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Deep Onshore



DEEP ONSHORE MODEL PRODUCTION SHARING CONTRACT



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Deep Onshore

TABLE OF CONTENTS

ARTICLE 1

DEFINITIONS.................................................. 8

ARTICLE 2

SCOPE....................................................... 15

ARTICLE 3

CONTRACT AREA............................................... 17

ARTICLE 4

CONTRACT TERM............................................... 18

ARTICLE 5

RELINQUISHMENTS............................................. 20

ARTICLE 6

RETAINED EXPLORATION AREA................................... 23

ARTICLE 7

MINIMUM EXPLORATION WORK PROGRAMME.......................... 24

ARTICLE 8

GUARANTEES.................................................. 27

ARTICLE 9

COORDINATION COMMITTEE...................................... 30

ARTICLE 10

UNDERTAKING BY CONTRACTOR................................... 31

ARTICLE 11

ANCILLARY RIGHTS OF CONTRACTOR.............................. 36

ARTICLE 12

ASSISTANCE BY THE MINISTER.................................. 37

ARTICLE 13

DISCOVERY, COMMERCIALIZATION PROCEDURE...................... 38

ARTICLE 14

EXPLORATION WORK PROGRAMME.................................. 45

ARTICLE 15

DEVELOPMENT AND PRODUCTION WORK PROGRAMMES AND BUDGETS...... 46



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ARTICLE 16

NATURAL GAS................................................. 48

ARTICLE 17

BOOKS OF ACCOUNT, FINANCIAL REPORTING, AUDIT, AND COST

VERIFICATION................................................ 52

ARTICLE 18

ALLOCATION OF PRODUCTION, RECOVERY OF COSTS55 AND EXPENSES,

PRODUCTION SHARING AND RIGHT OF EXPORT...................... 55

ARTICLE 19

MEASUREMENT OF PETROLEUM.................................... 62

ARTICLE 20

VALUATION................................................... 64

ARTICLE 21

FINANCIAL OBLIGATIONS....................................... 67

ARTICLE 22

PAYMENT AND CURRENCY........................................ 71

ARTICLE 23

MATERIALS AND EQUIPMENT IMPORT DUTIES....................... 72

ARTICLE 24

OWNERSHIP OF ASSETS......................................... 73

ARTICLE 25

SUBCONTRACTORS, PERSONNEL AND TRAINING...................... 75

ARTICLE 26

STATE'S RIGHT OF REQUISITION................................ 77

ARTICLE 27

UNITIZATION................................................. 78

ARTICLE 28

CONFIDENTIALITY............................................. 79

ARTICLE 29

PIPELINES................................................... 81

ARTICLE 30

INSURANCE................................................... 82

ARTICLE 31

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ASSIGNMENT AND TRANSFER..................................... 83

ARTICLE 32

APPLICABLE LAW.............................................. 85

ARTICLE 33

CONSULTATION, EXPERT DETERMINATION AND ARBITRATION.......... 86

ARTICLE 34

FORCE MAJEURE............................................... 88

ARTICLE 35

NOTICES..................................................... 89

ARTICLE 36

TERMINATION.................................................90

ARTICLE 37

ABANDONMENT PROGRAMME, BUDGET AND ESCROW ACCOUNT............ 92

ARTICLE 38

THE PETROLEUM ACT AND REGULATIONS........................... 95

ARTICLE 39

LOCAL CONTENT............................................... 96

ARTICLE 40

MISCELLANEOUS............................................... 98



ANNEX A

CONTRACT AREA

GEOGRAPHICAL DESCRIPTION OF BLOCK ---



...



...



...



A-1



ANNEX B

REPORTS TO BE SUBMITTED BY CONTRACTOR ...

ANNEX C

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...



...



...



B-1



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ACCOUNTING PROCEDURE

ARTICLE 1

GENERAL PROVISIONS ...



...



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...



...



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C-1



ARTICLE 2

COSTS AND EXPENDITURES



...



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C-4



ARTICLE 3

COST CENTRES



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C-12



ARTICLE 4

VALUATION OF MATERIALS



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C-15



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C-17



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C-18



ARTICLE 7

INVENTORIES AND INVENTORY STATEMENT



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C-20



ARTICLE 8

PRODUCTION STATEMENT



ARTICLE 5

RECEIPTS



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ARTICLE 6

NON-RECOVERABLE COSTS



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C-22



ARTICLE 9

COST RECOVERY STATEMENT



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C-24



ARTICLE 10

STATEMENT OF EXPENDITURES



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C-25



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C-26



... ...



C-27



ARTICLE 11

CONTROL STATEMENTS AND OTHER ACCOUNTS

Article 12

Local Content



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5



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PRODUCTION SHARING CONTRACT

This Contract made this

day of

2006 among the

PRESIDENT OF THE REPUBLIC OF TRINIDAD AND TOBAGO, His Excellency

George Maxwell Richards, Intendant of State Lands (hereinafter

referred to as "the President") of the FIRST PART, THE MINISTER OF

ENERGY AND ENERGY INDUSTRIES, Senator the Honourable Dr. Lenny

Saith (hereinafter referred to as "Minister") of the SECOND PART

and ---------------------------- registered in the Republic of

Trinidad and Tobago under the Companies Act and having a place of

business at -- -------------------------------------, the Republic

of Trinidad and Tobago and ---------------------------------registered in Trinidad and Tobago under the Companies Act and

having a place of business at ----------------------------- the

Republic of Trinidad and Tobago (hereinafter collectively referred

to as "Contractor") of the THIRD PART.

WHEREAS, pursuant to Section 6(3) of The Petroleum Act Chapter

62:01 of the Laws of the Republic of Trinidad and Tobago

(hereinafter referred to as "the Act") Minister is authorized to

enter into Production Sharing Contracts for the carrying out of

Petroleum Operations upon such terms and conditions as the Cabinet

may approve.

WHEREAS, Minister acting as the agent of the Government, is

responsible for the collection of revenues accruing under this

Contract.

AND WHEREAS, Minister, under Regulation 4 of the Petroleum

Regulations made under the Act, issued on the day of, 2005, the

Petroleum Regulations (Competitive Bidding) Order 2005 published as

Legal Notice No. 9 of 2006 by which bids were invited for certain

onshore and submarine areas described in the First Schedule

therein.

AND WHEREAS, Contractor submitted a bid on _______,2006

accordance with and pursuant to the said Order.

AND WHEREAS, Contractor has represented to Minister that it has

requisite technical and financial capabilities to carry

Petroleum Operations and wishes to assist the Government

thoroughly evaluating the Petroleum potential and promptly

efficiently developing Petroleum resources discovered in

Contract Area.



6



in

the

out

in

and

the



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AND WHEREAS, by Cabinet Minute No.---- dated -------- --, 2006 the

Cabinet approved this Contract.

NOW therefore, in consideration of the premises, mutual covenants

and conditions herein contained, it is hereby agreed as follows:



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ARTICLE 1

DEFINITIONS

The following words and terms used in this Contract shall unless

otherwise expressly specified in the Contract have the following

respective meanings:

1.1

"Accounting Procedure" means the Accounting Procedure set

out in Annex "C" hereto.

1.2

"Affiliate" means any entity directly or indirectly

effectively controlling or effectively controlled by, or under

direct or indirect effective common control with a specified entity

or which is directly or indirectly controlled by a company or

corporation that also directly or indirectly controls one of the

parties comprising Contractor. For the purpose of this definition

"control" when used with respect to any specified entity means the

power to direct, administer and dictate policies of such entity (it

being understood and agreed that it is not necessary to own

directly or indirectly fifty percent (50%) or more of such entity's

voting securities to have effective control over such entity, but

ownership, direct or indirect, of fifty percent (50%) or more of

such entity's voting securities shall automatically indicate

effective control), and the terms "controlling" and "controlled"

have meanings corresponding to the foregoing.

1.3

"Appraisal" or "Appraisal Programme" means all works

carried out by Contractor following a Discovery of Petroleum in the

Contract Area for the purpose of delineating one or more Petroleum

reservoirs to which that Discovery relates in terms of thickness

and lateral extent and in order to further define the quantity of

recoverable Petroleum therein.

1.4

"Appraisal Area" means that area surrounding a Discovery

encompassing the geological structure or feature of the Discovery

and a reasonable margin not exceeding 0.5km as approved by Minister

from time to time.

1.5

"Assessment Plan" means a plan submitted pursuant to

Article 13.3 for the purpose of evaluating a Natural Gas Discovery

in sufficient detail to be able to seek a market for the Natural

Gas.

1.6



"Associated Natural Gas" means all Natural Gas produced

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from any reservoir the predominant production of which is Crude Oil

and which is separated from Crude Oil in accordance with normal

oilfield practice including free gas cap, but shall exclude any

liquid hydrocarbon extracted from such gas either by normal field

separation, dehydration or in a gas plant.

1.7

"Available Crude Oil" means all Crude Oil produced and

saved from the Contract Area and not used in Petroleum Operations.

1.8

"Available Natural Gas" means all Natural Gas produced

and saved from the Contract Area and not used in Petroleum

Operations.

1.9

"Available Petroleum" means all Available Crude Oil and

Available Natural Gas.

1.10

"Barrel" means a unit of volume equal to forty-two (42)

United States gallons, liquid measure, corrected to a temperature

of sixty (60) degrees Fahrenheit and fourteen point seven (14.7)

p.s.i.a.

1.11

"Calendar Quarter" means a period of three (3)

consecutive Months beginning on the first day of January, April,

July, or October.

1.12

"Calendar Year" means a period of twelve (12) consecutive

Months beginning on the first day of January and ending on the

following thirty first day of December in the same year.

1.13

"Commercial Discovery" means a Discovery that Contractor

proposes to develop and produce under the terms of the Contract.

1.14

"Commercial Production" means regular and continuous

production of Petroleum from a Production Area pursuant to an

annual production schedule approved under Article 15.

1.15

"Contract" or "Production Sharing Contract" means this

Contract and any subsequent amendments.

1.16

"Contract Area" means the area specified in Article 3

hereof and delineated on the map set out in Annex A, as modified

and reconfigured from time to time in accordance with the

stipulations of this Contract.

1.17



"Contractor" means -------------------------------------9



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----------------------------------and includes its/their respective

successors and permitted assignees.

1.18

"Contract Year" means a period of twelve (12) consecutive

months within the term of this Contract, beginning on the Effective

Date or any anniversary thereof.

1.19

"Coordination Committee" means the committee composed of

representatives of Minister and Contractor constituted in

accordance with Article 9.

1.20

“Cost Recovery” means the recovery of costs and expenses

in accordance with Article 18.7.

1.21

Contract

pressure

state at

which is



"Crude Oil" means any hydrocarbon produced from the

Area which at standard conditions of temperature and

(60 degrees Fahrenheit and 14.7 p.s.i.a.) is in a liquid

the wellhead or separator, or distillate and condensate

extracted from gas or casing-head gas in a plant.



1.22

"Development" or "Development Operations" or "Development

Work" shall include but not be limited to:

(i)

all the operations and activities under the Contract

with respect to the drilling of wells

other than

Exploration Wells and Appraisal wells, the deepening,

plugging back, completing and equipping of such wells,

together with the design, construction and installation of

such equipment, pipelines or lines, installations,

production units and all other systems relating to such

wells as may be necessary in conformity with sound

oilfield and generally prevailing environmental practices

in the international Petroleum industry;

(ii) all operations and activities relative to the

servicing

and

maintenance

of

pipelines,

lines,

installations, production units and all related activities

for Production and management of wells.

1.23

"Development Plan" means the plan for the development of

a Commercial Discovery, as provided in Article 13.

1.24

"Discovery" means any Petroleum not previously known to

have existed, which is recovered at the surface in a flow

measurable by conventional Petroleum industry testing methods.

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1.25

"Effective Date" means the date on which this Contract

has been signed by all Parties.

1.26

"Energy Equivalent Basis" means the equivalent of Natural

Gas in Barrels of Crude Oil with 5,800 standard cubic feet of

Natural Gas being equivalent to one Barrel of Crude Oil.

1.27

"Exploration"

or

"Exploration

Operations"

means

operations which shall include but not be limited to such

geological, geophysical, and other surveys and any interpretation

of data relating thereto, and the drilling of such shot holes, core

holes, stratigraphic tests, Exploration Wells for the Discovery of

Petroleum, Appraisal of Discoveries and other related operations.

1.28

"Exploration Period" means the period not exceeding six

(6) Contract Years from the Effective Date divided into up to three

(3) phases, as provided for in Article 4.1.

1.29

"Exploration Well" means any well drilled with the

objective of confirming a geologic trap in which Petroleum has not

been previously discovered.

1.30

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

feature or stratigraphic conditions from which Petroleum may be

produced commercially.

1.31

“Government” shall mean the Government of the Republic of

Trinidad and Tobago.

1.32

“Local Content” means the local component of goods,

services and human resources employed in the conduct of Petroleum

Operations under this Contract.

1.33

“Local Content Policy” means the policy of the Government

with respect to Local Content.

1.34

“Local Enterprise” means a person, firm or entity

performing works, services and/or supplying goods and materials to

Contractor, whether as a Sub-contractor or otherwise, whose

business enterprise is incorporated or otherwise organised under

the laws of Trinidad and Tobago and whose principal place of

business is in Trinidad and Tobago and which is effectively owned

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and controlled by nationals of Trinidad and Tobago.

1.35

"Local Goods" means materials and/or equipment mined,

grown or produced in Trinidad and Tobago, whether through

manufacturing or processing. An article, which is produced by

manufacturing or processing, must differ substantially in its basic

characteristics, purpose or utility from any of its imported

components. Manufactured goods would be considered to be of local

origin if the total cost of the local materials, labour and

services used to produce the item constitute not less than fifty

(50) percent of the cost of the finished product.

1.36

“Local Services” means works or services performed or

supplied by a Local Enterprise.

