding
area covered by the Gas Field may be retained in the Contract .Area during the
^xploration Period. However, at the expiration of the Exploration Period, if the
tractor still considers the said Gas Field non - commercial, the area covered by
said Gas Field shall be excluded from the Contract Area. With respect to a Gas
ield 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 Explor^i^krSr^^Ax
hereunder. In case the time necessary for the market to develop/A
// • - p--- ' J'Mirffj r>ric
; CuFar’» Geology and Mines Commission 45 vvlO c
; A»«tant Comn^sione^^0|n
ignature:
'atf
consuming facilities to be constructed for the Gas Field exceeds such extended period
Contractor shall then have the right to request from the Minister a grant of further
extended period.
Prior to expiration of the Exploration Period, if the Parties agree that any commercial
Gas Field needs to be reappraised because of some favourable factors, the Contractor
shall work out and submit a new evaluation report on the Gas Field and submit it to
the GGMC for its review pursuant to Article 6.4 and any expenses incurred in doing
so shall be cost recoverable.
(d) ' If the Contractor retains a Gas Field beyond the expiration of the Exploration Period
pursuant to Article 12.2 (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 Fifty Five Thousand
United States Dollars (US$55,000). 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 such year.
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 Min
. Guyana Geology and Mines Commission 46
1 Date: -u>is
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 utilisation projects and Contractor
shall have the right to dispose of the liquids or products therefrom. The Contractor
shall have the right to process Natural Gas for recovery of the liquids contained
therein and such liquids sold shall be treated as Crude Oil. The Parties shall carry out
friendly negotiations to reach 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.
^D^)^y>JTie Contractor shall have the right to use Natural Gas, both Associated Gas and Non-
, v A"---'---N-’/rN,
VVoV
■t / _ ^ss^ciated Gas, as may ^&-re^ir®d^r Oil Field and Gas Field operations, including
iht to re-inje^[j§£ :e and enhanced recovery without charge.
royalty.
I <*uyan, Gooluj, and Mines Commit
;.. .:H‘
•NT- Nw
X . -'v. - '■ "’ate:
47
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:
(a) 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
ijAV. -v-> \ \sl
Y5^\ shall be determined in respect of production during that Calendar Month. It is
nderstood that production from different Fields may be of differing quality arid that
■k J separate average prices may accordingly be determined for any Calendar Month in
respect of production from each Field;
(b) the prices aforesaid shall be determined as follows:
(i) in the event that fifty percent (50%) or more of the total volume of sales by
the Contractor during the Calendar Month of Crude Oil 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;
(ii) in the event that less than fifty percent (50%) of the total volume of sales by
the Contractor during the Calendar Month of Crude Oil 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^kurisjtbpE^i^qU-.,
I noiirirnrn
| r.okivK’* (flu average of:. ^
,3uyanaG66logyand Hines Commission 48
1 Assistant Commissioner - Petroleum DWWon
Signature: ■
■ ... T£1X
(aa) The simple arithmetic average price actually realised in the Third
Party Sales during the Calendar Month of such Crude Oil produced
hereunder, if any, calculated by dividing the total receipts from all
such sales calculated FOB at the Delivery Point by the total number
of barrels of Crude Oil sold in such sales from such Field; and
(bb) The simple arithmetic average price per barrel at which one or more
crude oils of similar quality to the Crude Oil are being sold, such
price being determined by calculating the average for the Month in
which production takes place of the mean of the high and low FOB
price or prices for each day of those crude oils as quoted in Platts
Crude Oil Market Wire daily publication. In the event that Platt's
ceases to be published or is not published for a period of thirty (30)
consecutive days then the Parties shall agree on an appropriate
alternative publication.
In determining the final price, account shall be taken of any
differences between the Crude Oil and the crude oils quoted in Platt's,
for quality, API gravity, sulphur, pour point, product yield as well as
differences in quantity, delivery time, payment and other contract
terms to the extent known. Allowance will also be made to take
account of the market area into which the Crude Oil is sold should it
be different from the area used for Platt's.
The selected crude oils will be agreed between Contractor and the
)
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.
(iii) all such prices will be adjusted to FOB Delivery Point.
(iv) 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:
(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.
13.2 Contractor shall be responsible for determining the relevant prices in accordance with this
Article. The calculation, basis of calculation and the price arrived at, shall be supplied to the
Minister and shall be subjected to agreement by the Minister before it is finally determined.
Pending final determination the last established average Crude Oil price shall be used.
13.3 During the first Calendar Y ear of production fror
Minister will meet in order to establish a provi
Signatures
tes
appr°priate mechanism for the purposes of giving effect to Article 13.1 (b)(ii) above. This
selection will be reviewed annually and modified if necessary.
13.4 In the event of any difference or dispute between the Contractor and the Minister
concerning selection of the crude oils, the calculation or the basis of calculation of the prices
and the piices arrived at or generally about the manner in which the prices are determined
according to the provisions of this Article, the matter or matters in issue shall finally be
resolved by a sole expert appointed pursuant to Article 26,3.
13.5 For the purposes of this Article, in determining the “quality” of a Crude Oil regard shall be
given to all relevant characteristics inp-lu mited to gravity, sulphur and metal
content, pour point and product yis
■ Guyana Geology and Mines Commission
I Assistant Commissioner • Petroleum Division
| Signature: ---,/irlr.
1 Date ipry
51 | aajniM bn* X20l: A) msyuD
| -w......
-----------------„ .....
Article 14 - Disposal of Production
14.1 Each of the Parties shall have the right to take in kind at the Delivery Point and separately
dispose of its share of the total quantities of production available under this Agreement. The
Contractor shall have the right to use as much production as may be needed in any Petroleum
Operations within the Contract Area and also within the transportation and terminal system.
In the event of third party usage of the transportation terminal systems the quantities so used
or lost outside the Contract Area shall be proportionate to aggregate use of that transportation
and terminal system. All quantities so used or lost shall be excluded from any calculations of
entitlement pursuant to Article 11. The quantity of production to which the 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.
14.2 Within twelve (12) months after the Minister's approval of a Development Plan, or within a
later period as may be agreed between the Parties but in any event no longer than three (3)
Tf ^months before the first scheduled lifting of “Crude Oil,' the’Contractor shall propose to the
.:> . ■- \ Minister off taking procedures to govern the method whereby the Parties will nominate and
: 1 \ \ f...........
lift/their respective shares of Crude Oil. The details of such procedures shall be discussed
d agreed upon between Minister and Contractor. The major principles of such procedures
shall include the following:
(a) Lifting shall be carried out so as to avoid interference with Petroleum Operations.
(b) In the event that any Party shall find itself unable for any reason to lift such quantities
of Crude Oil as are to be lifted in accordance with procedures it shall
the other Parties to that effect. Such procedures shall include
Guyana Geology arid Mines Commission 52
’ Assistant Commissioner - DWWon
Signature:
» a*
Parties may agree, to prevent a Party from delaying the lifting of any quantities of
Crude Oil not so lifted, to a later period.
(c) In the absence of any agreement to. the contrary between the Parties, the Contractor
and the Minister shall share in each type of grade of Crude Oil in proportion to their
respective Lifting Entitlement.
f
l. 14.3 The Contractor shall, if requested by the Minister, use reasonable efforts to market abroad on
I competitive terms all or part of the Minister's Lifting Entitlement subject to payment by
r Minister of costs normally borne by a seller in such transactions and on other .terms to be
v_ agreed including an agreed marketing fee in respect thereof. The Minister shall provide the
Contractor with at least six (6) months notice before changing between receiving payments
in kind as provided under Article 14.1 and sqekmg;;the Contractor tq rnarket the Minister’s
--- f
Lifting Entitlement under this Article. { - .........
L 14.4 Subj ect 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
L_ Agreement free of any duty, tax or o ther 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 notification
will apply, as these relate to export destinations. The Contractor agrees to
laws, regulations, orders, directives and notifications whi
its Affiliated
r Companies engaged in Petroleum Operations in Guyj
L
53
| Guyana Geology and Hines Commission
r Assistant G onvfnisiioner - Petrol leum Division
. Signature! r ■
'TAi^i r i no i "5
In connection with the above, the Minister shall concurrently with the Effective Date and
thereafter from time to time advise Contractor of such 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 and /or deliver Petroleum to third parties in the
United States of America, Brazil and Trinidad and Tobago. Contractor's terms of sale to
third parties shall contain a stipulation that the regulations, orders, directives and
notifications as set forth in .Article 14.5
shall apply.
Guyana Geology and Mines Commission
Assistant Comnmssioner - Petroleum Division
Signature:
Date:
i
J
... 1
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, value-added 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) rent 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;
(f) stamp duties, registration fees, licence fees and any other tax, duty, fee or other
impost of a minor nature.
15.2 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”
Alai
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.