1.37

"Measurement Point" means the location specified in the

approved Development Plan within or outside of the Contract Area

where the Petroleum is metered and delivered to Minister and

Contractor.

1.38

"Minimum Exploration Programme" means the Exploration

work to which Contractor has committed itself for each phase of the

Exploration Period in accordance with Article 7.

1.39

"Minister" means the member of Cabinet to whom

responsibility for matters related to Petroleum is assigned and his

duly authorized delegates pursuant to Section 5 of the Act.

1.40

“Ministry” means the ministry in the Government to which

responsibility for matters related to Petroleum is assigned.

1.41

"Month" or "Calendar Month" means any of the twelve

months of the Calendar Year.

1.42

"Natural Gas" means all Petroleum which at standard

conditions of temperature and pressure (60 degrees Fahrenheit and

14.7 p.s.i.a.) is in a gaseous state, including wet gas, dry gas,

and residue gas remaining after the extraction, processing or

separation of liquid Petroleum from wet gas, as well as nonPetroleum gas or gases produced in association with liquid or

gaseous Petroleum.

1.43

"Natural Gas Field" means a Field from which more than

fifty percent (50%) per cent of the estimated reserves on an Energy

Equivalent Basis is Natural Gas at surface conditions.

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1.44

"Non-associated

Natural

Gas"

means

all

gaseous

hydrocarbons produced from gas reservoirs, and includes wet gas,

dry gas and residue gas remaining after the extraction of liquid

hydrocarbons from wet gas.

1.45

"Operator" means the entity or one of the entities

comprising Contractor which is in charge of the day to day

activities of Contractor under this Contract. The initial Operator

shall be ------------------------------------------. No change in

the Operator shall take effect unless it has been approved by

Minister.

1.46

"Party" or "Parties" means Minister and Contractor and

does not include any Subcontractor(s).

1.47

"Petroleum" means all natural organic substances composed

of carbon and hydrogen. This includes Crude Oil and Natural Gas,

and all other mineral substances, products, by-products and

derivatives that are found in conjunction with such substances.

1.48

"Petroleum Operations" means the Exploration Operations,

the Development Operations, the Production Operations, and all

other activities related thereto carried out under this Contract,

but excludes mining operations involving the extraction of

Petroleum from bituminous shales, tar sands, asphalt or other like

deposits.

1.49

"Petroleum

pursuant to the Act.



Regulations"



means



the



regulations



made



1.50

"Production Area" means the portion of the Contract Area

specified in an approved Development Plan under Article 13.8.

1.51

"Production" or "Production Operations" shall include but

not be limited to operations and all activities related thereto

carried out for Petroleum production after Minister's approval of

the Development Plan, such as extraction, injection, stimulation,

treatment,

transportation,

storage,

lifting,

and

related

operations, but does not include any storage or transportation

beyond the Measurement Point.

1.52



"Quarter" means a period of three (3) consecutive Months.



1.53



“Shallow Marine Block” means an acreage in which a

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minimum of fifty (50%)percent of the area is located in water depth

of less than one thousand metres.

1.54



"State" means the Republic of Trinidad and Tobago.



1.55

"Subcontractor" means a specialized person, firm or

entity contracted by Contractor to carry out specific work relative

to Petroleum Operations under the supervision of and for the

account of Contractor.

1.56

“Taxable Production Sharing Contract” means the agreement

in which each entity comprising Contractor is required to directly

discharge its liability for Withholding Tax, Petroleum Profits Tax,

Unemployment Levy, Green Fund Levy and any other taxes, or

impositions, other than Supplemental Petroleum Tax, Petroleum

Impost, Royalty, and Petroleum Production Levy.

1.57

“Transfer” shall include the following, whether voluntary

or involuntary and whether effected by operation of law, or

otherwise, any transfer of ownership or any part thereof of any

entity comprising Contractor by sale, merger, consolidation,

reorganisation or liquidation or any change in ownership or voting

rights in a company or legal entity.

1.58

is made.



“Transferee” shall mean any person to whom any Transfer



1.59

"Work Programme" means a programme itemizing the

Petroleum Operations to be conducted with respect to the Contract

Area and the time schedule for accomplishing such operations.



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ARTICLE 2

SCOPE

2.1

This is a Production Sharing Contract, the object of

which is the Exploration, Appraisal, Development and Production of

Petroleum in the Contract Area and the provision of required

infrastructure within and outside of the Contract Area up to the

Measurement Point, all at Contractor's sole risk and expense.

2.2

Subject to the terms and conditions of the Contract,

Minister hereby appoints Contractor as the exclusive agent to

conduct Petroleum Operations in the Contract Area during the term

of the Contract. It is hereby understood and agreed that nothing in

this Contract shall confer ownership of Petroleum in strata to

Contractor.

2.3

Contractor shall be responsible to Minister for the

execution of such Petroleum Operations in accordance with the

provisions of the Contract.

Without prejudice to Contractor's

position as an independent contractor hereunder, the work to be

done by Contractor shall be subject to the general supervision and

review of Minister in accordance with the Contract.

2.4

In performing Petroleum Operations, Contractor shall

provide the requisite financial resources and employ the highest

industry standards, scientific methods, procedures, technologies

and equipment accepted in the international Petroleum industry.

2.5

Contractor shall comply with the Local Content Policy of

Trinidad and Tobago in effect as may be varied from time to time.

In performing Petroleum Operations under the Contract, Contractor

shall provide for the maximum utilization of services and

facilities available from Local Enterprises. Contractor shall

employ with priority local personnel in all aspects of Petroleum

Operations.

2.6

Contractor shall receive no compensation for its

services, nor any reimbursement of its expenditures under the

Contract, except for the share of Petroleum from the Contract Area

to which it may become entitled under Article 18. If there is no

Commercial Discovery in the Contract Area or if Contractor’s share

of the production achieved from Production Areas within the

Contract Area developed by Contractor is insufficient to reimburse

Contractor, Contractor shall bear its own losses.

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ARTICLE 3

CONTRACT AREA

3.1

The Contract Area as of the Effective Date of the

Contract comprises a total area of approximately --------------------------------------------------------------- (---,---) hectares,

as described in Annex "A" attached hereto and delineated in the map

which forms part thereof.

3.2

Except for the rights expressly provided by the Contract,

no right is granted in favour of Contractor to the surface area,

sea-bed, sub-soil or to any natural resources or aquatic resources.



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ARTICLE 4

CONTRACT TERM

4.1

The Exploration Period shall be for a period not

exceeding six (6) Contract Years from the Effective Date, divided

into:

-



a first phase of ------ (-) years



-



an optional second phase of -----(-) years and



-



an optional third phase of ----- (-) years



Contractor's right to enter the next phase is subject to it having

fulfilled its obligations for the then current phase.

4.2

Contractor shall notify Minister of its election to enter

the next phase at least ninety (90) days prior to expiration of the

then current phase. If Contractor does not so elect to enter the

next phase, this Contract shall terminate as provided herein under

terms and conditions to be agreed by Minister and Contractor at the

end of the then current phase, with respect to any portion of the

Contract Area not included in:

(a)



a Production Area;



(b) Appraisal Areas subject to an extension pursuant to

Article 4.3;

(c) areas retained for a market development phase pursuant to

Article 16.2;

(d) areas retained for Exploration pursuant to

Article 6.1; and

(e) any areas then pending approval or then in dispute under

Article 33.

4.3

Where insufficient time is available during the

Exploration Period to complete the commercialization determination

under an Appraisal Programme approved under Articles 13.2 or 13.4,

Contractor shall have the right, upon written application to

Minister not less than ninety (90) days before the end of the

Exploration Period, to an extension of the term with respect to the

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Appraisal Area until the date on which the evaluation report on

such Discovery is due under Article 13.2 (d) or 13.4 (d).

4.4

In the event of a Commercial Discovery, the term of the

Contract shall be twenty-five (25) years from the Effective Date

with respect to the Production Area corresponding to such

Commercial Discovery; provided, however, if the Commercial

Discovery relates to a Natural Gas Field, the term of the Contract

shall be twenty-five (25) years from the Effective Date plus the

period of any market development phase granted and utilized in

accordance with Article 16.2 and any extension granted in

accordance with Article 16.6, with respect to the Production Area

corresponding to such Natural Gas Field.

4.5

Contractor may request by notice to Minister at least one

(1) year prior to the end of the term of the Contract to extend the

duration of the Contract with respect to any Production Area for up

to an additional five (5) years on terms and conditions to be

mutually agreed between Minister and Contractor.

4.6

The Minister may grant further five (5) year extensions

in the same manner as has been laid down in Article 4.5.

4.7

At the request of Contractor or Minister, the provisions

of this Contract may be reviewed or renegotiated five years prior

to the termination of the initial Contract term referred to in

Article 4.4 provided that the Contract Profit Ratio is less than

one (1) or greater than three and one half (3.5). The Contract

Profit Ratio shall be taken as the cumulative value of Contractor’s

Profit Petroleum divided by the cumulative value of Cost Recovery

Petroleum.



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ARTICLE 5

RELINQUISHMENTS

5.1

Subject to Article 5.2, the Contract Area shall be

reduced by:

(a) at least forty percent (40%) of the original Contract

Area, not later than the end of the first phase of the

Exploration Period;

(b) at least fifty percent(50%)of the original Contract

Area(inclusive of areas previously relinquished), not later

than the end of the second phase of the Exploration Period;

(c) all portions of the original Contract Area, not later

than the end of the Exploration Period under Article 4.1 with

the exception of:

(i)



Production Areas;



(ii) Appraisal

Article 4.3;



Areas



subject



to



an



extension



under



(iii) Natural Gas Discovery areas retained for a market

development phase under Article 16.2; and

(iv) Exploration

Article 6.1;



areas



retained



in



accordance



with



(d) any Appraisal Area subject to an extension under Article

4.3 that is not declared a Commercial Discovery, by the end of

the extension under Article 4.3;

(e) any Natural Gas Discovery area retained pursuant to

Article 16.2 that is not declared a Commercial Discovery, by

the end of the market development phase granted under Article

16.2;

(f) any Production Area, not in Commercial Production by the

end of five (5) years after declaration of Commercial

Discovery for such area, within thirty (30) days after

Minister's request for such relinquishment, and

(g)



any Exploration area retained pursuant to Article 6.1 for

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which no approved Exploration Work Programme for such area is

committed.

5.2

Subject only to Articles 5.1(f) and 5.6, Contractor shall

not be required pursuant to Article 5.1 to relinquish any portion

of the Contract Area designated as a Production Area.

5.3

Unless the Contract Area is earlier surrendered or the

Contract terminated, Contractor shall furnish Minister with a

description of the boundaries of the part to be relinquished not

less than ninety (90) days in advance of the deadline for the

relinquishment prescribed in Article 5.1.

5.4

The area designated under Article 5.3 for relinquishment

shall be as far as practicable rectangular bounded by lines running

due north and south and due east and west, having the longer side

no more than three (3) times the shorter side. Unless Minister

specifically consents, no individual block relinquished shall be

less than thirty percent (30%) of the total area being relinquished

at such time.

5.5

Article 5.4 shall also apply where a

voluntarily surrenders a part of the Contract Area.



Contractor



5.6

Contractor shall relinquish rights to conduct Petroleum

Operations in a Production Area upon request of Minister where, for

reasons other than force majeure or scheduled maintenance under an

approved Work Programme and budget, Contractor has ceased normal

production of such Production Area for more than one hundred and

eighty (180) consecutive days.

5.7

No relinquishment shall relieve Contractor of accrued,

but unfulfilled obligations under the Contract. In the event that

Contractor desires to relinquish its rights hereunder in all of the

Contract Area without having fulfilled all accrued Minimum Work

Programme under Article 7, Contractor or its guarantor shall pay

Minister prior to the date of such proposed total relinquishment an

amount equal to the remaining amount of the non-discharged

guarantees under Article 8 corresponding to such accrued, but

unfulfilled work obligations.

5.8

Prior to relinquishment of any area, Contractor shall

perform all necessary abandonment programme activities in

accordance with the highest internationally accepted petroleum

industry standards to restore such area as nearly as possible to

21



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the condition in which it existed on the Effective Date, including

removal of such facilities, equipment or installations as Minister

may instruct, and shall take action necessary to prevent hazards to

human life, property and the environment which may be caused by its

facilities, equipment or installations.



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ARTICLE 6

RETAINED EXPLORATION AREA

6.1

Where Contractor declares a Commercial Discovery in the

Contract Area during the Exploration Period specified in Article

4.1 or any extension as provided for under Article 4.3, Contractor

shall have the option, exercisable by notice to Minister at least

one hundred and twenty (120) days before the relinquishment

required under Article 5.1(c), to retain up to twenty percent (20%)

of the original Contract Area or an area to be mutually agreed by

Minister and Contractor if justified by Contractor's Work Programme

for ongoing Exploration. The notice to Minister:

(a) shall specify the coordinates of the Exploration area

selected for retention, which shall be comprised of no more

than two (2) separate rectangular blocks that comply with the

specifications stated in Article 5.4; and

(b) shall contain Contractor's proposed Exploration Work

Programme and budget corresponding to such area for the

balance of the current Calendar Year and the next two Calendar

Years.

Provided Minister approves the Exploration Work Programme and

budget submitted with the aforementioned notice, Contractor shall

have the right to conduct Petroleum Operations in the retained

Exploration area for the approved period.

6.2

If Contractor wishes to retain any portion of the

Exploration area selected under Article 6.1 beyond the date for

which an agreed programme is committed, Contractor shall propose,

for Minister's approval, an Exploration Work Programme and budget

for the next two (2) Calendar Year periods. Such proposal shall be

presented to Minister at least ninety (90) days before the end of

the period for which an Exploration Work Programme has been

approved.

6.3

Notwithstanding the guarantees committed to under Article

8, Contractor shall complete the Work Programme as agreed to under

this Article.