15.4 The Minister hereby agrees:
(a) that a sum equivalent to the tax assessed pursuant to Article 15.2 and 15.3 will be
paid by the Minister to the Commissioner General, Guyana Revenue Authority on
behalf of the Contractor and that the amount of such sum will be considered income
of the Contractor; and
that the appropriate portion of the Government's share of Profit Oil delivered in
accordance with the provisions of this Agreement shall be accepted by the Minister
| las payment in full by the Contractor of Contractor's share of each of the following
!;> 4 / * /
J levies, whatsoever the applicable rate of such levies may be, which the Minister shall
then pay on behalf of the Contractor under Article 15.4 (a) to the Commissioner
General, Guyana Revenue Authority:
(i) the share of royalty -payable by Contractor pursuant to Article 15.6;
(u) 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 othemlev^^rrcharge on
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 to be
submitted by the Minister to the Commissioner General, Guyana Revenue Authority so the
Minister can pay income tax on behalf of the Contractor as provided under Article 15.4 fa).
On such returns, the Minister shall note that he is paying the income taxes on behalf of the
Contractor, so that the Commissioner General, Guyana Revenue Authority can properly
prepare the receipts required under this Article 15.5. Within one hundred and eighty (180)
days following the end of each year of assessment, the Minister shall furnish to Contractor
■ *1,
proper tax certificates in Contractor's name from the Commissioner General, Guyana
Revenue Authority evidencing the payment of the Contractor's income tax under the Income
Tax Act and corporation tax under the Corporation Tax Act. Such certificates shall state the
amount of tax paid and other particulars customary for such certificates.
15.6 The Government's share of Profit Oil specified in Article 11 includes royi
Contractor at the rate of one percent (l%) of Crude Oil produced and s
the Minister, pursuant to Article 14 of his share of Profit Oil equival
constitute payment of such royalty in kind. Within one hundred and
following the end of each year of assessment receipts evidencing payment
| Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
TPPROVED
Signature: . -Of \
J
1
royalty shall be furnished by the Minister to the Contractor stating the amount and other -1
particulars customary for such receipts. ~j
15.7 Subject to the conditions of section 49 of the Act, the Minister may remit in whole or in part,
or defer payment of any royalties payable by Contractor.
15.8 Nothing in this Agreement shall be construed to place an obligation on the Government to
file a tax return declaring its share, of production or profit share or to regard such profit share
as income within the meaning of section 5 of the Income Tax Act (Cap 81:01) or section 4 of
the Corporation Tax Act (Cap 81:03)
15.9 The Minister hereby agrees that the Contractor shall be exempted from the Property Tax Act
pursuant to section 51 of the Act and any other act which amends or replaces in part or in
whole the Property.Tax Act.
J
inister agrees that for the duration of the Exploration Period, and for any area within
ontract Area where exploration activity is in progress, the provisions of section 10(b) of
Corporation Tax Act (Cap 81:03) shall not apply to the Contractor, with respect to any J
payments made any Affiliated Companies or Sub-Contractors. The Affiliated Companies or
Sub-Contractor shall, however, be subject to withholding tax in accordance with 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.
be liable to pay personal income tax in Guyana on income earned in Guyana. Guyana
(represented herein by the Minister) shall cause the proper authorities to issue appropriate tax
certificates to expatriate employees when required.
(i) if an expatriate employee is liable to pay income tax in Guyana on income earned in
Guyana, such expatriate employee shall pay such income tax at a rate equal to the
current income tax rate of Guyana.
15.12 An Order shall be made giving effect to theprf^ cle in statutory form and
ZdS,
language as specified in section 51 ofthe#\c
Guyana Geology and Mines Commission
Assistant Commissioner - Petr< Petroleum Division
Signature: ---X
Date:
Article 16 - Contracts and Assignments
6.1 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 Contra
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division nouAurn
noiitviO
60
Article 17 - Domestic Supply 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,
■ <0 -■■■ ’A:
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's Lifting
Entitlement the proportion of the Crude Oil requirements of Guyana that the quantity
produced from the Contract Area bears to the total production at the time in Guyana to the
extent that such requirement is not satisfied from any.eontractentered into prior to the date of
' ‘ -----------
< floi;*'' «n t .......
enceinent of production from the Contract Area. For the purpose of this paragraph, the
4 ** " ............ , , ;
Crude Oil requirements of Guyana” means the amount by which, in any Year,
-mu -n._
emand exceeds the Minister's total entitlement to all Crude Oil produced in
e Contractor shall give the Minister notice on or prior to April 1 of the Calendar
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 unlej^
61
\ / /
x v
V
agreed. Notwithstanding the foregoing the Contractor shall have the right to supply the total
amount calculated pursuant to the foregoing provisions.
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.
1 7.4 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.
12.5 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 Contractor
Guyana Geology and Mines Commission
Assistant Commfrlloner • Petroleum DWiskm
Signature: X
r--- ^ ±
Article 18 - Guyana Resources
18.1 In the conduct of Petroleum Operations pursuant to this Agreement the Contractor shall
require that the Operator give preference to:
(a) the purchase of Guyanese goods and materials, provided that such goods and
materials are available on a timely basis of the quality and in the quantity required by
Operator at competitive prices; and
(b) the employment of Guyanese Sub-Contractors in so far as they satisfy the Operator's
financial and technical requirements and meet the requirements of Article 18.1 (a).
18.2 The Contractor shall establish appropriate tender procedures for the acquisition of goods,
materials and services which shall ensure that Guyanese suppliers and Sub-Contractors are
given adequate opportunity to compete for the supply of goods and services.
18.3 Within ninety (90) days after the end of each Calendar Y ear the Contractor shall provide the
Article 19 - Employment and Training
19.1 Subject to the requirements of any law relating to immigration, Government shall provide the
necessary work permits and other approvals required by the Contractor for employment of
Expatriate Employees in Guyana for the purpose of Petroleum Operations.
19.2 Without prejudice to the right of the Contractor to select employees and determine the
number thereof in the conduct of Petroleum Operations, the Contractor shall, to the
maximum extent practicable, employ, require the Operator to 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 thereafter
the Contractor shall make available to GGMC the amount of five thousand United States
Dollars (US$5,,000) for one or more of the following purposes mentioned in Article 19.3 (a-
o provide Guyanese personnel nominated by GGMC with on-the-job training in
ontractor's operations in Guyana and overseas and/or practical training at
institutions abroad, particularly in the areas of logistical planning for undertaking
Petroleum Operations, seismic acquisition and interpretation, economic analysis,
petroleum accounting and contract administration;
(b) to send qualified Guyanese personnel selected by GGMC on courses not exceeding
one year at universities, colleges or other training institutions mutually^;
Guyana Geology and Mines Commission 64
Assistant Commissioner -J’etroleym Division
------
Signature:-
--- sA 1 '
Contractor and GGMC;
(c) to send Guyanese personnel selected by GGMC to conferences and seminars related
to the petroleum industry; •
(d) to purchase for GGMC advanced technical books, professioxi^k^'^^
scientific instrument- or other equipment required by GGMC./C^
Guyana Geology and Mines Commission
Assistant Commissioner >£etroleum Division
Signature:
Date
r ---
65 ! fs-i>h<5ry??fK*D
1 trir - -
\
I
g‘ ... w ^
f
ii
i
Article 20 - Mights to Assets and Insurance
20.1 Rights to Assets
(a) The Contractor shall have the right to use free of charge assets previously installed by
the Contractor in relinquished areas which are required for its operations in the
remaining portion of the Contract Area provided that in the event of re-licencing of
the relinquished area, such licence shall exclude the aforesaid assets.
(b) Subject to Article 20.1 (cj) .upon expiry dr termination, of this Agreement in
accordance with the provisions hereof, the Contractor shall upon,.notification by
*';QGMC pursuant to Article - . r . Ar ' .. id.:
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 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 noL-been~hjll}
recovered the provisions of Article 20.1 (b)(iii) shall apndSfef/"^
\ Guyana Qeology and Mines Commission 66
] Assistant Commissioner - Petroleum Division
Signature;1
(iii) sell to the Minister any other assets owned by the Contractor or Operator and
used or employed by the Contractor or Operator in the Contract Area or
elsewhere in Guyana in connection with Petroleum Operations at a price
equivalent to the unrecoverable 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;
equipment and other assets rented or leased by Contractor and imported in
Guyana for use in Petroleum Operations and subsequently exported
therefrom;
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 or Operator.
(d) The Contractor shall notify the Minister of all assets acquired as provided in section 4
of Annex C to this Agreement.
(i) At least six (6) Calendar Months before expiry of thete:
67
Guyana Geology and Mines Commission
Assistant CommissionerMPetroleum Division
Signatures LkL
rv.A
within three (3) Calendar Months following notice of termination of this
Agreement or promptly following cancellation of all Licences, GGMC shall
notify the Contractor of the assets to be delivered or sold to the Government,
(ii) Subject to the terms and the provisions of this Article, the Contractor shall
not, within one (1) year of the date upon which it estimates that termination
of this Agreement will occur, remove from the Contract Area or sell any
assets of a fixed or permanent nature which might be deliverable to the
Government under this Article without the consent of the Minister, such
consent not to be unreasonably withheld.