23



Deep Onshore

ARTICLE 7

MINIMUM EXPLORATION WORK PROGRAMME

7.1

Contractor

shall

commence

Exploration

Operations

hereunder within ninety (90) days after the Effective Date. Such

Exploration Operations shall be diligently and continuously carried

out in accordance with the best current international Petroleum

industry practice for the duration of the Exploration Period.

7.2

During the first phase of the Exploration

Contractor shall carry out at least the following

Exploration Programme:

(a)



Geological:



Evaluate,

Contract Area.

(b)



Period,

Minimum



integrate



and



map



all



data



related



to



the



Geophysical:

(i) Acquire and process to industry standards at least ----------------- (-----) square kilometres of 3D seismic resulting

in full fold coverage of approximately ---------------------(----), with shooting to commence within fifteen (15) months

after the Effective Date.

(ii) Evaluate, integrate and map all seismic data related to

the Contract Area.



(c)



Drilling:



Drilling of at least --- Exploration Wells, to depths of at least ------------ (----) metres, true vertical depth with spudding of

the first such well to be not later than thirty (30) Months after

the Effective Date.

7.3

During the optional second phase of the Exploration

Period, Contractor shall carry out at least the following Minimum

Exploration Programme:

(a)



Geological:



Evaluate, integrate and map all data related to the Contract

Area.

24



Deep Onshore

(b)



Geophysical:

(i) Acquire and process to industry standards at least ----------------- (-----)square kilometers of 3D seismic resulting

in full fold coverage of approximately ---------------------(------) square kilometres.

(ii) Evaluate, integrate and map all seismic data related to

Contract Area.



(c)



Drilling:



Drilling of at least --- Exploration Wells, to depths of at least ------------ (----) metres, true vertical depth.

7.4

During the optional third phase of the Exploration

Period, Contractor shall carry out at least the following Minimum

Exploration Programme:

(a)



Geological:



Evaluate, integrate

Contract Area.

(b)



and



map



all



data



related



to



the



Geophysical:

(i)

Acquire and process to industry standards at least ----------------- (-----) square kilometers of 3D seismic

resulting in full fold coverage of approximately --------------------- (------) square kilometres.

(ii) Evaluate, integrate and map all seismic data related

to Contract Area.



(c)



Drilling:



Drilling of at least --- Exploration Wells, to depths of at

least ------------- (----) metres, true vertical depth.

7.5

For purposes of the Minimum Exploration Programme under

Articles 7.2 through Article 7.4:



25



Deep Onshore

(a) The obligations related to the second phase or third

phase of the Exploration Period will accrue only if Contractor

elects to enter such subsequent phase by notice pursuant to

Article 4.1.

(b) In the event that an Exploration Well attains the minimum

depth requirement in a prospective zone, Contractor shall be

required to continue drilling to a depth which will ensure

penetration of and allow for the proper testing of the entire

prospective

zone,

provided

such

further

drilling is

technically feasible.

(c) Additional line kilometres of seismic and additional

Exploration Wells beyond the minimum required for any phase of

the Exploration Period may be carried forward to satisfy the

respective seismic and drilling obligations of a subsequent

phase of the Exploration Period.

7.6

Neither Appraisal wells, seismic surveys nor any other

Petroleum Operations carried out as part of an Appraisal Programme

or Assessment Plan approved under Article 13 shall discharge

Contractor of obligations in respect of the Minimum Exploration

Programme.



26



Deep Onshore

ARTICLE 8

GUARANTEES

8.1

Within seven (7) days after the Effective Date of the

Contract, upon commencement of each subsequent phase of the

Exploration Period entered into under Article 4 and within seven

(7) days of approval being granted for an Exploration Work

Programme under Article 6 or for any additional Exploration or

Appraisal Work Programme pursuant to Article 13.6(c), Contractor

shall provide Minister with irrevocable guarantees from a guarantor

of financial substance acceptable to Minister for an amount equal

to:

(a) the respective amounts specified in Article 8.2, of

carrying out the Work Programmes under Articles 6, 7 and

13.6(c);and

(b) the sum of two hundred thousand (200,000) dollars in the

currency of the United States of America for the performance

of any obligation under the Contract other than those covered

by the guarantees under (a) above.

Such guarantees shall be in a form and substance acceptable to

Minister.

8.2

The respective amounts of the guarantees for obligations

arising out of Work Programmes referred to in Article 8.1 shall be:

(a) For the first phase of the Exploration

Period

- US$--------(b) For the second phase of the Exploration

Period

- US$---------(c) For the third phase of the Exploration

Period

- US$--------(d) For any retained Exploration area, the estimated cost of

the Work Programme that Contractor commits itself to carry out

under Article 6.

(e) For any additional Exploration or Appraisal Work

Programme, pursuant to Article 13.6(c), the estimated cost of

the Work Programme that Contractor commits itself to carry out

27



Deep Onshore

under Article 13.6(c) from time to time.

8.3

Upon delivery to the issuing guarantor of a certificate

from Contractor countersigned on behalf of Minister by a duly

authorized official that the corresponding items of work have been

completed in accordance with the Contract and that all technical

data related thereto has been delivered to Minister the

guarantee(s) shall be reduced in accordance with the following

schedule:

(a) by an amount of ---------------------------------- (--------) US dollars upon completion of

the first phase.

(b) by an amount of ---------------------------------- (--------) US dollars upon completion of the second phase.

(c) by an amount of ---------------------------------- (--------) US dollars upon completion of the third phase.

(d) by an amount equal to the estimated cost of the Work

Programme agreed to under Article 6.

(e) by an amount equal to the estimated cost of the Work

Programme agreed to under Article 13.6 (c) from time to time.

8.4 Where Contractor has failed to perform in accordance with this

Contract all or any part of accrued Work Programmes:

a)



at the end of any phase of the Exploration Period,



b)

at the end of an approved period in respect of a retained

Exploration area pursuant to Article 6,or

c)

at the end of an approved period in respect of an

additional Exploration or Appraisal Work Programme pursuant to

Article 13.6(c),or

d)



upon termination of this Contract,



Contractor or its guarantor shall on demand from Minister

immediately pay Minister the entire remaining amount of such

outstanding guarantee or guarantees.

8.5



Contractor shall deliver to Minister within seven (7)

28



Deep Onshore

days after the Effective Date of the Contract in a form acceptable

to Minister an undertaking from the ultimate parent company that

such parent company shall provide all technical and financial

resources that its subsidiary may require to meet on a timely basis

Contractor's obligations under the Contract.



29



Deep Onshore

ARTICLE 9

COORDINATION COMMITTEE

9.1

Within ten (10) days after the Effective Date, a

Coordination Committee composed of four (4) members, two (2) of

whom shall be appointed by Minister and two (2) by Contractor,

shall be established. A Party, by at least ten (10) days' notice

to the other Party, may replace one or more of its members on the

Coordination Committee. The chairman of the Coordination Committee

shall be appointed by Minister from the members appointed by him,

and the secretary shall be named by Contractor from among its

appointees. Additional representatives of either Party may attend

meetings as observers or alternate members.

9.2

The mandate of the Coordination Committee is to assist

Contractor in its activities under this Contract by providing a

forum for a continuous dialogue and flow of information between

Contractor and Minister regarding Contractor's planned activities

and progress related to the Contract Area. The Committee shall

review proposals for revisions to agreed Work Programmes and

budgets and periodically evaluate Contractor's progress in respect

of approved Work Programmes, budgets, local content initiatives and

other matters related to Petroleum Operations under this Contract.

9.3

Ordinary meetings of the Coordination Committee shall be

held quarterly in Port of Spain, or any other location agreed by

the Parties. Special meetings of the Coordination Committee may be

called on reasonable notice by either Party for the purpose of

considering any major development or problems in Petroleum

Operations.

9.4

The secretary's minutes of a meeting shall be prepared,

and circulated within fourteen (14) days after adjournment of the

meeting. A copy of such minutes shall be delivered to each of the

Parties for information and appropriate action.

9.5

The Coordination Committee may from time to time

designate one or more technical committees, composed of specialists

appointed by the Parties to assist as required.



30



Deep Onshore

ARTICLE 10

UNDERTAKING BY CONTRACTOR

10.1

Resident Representative: Within thirty (30) days after

the Effective Date Contractor shall designate a representative

residing in Trinidad and Tobago who shall have full authority to

represent it in respect of matters related to the Contract and to

receive notices addressed to Contractor.

10.2

Office:

Within ninety (90) days after the Effective

Date, Contractor shall establish and maintain an office in Trinidad

and Tobago with sufficient competence and capacity to conduct and

perform Petroleum Operations in accordance with the terms of this

Contract.

10.3

Conduct of Petroleum Operations:

Contractor shall

conduct Petroleum Operations hereunder in a continuous, diligent,

and workmanlike manner, in accordance with applicable law and the

Contract, and the best current international petroleum industry

practices and environmental standards applicable from time to time

in similar circumstances, all designed to achieve efficient and

safe Exploration and Production of Petroleum and to maximize the

ultimate economic recovery of Petroleum from the Contract Area. In

this regard, Contractor shall ensure that all materials, equipment,

technologies and facilities used in Petroleum Operations comply

with the best engineering and environmental standards accepted in

the international petroleum industry, and are kept in good working

order.

10.4

Local Content Commitment: Contractor shall comply with

the Local Content Policy of Trinidad and Tobago in effect from time

to time. In performing Petroleum Operations under the Contract,

Contractor shall provide for the maximum utilization of goods,

services and facilities available in Trinidad and Tobago in

accordance with the provisions of Article 25.2. Contractor shall

employ with priority local personnel in all aspects of Petroleum

Operations and shall undertake the training and development of such

personnel in accordance with the provisions of Article 25.6. The

Work Programmes and budgets submitted and reported pursuant to

Articles 14 and 15 should indicate Contractor’s estimate of the

Local Content component of ongoing Petroleum Operations.

10.5

Notification of Work: Contractor shall provide Minister

with regular and complete information concerning all Petroleum

31



Deep Onshore

Operations and shall present to Minister prior to execution of

specific work information relative thereto.

10.6

Records:

Contractor shall prepare and maintain in

Trinidad and Tobago at all times during the term of the Contract

accurate and current records of its Petroleum Operations hereunder.

10.7

Reports: In accordance with Annex "B", Contractor shall

submit to Minister detailed daily drilling reports and monthly

physical progress reports covering in reasonable detail all the

activities carried out under this Contract, as well as all other

reports as may be required by Minister.

10.8

Comprehensive Technical and Commercial Evaluation:

Within ninety (90) days after completion of the Minimum Exploration

Programmes under Articles 7.2, 7.3 and 7.4 respectively, and Work

Programmes under Articles 6 and 13, Contractor shall prepare and

present to Minister a comprehensive technical and commercial

evaluation of the Petroleum potential of those portions of the

Contract Area for which Exploration Operations and other activities

have been performed or evaluated by the work conducted.

10.9

Data: Contractor shall provide Minister in accordance

with Annex "B" any and all data, reports, samples, information,

interpretation of such data and all other information or work

product pertaining to the Contract Area including in particular all

data for which the cost was recorded by Contractor as a cost of

Petroleum Operations. Contractor may retain for use in Petroleum

Operations hereunder copies of technical data. All original data

shall be delivered by Contractor to Minister not later than the end

of the term of the Contract. Subject to the prior approval of

Minister, Contractor may:

(a)



export original data;



(b) retain for use in Petroleum Operations hereunder original

technical data;

(c)



export for processing or laboratory examination or

analysis, samples or other original materials, 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 Minister.



32



Deep Onshore

10.10

Inspection by Minister:

(a) Contractor shall enable at all reasonable times the duly

authorized representatives of Minister and other agencies of

the Government to inspect any part of Petroleum Operations and

all facilities, installations, offices, records, books or data

related to Petroleum Operations.

(b) All duly authorized representatives of Minister and other

agencies of the Government agree to abide by the posted or

published safety rules of Contractor during such inspections.

10.11

Use of Facilities: Contractor shall provide facilities to

a reasonable number of duly authorized representatives of Minister

and other agencies of the Government to perform their duties and

obligations in relation to this Contract, including in the case of

field operations, transportation, lodging, food and other amenities

at equal conditions as those supplied by Contractor to its own

staff.

10.12

Loss or Damage: Contractor shall bear responsibility in

accordance with applicable law for any loss or damage to third

parties caused by its employees' or Subcontractors' wrongful or

negligent acts or omissions and indemnify Minister and the

Government against all claims and liabilities in respect thereof.

10.13

Legal Proceedings: Contractor shall give Minister timely

notice of any legal proceedings in relation to this Contract.

10.14

Environment,

Pollution,

Safety:

While

conducting

Petroleum Operations and in accordance with the highest sound and

current international Petroleum industry practice, Contractor shall

take and ensure that its Subcontractors and agents take necessary

measures for safety of life; conservation of property, crops, fish,

wildlife and navigation; protection of the environment; prevention

of pollution; and safety and health of personnel, including but not

limited to:

(a) ensuring

equipment;



security



areas



around



all



machinery



and



(b) erecting of fences, if applicable, at a distance of not

less than fifty (50) metres from any drilling rig, generator,

or other equipment of a dangerous nature;



33



Deep Onshore

(c) providing secure storage areas for all explosives,

detonators, and similar dangerous materials used in Petroleum

Operations;

(d) preventing pollution or damage to

formations and other natural resources;



any



water-bearing



(e) containing any blowout, fire or other emergency situation

that would result in loss of reserves or damage to the

reservoir;

(f) preventing unintentional entrance of fluids into

Petroleum formations and the production of Crude Oil or

Natural Gas from reservoirs at higher rates than consistent

with good Petroleum industry practice;

(g) taking all necessary precautions to prevent pollution of

or damage to the environment including the undertaking of

remedial measures within a reasonable period to repair or

offset damage to the environment in cases where Minister

determines that any works or installations erected by

Contractor or any operations conducted by or on behalf of

Contractor endanger third party property or cause pollution or

harm wildlife or the environment, including where pollution

occurs promptly to treat or disperse it in an environmentally

acceptable manner;

(h) reporting to Minister within twenty-four (24) hours in

cases of death or serious injury to workers in the performance

of duties connected with Petroleum Operations;

(i) arranging an adequate supply of first-aid medicines and

equipment in each area and maintaining a healthy environment

for the workers;

(j) providing safety and fire-fighting equipment and training

of personnel in the use of such equipment in each work area;

and

(k) participating in the National Oil Spill Contingency Plan,

as is in force from time to time, and, in addition and without

prejudice to its obligations thereunder, preparing and

submitting to Minister for approval prior to commencing any

drilling activities, an oil spill and fire contingency plan,

which plan shall be implemented in the event of such a

34



Deep Onshore

catastrophe.