Abandonment Programme and Budget
(aa) Within sixty (60) days after the expiration of the term of this
Agreement or the sooner relinquishment of some or all of the
Contract Area, the Contractor shall carry out to the Minister’s
satisfaction an abandonment programme agreed with the Minister for
all installations and pipelines provided by Contractor under this
Agreement that the Minister elects not to have delivered up to him in
accordance with Article 20.1(b). With respect to the area being
relinquished and/or facilities thereon, such abandonment programme
shall comply with and be limited to internationally accepted standards
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 20.1 (d)(iii)(bb)
and may approve or modify or impose conditions thereon. Before
modifying or imposing conditions on the proposal, the Minister shall
notify the Contractor of the proposed modification or conditions and
give the Contractor the opportunity to make written representations
within sixty (60) days thereafter about the proposed modifications or
conditions. After taking into consideration such representations the
Minister and the Contractor shall make their best efforts to mutually
agree on the proposed modifications or conditions of the
abandonment programme and budget. In the event that the Minister
and Contractor cannot mutually agree on the proposed abandonment
programme and budget, either Party may by written notice to the
other Party propose that the dispute be referred for determination in
accordance with the provisions of Article 26.
(dd) In the event that the Contractor does not present a timely proposal to
thirty (30) days notice to the Contractor of his intention to do so, may
prepare an abandonment programme and budget for the Contract Area
if the Contractor does not present a proposal by the end of the thirty
(30) day period. When the Minister has so prepared the abandonment
programme and budget, it shall have the same effect as if it
had been submitted by the Contractor and approved by the Minister.
) J (ee) Contractor shall have the right on an annual basis to propose a revised
abandonment programme and budget. Such proposal shall be subject
to the approval process in Article 20.1(d) (iii) (cc). Any revisions to
the abandonment programme and budget shall result in a revision to
the guarantee referred to in Article 20.1(d) (iii) (hh).
(ff) All funds required to carry out the approved abandonment programme
shall be made available by Contractor when the costs for
abandonment are incurred.
(gg) All costs included in the approved abandonment programme and
budget shall be recoverable as operating costs on a unit of production
basis commencing during the period when the abandonment
programme and budget is approved. The amount to be recovered in a
respective period shall be calculated by dividing the apnmv<
,/^qSR
abandonment budget by the estimated units of prb
produced and sold by the Contractor between ff£
[ Guyana Geology and Mines Commission ;
Assistant .Commissioner - Petroleum Division
Commissioner - Peti
Signature e: ---
Date: \s> \ "S
Minister’s approval and the anticipated date of abandonment and
multiplying the result by the units produced in the period.
(hh) Contractor shall deliver to the Minister within seven (7) days after the
date the abandonment programme and budget are approved an
undertaking from Contractor’s immediate parent company stating that
such parent company shall ensure provision of financial and technical
resources necessary to conduct the approved abandonment
programme. The amount of the financial undertaking shall be equal
to the amount recovered under Article 20.1(d)(iii)(gg) less any
amounts spent under the approved abandonment programme.
(ii) Notwithstanding the provisions of Article 20.1 (d)(iii)(ff), in the event
the Minister elects to have all or a portion of the facilities delivered
up to him in accordance with Article 20.1 (b), the Contractor shall pay
the Minister at the time of transfer the amounts stipulated in the 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,
to Article 20.1 (c), in the event
(iv) Subject
V-.: acquires any assets pursuant to this Article,
71
; Guyana and Mines Commission
> Assistant mssioner -.£eqroieum Division
I :
•: Signal;
assume all liabilities, with respect to such assets, ansing from and
after the date of acquisition and shall not direct the Contractor to
remove or abandon any such assets pursuant to regulation 9 (l)(a) of
the Regulations. The Government shall indemnify and hold
Contractor harmless for any and all costs and claims which may arise
from the use or abandonment of any asset from and after the date of
acquisition by the Government.
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) loss or damage to all assets used in Petroleum Operations;
(ii) pollution caused in the course of Petroleum Operations for which the
Contractor or the Operator may be held responsible;
(iii) loss or damage to property or bodily injury suffered by a:
Guyana baology and Mines Commission 72
Assistant Conynlssipner - Petroleum Division
C-----
the course of Petroleum Operations for which the Contractor may be
liable to provide an indemnity pursuant to Article 2.4;
(iv) the Contractor's and/or Operator's liability to its employees engaged in
Petroleum Operations.
To the extent permitted by applicable laws, mies and regulations, such insurance may
be provided through Contractor’s affiliate insurance company.
(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
temational petroleum industry in accordance with good oil fief
^ ^ ,y
?oi«h'iu ° j;71
73 3|"-?
Article 21 - Import Duties
-ll The Contractor, 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 rhe said
categories have been certified by the Chief Inspector to be for use solely in carrying out
Petroleum Operations. The Contractor shall give prior notification to the Minister of
Sub-Contractors engaged in Petroleum Operations.
Subj ect to Article 21.1, and for as long as this Petroleum Agreement remains in force
x \ the Contractor and Sub-Contractors engaged in Petroleum Operations hereimder shall
be required to pay to the relevant authority a ten percent (10%) consumption tax on
j •>* :.-‘I::f- . j: .. :"
any fuel imports, where such, imports have been certified by the Chief Inspector to be
i . - o *'*. v ‘ 5 “v . !
used solely in carrying out Petroleum Operations in any area within the Contract Area.
21.2 Subject to Article 20, any of the items imported into Guyana may, if no longer required for
Petroleum Operations hereunder, be freely exported at any time by the importing party,
without the payment of any export duty or impost; provided, however, that on the sale or
transfer by the importer of any such item to any person in Guyana (other than the
Government) import duty shall be payable by the importer on the value thereof at the date of
such sale or transfer as determined by the Customs and Excise Depa
with their applicable rules.
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division 74
21.3 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
Minister ^ \
with the
fyana Geology and MmesCommlss}^
Assistant Con,i^jone^jwofeum 0J^ I
Signature;'---/' '. |
~>ate: 2£±J>
Article 22 - Foreign Exchange Control
11 i The Contractor shall, during the term of this Agreement have the right:
LLA
(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
x production payments but no payments of principal or interest in respect thereof shall
e made from any source in Guyana other than the bank accounts referred to in
^Article 22.T (c); / ;• l ie \
to open and.maintain bank accounts denominated in Guyanese dollars and/or United
States dollars in Guyana and freely dispose of the sums deposited therein without'any
restriction; provided the said accounts are credited only with sums deposited in
foreign currency or with the proceeds of the sale of foreign currency being credits
relating to or derived from Petroleum Operations;
(d) to open and maintain bank accounts in any foreign currency outside Guyana which
may be credited without restriction and freely dispose of any sums deposited therein
without restriction and without any obligation to convert into Guyana currency any
part of the said amounts, save that such accounts shall not be credited with the
proceeds of the sale of any Guyanese currency without the consent of the Bank of
Guyana;
(e) to purchase and, with the approval of the Bank of Guyana, to sell Guwi
Guyana Geology and Mines Commission 76
Assistant Commissioner - Petroleum Division
Signature:
n.,.: ttW ytQ'i
through the authorized banks, without discrimination, at the rate of exchange
determined by the Bank of Guyana for authorized banks at the time of purchase or
sale.
22.2 Expatriate Employees of the Contractor or of Affiliated Companies and of Sub-Contractors
engaged in Petroleum Operations shall not be subjected to all Exchange Control Regulations
that may be in effect from time to time. Expatriate Employees of the Contractor and Sub-
Contractors shall be entitled to remit freely abroad any portion of their salaries paid in
Guyana and any investment income that may be earned on the portion of their salaries paid in
Guyana.
22.3 Where Contractor, Affiliated Company or Sub-Contractor by notice in writing to the
Commissioner General, Guyana Revenue Authority has guaranteed the full and proper
discharge by an Expatriate Employee engaged in Petroleum Operations of his liability to
r income tax under the laws of Guyana, that Expatriate Employee shall be entitled to receive
i
r
1
St
L-j
77
i
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
• to audit or cause to be audited the books of
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
Signature! a
T7^"----
78
Article 24 - Force Maieure
24.1 Any non-performance or delay in performance by any Party hereto or any of its obligations
under this Agreement or in fulfilling any condition of any Licence granted to such Party or in
meeting any requirement of the Act or Regulations and any Licence issued thereunder, shall,
except for the payment of monies due by Government to Contractor or monies due to
Government under section 43 (4) of the Act (unless such failure to pay is prevented by any
action of the Government), not be a breach of this Agreement, the Licence or the Act and
Regulations if and to the extent that such non-performance or delay 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 asj^ ‘TskArticle
14.5).
24.3 Where any Party is claiming suspension of its obligations on accord
Parties in writin8 of 1116 000
| (104? M 79
1
t‘ Guyana Geology and Mines Commission \ :-*r
j Assistant Commissioner -j^troleum Division
particulars of the Force Majeure and obligations affected. Each Party shall promptly notify
the other Parties as soon as the Force Majeure has been removed or no longer prevents it
from carrying out its obligations hereunder:
24.4 Where a Party is prevented from exercising any rights or performing any obligations under
this Agreement due to a Force Maj eure, the Minister hereby agrees pursuant to section 43 (3)
of the Act, subject to the proviso therein, that a period of additional time necessary for
restoration of damages caused during a Force Majeure delay shall be added to the time
-g o A ""--^allowed under this Agreement for the performance of such obligation and for the
.S' ^ Sr
ormance of any obligation or the exercise of any right dependent thereon and to the term
Licence issued pursuant to this Agreement. The Contractor shall have the option of
nating this Agreement without any further obligation if Force Majeure exceeds one (1)
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 i Ic&Mqieure due to any order, regulation or written
directive of the Govemm/Str Government’s performance of its obligations
/ J
under this Agreement.
Guyana Geolojgy and Mines Commission
Assistant Comrrifssioner - Petroleum Division
80 Signature:
-.......
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:
the assignment or transfer will not adversely affect the performance or obligations
j ..... ;
jder this Agreement; j •«-*< 1
* i
assignment is not contrary to the interests .of.Guyana; or--.*- -..: ---. _;r i
ect 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 this Agreement or any Licence issued pursuant to this
/A?
Agreement, hC
! Guyana Geology and Mines Commbsion
81 'tZ/Xh I Assistant Commissioner- Petroleum Division
S. Ai*-
\ -■« \
i Date: .
to An application for assignment or transfer of a Licence shall be made in accordance with Form
E of the schedule specified in the Regulations. The applicant shall submit such additional
information relating to the intended assignee which the Minister may reasonably require to
enable him to dispose of the application.
Guyana Geology and Mines Commission
Assistant Comrrflssioner - Petroleum Division
Signature:
Date:
Article 26 - Sole Expert. Conciliation and Arbitration
26. i The Parties shall use their best efforts to settle amicably all disputes arising put.of orf elating
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 writtenmotice horn 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 irrevi
j'
__ 83
; Guyana Geology and Mines Commission \ ■ r-
i Assistant Confrnissioner ^Pfitroleum Division ,ov.
; Signature;,rji i,,
--'7xmwrr
' Date: M 'z£lh2:---
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 rendered in an arbitration thereunder. Without prejudice to the
,^.\enerality of the foregoing, the waiver of immunity shall include immunity from service of
ocess 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 ICSID 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 ICSID’s jurisdiction, either Party may request arbitration of the dispute
before three arbitrators pursuant to the Arbitration Rules of the United Nations Commission
on International Trade Law (UNCITRAL). The American Arbitration Association shall
administer the arbitration under the UNCITRAL Arbitration Rules and shall act as the
appointing authority when the UNCITRAL Arbitration Rules call for an appo.
Guyana Geology and Mines Commission 84
Assistant Commissioner • Petroleum Division
Signature:-
Pate:
26.7 If the Secretary-General of ICSID refuses to register a request for conciliation and neither
party has requested arbitration under the UNCITRAL Arbitration Rules pursuant to Article
26.6 above, either Party may request conciliation pursuant to the UNCITRAL Conciliation
Rules prior to submitting the dispute to arbitration.
26.8 Conciliation or arbitration proceedings pursuant
pouK'iO /nusiowH • •• •nc
Washington DC, United States of America, or Port-of- Spain, Trinidad, and conducted in the
English language. The Parties shall select the locatiopfr om 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
ICSID 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 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 bindj
. / a
- shall be enforceable in any court of competent jurisdiction. M
/ A/
| Guyana Geology and Mines Commission
Assistant Coi mrbissioner - Petr, ;oleum Division 85
f Signature
11«: M2
1
Article 27 - Applicable Law
27.1 This Agreement shall be governed by, interpretedaniGes^med in accordance with the laws
]
of the Cooperative Republic of Guyana.
3
\ -sf \■w/'kj ]
Guyana Geology and Mines Commission \ /
Assistant CcHfTmlssjonar - Petroleum Division
Signature:
1
Date:
/■ ]
n
Article 28 - Protection of the Environment
28.1 In accordance with the Environmental Protection Act, 1996, the Contractor shall obtain an
environmental authorization as required from the Environmental Protection Agency and
comply with the provisions of that Environmental Protection Act in relation to any activity of
this Agreement that is gdvemed by that Environmental Protection Act.
28.2 The Contractor is precluded from initiating any exploration or development activity on those
areas outside of the Contract Area which the Environmental Protection Agency may
determine to be sensitive or protected.
28.3
Contractor shall take necessary and adequate precautions;, in accordance!-with'good
international petroleum industry practice, against pollution and the
environment and the living resources of the rivers and sea.
28.4 If the Contractor's failure to comply with the provisions of Article 28.1 results in pollution or
damage to the environment, riverain or marine life or otherwise, the Contractor shall take all
reasonable measures in accordance with good international petroleum industry practice to
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 28.2 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
."T-*
88
! ' '
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-effeetsO'longns-the Gontractor.continues to
1 flwfaimmoD ftiy.M bus ysob :,0 zasyiiO f
hold any of the said Licences.
29.2. Should any issue arise between the Parties as to whether the Contractor is in default and such
- issue cannot be amicably settled by consultation between the Parties and a dispute thereon is
, referred for resolution pursuant to Article 26, this Agreement and the said Licences shall
continue in force pending resolution of such dispute.
29.3 Pursuant to section 42 of the Act, the Minister shall not cancel a Licence on the basis of
default unless the Minister has, by notice served on the licensee, given not less than thirty
(30) days notice of such intention and the basis of default. In the notice the Minister shall
specify a reasonable date before which the licensee may submit a written response or remedy
the default.
29.4 On termination of this Agreement, or cancellation of any Licence as aforesaid, the rights and
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
mighthave beQM0jftn^TCsa>OT'W^inued against a Party may be commenced or continued
.......WJ&Swx
against it.
Guyana Geology and Mines Commission
Assistant Commissioner ■ Petroleum Division
Signature:
Date: -tflbU 4- tai ^
90
Article 30 - Effective Date
The Effective. Date shall be the date on which this Agreement is duly signed.
30-1
Guyana Geot and Mines Commission
Assistant issioner - Petroleum Division
S7--
Signature:
Date:
A'dV
f :sos
91
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 erms and
conditions of this Agreement by both Parties. Both Parties undertake not to take any action
inconsistent with the terms and condition's of the Agreement
31.2 This Agreement shall not be amended or modified in any respect except by written
agreement entered into by all the Parties which shall state the date upon which the
amendment or modification shall become effective.
51.3 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.
\"Tpe headings of this Agreement are for convenience of reference only and shall not be taken
Ksi
o account in interpreting the terms of this Agreement.
gZaA reference to the singular in this Agreement includes a reference to the plural and vice
versa.
31.6 The provisions of this Agreement shall inure to the benefit of and be binding upon the Parties
and their permitted assignees and successors in interest.
31.7 No waiver by any Party of any one or more obligations or defaults by any other
construed as a waiver of anv other obligations or defaults whether of a lik
Guyana Geology and Mines Commission 92
Assistant Commissionef- Petroteym Division
Signature^,
i
t
character.
f
v_ 31.8 This Agreement supersedes and replaces any previous Agreement or understanding between
i
L
1 Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
' Signature: ■■■ < ■ ■ » 7"
r Date:
I
b->
93
Article 12 - Stability of Agreement
32.1 Government shall not, following 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 any
level of the Government promulgates new or amended laws, decrees 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
94
Article 33 - Notices
33.1 All notices and other communications to be givemunder this Agreement shall be deemed to
have been made properly if delivered in person in writing, mailed with charges prepaid or
sent by facsimile, by one Party to the other at their respective addresses in Guyana as set
forth below and copied to their overseas addresses. Any such notice or communication given
as aforesaid shall be deemed to have been given and received at the time of delivery (if
delivered by hand or by courier) or at the time of receipt (if transmitted by facsimile):
The Minister Responsible for Petroleum
c/o Guyana Geology And Mines Commission
Upper Brickdam, Stabroek,
P.O. BOX 1028, Georgetown,
GUYANA.
Attention: Commissioner, GGMC
Facsimile: 592-225-3047
The Company Secretary/Director
NAJBI OIL AND GAS INC.
c/o Lot 63 Brickdam, Stabroek, Georgetown,
GUYANA
Attention: Rafael S. Nabi
Facsimile: 592-227-1095
Geology and Mines Commission
|. rt-. 1 - . . -■ :?Af . Atar»t Commissioner - Petroleum DWhion
i $
, iqK> j rture:
? inn
_ ^ ^ m _ .......... _ . \ |
95
Any Party may, by notice as provided hereunder to the other Parties and GGMC change its
address and other particulars for notice purposes.
IN WITNESS wnereoi tne ranies nave caused meir auiy aurnorised. represer
at the City of Georgetown, in the Republic of Guyana in the presence
first above written.
Signed by The Minister Responsible For Petroleum
Representing the Government of the Republic of GuyanX. *'
\
His Excellency DONALD RAMOTAJR
President of the Republic of Guyana.
Signed by Company Secretary/Director of NABI OIL
AND GAS INC.
axy Sefcretary/Directbr
S. Na|bi [
Guyana Geology and Mines Commission
Assistant Corhmissioner -.Petroleum Division
A TRUE COPY of the ordinal which Signature: -
was registered in the Deeds Registry of Date: . ---M Jvw
Georgetown, Oe'merara, Guyana on the
Day 96
rio,i NN-
r
ANNEX A
DESCRIPTION OF PROSPECTING AREA _
L.