10.15

Joint Operating Agreement: In the event there is

more than one entity comprising Contractor, a joint operating

agreement between the entities shall be executed within ninety (90)

days of the Effective Date and submitted to Minister for his

information. Contractor shall also supply to Minister for his

information any other agreements executed by the entities

comprising Contractor relating to the conduct of Petroleum

Operations under this Contract within ten days of execution of such

agreements. Changes made to any of these agreements shall be

submitted to Minister for his information within ten days of the

execution of such changes.



35



Deep Onshore

ARTICLE 11

ANCILLARY RIGHTS OF CONTRACTOR

11.1

Contractor shall for the efficient conduct of Petroleum

Operations have the right subject to appropriate arrangements with

other operators and/or relevant authorities and as approved by

Minister:

(a) to reasonable access to and from the Contract Area and to

and from facilities pertaining to Petroleum Operations

hereunder wherever located at all times, and to use of the

land required; and

(b) to use in Petroleum Operations sand, gravel and water

belonging to the public domain

in accordance with the

relevant laws and on payment of the generally prevailing

charge for such resources in the locality of use.



36



Deep Onshore

ARTICLE 12

ASSISTANCE BY THE MINISTER

12.1

To enable

Contractor to implement

the

Contract

expeditiously and efficiently, Minister shall when specifically

requested by Contractor assist Contractor among other things, in:

(a) obtaining right to use land, rights of way, permits

and/or easements as may be required for the conduct of

Petroleum Operations;

(b) obtaining licences or permits for transportation and

communication facilities;

(c) complying with import/ export controls and regulations

and custom formalities and where applicable obtaining

exemptions from customs and other duties;

(d) obtaining entry and exit visas for the foreign employees

of Contractor and foreign Subcontractors who may come to

Trinidad and Tobago for the implementation of the Contract,

and members of their families;

(e)



obtaining relevant work permits;



(f) obtaining access to all geological, geophysical,

drilling, well and production information in the Contract

Area; and

(g)



dealing with Government authorities in general.



12.2

The Minister shall be promptly reimbursed by Contractor

for all reasonable expenses incurred in providing the assistance

requested by Contractor in accordance with this Article 12.



37



Deep Onshore

ARTICLE 13

DISCOVERY, COMMERCIALIZATION PROCEDURE

If a Discovery is made in an Exploration Well, Contractor shall:

(a)



immediately notify Minister of such Discovery;



(b) within thirty (30) days thereafter provide Minister with

all available information regarding the Discovery, including a

preliminary classification of the Discovery as Crude Oil or

Natural Gas; and

(c) within ninety (90) days after such Discovery, also notify

Minister whether:

(i)

it considers the Discovery of Crude Oil or Natural

Gas to have commercial potential; or

(ii) it does not consider the Discovery of Crude Oil or

Natural Gas to have commercial potential.

13.2 (a) If Contractor pursuant to Article 13.1 (c)(i) notifies

Minister that a Discovery of Crude Oil has commercial

potential, it shall within thirty (30) days after such notice

present to Minister for approval an Appraisal Programme. The

Appraisal Programme shall be deemed approved as submitted if

Minister does not respond in writing within sixty (60) days of

receipt thereof.

(b)



The Appraisal Programme shall:

(i)

specify in reasonable detail the Appraisal work

including seismic, drilling of wells and studies to be

carried out, the estimated cost of these works and the

time frame within which Contractor shall commence and

complete the programme; and

(ii) identify the Appraisal Area.



(c) Contractor shall carry out the approved Appraisal

Programme under Article 13.2(a) within the time frame

specified therein.

Contractor may amend the Appraisal

Programme subject to Minister's prior approval.

38



Deep Onshore

(d) Within ninety (90) days after completion of the Appraisal

Programme Contractor shall submit to Minister a comprehensive

evaluation report on the Appraisal Programme. Such evaluation

report shall include, but not be limited to, the following

information: geological conditions, such as structural

configuration; physical properties and extent of reservoir

rocks; pressure, volume and temperature analysis of the

reservoir fluid; fluid characteristics, including gravity and

composition of liquid and gaseous hydrocarbons, sulphur

percentage, sediment and water percentage, and product yield

pattern; production forecasts (per well and per Field); and

estimates of recoverable reserves, projected delivery rate and

pressure, quality specifications and other relevant technical

and economic factors including economic feasibility studies

carried out by Contractor in respect of its declaration made

under Article 13.6.

13.3 (a) If Contractor pursuant to Article 13.1(c)(i) notifies

Minister that a Discovery of Natural Gas has commercial

potential, it shall within ninety (90) days after such notice

present to Minister for approval a plan for assessing the

Discovery in sufficient detail to be able to seek a market for

the Natural Gas ("Assessment Plan"). The Assessment Plan shall

be deemed approved as submitted if Minister does not respond

within sixty (60) days of receipt thereof.

(b)



The Assessment Plan shall:

(i) specify in reasonable detail the work that is needed

to assess the Discovery, including seismic, drilling of

wells and studies to be carried out, the estimated cost

of these works and the time frame within which Contractor

shall commence and complete such works.

(ii) identify the Assessment Plan area which shall not

exceed the area encompassing the geological structure or

feature in which the Discovery is made and a reasonable

margin surrounding such structure or feature to be

mutually agreed by Minister and Contractor.



(c) Contractor shall carry out the approved Assessment Plan

under Article 13.3(a) within the time frame specified therein.

Contractor may amend the Assessment Plan subject to Minister's

prior approval.

39



Deep Onshore

(d) Within ninety (90) days after completion of the

Assessment Plan, Contractor shall submit to Minister a

comprehensive evaluation report on the Assessment Plan. Such

evaluation report shall include all available information

related to the Discovery and a preliminary evaluation of its

technical and economic factors including economic feasibility

studies relevant to the determination of a market for

available Natural Gas.

(e) Upon submission of the evaluation report under Article

13.3(d) Contractor shall notify Minister whether or not based

on the results of its Assessment Plan it wishes to retain the

Natural Gas Discovery for a market development phase in

accordance with Article 16.2.

13.4 (a)



(i) As a condition for declaring Commercial Discovery of

a Natural Gas Field, Contractor shall conduct an

Appraisal Programme acceptable to Minister.

(ii) As soon as Contractor develops an acceptable market

for Natural Gas, but in any event within the term of the

Contract including any market development phase granted

under Article 16.2, Contractor shall apply to Minister

for approval and upon approval being granted forthwith

carry out an Appraisal Programme of the Natural Gas

Discovery.



(b)



The Appraisal Programme shall:

(i) specify in reasonable detail the Appraisal work

including seismic, drilling of wells and studies to be

carried out, the estimated cost of these works and the

time frame within which Contractor shall commence and

complete the programme; and

(ii) identify the Appraisal Area.



(c) Contractor shall carry out the approved Appraisal

Programme under Article 13.4(a) within the time frame

specified therein.

Contractor may amend the Appraisal

Programme subject to Minister's prior approval.

(d)



Within ninety (90) days after completion of the Appraisal

40



Deep Onshore

Programme Contractor shall submit to Minister a comprehensive

evaluation report on the Appraisal Programme. Such evaluation

report shall include, but not be limited to, the following

information: geological conditions, such as structural

configuration; physical properties and extent of reservoir

rocks; pressure, volume and temperature analysis of the

reservoir fluid; fluid characteristics, including gravity and

composition of liquid and gaseous hydrocarbons, sulphur

percentage, sediment and water percentage, and product yield

pattern; production forecasts (per well and per Field); and

estimates of recoverable reserves, projected delivery rate and

pressure, quality specifications and other relevant technical

and economic factors including economic feasibility studies

carried out by Contractor in respect of its declaration made

under Article 13.6.

13.5

If Contractor fails to present an Appraisal Programme

under Article 13.2(a) or Assessment Plan under Article 13.3 that is

acceptable to Minister, Contractor shall upon the request of

Minister at any time thereafter relinquish an area which shall

contain as a minimum the geological structure or feature in which

the Discovery was made.

13.6

With the submission of the evaluation reports pursuant to

Article 13.2 and 13.4, Contractor shall submit a written

declaration to Minister indicating, that based on the results of

its Appraisal Programme, it has determined the Discovery is either:

(a)



a Commercial Discovery;



(b)



not a Commercial Discovery in which event Contractor

shall be required to relinquish the areas pursuant to

Article 5; or



(c) a significant Discovery which may become a Commercial

Discovery conditional on the outcome of further work,

acceptable to Minister, that Contractor commits itself to

carry out under a further Exploration or Appraisal Work

Programme in specified areas within or outside the Appraisal

Area.

13.7

In the event Contractor commits itself to an approved

Work Programme under Article 13.6(c), it shall be entitled to

retain the Appraisal Area pending the completion of the further

Exploration or Appraisal Programme within the term of the Contract,

41



Deep Onshore

at which time the provisions of Article 13.6(a) or (b) shall be

applied accordingly.

13.8 (a) If Contractor declares pursuant to Article 13.6(a) that a

Discovery is a Commercial Discovery, Contractor shall submit,

within ninety (90) days of such declaration, the following:

(i)



a proposed Development Plan;



(ii) a proposed designation of the Production Area;

(iii)a comprehensive environmental impact study covering

the proposed Development and any related facilities or

infrastructure inside or outside of the Contract Area,

and

(iv) evidence that Contractor is complying with the

applicable legislation respecting approvals required by

environmental authorities.

The proposed Development Plan and Production Area shall be deemed

approved as submitted if Minister does not respond within ninety

(90) days of receipt.

(b) In the event Minister and Contractor are unable to reach

agreement on any objections raised or changes proposed by

Minister, Contractor or Minister shall have the right to

request determination of the disputed issues pursuant to

Article 33, in which case the decision shall be binding on

both Minister and Contractor.

(c) Upon approval being granted, Contractor shall proceed

promptly and diligently and in accordance with the best

international Petroleum industry practice to develop the

Discovery, to install all necessary facilities, to commence

Commercial Production and to produce the Field in a manner

that will achieve maximum economic recovery of the reserves.

Production shall continue without interruption unless Minister

is satisfied that the interruption is justified for technical

or other reasons.

13.9

Contractor's proposed Development Plan under Article 13.8

shall detail Contractor's proposals for Development and operation

of the Production Area and of any facilities and infrastructure up

to the Measurement Point required outside of the Production Area.

42



Deep Onshore

Such Development Plan shall set forth

(i) production parameters,

(ii) number and spacing of wells,

(iii) the facilities and infrastructure (including proposed

locations) to be installed for Production, storage,

transportation and loading of Petroleum,

(iv) an estimate of the overall cost of the Development, and

estimates of the time required to complete each phase of the

Development Plan,

(v) a production forecast and an estimate of ongoing capital

and operating expenses involved to achieve the production

profile an analysis of marketing options evaluated including

supply to existing or its potential projects in the internal

market of Trinidad and Tobago and any other factor which

would affect the economic or technical feasibility of the

proposed Development,

(vi) profitability estimates,

(vii) safety measures to be adopted,

(viii) a description of the organisation to be established in

Trinidad and Tobago,

(ix) measures to be implemented for the employment of

nationals and the utilization of Local Goods and Local

Services,

(x) the proposed abandonment plan, and

(xi) such other particulars as Minister may direct.

13.10

Any significant changes to an approved Development Plan

or proposals related to extension of a Field or for enhanced

recovery projects shall be discussed among the Parties and if

agreed shall be submitted in writing to Minister for his prior

approval. Such changes shall be deemed approved as submitted if

Minister does not respond within ninety (90) days of receipt.

13.11



All evaluation reports and plans submitted under this

43



Deep Onshore

Clause 13 shall include an analysis of marketing options including

supply to existing or potential projects in the internal market of

Trinidad and Tobago.



44



Deep Onshore

ARTICLE 14

EXPLORATION WORK PROGRAMME

14.1 (a) Contractor shall present to Minister for approval with

respect to each Calendar Year during the Exploration Period an

annual Work Programme and budget for the Contract Area. The Work

Programme and budget shall be deemed approved as submitted if

Minister does not respond within sixty (60) days of receipt. The

first such Work Programme and budget shall be submitted within

thirty (30) days after the Effective Date and each subsequent Work

Programme and budget at least sixty (60) days before the beginning

of the relevant Calendar Year.

(b) Within thirty (30) days following the end of each Quarter

of the Calendar Year, Contractor shall provide to Minister a status

report specifying the work carried out during that Quarter, the

approximate costs incurred during such period and any changes that

Contractor plans to make to the Work Programme and budget as a

result of operations to date in that Calendar Year. The status

report corresponding to the fourth Quarter of each Calendar Year

shall also contain an annual summary of the quarterly reports for

that Calendar year.

14.2

In respect of the retained Exploration area approved

under Article 6 and the Appraisal Area under Article 13, the

provisions of 14.1 (b) shall apply.

14.3

Subject to Contractor's obligations under Article 7 and

Minister's prior approval, Contractor may amend the Work Programme

and budget approved under Article 14.1.