Description of area to be granted under Petroleum Prospecting Licence pursuant to Article 3 of the
Petroleum Agreement.
The area comprises approximately 2592 sq. km described herein consisting of graticular blocks identified
herein shown on Block Reference Map attached.
Latitude and Longitude Measurements are North and West respectively.
POINT NO. LATITUDE LONGITUDE
1 06° 50.00' N 58° 10.00'W
2 06° 50.00’ N 57° 55.00'W
3 06° 45.00' N 57° 55.00' W
4 06° 45.00' N 57° 50.00' W
U 5 06° 40.00' N 57° 50.00’W
6 06° 40.00’ N 57° 45.00' W
7 06° 35.00’ N 57° 45.00' W
8 06° 35:00'N 57° 40.00' W
9 06° 30.00' N 57° 40.00' W
10 06° 30.00' N 57° 35.00'W
11 06° 20.00' N 57° 35.00' W
■ :f 12 06° 20.00' N 58° 10.00 'W
- AxTji
k
n j Guyana Geology and Mines Commission
; Asstetant ComrrvrJsfoner - Petroleum Div.i ion
t Signature: s:---_
r
* Date: 'zoi y
i
DESCRIPTION OF PROSPECTING AREA (CONT’D)
The following five (5) minute by five (5) minute square graticular blocks' describe the area. These blocks
are shown on the Map attached
Block W Full blocks35, 36, 47, 48, 59, 60, 71,72,83, 84,95. 96
BlockX Full blocks 25, 37. 38, 49-51, 61-64, 73-77,85-89 /V '
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
Signature:
Date: J L~C-7 u. ■7^1
11
5 (•' .1 (. 3 [ . ■! [~~y f"'”l f7~“i
”S [A r~
59° -S8-S5- -53*50' -SB-45' -53*40' -58»3!r -53*30' -53*25' -58*20' -58>15' -56*10' -58*05- 58° -57*55' -57*50' -57-45' -57-40' -57*35- -57*30- -57*25' -S7'20' -57*15* -57*10' -57*05' *57'
"jo------ --- - --- --------- -■ ■---. -------------------------. ... ■ - - ■ _______ vJr_
IVJ 2W aw AW GW GW 7 VJ 9W 1QW tiw 9X l OX MX 12X^
.01*9 .SU9 .02*9 *SZc9 .QC»9 .5C*9 .0P.9 .SM .0S*9 ,SSc9 8W |
23W 527 ^4X
131V *■-*'• tsw 16W mv 18W tow SOW 21W 22V/ 21X 22X
'
357^ 367
25 V.* 2 >3W 27W 28W 29VV 30W 51W 32W 33W 34W 35V/ 25X g 20X 2?X 2BX 29X 3QX 3'.fc 32X $ 33X : 34X
37VV 35W 39W dOW 41W 42W -13W 44W 45W 46V/ 47 w 477 43X
AREAS ■
d9W SOW 51W 52 W S3W SdW 5SW 56W $7W saw SOW 4CX SOX 51X | 52X 53X S4X 5S7 567 jj 57K S8X 59K GOX
NABI
61W ■52iTj G3W $4W 6SW S6W G7W COW G9W TOW 71W CSX €67 €77 CSX S9X |j 70X 717 72X
73 W 7iW 75W 76W 77W ;7SW row OOW eiw 32W 83V/ 73X 79;; aox aix S 02X 83x: 84x
05VV 35W 07W taw 39W SOW 91W 02W 93W 94W 95V/ 007 Six 927 037 94X 857 067
971V 9SW 99 W tmv 101W 102W 103W 104W 105W 106W 107W 108W 07X 9€X 99X 100X 101X 102>: *03X 104X . 105X lOKK 107X 108X
120W IflOX 110X •taU i1HX
100W 110W 111W it aw 1T3W ii«sw 115V/ 116W 117W mw 113W 11IX 112X 113X 1WX 11751 11BX 11SX 120X*'
At 5EA 3 •its
'v
121W 122W 123VV 124W 125W 126W 127W 128W 129W 130W 131W 132W 121X 122X 123X 124X 125X ! i2t>: *27* 123*/ 129X 130X 131X 132X
1331V 12-1W 135 W 135V/ 137W 13EW 139W 140W 141W 14 2 W 143W 144W 133X 134X 135X 136X 1377 13SX | :39X 140X 141X 142K $ 1MX
;1*13X
59° -58*5 S' -58*50' -58*45' -53*40' -53*35' -58*30' -5S”2S' -58*20' -58*15' -28*10' -58*05' 58° 57*55' -57-50' .S7“4$‘ -27*40' -51*32' -57*30' -57*25’ -57*20' -ST’IS' -21* 18' -S7*0S- 57°
20 40 60
fOH JURTHBR IN IrOftlt A71 OH i
“Si. Karen Livan Commissioner Ag. t
KJtomefei-s Guyana Geology & Minos Commission
upper 8ric'
Scale: 1:1,000,000 ItL: (S92J 226*3047
S’Boara (692)225-2662
PA& 1592) 2274Mi
email: 7.crnm!S3ioaBr@gpmc.^;.0'/
webGiTE: AV/.v.fjgmc gov.gy
t Signature --------- ■ *- ^
\ *ar>
•V
\ Guyana Geology and Wines Commission1
Assistant Commissioner - Petroleum Division
t Signature: ---
Pate:
Section 1
GENERAL PROVISIONS
El Definitions
For the purpose of this Accounting Procedure the terms used herein which are defined in the
Agreement or in the Act shall have the same meaning when used in this Accounting Procedure.
1.2 Documentation Required to be Submitted by the Contractor
(a) The Contractor shall keep the accounts, operating records, reports and statements
relating to the Petroleum Operations:
in accordance with the terms of the Agreement and this Accounting
Procedure; and
in such form as may be agreed from time to time between the Parties which
shall identify the categories of costs, expenses, expenditures and credits
cl assified in Sections 2 and 3 of this Annex.
i - \ j
\ /
‘ VAt^nr Commissioner
/CL) I
ate?
(b) Pursuant to (a) above, the Contractor shall make quarterly_Statements relating to the
Petroleum Operations including:
r
(i) Production Statement (see Section 5 of this Annex).
cn
(ii) Value of Production and Pricing Statement (see Section 6 of this Annex).
r~.)
ff: '
(iii) Statement of Expenditures and Receipts (see Section 7 of this Annex).
(iv) Cost Recovery Statement (see Section 8 of this Annex).
(v) End-of-Year Statement (see Section 9 of this Annex).
r'- (vi) Budget Statement (see Section 10 of this Annex).
1.3 Language, Units of Account and Exchange Rates
(a) Accounts shall be maintained in Guyanese dollars and United States dollars;
however, the United States dollars accounts will prevail in case of conflict. Barrels
shaill be employed for measurements of production of Crude Oil required under the
r* Agreement and this Annex. Standard cubic feet (scf) shall be employed for
measurements of production of Natural Gas required undpr-the-A-greement and this
r*
Annex. The language employed shalLbe English.
» no, fhf . '$>
-r inovancl Minesc°mmfest°n jj J:
u >TtUr j 1 m \ \
i Guyana Ge0'0S*r petroleUm DNWon V \ :
1 Assistant Comm ■ ■ : >
l Signature: ■
L
Date:
Should there be any gain or loss from exchange of currency, it will be credited or
charged to the accounts under the Agreement.
(c) (i) Amounts received and costs, expenses and expenditures made in currencies
other than United States dollars and Guyanese dollars shall be converted into
United States dollars by using the relevant cross rate published in the
Exchange Cross Rate table of the Financial Times, London edition, on the
first business day for the Month in which the relevant transaction occurred.
Amounts received and costs; expenses and expenditures made in Guyanese
(ii)
dollars or in United States dollars shall be converted from Guyanese dollars
into United States dollars or from United States dollars into Guyanese dollars
n. on the basis of the average weekly buying and selling exchange rates between
the currencies in question as determined and published by the Bank of
Guyana at the time that the relevant transaction occurred.
The actual exchange rates applied in accordance with sub-section 1.3 (c) (ii)
above and, where relevant, sub-section 1.3 (c) (i) above, shall be identified in
the relevant Statements required under sub-Section 1.2 (a) of this Annex.
agreed, be made in United States dollars and through a bank designated by the
receiving Party.
(b) All sums due under the Agreement during any Calendar Month shall, for each day
such sums are overdue during such Month, and thereafter, bear interest at the Agreed
Interest Rate.
1.5 Audit and Inspection Rights of Government
(a) The President shall have the right to audit upon ninety (90) days written notice, at his
sole cost and expense, accounts and records of the Contractor, maintained hereunder
with respect to each Calendar Year within two (2) years from the end of each such
Year. For purposes of auditing, the President may audit, examine and verify, at
reasonable times during normal business hours but not more than once per Calendar
Year, all charges and credits relating to the Contractor's activities under the
Agreement and all books of accounts, accounting entries, material records and
inventories, vouchers, payrolls, invoices and any other documents, correspondence
and records necessary to audit and verify the charges and credits. During such annual
audit, examination and verification in respect of each Calendar Year the President
may review items previously subjected to audit in earlier Years but such review shall:
nly be carried out in^prmmction with the annual audit in any given Year;
Assistant Commissioner •
I Signature: ■
i Date: UJ -s u -Ml
(ii) subject to Section 1.5 (b), no sooner than twelve (12) months following the
previous audit thereof; and
(iii) only be for the purposes of verifying a matter arising in a later period, which
relates to the earlier Year(s) in question or as specified in Section 1.5 (b).
In conducting such audits, the auditors may physically examine at the sole cost and
expense of the President, property, facilities and stocks used in Petroleum Operations
wherever located. Such examinations shall take place at reasonable times during
normal business hours upon fifteen (15) days prior notice.
>Yt the conclusion of each audit, the Parties shall endeavour to settle outstanding
matters and a written report will be issued to the Contractor within sixty (60) days of
the conclusion of such audit. The report shall include all claims arising from such
audit.
The Contractor shall reply to the report in writing as soon as possible and in any event
not later than sixty (60) days following receipt of the report indicating acceptance or
rejection of the audit claim and in the case of a rejection showing explanations
thereof.
Should the President consider that the report or reply requires further investigation on
any item therein, the President shall have the right to conduct a
} Guyana Geology and Mines Commission
Assistant Commissioner etroleum Division m :;eY',wY
^qLy i
ignature: re \ yy.
1 Oate:
relation to such matter within sixty (60) days of its receipt of Contractor's reply. If
within sixty (60) days of the President's further audit, the President's audit claim is not
settled, the claim shall be submitted to arbitration in accordance with Article 26 of the
Agreement.
All adjustments resulting from an audit agreed between the Contractor and the
President conducting the audit shall be reflected promptly in the accounts by the
Contractor and any consequential adjustments in Crude Oil entitlements shall also be
made promptly.
In the event that an audit claim by the President is not settled to the' President's
; -i
satisfaction by the Contractor's reply as provided for above, the Contractor shall be
$
entitled to recover any disputed amounts pending final resolution of the claim.
However, any subsequent adjustments in the President's share of Profit Oil following
resolution of the claim shall be repaid with interest, at the Agreed Interest Rate as a
first claim from Contractor's share of future Profit Oil. In the event that the
. . v ■„
Contractor's share of Profit Oil is insufficient to provide for the President's extra
Jement including interest, the Contractor shall promptly make an equivalent
t in United States dollars to the President.
ithout prejudice to the finality of matters as described in sub-sections 1.5 (a) and
1.5(b) all documents referred to in those sub-sections shall be maintemC&t
Guyana Geology and Mines Commission | nofreimruoD q ,
Assistant Commissioner - Petroleum Division
Signature:
• / ■
1 Date: *•' 1*«» M- VMM*-* • Vi
’*>-«*<* THO,***r**---,
i
available for inspection by the President for two (2) years following their date of
issue providing, however, that where issues are outstanding with respect to an audit,
the Contractor shall maintain documents for a longer period until the issues are
resolved. . ... ........ .
(d) The Contractor may require that audits hereunder of accounts and records maintained
by Affiliated Companies of the Operator, other than any Affiliated Company of the
Operator which is conducting a substantial part of the Petroleum Operations on
behalf of the Contractor be conducted either by the Operator's statutory auditors
working under the instruction of the President (provided such appointment is
accepted by the statutory auditors), failing which, by an independent firm of auditors
of international standing to be approved by the President.
, ^Nothing herein above provided shall entitle the President or his auditors to have
\
cess to data and records which:
(i) are subject to statutory restrictions on disclosure; or
(ii) ' do not relate to Petroleum Operations; or
( i i t \ P, TP Y\ Pit PI •Qff' o ri I x d i o n I a c a ri in ondifmrr nroAfiAQ i r~i mt ar-n O +1 /'A O I f-ha info r-rx otiAno 1
V LliJ clx uv/i N-'UtocwjLii.a.i iiy uuciuoou m cluiVAiLiAA^ m xrx'*/ xj-xuv^x xaCalawaxcaa
petroleum industry; provided however, that where the President or his
auditors seek confirmation that charges subject to restricted access under (a),
(b) and (c) above have been properly charged under this Agreement and
Accounting Procedure, they shall be entitled to seek (at their:
f the Contractor or its Affiliated C
Guyana - „,;<«ioner - Petroleum Division
Assistant Comp'IS
1 Signature: , j x
j Guyana Geology and Mines Commission
| Assistant Commiasioner * Petroleum Division
' Signature
Section 2
CLASSIFICATION, DEFINITION AND ALLOCATION OF COSTS,
EXPENSES AND EXPENDITURES
All costs, expenses and expenditures relating to the Petroleum Operations referred to in Section 3
shall be classified, defined and allocated as follows:
2.1 _ Exploration Costs are all direct and allocated indirect expenditures incurred in the search for
Petroleum in an area, which is or was, at the time when such costs were incurred, in the
Contract Area, including:
yd Aefial, geophysical, geochemical, paleontological, geological, topographical and
'Seismic surveys and studies and then interpretation provided the data relates to the
iA
tL \
Contract Area.
/Core hole drilling and water well drilling.
(c) Labour, materials and services used in drilling Exploration and Appraisal Wells with
the object of finding Petroleum or for the purposes of appraising the extent of
producible reservoirs already disco vered’pfovided such wells, are not completed as
producing wells. {
(e) All General and Administrative Costs and Annual Overhead Charge and all Service
Costs allocated to Exploration Costs.
(f) Any other Contract Costs incurred in the search for and appraisal of Petroleum after
the Effective Date.
(g) Training Costs set forth in Article 19.3 of the Agreement. , _
2.2 Development Costs shall consist of all expenditures incurred in:
(a) Drilling wells, which are completed as producing wells and drilling wells for
purposes of producing from a producible reservoir whether these wells are dry or
producing, and drilling wells for the injection of water or gas to enhance Recovery of
Petroleum.
(b) Completing wells by way of installation of casing or equipment or otherwise after a
well has been drilled for the purpose of bringing the well into use as a producer or as
a well for the injection of water or gas to enhance recovery of petroleum.
(c) Intangible drilling costs such as labour, consumable material and send
salvage value which are incurred in drilling and deepening of
j"Guyana Commission
< Assistant C<-nunJ#?p>nar - Petroleum Division
, ■ • • •
I'd) The costs of field facilities such as pipelines, flow lines, production and treatment
units, wellhead equipment subsurface equipment, enhanced recovery systems,
offshore platforms, petroleum storage facilities, export terminals and piers, harbours
and related facilities and access roads for production activities.
(e) Engineering and design studies for field facilities.
(f) All General and Administrative Costs and .Annual Overhead Charges and all Service
Costs allocated to Development Costs.
2.3 Operating Costs are all expenditures incurred in the Petroleum Operations, which are other
than Exploration Costs, Development Costs, General and Administrative Costs and Annual
Overhead Charge and Service Costs. The balance of General and Administrative Costs and
Service Costs not allocated to Exploration Costs or Development Costs shall be allocated to
Operating Costs.
. m
these are direct and indirect expenditures in support of the Petroleum Operations
including but not limited to warehouses, piers, marine vessels, vehicles, motorised
rolling equipment, aircraft, fire and security stations, workshops, water and sewage
plants, power plants, housing, community and recreational facilities and furniture,
tools and equipment used in these activities and safety and security services. Service
Costs in any. Calendar Year shall include the total costs incurr
operate the same.
nines
- Fetroreii/r* DiAv--
11
(b) All Service Costs will be allocated to Exploration Costs, Development Costs and
Operating Costs in accordance with standard industry accounting practice or on an
equitable basis otherwise agreed between the President and the Contractor.
2• 5 General and Administrative Costs and Annual Overhead Charge
l r*"'r-uA‘a••<»-•» J -•» - . *v/>
(a) General and Administrative Costs afe all general and administrative costs in respect
of the local office or offices including but not limited to supervisory, accounting and
employee relations services, but which are not otherwise recovered.
(b) An Annual Overhead Charge for services rendered outside Guyana and not otherwise
charged under this Accounting Procedure, for managing the Contractor's activities
under the Agreement and for staff advice and assistance including but not limited to
financial, legal, accounting and employee relations services. For the period from the
Effective Date until the date on which the first Petroleum Production Licence under
.Agreement is granted by the President this annual charge shall be two percent
sM?* " (polof the Contract Costs, including those covered in sub-section 2.5 (a), incurred'
J f the Calendar Year. From the date of grant of the Petroleum Production;
Of /fcence the annual overhead charge will be:
three percent (3%) of the first US$5 million of annual Contract Cost, plus two
percent (2%) of the next US$5 million annual Contract Cost, plus one percent (1 %)
of the next US$5 million annual Contract Cost, plus one half of one percent (0.5%)
of the next US$20 million of annual Contract Cost, nt(l%) of annual
Contract Cost in excess of US$35 million.-
----Cornnni^'O
Guyana Geology * petroleurn Division | f
3 \i .ttfMVSS
| Assistant ComntjA'0 ^ .---, { \ "pv:
1 \ . \ / 'A'.)