45



Deep Onshore

ARTICLE 15

DEVELOPMENT AND PRODUCTION WORK PROGRAMMES AND BUDGETS

15.1

Commencing in the Calendar Year in which Minister

approves the first Development Plan for the Contract Area,

Contractor shall prepare and submit to Minister for approval, in

such form as Minister may direct, an annual Development and

Production Work Programme and budget detailing by Calendar Quarter

all aspects of the proposed Petroleum Operations to be carried out

in relation to each Production Area and related facilities and

infrastructure, the estimated cost thereof, duration and location

of each operation, and, where applicable, the estimated monthly

rate of production for each Production Area. Each proposed Work

Programme and budget shall also include a forecast of yearly

Development and Production activity and expenditure for the ensuing

period of four (4) Calendar Years or the period up to the end of

the term of the Contract, whichever is shorter.

15.2

The first Development and Production Work Programme and

budget, covering the balance of the Calendar Year in which the

first Development Plan is approved shall be submitted within thirty

(30) days after the date of approval of such Development Plan.

Thereafter, Contractor shall submit its proposed annual Work

Programme and budget at least ninety (90) days before the beginning

of the relevant Calendar Year.

15.3

Contractor's proposed Work Programme and budget shall be

deemed approved as submitted if Minister does not respond in

writing within sixty (60) days after receipt.

15.4

If Minister objects to any part of Contractor's proposal,

he shall notify Contractor within the period specified in Article

15.3.

The Minister's notice shall specify the modifications

required by Minister. If Contractor considers that any revision

required by Minister renders the Work Programme and budget

unacceptable to Contractor, Contractor shall within twenty-five

(25) days after receipt notify and substantiate to Minister its

reasons for that decision. Forthwith Minister and Contractor shall

meet with a view to resolving any differences. If they fail to

resolve their differences by the beginning of the Calendar Year for

which the Work Programme is to apply, Contractor shall incorporate

the modifications requested by Minister into the proposed Work

Programme and budget submitted under Article 15.2 to the extent

such changes:

46



Deep Onshore

(a) do not increase or decrease any line item of such

proposed Work Programme and budget by more than ten percent

(10%); and

(b) do not materially alter the Development Plan as approved

by Minister provided that the Development and Production Work

Programme and budget is consistent with such Development Plan.

The Minister may direct Contractor to modify the proposed rate of

production from any Field from which more than fifty percent (50%)

of the production on an energy equivalent basis is Crude Oil for

any of the reasons contained in Sections 43(h), 43(i) and 43(s) of

the Regulations, provided always that such changes in production

levels shall not significantly alter the production levels agreed

to between Minister and Contractor in the then current Development

Plan. Notwithstanding the above provisions Minister reserves the

right to modify production levels for safety considerations.

15.5

Contractor shall deliver to Minister within twenty-one

(21) days after each Calendar Quarter a status report on the

operations conducted and costs incurred under the approved

Development and Production Work Programme and budget during such

Calendar Quarter. The status report shall forecast any significant

changes to such approved Work Programme and budget that Contractor

anticipates may be necessary during the balance of the Calendar

Year.

The report corresponding to the last Quarter of each

Calendar Year shall also include a year-end summary of operations

and costs during such Calendar Year.



47



Deep Onshore

ARTICLE 16

NATURAL GAS

16.1

Within ninety (90) days of completion of an Assessment

Plan agreed with Minister under Article 13.3, Contractor shall

submit a comprehensive evaluation report on the Assessment Plan in

accordance with Article 13. Upon submission of the evaluation

report Contractor shall in accordance with the provisions of

Article 13 notify Minister whether or not it wishes to retain the

Natural Gas Discovery for a market development phase.

16.2

If Contractor requests a market development phase for

such Discovery, Contractor and Minister shall within sixty (60)

days after such election define by mutual agreement the portion of

the Contract Area to be subject to such market development phase.

Such portion shall not exceed the area encompassing the geological

structure or feature in which such Discovery was made and a

reasonable margin surrounding such structure or feature to be

mutually agreed by Minister and Contractor. Subject to Articles

16.2 through 16.5 the duration of such market development phase

shall not exceed five (5) years from the date of Contractor's

notice under Article 16.1. The market development phase shall end

on the first to occur of:

(a) the date following that on which the

Discovery is declared a Commercial Discovery;

(b) the date that Contractor

market development area, or



voluntarily



Natural



Gas



surrenders



the



(c) five (5)years after the date of Contractor's notice under

Article 16.1.

Contractor shall be deemed to have relinquished all rights to the

Natural Gas Discovery if it does not declare the Discovery a

Commercial Discovery by the end of the market development phase or

on earlier relinquishment of that portion of the Contract Area.

16.3

During the market development phase, Contractor shall pay

to Minister at the end of each year of the market development phase

or upon earlier termination an annual holding fee of two million

(2,000,000) US dollars, reduced by duly verified amounts that

Contractor has expended during such year under specific programmes

approved by Minister on activities or projects directly

48



Deep Onshore

attributable to the market development area. Expenditures for the

following types of activities will be eligible as credits against

the holding fee:

(a) further geochemical, geophysical or geological surveys in

the market development area;

(b) the drilling and testing of any well in the market

development area;

(c)



consulting, feasibility and marketing studies



(d) market development outside

projects approved by Minister.



Trinidad



and



Tobago



for



Amounts expended in a particular year in excess of the holding fee

may be carried forward as a credit against the following years'

holding fees if agreed by Minister in his approval of the programme

under which the expenditure was made. The holding fee shall be

applied on a pro rata daily basis in the event Contractor

relinquishes the market development area or declares such Natural

Gas Discovery to be a Commercial Discovery prior to the end of such

year.

16.4

Contractor shall notify Minister, forthwith upon entering

the market development phase, of the quantity of the Natural Gas

from such Discovery for sale and use in the internal market in

Trinidad and Tobago. With such notice Contractor shall provide the

results of the Assessment Plan carried out under Article 13.3. The

internal market includes, without limitation, Natural Gas sold to

refineries, electricity generating facilities, petrochemical

manufacturers and other industrial, commercial and domestic

customers in Trinidad and Tobago but expressly excludes Natural Gas

to be liquefied for export or to be chemically converted to

gasoline for export or to be used by Contractor in its Petroleum

Operations hereunder. The Minister shall advise Contractor of his

preferred marketing arrangements for the disposal of such Natural

Gas, including the delivery of all or part of such Natural Gas to

the internal market of Trinidad and Tobago.

16.5 (a) Subject to provisions of Article 16.4, Contractor shall

have primary responsibility for developing a market for all

Available Natural Gas from the market development area and for

negotiation of arrangements for

sale thereof on a joint

dedicated basis at prices and terms common to both Minister

49



Deep Onshore

and Contractor. Contractor shall provide for the active

participation of representatives of Minister in all such

market development activities and related negotiations. The

marketing arrangements for such Natural Gas sales contract

shall be subject to approval by Minister. In applying for such

approval Contractor shall demonstrate to Minister that the

price of such Natural Gas at the Measurement Point represents

the fair market value for such Natural Gas, taking into

consideration a fair market cost for transporting the Natural

Gas from the Measurement Point to the consumer. The approval

of any export project shall be at the discretion of Minister.

(b) Notwithstanding the provisions of (a) above, Minister

shall have the right to develop separate marketing

arrangements for the Government’s share of Natural Gas.

16.6

With its application for approval of any gas sales

contract, pursuant to Article 16.5, Contractor may also apply to

Minister for the granting of an additional period, to be added to

the term of the Contract, to facilitate the sale of Natural Gas

under such

gas sales contract. The Minister shall, subject to

the execution of such gas sales contract, extend the term of the

Contract, with respect to the Natural Gas Production Area

corresponding to such gas sales contract, for a period which will

allow for the supply of Natural Gas under the terms of the gas

sales contract.

16.7

Contractor shall apply to Minister for such licences as

may be required for operations in Trinidad and Tobago beyond the

Measurement Point. Costs incurred in this regard shall not be

subject to cost recovery under this Contract.

16.8

Contractor shall use with priority in Petroleum

Operations, Associated Natural Gas, including use for reinjection

for pressure maintenance or recycling operations to effect maximum

economic recovery of Crude Oil.

16.9

The Minister may at any time call upon Contractor to

deliver to Minister at the Field separator without compensation any

quantity of Natural Gas, produced in association with Crude Oil,

not being required by Contractor for Petroleum Operations or for

sale, which may be needed in the public interest, provided that

delivery does not unreasonably interfere with Contractor's

Petroleum Operations. Government shall at its own cost provide and

maintain any facilities beyond the delivery point required in

50



Deep Onshore

connection with gathering, transport, processing or utilization of

such Associated Natural Gas.

16.10

Contractor shall minimize flaring of any remaining

Associated Natural Gas by re-injecting such Natural Gas into

suitable strata or underground storage in accordance with good

Petroleum industry practice.

Contractor shall seek Minister's

approval to flare any such natural gas which cannot be re-injected

due to specific reservoir considerations or for other reasons that

are in line with best practice employed in the petroleum industry.

The decision to grant or refuse such approval shall be at

Minister’s sole discretion. Any approval shall be subject to terms

and conditions to be determined by Minister in light of the

prevailing circumstances. Before flaring, Contractor shall take

reasonable measures to ensure the extraction of natural gasoline

and other liquids contained in the Associated Natural Gas if

Minister and Contractor agreed that such extraction is economically

justifiable. Notwithstanding anything in this Article to the

contrary, Associated Natural Gas may be flared at any time if

necessary for the conducting of well and production tests and

during any emergency.



51



Deep Onshore

ARTICLE 17

BOOKS OF ACCOUNT, FINANCIAL REPORTING, AUDIT, AND

COST VERIFICATION

17.1

Contractor shall maintain in Trinidad and Tobago in

accordance with the Accounting Procedure in Annex "C" and accepted

accounting practices generally used in the international petroleum

industry, books of account and such other books and records as may

be necessary to show the work performed under the Contract, the

costs incurred and the quantity and value of all Petroleum produced

and saved from the Contract Area and not used in Petroleum

Operations.

17.2

Contractor shall prepare for each Calendar Year financial

statements including a balance sheet and profit and loss statement

reflecting its operations under the Contract. Accounting methods,

rules and practices applied for determining revenue and expense

shall be consistent with sound and usual international petroleum

industry practice and the laws of Trinidad and Tobago.

Each

financial statement shall be certified by an independent certified

firm of chartered accountants acceptable to Minister and shall be

submitted, along with the auditor's report to Minister and the

minister responsible for finance within ninety (90) days after the

end of the Calendar Year to which it pertains.

17.3

Contractor shall also provide Minister with the various

other financial reports required by Annex "C".

17.4

The Minister shall have the right to inspect and audit

Contractor's books, accounts and records relating to Petroleum

Operations under the Contract for the purpose of verifying

Contractor's compliance with the terms and conditions hereof. Upon

reasonable advance notice such books, accounts and records shall be

available in Trinidad and Tobago at all reasonable times for

inspection and audit by duly authorized representatives of the

Government, including independent auditors that may be employed by

it. Fiscal audits shall be carried out within the period allowed

under the Petroleum Taxes Act Chapter 75:04.

17.5

The Minister and/or the minister responsible for finance

may require Contractor to engage the auditors of any of the

entities comprising Contractor to examine at Contractor's cost and

in accordance with generally accepted auditing standards, the books

and records of an Affiliate to verify the accuracy and compliance

52



Deep Onshore

with the terms of the Contract insofar as a charge from the

Affiliate of Contractor (or of any entity comprising Contractor) is

included directly or through Contractor as a reimbursable cost

under the Contract.

Whenever audit of an Affiliate's books is

requested, Minister shall specify in writing the item or items for

which it requires verification from such independent audit. A copy

of the independent auditor's findings shall be delivered to

Minister and the minister responsible for finance within thirty

(30) days after completion of such audit.

17.6

Subject to the Accounting Procedure and the auditing

provisions of the Contract, the following procedure shall be

implemented with respect to each Calendar Month to verify and

establish promptly Contractor's costs that qualify for cost

recovery under Article 18.

(a) Contractor shall submit a statement of expenditure in

accordance with the procedure detailed in Annex "C" to

Minister who shall verify:

(i) that claimed costs qualify for cost recovery under

the terms of the Contract and the Accounting Procedure;

and

(ii) that the claimed amount of a qualifying cost is

correct based on documentation made available at

Contractor's office in Trinidad and Tobago.

(b) The statement of expenditure shall be deemed approved as

submitted if Minister does not respond within ninety (90) days

of receipt. If Minister takes written exception thereto, such

written exception shall identify the particular cost or costs

being contested and the reason for the query.

(c) Contractor shall submit to Minister within thirty (30)

days after receipt of Minister's exception notice such

additional information in written form as Minister may require

or Contractor considers appropriate to support the correctness

and/or recoverability of the contested cost or costs.

If

Contractor does not make a written submission within such time

supporting the charge, the cost or costs shall be deemed

disallowed for purposes of cost recovery.

(d) If additional written information supporting the

contested cost or costs is submitted by Contractor within the

53



Deep Onshore

prescribed period, Minister shall notify Contractor of his

decision within thirty

(30) days after receipt of such

information.

(e) If Minister notifies Contractor that the exception

remains, the charge shall be deemed disallowed for purposes of

cost recovery under the Contract subject to the right of

Contractor to request within thirty (30) days after the

receipt of such notice that the final determination as to

recoverability of the disputed cost or costs be made by an

expert pursuant to Article 33.8.

(f) Contractor shall promptly correct its books of account to

reflect any changes resulting from the cost verification

procedure.

17.7

Except as otherwise agreed in writing between Minister

and Contractor, all transactions giving rise to revenues, costs or

expenses which will be credited or charged to the books, accounts,

records and reports prepared, maintained or submitted hereunder

shall be conducted at arm's length or on such a basis as will

assure that all such revenues, costs or expenses will not be higher

or lower than would result from a transaction conducted at arm's

length on a competitive basis with third parties.