Signature: \ : “ / /■
12
(c) All General and Administrative Costs and .Annual Overhead Charge will be allocated
to Exploration Costs, Development Costs and Operating Costs in accordance with
standard industry accounting practice or on artajatu ai/ ba,sis otherwise agreed
between the President and the Contractor/^-
' ■ . A-c'ngy and Mines Commission
Commissioner - Pecroleum Division
13
Section 3
COSTS, EXPENSES, EXPENDITURES AND CREDITS
OF THE CONTRACTOR
3.1 Costs Recoverable Without Further Approval of the President
Subject to the provisions of the Agreement, the Contractor shall bear and pay the following
costs and expenses in respect of the Petroleum Operations. These costs and expenses will be
classified under the headings referred to in Section 2. They are all recoverable as Contract
Costs by the Contractor under the Agreement.
(a) Surface Rights
This covers all. costs attributable to the acquisition, renewarAr^flW^tti^kfhent of
surface rights acquired and maintained in force for the Contract Area including any
amounts payable pursuant to Article 10 of the Agreement.
(b) Labour and Associated Labour Costs
(i) Gross salaries and wages including bonuses of the employees of the Parties
comprising the Contractor directly engaged in the Petroleum Operations,
irrespective of the location of such employees, it being understood that in the
case of those personnel only a portion of whose time is whollyyd^^qj®d}t^
Petroleum Operations, only that pro-rata portion of appli/g&I
I Guyana Geology and Mines Commission ie charged.
' Wsistanf ComrnKsioner • PctrcMlWgfciWiU
■
-’ate:
(ii) Costs regarding holiday, vacation, sickness and disability payments
applicable to the salaries and wages chargeable under (i) above.
(iii) Expenses or contributions made pursuant to assessments or obligations
imposed under the laws of the Republic of Guyana which are applicable to
cost of salaries and wages chargeable under (i) above.
(iv) Cost of established plans for employees' life insurance, hospitalisation,
pensions, and other benefits of a similar nature customarily granted to the
employees of the Parties comprising the Contractor.
A>S R y ,ChK Reasonable travel and personal expenses of such employees including those
/(■v \X\made for travel and relocation of the Expatriate Employees assigned to the
\ Republic of Guyana all of which shall be in accordance with the normal
(ractice of the Parties comprising the Contractor.
Any personal income taxes owing to the Republic of Guyana by employees of
the Parties comprising Contractor and paid or reimbursed by a Party
comprising the Contractor.
15
(d) Charges for Services
(i) Third Party Contracts
The actual costs of contracts for technical and other services entered into by
the Contractor for the Petroleum Operations, made with third parties other
than Affiliated Companies of the Contractor are recoverable; provided that
the prices paid by the Contractor are competitive with those generally charged
by other international or domestic suppliers for comparable work and
services.
(ii) Affiliated Companies
Without prejudice to the charges to be made in accordance with sub-section
5, in the case of services rendered to the Petroleum Operations by an
iliated Company, the charges will be based on actual costs without profits,
ie charges will be no higher than the usual prices charged by the Affiliated
^^/Company to third parties for comparable services under similar terms and
conditions elsewhere and will be fair and reasonable in the light of prevailing
international oil industry practice and conditions. The Contractor will, if
requested by the President, specify the amount of the charges, which
constitutes an allocated proportion of the general material, management,
technical and other costs of the Affiliated Company and the amount, which is
y the direct cost of providing the services concerned. If necessary, certified
evidence regarding the basis of prices charged may be
--------™^^^-...---au4ker-S'-0'f;:the“Affili'ated Company in relation theret&i^
Guyana Geology and Mines Commission ^ /k7
Assistant Comnfrts'fionar - Petroleum Division j
Signatur e:«
' Date: 16
(e) Material
(i) So far as is practicable and consistent with efficient and economical
operation, only such material or equipment shall be purchased or fiimished by
tiie Contractor for use in the Petroleum Operations as may be required for use
in the reasonably foreseeable future and the accumulation of surplus stocks
shall be avoided.
(ii) In case of defective material or equipment, any adjustment received by the
Contractor from the suppliers/manufacturers or their agents will be credited
to the accounts under the Agreement.
(a) Except as provided in (b) below, material purchased by the
Contractor for use in the Petroleum Operations shall be valued to
include invoice price less trade and cash discounts (if any), purchase
and procurement fees plus freight and forwarding charges between
point of supply and point of shipment, freight to port of destination,
insurance, taxes, custom duties, consular fees, other items chargeable
against wifcable, handling and
transpor
17
from point of importation to warehouse or operating site, and its costs
should not exceed those prevailing in normal arms length transactions
on the open market at the time of procurement.
(b) Material purchased from Affiliated Companies of the Parties
comprising Contractor shall be charged at the prices specified at (1)
and (2) hereof.
(1) New Material (Condition "A")
Shall be valued at the invoiced price, which should not exceed
the price prevailing in normal arms length transactions on the
open market at the time of procurement.
'* f V »
Used Material (Conditions "B"and "C")
(i) Material which is in sound and serviceable condition
and is suitable for reuse without reconditioning shall
be classified as Condition "B" and at not more than
seventy-five percent (75%) of the new *
Guyana Geoloj
i Assistant Comrr
i Signature:
Hr ' <
18""
Material, which cannot be classified as Condition "B"
but which
(a) after reconditioning will be further serviceable
for original function as good second-hand
material (Condition "B"), or
(b) is serviceable for original function but not
suitable for reconditioning; shall be classified
as Condition "C" and priced at not more than
fifty percent (50%) of the current price of new
material (Condition "A") as defined in (1)
above. The cost of reconditioning shall be
charged to the reconditioned material provided
that the Condition "C" material value plus the
cost of reconditioning does not exceed the
value of Condition "B" material.
(iii) Material, which cannot be classified as
or Condition “C”, shall be
commensurate with its use.
19
(iv) When the use of material is temporary and its service
to the Petroleum Operations does not justify the
reduction in price as provided for in (2) (ii) hereof,
such material shall be priced on a basis that will result
in a net charge to the accounts under the Agreement
'''vjptr consistent with the value of the service rendered.
(f) Rentals. Duties and Other Assessments
All rentals, taxes, levies, charges, fees, contributions and any other assessments and
charges levied by the Government in connection with the Petroleum Operations and
paid directly by the Contractor. . , *
(g) Insurance and Losses
Insurance premium and cost incurred for insurance pursuant to Article 20 provided
that if such insurance is wholly or partly placed with an Affiliated Company of the
Parties comprising the Contractor, such premium and costs shall be recoverable only
to the extent generally charged by competitive insurance companies other than an
Affiliated Company of a Party comprising the Contractor. Costs, losses and damages
.incurred to the extent not made good by insurance, are recoverable, including costs,
losses or damages resulting from the indemnities in Article 2
20
unless such costs, losses or damages have resulted solely from an act of willful
misconduct or gross negligence of the Contractor.
(h) Legal Expenses
All costs and expenses of litigation and legal or related services necessary or
expedient for the procuring, perfecting, retention and protection of the Contract Area
and in defending or prosecuting lawsuits involving the Contract Area or any third
«' party claim arising out of activities under the Agreement or sums paid in respect of
legal services necessary or expedient for the protection of the interest of the Parties-
tire recoverable. Where legal services are rendered in such matters by salaried or
^ /regularly retained lawyers of the Contractor or an Affiliated Company of the Parties
comprising Contractor, such compensation will be included instead under sub-section
guyaH^.
3.1(b) or 3.1(d) above as applicable.
(i) Training Costs
All costs and expenses incurred by the Contractor in training of Guyanese personnel
and such other amounts as may be expended on training under Article 19 of the
Agreement.
I
r
The costs described in sub-section 2.5(a) and the charge described in sub-section
IT 2.5(b).
(k) Pre-Contract Costs
The sum of three thousand United States dollars (US$3,000.) in respect of a!! costs
r incurred by Contractor prior to the Effective Date.
r (l) Interest and Financing Costs
r
L
Interest, expenses and related fees incurred on loans raised by the Parties comprising
the Contractor for Petroleum Operations and other financing costs provided that such
expenses, fees and costs are consistent with market rates.
r
Commission paid to intermediaries by the Contractor.
(c) Expenditure on research into and development of new equipment, material and
techniques for use in searching for developing and producing petroleum which will
rv-F pfit tn Ppfrnlpnm Onpr^+innQ
(a) ’ With the exception of the sum specified in sub-section 3.1 (k), costs incurred before
the Effective Date.
(b) Petroleum marketing or transportation costs of Petroleum beyond the Delivery Point.
(c) Amounts paid under Article 3.2 of the Agreement, if any, and, subject to Section
3.1(g) any other amounts paid with regard to non-fulfilment of contractual
obligations.
(d) Costs of arbitration and the sole expert in respect of any dispute under the
Agreement.
(e) Fines and penalties imposed by Courts of Laws of the Co-operative Republic of
Guyana.
(g) Costs incurred as a result of willful misconduct or gross negligence of the Contractor
or failure to insure where insurance is required pursuant to the Agreement or where
the Contractor has elected to self-insure.
Other Costs and Expenses
Other costs and expenses not covered or dealt with in the provisions of this Section 3 and
which are incurred by the Contractor in the conduct of the Petroleum. Operations are
recoverable subject to the approval of the President.
Credits under the Agreement
The net proceeds of the following transactions will be credited to the Accounts under the
Agreement and shall reduce the amount of Contract Costs, which the Contractor is entitled to
recover from Cost Oil, by a corresponding amount:
(a) The net proceeds of any insurance or claim in connection with the Petroleum
Operations or any assets charged to the accounts under the Agreement when such
operation or assets ^^g^gs^g^and the premium charged to the accounts under the
Agreement.
1 /
\ 4- \ / 4- ! fcL!na ** «n« 5^53331
\r %'
V f®5"' c°m'f I:
S•.'-’ A? ?’
1 Date; ......... 7-0’ 4
(b) Revenue received from third parties for the use of property or assets the cost of which
has been charged to the accounts under the Agreement.
(c) Any adjustment received by the Contractor from the suppiiers/manufacturers or their
agents in connection with defective material the cost of which was previously
charged to the accounts under the Agreement.
Rentals, refunds or other credits received by the Contractor which apply to any
charge which has been made to the accounts under the Agreement, including any
costs and expenses previously charged to the accounts pursuant to sub-section 3.1(h)
and which have been successfully recouped from legal proceedings but excluding any
award granted to the Contractor under arbitration or sole expert proceedings referred
to in sub-section 3.3(d) above.
(e) The value at the time of export of inventory materials subsequently exported from the
Co-operative Republic of Guyana without beingfrsdd in the Petroleum Operations.
(f) The proceeds from the sale or exchange by the Contractor of materials, equipment,
plant or facilities, the acquisition costs of which have been charged to the accounts
under the Agreement, including such items sold to the Government; ^____.,T|.
^rgjs
Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
Commissioner - Pe
Signature:--j- 25
Date:,.
(g) The proceeds, from the sale of Petroleum Data which relates to the Contract Area
provided that the acquisition costs of such rights and information have been charged
to the accounts under the Agreement;
(h) The proceeds derived from the sale or licence of any intellectual property the
Notwithstanding any provision to the contrary in this Accounting Procedure, it is the
rt-
intention that there slj^iWs^mduplication of charges or credits to the accounts under the
Agreement.
j Guyana Geology and Mines Commission
Assistant Commissioner - Petroleum Division
Signature, IttSSfflr
! Date:
‘ : '»il.
Section 4
RECORDS AND VALUATION OF ASSETS
The Contractor shall maintain detailed records of property in use for the Petroleum Operations in
accordance with normal practice in exploration and production activities of the international
petroleupi industry. At annual intervals the Contractor shall notify the President in writing of all
assets acquired and all assets disposed of during the preceding twelve (12) months. At reasonable
intervals but at least once a year with respect to moveable assets and once every three (3) years with
respect to immovable assets, inventories of the property under the Agreement shall be taken by the
Contractor. The Contractor shall give the President at least thirty (30) days written notice of its
intention to take such inventory and the President shall have the right to be represented when such
inventory is taken. The Contractor will state clearly the principles upon which valuation of the
inyeritbt^’.Ms been based. When an.assignrhent of rights under the Agreement takes place a special
l • ......
inventory may be taken by the Contractor at the request of the assignee provided that the costs of
such.inventory are borne by the assignee.
1 yyana Geology and Mines Commission^ i
; sststant C troleum Division a
S ignature:
Section 5
PRODUCTION STATEMENT
Upon commencement of production of Petroleum from the ContracNilJ^A+t^Orttractor
shall submit a monthly Production Statement to the President showing the following
information separately for each Field and in aggregate for the Contract Area.
(a) The gross quantity of Crude Oil and Natural Gas produced.
(b) The quantities of Crude Oil and Natural Gas used for the purpose of carrying on
Petroleum Operations including drilling and Production Operations and pumping to
Field storage. ■
i :
i
(c) Quantities of Crude Oil-and-Natural Gas lost; -
(d) The quantities of Natural Gas flared.
(e) The quantity of Crude Oil produced and saved.
(f) The quantity of Natural Gas produced and saved.
(g) The quantity of stoc.^r^.Hjde Oil held at the beginning of the Calendar Month in
question. /<&"'■
Guyana Geology and Mines Commission
Assistant Commissioner • Petroleum Division
... , H 28 J Signature:
/ Date: ---
00 The quantity of stocks of Crude Oil held at the end of the Calendar Month in
question.
(i) The number of days in the Month during which Petroleum was produced from each
Field.
(j) The average daily production rate for each Field, calculated in accordance with
Article 11.6 of the Agreement.
j*
Section 6
rn
I
m VALUE OF PRODUCTION AND PRICING STATE
i vs ,
m 6.1 The Contractor shall, for the purposes of Article 13 of the Agreement prepare a statement
I
r providing calculations of the value of Crude Oil produced and saved during each Calendar
m Month for each Field. This statement, which shall be prepared for each quality of Crude Oil
t
produced from the Contract Area, shall contain the following information:
(a) . • The quantities, prices and receipts realised therefor by the Contractor as a result of
; Third Party Sales of Crude Oil made during the Calendar Month in question.
r
I
(b) The quantities, prices and receipts realised therefor by the Contractor as a result of
sales of Crude Oil made during the Calendar Month in question, other than Third
Party Sales.
r? (c) The percentage volume of total sales.
i
P (d) Relevant information available to or obtainable by the Contractor for the purposes of
I Article 13 of the Agreement.
r 6.2 The Value of Production and Pricing Statement for each Calendar Month shall be submitted
Section 7
STATEMENT OF EXPENDITURE AND RECEIPTS
The Contractor shall prepare with respect to each Calendar Month a Statement of
Expenditure and Receipts under the Agreement. The Statement will distinguish between
Exploration Costs, Development Costs and Operating Costs consistent with the individual
categories specified in Sections 2 and 3 herein and will separately identify major items of
expenditures within these categories. The statement will show the following:
( a) Actual expenditures and receipts for the Month in question.
(b) Cumulative expenditure and receipts for the budget year in qn
(c) Cumulative expenditures and receipts since the Effective Date
(d) Latest forecast of cumulative expenditures to year end.
(e) Variations between budget forecast and latest forecast, with explanations thereof.
The Statement of Expenditure and Receipts for each Calendar Month shall t>
the President no later than thirty (30) days after the end of such Month.
[<3:.,-.f'cilogy and Mines Commission
f As-sista»>« Com ionsr • Petroleum Division
| Si jjoa-tu !*■*■<
Date: 31 J fioHOviv
I . .
i ••
Section 8
COST RECOVERY STATEMENT
8.1 The Contractor shall prepare with respect to each Calendar Month a Cost Recovery
Statement containing the following information:
r (a) Recoverable Contract Costs carried forward from the previous Month, if any.
i
W'
(b) Recoverable Contract Costs for the Month in question.
(c) Total Recoverable Contract Costs, which is that cost at sub-section 8.1 (a) plus that
cost at sub-section 8.1 (b).
(d) Quantity and value of Cost Oil taken and disposed of by the Contractor for the Month
in question.
(e) Contract Costs recovered for the Month in question.
F'«
(f) Total cumulative^amotijit of Contract Costs to be carried forward into the next
Month.
m
Guyana Geology and Mines Commission
Assistant Commi(
Signature:
Date: ...
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8.2 The information to be submitted under Section 8.1 (d) and (e) above shall be given in
separate statements for each Field, so as to indicate together, the Contractor's total allocation
of Cost Oil as required under Article 11 of the Agreement
8.3 The Cost Recovery Statement to be submitted under sub-section 8.1 shall identify the
unrecovered cost of assets for the purpose of Article 20.1 (a)(iii) of the Agreement.
Section 9
m. END-OF-YEAR STATEMENT
m
i'; * The Contractor shall prepare an End-of-Year Statement. The Statement will contain aggregated
i • information for the Year in the same format as required in the Value of Production and Pricing
FT] Statement, Cost Recovery Statement and Statement of Expenditures and Receipts but will be based
on actual quantities of Petroleum produced and expenses incurred. The End-of-Year Statement for
pz%
each Calendar Year shall be submittSrK^SYt within one hundred and twenty (120) days of
-r, the end of such Calendar Year, /a?
(
n
A/ j Guyana Geoir r* Mi \ i.)
., ,vv, ,..Y-”VE | Signature:
I Date:
r:\
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Section 10
BUDGET STATEMENT
10.1 The Contractor shall prepare an annual budget pursuant to Article 7 of the Agreement (the
“Budget Statement”). The Budget Statement will distinguish between Exploration Costs,
Development Costs and Operating Costs consistent with the individual categories specified
in Sections 2 and 3 and will show the following:
(a) Forecast expenditures and receipts under the Agreement for the Calendar Year.
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