54



Deep Onshore

ARTICLE 18

ALLOCATION OF PRODUCTION, RECOVERY OF COSTS

AND EXPENSES, PRODUCTION SHARING AND

RIGHT OF EXPORT

18.1

Contractor shall have the right to use free of charge

Petroleum produced from the Contract Area to the extent reasonably

required for Petroleum Operations under the Contract.

18.2

All Available Petroleum shall be measured at the

applicable Measurement Points and allocated as set forth

hereinafter. Test or experimental production, to the extent not

required for Petroleum Operations hereunder, shall be deemed Profit

Petroleum and shall be allocated between Minister and Contractor in

accordance with Article 18.14.

18.3

Contractor

and

Minister

shall

review

annually

Contractor's production programme from each Production Area having

due regard to ensuring compliance with Contractor's obligations

under Article 10.

18.4

Contractor shall prepare and provide Minister not less

than ninety (90) days prior to the beginning of each Calendar

Quarter following commencement of Commercial Production a written

forecast setting out the total quantity of Petroleum that it

estimates can be produced and saved hereunder during each Month for

the next four (4) Calendar Quarters in accordance with good

Petroleum

industry practice

and

the

Production

programme

established in accordance with Article 18.3.

Contractor shall

endeavour to produce each Calendar Month the forecast quantity.

18.5 (a) All Available Crude Oil shall be run, if applicable, to

storage tanks constructed, maintained and operated at the

Measurement Point under this Contract where it shall be

measured for purposes of this Contract and delivered to

Minister and each entity comprising Contractor who shall each

take in kind, assume risk of loss and separately dispose of

their respective entitlement.

(b) All Available Natural Gas shall be disposed of in

accordance with the marketing arrangements developed pursuant

to Articles 16.4 and 16.5.

55



Deep Onshore

18.6

Prior to commencement of Commercial Production of Crude

Oil from the Contract Area, Minister and Contractor shall agree on

a procedure for taking volumes of Crude Oil corresponding to their

respective entitlements on a regular basis and in a manner that is

appropriate having regard to the respective destinations and uses

of the Crude Oil.

Cost Recovery

18.7

Subject to the Accounting Procedure and the auditing

provisions of the Contract, Contractor shall recover costs and duly

verified in accordance with Article 17 of the Contract in respect

of the Petroleum Operations hereunder to the extent of and out of

the following maximum limits per Calendar Month of all Available

Crude Oil and/or all Available Natural Gas from the Contract Area,

(hereinafter referred to as "Cost Recovery Crude Oil" and/or "Cost

Recovery Natural Gas" and collectively as “Cost Recovery

Petroleum”):

(a) ------ percent (--%) of all Available Crude Oil and ----- percent (--%) of all Available Natural Gas from the Contract

Area when cumulative production of Petroleum in the Contract

Area after the Effective Date is equal to or less than twentyfive million (25,000,000)Barrels of Crude Oil;



56



Deep Onshore

(b) ------ percent (--%) of all Available Crude Oil and ----- percent (--%) of all Available Natural Gas from the Contract

Area when cumulative production of Petroleum in the Contract

Area after the Effective Date exceeds twenty-five million

(25,000,000)Barrels but is equal to or less than fifty million

(50,000,000)Barrels of Crude Oil; and

(c) ------ percent (--%) of all Available Crude Oil and ----- percent (--%) of all Available Natural Gas from the Contract

Area when cumulative production of Petroleum in the Contract

Area after the Effective Date exceeds fifty million

(50,000,000)Barrels of Crude Oil.

In computing the total cumulative production referred to above,

Natural Gas production shall be added to Crude Oil production after

converting to Barrels of Crude Oil on an Energy Equivalent Basis.

18.8

Subject to Article 18.9 such costs and expenses shall be

allocated to the applicable recoverable Crude Oil cost account or

recoverable Natural Gas cost account and shall be recovered from

the relevant account on a first in, first out basis subject to the

following:

(a) costs incurred in respect of Exploration Operations may

be recovered on an expensed basis;

(b) capital costs incurred in respect of Development and

Production Operations may be recovered over four(4) years

commencing in the year in which such expenditure is incurred

with 40% recoverable in the first year and 20% recoverable in

each of the next three(3) years;

(c) annual operating costs, may be recovered in the year in

which they are incurred;

(d) annual administrative overhead costs, up to the limits

established in Article 2(l) of the Accounting Procedure may be

recovered in the year incurred; and

(e) any Exploration Well or Appraisal well which is

subsequently used for Development Operations shall be

classified as a Development well and all costs incurred shall

be deemed recoverable as prescribed under Article 18.8 (b).

An appropriate adjustment shall be made to the cost recovery

account in the Calendar Month immediately following this

57



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reclassification.

18.9

To the extent that in a Calendar Year the recoverable

costs or expenses related to the Contract Area exceed the amount

allowable for Cost Recovery Crude Oil or Cost Recovery Natural Gas

from the Contract Area for such Calendar Year, then the excess

shall be carried forward for recovery in the next succeeding

Calendar Years until fully recovered, but in no case after

termination of this Contract.

18.10

To the extent that the amount of Cost Recovery Crude Oil

or Cost Recovery Natural Gas received by Contractor from the

Contract Area during a Calendar Month is greater or less than the

amount Contractor was entitled to receive for that Month, an

appropriate adjustment shall be made in accordance with

internationally accepted accounting principles.

Profit Petroleum

18.11

The remaining Available Petroleum including any portion

of Cost Recovery Crude Oil or Cost Recovery Natural Gas not

required to cover costs hereinafter referred to as "Profit Crude

Oil" and/or "Profit Natural Gas" and collectively as "Profit

Petroleum") shall be allocated between the Government and

Contractor.

18.12

Contractor's share of Profit Petroleum shall be the

remaining portion after deducting the Government’s share in

accordance with the provisions of Article 18.14.

18.13

Subject only to Article 16.5 and 26, Contractor may

freely export any Available Petroleum received by it under Article

18.

18.14

The Government’s share of Profit Crude Oil and/or Profit

Natural Gas for a Calendar Month from the Contract Area shall be

determined separately for Crude Oil and Natural Gas by reference to

the applicable price class in the relevant table(s) detailed

hereunder. The relevant price class shall be determined using the

value of Profit Crude Oil and Profit Natural Gas calculated in

accordance with Article 20 herein. The average daily production

rates referred to in the production tiers set out in the tables

hereunder shall be calculated for each Calendar Month by dividing

the respective volumes of Available Crude Oil and Available Natural

Gas produced from the Contract Area during that Month by the number

58



Deep Onshore

of days in such Month.



59



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Government’s share of Profit Crude Oil (percent %)

Production Tier



Crude Oil Price Class

A



B



C



D



Production up to 10,000 B/D

Production in

excess of 10,000

B/D and up to 25,000 B/D

Production in

excess of 25,000

B/D and up to 50,000 B/D

Production in

excess of 50,000

B/D and up to75,000 B/D

Production in

excess of 75,000 B/D

Where:

Price Class A refers to Minister’s share for a Crude Oil

price less than or equal to US $20.00 per Barrel.

Price Class B refers to Minister’s share for a Crude Oil price

greater than US $20.00 per barrel but less than or equal to US

$30.00 per Barrel.

Price Class C refers to Minister’s share for a Crude Oil

price greater than US $30.00 per barrel but less than or

equal to US $40.00 per Barrel.

Price Class D, Crude Oil Price greater than US$40.00 per

Barrel, the Government’s share of Profit Crude Oil is equal

to:

BR + 80% [P –US$ 40) /P] (1-BR)

where:

BR refers to the Base Rates set out in Price

Class D, and P is the Crude Oil price



60



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(b)

Government’s share of Profit Natural Gas

Production Tier



Natural Gas Price Class

A



B



C



D



Production up to 60 MMcfd

Production in

excess of 60 MMcfd

and up to 150 MMcfd

Production in excess

of 150 MMcfd and up

to 300 MMcfd

Production in excess

of 300 MMcfd and up

to 450 MMcfd

Production in excess

of 450 MMcfd

Where:

Price Class A refers to Minister’s share for a Natural Gas

price less

than or equal to US $1.50 per Mcf.

Price Class B refers to Minister’s share for a Natural Gas

price greater than US $1.50 per Mcf but less than or equal

to US$2.75 per Mcf.

Price Class C refers to Minister’ share for a Natural Gas

price greater than US $2.75 per Mcf but less than or equal

to US $4.00 per Mcf.

Price Class D, Natural Gas price greater than US$4.00 per

Mcf, the Government’s share of Profit Natural Gas is equal

to:

BR + 80% [(P –US$4.00) / P] (1-BR)

where:

BR refers to the Base Rates set out in Price

Class D, and P is the Natural Gas price.



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ARTICLE 19

MEASUREMENT OF PETROLEUM

19.1

All Petroleum produced, saved and not used in Petroleum

Operations shall be measured at the Measurement Points approved in

the Development Plan.

19.2

The Measurement Points shall be at the end of the

facilities for which the cost is included as a recoverable cost of

Petroleum Operations under the Contract.

19.3

The production shall be measured in accordance with the

highest standards generally accepted in the international Petroleum

industry. All measurement equipment shall be installed, maintained

and operated by Contractor. The Minister shall have the right to

inspect the measuring equipment installed by Contractor and all

charts and other measurement or test data at all reasonable times.

The accuracy of Contractor's measuring equipment shall be verified

by tests at regular intervals and upon the request of Minister,

using the best means and methods generally accepted in the

international Petroleum industry.

19.4

Upon discovery of a meter malfunction, Contractor shall

immediately have the meter repaired, adjusted and corrected and

following such repairs, adjustment or correction shall have it

tested or calibrated to establish its accuracy. Upon the discovery

of a metering error, Contractor shall have the meter tested

immediately and shall take the necessary steps to correct any error

that may be discovered.

19.5

In the event a measuring error is discovered, Contractor

shall use its best efforts to determine the correct production

figures for the period during which there was a measuring error and

the corrected figures shall be used.

In determining the

correction, Contractor shall use, where required, the information

from other measurements made inside or outside the Production Area.

Contractor shall submit for Minister's approval a report detailing

the source and nature of the measuring error and the corrections to

be applied.

If it proves impossible to determine when the

measuring error first occurred, the commencement of the error shall

be deemed to be that point in time halfway between the date of the

last previous test and the date on which the existence of the

measuring error was first discovered.



62



Deep Onshore

19.6

All measurements for all purposes in this Contract shall

be adjusted to standard conditions of pressure and temperature

(sixty (60) degrees Fahrenheit and 14.7 p.s.i.a.).



63



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ARTICLE 20

VALUATION

20.1

The value of Crude Oil from each Production Area shall be

the international fair market value of such Crude Oil at the

Measurement Point.

20.2

The international fair market value of Crude Oil, shall

be the price in United States dollars at which an independent third

party buyer would be prepared to buy at the particular time such

Crude Oil at the Measurement Point, on an arms length basis, taking

into account the quality, volume, cost of transportation, terms of

payment, and any other relevant conditions, including the then

prevailing market conditions for crude oil.

20.3

Where different grades of Crude Oil are being produced

from the Contract Area, the value shall be determined and applied

for each grade of such Crude Oil. However, in the event that

different grades of such Crude Oil are blended together for sale

then the value of such a blend shall prevail.

20.4 (a) Contractor shall present to Minister, within ten (10)

days after the end of each Calendar Month during which Crude

Oil is produced and measured from a Production Area, its

proposal as to the value of the particular Crude Oil for the

preceding Month.

Such proposal shall be accompanied by

information supporting Contractor's proposal, including

evidence of actual arms length, FOB sales prices for the

particular Crude Oil and/or comparable crude oils delivered

during such preceding Calendar Month by Contractor or other

producers from Trinidad and Tobago or other producing

countries.

(b) The proposals shall be deemed approved, as submitted,

under Article 20.4 (a) if Minister fails to respond within

thirty (30) days of receipt.

(c) If Minister takes written exception to Contractor's

proposal, Minister shall include with such notice a counterproposal for the value of the particular Crude Oil.

(d) If Contractor accepts Minister's counter-proposal or does

not take written exception thereto within ten (10) days after

receipt, Minister's counter-proposal shall be the value for

64



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the Calendar Month for which the price is being determined.

(e) If Contractor takes written exception to Minister's

counter-proposal within the prescribed period, authorized

representatives of Minister and Contractor shall meet to

establish the value for the Calendar Month for which the

determination is being made, in accordance with the principles

outlined under Article 20.5.

20.5

For Crude Oil sales that are non-arms length, the

following principles shall apply in determining the value of Crude

Oil:(a) a basket of widely traded reference crudes similar in

quality to the crude to be valued shall be selected and the

international market prices of the crudes selected shall be

used as the base value for the crude to be valued;

(b) an appropriate price-setting market where substantial

quantities of the reference crudes are traded at arms length

and on an ongoing basis shall be chosen;

(c) the crude oils to be included in the basket shall be

proposed by Contractor as part of the Development Plan under

Article 13.8 to be approved by Minister;

(d) in the event that one or more of the crude oils

comprising an agreed basket no longer meets the requirements

of Article 20.5(a), a replacement crude oil shall be

determined by agreement between Minister and Contractor;

(e) transportation differential shall be taken into account,

that is to say, the difference between the cost of

transporting to the price-setting market, the reference crudes

and the Crude to be valued;

(f) interest charges on the value of the inventory in transit

may be considered in determining transportation costs;

(g)



other relevant considerations.



20.6

The fair market value of Natural Gas determined at the

Measurement Point shall be the price in United States dollars at

which an independent third party would be prepared to buy at the

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Deep Onshore

particular time such Natural Gas, on an arms length basis, taking

into account the quality, volume, cost of transportation, terms of

payment, and any other relevant conditions, including the then

prevailing market conditions for Natural Gas at the final sales

destination and shall be based on the higher of actual realized

prices or the prices calculated under the marketing arrangements

for Natural Gas approved by Minister under Article 16.5 for

deliveries of Natural Gas during the Calendar Month.

20.7

For Natural Gas sales transactions that are non-arms

length, the following considerations shall apply in determining the

value of Natural Gas:(a)



the market destination of the Natural Gas;



(b)



the price of the Natural Gas at the final destination;



(c)



regasification costs;



(d)



shipping costs;



(e)



liquefaction costs;



(f)



pipeline transport costs;



(g)



publicly available values outside Trinidad and Tobago; and



(h)



other relevant considerations.



20.8

Subject to the provisions of this Article 20, in the

event of any dispute between Minister and Contractor concerning the

pricing of Crude Oil or Natural Gas, such dispute may be referred

by either Party for final determination in accordance with Article

33.



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ARTICLE



21



FINANCIAL OBLIGATIONS

21.1

Contractor's financial obligations towards Minister,

which it shall satisfy at its own expense, shall consist of the

following payments:

(a)



(i) Minimum payment in respect of each hectare of the

Contract Area retained by Contractor from time to time

throughout the period of this Contract at the following

rates:US$ per hectare per annum

During

During

During

During

During

During



the

the

the

the

the

the



1st

2nd

3rd

4th

5th

6th



Contract

Contract

Contract

Contract

Contract

Contract



Year

Year

Year

Year

Year

Year



5.50

6.00

6.50

7.00

7.50

8.00



Thereafter minimum payment shall increase annually at a rate of six

percent(6%) for the unexpired term of the Contract. Minimum payment

shall be payable quarterly in advance within the first ten (10)

days of January, April, July and October. No refund shall become

due if before the end of a quarterly period a part of the area has

been surrendered.

(ii) Annual surface rental for that part of the Contract

Area used for Petroleum Operations payable in accordance

with Regulation 60 at the following rates:

U.S. $ per hectare

per annum

During

During

During

During

During

During



the

the

the

the

the

the



1st

2nd

3rd

4th

5th

6th



Contract

Contract

Contract

Contract

Contract

Contract



Year

Year

Year

Year

Year

Year



5.00

5.25

5.50

5.75

6.00

6.25



Thereafter, annual surface rental shall increase annually at a rate

of six percent (6%) for the unexpired term of the Contract. Annual

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Deep Onshore

surface rental shall be payable within thirty (30) days after the

Effective Date of this Contract and thereafter on each anniversary

date of the Effective Date of the Contract on the number of

hectares comprising the State Lands in the Contract Area as of the

date of payment. No refund shall become due if before the next

anniversary date any part of the Contract Area has been

surrendered.

(b) Annual charges payable within ten (10) days of the

Effective Date of this Contract and thereafter within the

first ten (10) days of each Contract Year in respect of the

following items:

(i)

An administrative charge of two hundred

thousand (200,000) US dollars during the first year of

this Contract increasing annually at a rate of six

percent(6%) for the unexpired term of the Contract. No

refund shall be due if Contractor ceases operation prior

to the end of a Contract Year.

(ii) A training contribution of --------(---------) US

dollars to the University of Trinidad and Tobago and the

University of the West Indies or such other institution as

the Minister may direct for the financing of hands on

training of nationals in appropriate fields of study

associated with the energy sector for the first year of

the Contract and increasing annually at a rate of six

percent(6%) for the unexpired term of the Contract. In the

event of a Commercial Discovery the amount shall increase

to ----------- (---,---) US dollars in the year following

Commercial Discovery increasing by six percent(6%) per

annum for the remaining term of the Contract. In the event

that these funds are not utilized as prescribed above

during any Contract Year, Contractor shall pay to Minister

an amount equivalent to funds not expended for the same

purpose.

(iii) Contractor and his Subcontractors shall collaborate

with these tertiary institutions in the development,

scheduling and management of the programmes which shall

include but not be limited to petroleum exploration,

exploitation, law, project management, marketing, finance,

commercial analysis and procurement.

(iv) An Environmental Bonus of ------------(--,---)in

the currency of the United States of America payable

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Deep Onshore

within ten (10) days of the Effective Date of this

Contract. This payment is to implement an agreed

programme to effect the remediation in accordance of

applicable law in identified areas of environmental

degradation in the Contract Area.

21.2

Contractor shall be subject to payment of assessment or

contributions, assessed on employees by generally applicable law on

labour costs. Contractor shall also guarantee the payment of any

Trinidad and Tobago income tax due from its foreign employees.

21.3

personnel

duties as

generally

Tobago.



Contractor and its Subcontractors and their respective

shall be obliged to pay such transfer taxes and stamp

may be in effect from time to time at the rates which are

applicable to all persons or entities in Trinidad and



21.4

Contractor shall be subject to and must observe the laws

in force from time to time in Trinidad and Tobago and nothing

herein contained shall be construed as exempting Contractor from

complying with the laws imposing taxes, duties, levies, fees,

charges or similar impositions or contributions which Contractor

would be liable to pay or is called upon to pay under such laws by

virtue of its conduct of Petroleum Operations hereunder.

21.5

The Government’s share of petroleum shall be in lieu of

Supplemental Petroleum Tax, Petroleum Impost, Royalty, and

Petroleum Production Levy being obligations which Contractor

ordinarily would have been liable to pay in accordance with the

laws of Trinidad and Tobago. The Government’s share shall not be a

deduction for tax purposes.

21.6

Each entity comprising Contractor shall pay its liability

for Petroleum Profits Tax, Unemployment Levy, Green Fund Levy and

Withholding Tax arising out of income or profits derived from the

conduct of Petroleum Operations. Contractor shall also furnish to

the relevant tax authority and Minister a statement showing the

manner in which the Government’s share of Profit Petroleum is

computed and any other information as may be required.

21.7

income of

of income

Petroleum



For the purpose of applying Article 21.6, the gross

each entity comprising Contractor in respect of any year

shall be calculated as the total of its share of Profit

plus Cost Recovery Petroleum.



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21.8

Subject only to Articles 21.1, 21.2, 21.3 21.4, 21.5,

21.6 and 23, Minister shall save Contractor harmless from Royalty,

Petroleum Impost, the Supplemental Petroleum Tax and the Petroleum

Production Levy.

21.9

Profits and/or losses resulting from any Petroleum

Operations carried out by Contractor or any entity comprising

Contractor under any of its Taxable Production Sharing Contracts

for Onshore and Shallow Marine Blocks in Trinidad and Tobago may be

consolidated for tax purposes.



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ARTICLE 22

PAYMENT AND CURRENCY

22.1

All payments which the Contract requires Contractor to

make to Minister or the Government shall be made in United States

dollars at a bank designated by recipient. Contractor may make

payment in other currencies, if acceptable to recipient.

22.2

Conversion of all payments made by Contractor in Trinidad

and Tobago into United States dollars or any other currency

acceptable to the recipient shall be effected at the generally

prevailing rate of exchange at the time of payment.

22.3

All payments due to Contractor from Minister shall be

made in United States dollars or any other currency acceptable to

Contractor, at a bank to be designated by Contractor.

22.4

Contractor shall have the right to receive, retain abroad

and use without restriction the entirety of proceeds received from

its sales of its share of Petroleum from the Contract Area subject

to Contractor satisfying completely its then accrued financial

obligations under this Contract.

22.5

Contractor shall during the term of the Contract have the

right without the imposition of any control, except as otherwise

imposed by the terms of the Contract, to make any payments and to

maintain and operate bank accounts outside Trinidad and Tobago in

whatsoever currency.

Contractor may also operate and maintain

United States dollar or other foreign currency bank accounts within

Trinidad and Tobago subject to applicable law.



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ARTICLE 23

MATERIALS AND EQUIPMENT IMPORT DUTIES

23.1

Contractor shall provide all equipment, machinery, tools,

spare parts and any other goods of a similar nature ("Materials")

required for Petroleum Operations under this Contract.

23.2

Such Materials shall be provided by Contractor in

accordance with programmes and budgets under Articles 14 and 15 and

shall be acquired pursuant to procurement procedures specified by

Contractor under Article 1.7 of the Accounting Procedure.

23.3

Contractor shall give preference to the use of locally

manufactured or locally available Materials when such are

comparable with the competing imported Material in quality and

availability and the price thereof does not exceed the c.i.f. price

(including import duties where applicable) of the imported Material

delivered to the Contract Area. In this regard Contractor shall

maintain records and accounts and provide reports in accordance

with the provisions of Article 13 of the Accounting Procedure.

23.4

Subject to Article 23.3, Contractor shall have the right

to import any Materials required for Petroleum Operations. In this

regard

Contractor

shall

comply

with

generally applicable

importation formalities and pay import and excise duties to the

extent not exempt therefrom by generally applicable law.



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ARTICLE 24

OWNERSHIP OF ASSETS

24.1

Subject to Article 24.3, ownership of any asset, whether

fixed or moveable, acquired and owned by Contractor in connection

with Petroleum Operations hereunder shall pass to Minister without

consideration when the part of the Contract Area in which the asset

is located is relinquished or at the end of the term of this

Contract, whichever first occurs, except in cases where Minister

notifies Contractor that he does not accept the particular asset.

Where Minister elects not to take a particular asset Contractor

shall carry out the approved abandonment programme under Article 37

and shall be free to dispose of the asset in accordance with

applicable law.

24.2

Where Production from a Production Area is possible

beyond the term of the Contract, Contractor shall hand over to

Minister without consideration such Production Area and all

facilities required for carrying out existing operations, in good

working order, normal wear and tear excepted. Upon the transfer of

said Production Area and related facilities, Minister shall assume

all responsibility for the facilities and their abandonment and

hold Contractor harmless against any liability with respect thereto

accruing after the date of such transfer to Minister.

24.3

Subject to Article 24.2, whenever Contractor relinquishes

any part of the Contract Area, all moveable property located within

the part of the Contract Area so relinquished, may be removed to

any part of the Contract Area that has been retained.

24.4

The provisions of Article 24.1 and 24.2 shall not apply

to materials, facilities, or other property that are rented or

leased to Contractor or which belong to employees of Contractor,

provided that the ownership of any such item by other than

Contractor is clearly documented with Minister at the time of entry

into Trinidad and Tobago or of local acquisition.

24.5

In the event Contractor desires to move property located

on the Contract Area but no longer used in Petroleum Operations to

another location within Trinidad and Tobago for further use prior

approval of Minister shall be required.

Upon receipt of such

approval Contractor shall pay to Minister either:

(a)



an amount equal to a transfer price mutually agreed upon

73



Deep Onshore

by the Parties, or

(b) if no price is agreed and Contractor still desires to

move the property as provided herein, an amount equal to the

percentage of the cost of such property that has been costrecovered under this Contract as of the date such property is

moved multiplied by the depreciated value of the property

determined in accordance with applicable law.

24.6

In the event Contractor desires to use property located

on this Contract Area for Petroleum Operations not related to this

Contract Area the prior approval of Minister shall be required. The

terms and conditions under which the facilities shall be used for

such purpose shall be subject to the approval of Minister.



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ARTICLE 25

SUBCONTRACTORS, PERSONNEL AND TRAINING

25.1

Contractor has the right to use qualified Subcontractors

to provide specialized equipment or services.

25.2

Contractor shall provide Local Enterprises opportunities,

in competition with foreign entities, to provide any services or

equipment required in connection with Petroleum Operations. The

procurement procedures submitted pursuant to Article 1.7 of the

Accounting Procedure shall contain appropriate measures in

accordance with the provisions of Article 39 to ensure Contractor’s

compliance in this regard. Contractor shall give preference to

Local Enterprises as Subcontractors where bids placed by such are

competitive with foreign bids in skills, resources, availability

and price and meet the technical and financial requirements of

Contractor.

25.3

Prior to the commencement of any contract, Contractor

shall provide Minister with all necessary information covering each

Subcontractor including, upon Minister's request, an executed copy

of any contract and related agreements and changes thereto.

25.4

Contractor and its Subcontractors undertake to employ

with priority nationals of Trinidad and Tobago in all aspects of

Petroleum Operations to the extent that these nationals with the

requisite qualifications and experience can be found.

25.5

Contractor and its Subcontractors shall minimize the

employment of foreign personnel but may subject to the provisions

of this Contract and applicable law employ foreign nationals:

(a) to the extent that qualified nationals cannot be found to

fill the positions required;

(b) to fill a limited number of specialist technical or

managerial positions, provided that there are clearly

identified counterpart national understudies together with

comprehensive programmes for their development in accordance

with the provisions of Article 25.6; and

(c)



to provide short-term specialist expertise.



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Deep Onshore

25.6

Contractor shall undertake the development and training

of its national personnel (including training for the specific

purpose of taking over positions held by expatriate personnel) for

all positions including administrative, technical and executive

management positions. Contractor shall, together with its annual

Work Programme and Budget, prepare and submit annually to Minister

for approval programmes for such development and training.

Contractor shall include a status report on these programmes with

its submission of the quarterly status report required under

Articles 14.1(b) and 15.5.

25.7

Contractor shall at its own expense as part of Petroleum

Operations provide a reasonable number of personnel of the Ministry

with on-the-job training and where appropriate and practicable,

with overseas training, based on a mutually agreed programme. Onthe-job training shall involve the inclusion of representatives of

Minister on project teams responsible for various aspects of

Petroleum Operations under this Contract.

25.8

Contractor shall also submit to Minister together with

its submission of the annual Work Programme and budget, the details

of all the payments, benefits and privileges accorded for each

classified category of Contractor's personnel (both expatriate and

local).



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ARTICLE 26

STATE'S RIGHT OF REQUISITION

26.1

In case of war or imminent expectation of war or grave

national emergency (as provided for in Section 36 of the Act), the

President may requisition all or a part of the Petroleum production

from the Contract Area and require Contractor to increase such

production to the extent required. In such event, the price to be

paid by the President for the Petroleum shall be the value

determined in accordance with Article 20 of the Contract and

payment shall be made within thirty (30) days after delivery in US

dollars at a bank outside of Trinidad and Tobago designated by

Contractor.

26.2

In the event of any requisition as provided above, the

President shall indemnify Contractor in full for the period, during

which the requisition is maintained, including all reasonable

damages, if any, which result from such requisition.



77



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ARTICLE 27

UNITIZATION

27.1

If a Petroleum Discovery in the Contract Area extends

beyond the boundaries of the Contract Area, Minister may require

that the Development of the Discovery and the Production of

Petroleum therefrom be carried out in collaboration with the entity

or entities that have the right to conduct Petroleum Operations in

the areas into which the Discovery extends.

27.2

In such case, a collective proposal for common

Development and Production of the deposit of Petroleum shall be

proposed by Contractor and such other entity or entities for

approval by Minister. If such proposal is not approved, Minister

may prepare or cause to be prepared, for the account of Contractor

and the other entities involved a reasonable plan for common

Development and Production.

27.3

Where one or more of the entities object to the programme

prepared by Minister under Article 27.2 it or they may within

twenty-eight (28) days of receipt of the programme, submit the

matter for arbitration in accordance with the procedure set out in

this Contract.



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ARTICLE 28

CONFIDENTIALITY

28.1

All technical data and other information related to

Petroleum Operations in the Contract Area shall be the property of

the State. Except as provided in Articles 28.3, 28.4 and 28.5 all

data shall be maintained by the Parties as strictly confidential

and shall not be divulged by either Party during the term of the

Contract without prior written consent of the other Party, except

to the extent required to comply with applicable law, unless such

data become part of the public domain.

28.2

Such confidentiality undertaking shall continue to apply

to Contractor for a period of five (5) years after the termination

of the Contract. Contractor shall not trade, sell or publish data

pertaining to the Contract Area at any time without the prior

written consent of Minister.

28.3

A Party may disclose such information to its employees,

Affiliates, consultants, banks, financial institutions, auditors,

Subcontractors and prospective assignees to the extent required for

the efficient conduct of Petroleum Operations. Prior to making any

such disclosures to its consultants, banks, financial institutions,

auditors, Subcontractors or prospective assignees, such Party shall

obtain from such individuals or entities a written confidentiality

undertaking to keep the data and information strictly confidential.

Contractor may also, upon written notice to Minister, make such

disclosures as may be required by applicable law or the rules of a

recognized stock exchange and such notice shall include copies of

the information to be disclosed.

28.4 (a) All data furnished under this Contract shall, subject to

the exemptions in Article 28.4 (b) below, be treated as

strictly confidential for the term of this Contract or any

extension or renewal hereof, except that Minister and

Contractor shall have the right to use such data for the

purpose of any arbitration or litigation between Minister and

Contractor.

(b)(i)

Data related to Petroleum Operations in areas which

have been relinquished by Contractor may be released by

Minister immediately on relinquishment.

(ii)



Data related to the Petroleum Operations in areas

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not relinquished in accordance with the terms of this

Contract may be released by Minister at the end of the

sixth(6th) year of the Contract or one (1) year after

acquisition whichever period is later.

28.5

The Minister shall be entitled at any time to prepare and

publish reports or studies using information derived from any

information or data related to the Contract Area.



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ARTICLE 29

PIPELINES

29.1

Sections 26 and 27 of the Petroleum Regulations shall

apply to any pipeline outside of the Contract Area but which is

included as a part of Petroleum Operations hereunder.

29.2

In the event of usage of such pipeline by third parties,

the tariff collected by Contractor shall be credited to the cost

recovery account.



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ARTICLE 30

INSURANCE

30.1

Contractor shall provide all insurance required by

applicable law and such other insurance as may be agreed with

Minister from time to time in conformity with generally accepted

practices in the international Petroleum industry.

Contractor

shall insure with a reputable insurance company that shall repay

claims in convertible currency.

30.2

All such policies of insurance with respect to the

operations of Contractor shall name Minister as an additional named

insured or "loss payee" and shall contain an express waiver of

subrogation against the Government and Minister.

30.3

Contractor shall upon request

copies of all policies of insurance.



provide



Minister



with



30.4

Contractor shall actively pursue any claims against

insurers. Any amount received from insurance settlements shall be

applied and accounted for in accordance with the Accounting

Procedure.

30.5

Contractor shall not self-insure or insure through

Affiliates without the specific prior approval of Minister.

30.6

Contractor may utilize its normal worldwide insurance

programmes and coverage to satisfy these insurance requirements

with the prior approval of Minister.



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ARTICLE 31

ASSIGNMENT AND TRANSFER

31.1

Any entity or entities comprising Contractor may with

prior approval of Minister assign all or an undivided percentage

interest in its rights and obligations under the Contract to any of

its Affiliates provided that:

(a) such entity demonstrates to Minister's satisfaction that

the Affiliate to which the assignment is proposed to be made

is as qualified as the assignor with respect to its technical

and financial competence;

(b) such entity at

with an undertaking

Affiliate to which

required by Article



the time of such notice provides Minister

from the ultimate parent company of the

the assignment is proposed to be made

8.5;



(i) the instrument of assignment states precisely that the

assignee is bound by all covenants contained in the Contract;

and

(j) the assignor submits a valuation and all material terms

of the assignment.

31.2

Subject to the prior written approval of Minister any of

the entities comprising Contractor may assign all or an undivided

percentage interest in its rights and obligations under the

Contract to a third party that is not an Affiliate of Contractor.

For consideration to be given to any such request:

(a) all accrued obligations of the assignor derived from the

Contract must have been duly fulfilled as of the date such

request is made, or assignor and assignee must jointly and

severally guarantee fulfillment of any unfulfilled accrued

obligations of assignor;

(b) the proposed assignee or assignees must produce

reasonable evidence to Minister of its or their financial and

technical competence;

(c) the instruments of assignment shall be submitted to

Minister for scrutiny and approval and shall include

provisions stating precisely that the assignee is bound by all

83



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covenants contained in the Contract; and

(d) the assignor submits a valuation and all material terms

of the assignment.

31.3

No assignment shall in any way absolve the assignor from

the obligations undertaken by it under the Contract except to the

extent such obligations are in fact performed by the assignee.

31.4

Any entity or entities comprising Contractor shall apply

for consent, at least ninety (90) calendar days before the proposed

effective date of the Transfer; which application shall include

evidence to Minister of the financial and technical competence of

the Transferee together with a valuation and all material terms of

the transfer.

31.5

Each assignee or Transferee shall within thirty (30) days

after the effective date of the assignment or Transfer comply with

the requirements of Articles 10.1 and 10.2.

31.6

For each assignment or Transfer made by any entity or

entities comprising Contractor the following rates shall apply to

the amounts or value of the consideration:

(a)

(b)

(c)



For every dollar of the first US$100 million: 1%

For every dollar of the next US$100 million: 1.5%

For every dollar thereafter: 2%



31.7

The Minister reserves the right to employ the services of

an independent consultant, at the cost of Contractor or any of the

entities comprising Contractor, to be mutually agreed by Minister

and such entity, to carry out an independent valuation of the

transaction. The final determination of the valuation shall remain

with Minister and will be subject to the applicable rates stated in

Article 31.7 above.

31.8

Should an assignment or Transfer referred to under this

Article occur without such entity first obtaining the required

consent of Minister, it may result in the forfeiture of this

Contract at the sole discretion of Minister.



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ARTICLE 32

APPLICABLE LAW

32.1

The validity, interpretation and implementation of the

Contract shall be governed by the laws of the Republic of Trinidad

and Tobago.



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ARTICLE 33

CONSULTATION, EXPERT DETERMINATION

AND ARBITRATION

33.1

The Parties shall make their best effort to settle

amicably through consultation any dispute arising in connection

with the performance or interpretation of any provision hereof.

33.2

If any dispute referred to under this Article has not

been settled through such consultation within ninety (90) days

after the dispute arises either Party may by notice to the other

Party propose that the dispute be referred either for determination

by a sole expert or to arbitration in accordance with the

provisions of Article 33.

33.3

Following the giving of notice under Article 33.2, the

Parties may, by mutual agreement, refer the dispute for

determination by a sole expert to be appointed by agreement between

the Parties.

Such sole expert shall be an internationally

recognized specialist in the interpretation of the subject under

dispute. If the Parties are unable to agree on designation of the

expert within thirty (30) days following the giving of notice under

Article 33.2, the expert shall be named by an internationally

recognized organisation to be agreed to by the Parties.

33.4

As an alternative to the procedure described in Article

33.3 and if agreed upon by the Parties, such dispute shall be

referred to arbitration by an agreed sole arbitrator.

33.5 (a) If the Parties fail to refer such dispute to a sole

expert under Article 33.3 or to a sole arbitrator under

Article 33.4, within sixty (60) days of the giving of notice

under Article 33.2, the dispute shall be referred to

arbitration. The arbitration shall be conducted by three (3)

arbitrators in accordance with the the Arbitration Rules of

the United Nations Commission on International in effect on

the Effective Date of the Contract.

(b) Where arbitration is resorted to either by the sole

arbitrator under Article 33.4 or arbitral tribunal, the

Arbitration Rules of the UNCITRAL Rules in effect on the

Effective Date of the Contract shall be used.

33.6



The English language shall be the language used in the

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expert or arbitral proceedings. All hearing materials, statements

of claim or defence, award and the reasons supporting them shall be

in English.

33.7

The place of the expert determination or arbitration

shall be in Trinidad and Tobago.

33.8

In the case of a request by Contractor pursuant to

Article 17.6 (e) for final determination by an expert of whether a

disputed charge is subject to cost recovery, such expert shall be

an internationally recognized specialist in interpretation of

Petroleum contracts with experience in verifying costs of Petroleum

Operations. If the Parties are unable to agree on designation of

the expert within thirty (30) days after Contractor's request under

Article 17.6 (e) for the expert determination, the expert shall be

named by the International Chamber of Commerce. The waiting period

required by Article 33.2 shall not apply to this type of expert

determination.

33.9 (a) Any decision by the expert determination, sole arbitrator

or arbitral tribunal shall be final and binding upon the

Parties. Such decision shall be rendered within sixty (60)

days after the completion of the expert determination or

arbitration proceedings.

(b) Judgment for execution of any award rendered by the

expert determination, sole arbitrator or arbitral tribunal may

be entered by any court of competent jurisdiction without

review of the merits of such award.



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ARTICLE 34

FORCE MAJEURE

34.1

No delay, default, failure or omission by either Party in

the performance of any obligation under this Contract shall be

considered as a breach of the Contract if such delay, default or

omission is due to force majeure, as defined in Section 19(2) of

the Act. The Party claiming force majeure shall notify the other

in writing as soon as possible and take all reasonable and

necessary measures to resume full execution of performance

hereunder as soon as possible.

34.2

Notwithstanding anything in Article 34.1 (and without

prejudice to the generality thereof) the following events or

circumstances shall not be treated as being force majeure or caused

thereby:

(a) failure by either Party to pay money when due or fulfill

any financial obligation under this Contract;

(b) the insolvency of Contractor or any entity constituting

Contractor.

34.3

If the Petroleum Operations are partially or totally

suspended as a result of force majeure, the duration of the period

directly affected by such suspension shall be extended by a period

corresponding to the period of the suspension which in no event

shall be more than two(2) years.

34.4

Contractor may terminate this Contract upon a three (3)

month written notice to Minister if the fulfillment of the

obligation of either Party under this Contract is affected by Force

Majeure during the Exploration Period or any extension thereof for

a continuous period exceeding two (2) years without further

obligation and liabilities of any kind.



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ARTICLE 35

NOTICES

35.1

Any notice, report and other communications required or

given under this Contract shall be deemed given when delivered in

writing either by hand, in person or through the registered mail,

courier service or fax transmission, appropriately addressed as

follows:

TO THE MINISTER

(i)



By Hand or Mail:-



Permanent Secretary

Ministry of Energy and Energy Industries

Level 9, Riverside Plaza

Besson Street

Port of Spain. Trinidad & Tobago

Telefax No. (868) 625 0306



TO CONTRACTOR

(i)



By Hand or mail -



Official designated under Article 10.1

35.2

Each of the Parties may change its address or addresses

or representative for purpose of receiving notices by giving at

least ten (10) days prior written notice of the change to the other

Party.



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Deep Onshore

ARTICLE 36

TERMINATION

36.1

The Minister shall have the right to terminate the

Contract and to take without consideration all property of whatever

nature belonging to Contractor in Trinidad and Tobago related to

the Contract Area if Contractor fails:

(a) to fulfill the obligations provided for in Articles 7 or

14 hereof; or,

(b) to conform to the provision of an arbitration award or

expert determination under Article 33 hereof.

36.2

Contractor shall have the right to terminate

Contract by electing to relinquish the entire Contract

pursuant to the conditions specified in Article 5.



this

Area



36.3

If either Party to the Contract commits a material breach

of Contract, the other Party shall have the right to terminate the

Contract using the following procedure:

(a) The Party claiming the right to terminate shall give

notice to the other Party specifying the particular material

breach complained of, and requiring the other Party, within

ninety (90) days of such notice, to remedy the same or make

reasonable compensation to the complaining Party, as the case

may be;

(b) If the Party receiving the notice fails to comply with

said notice, the complaining Party may, after the expiration

of the ninety (90) days notice, forthwith terminate this

Contract provided that in the event the issue of whether there

has been a material breach has been referred to arbitration or

expert determination under Article 33, the complaining Party

may not exercise its power of termination until the result of

arbitration or expert determination is known. The Party which

elects to refer the dispute to arbitration or expert

determination must be diligent in pursuing its claim in such

proceedings.

Failure to pursue such claim diligently will

entitle the complaining Party to exercise its right to

terminate in spite of the referral to arbitration or expert

determination.



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Deep Onshore

36.4

Contractor shall have the right to terminate

Contract in accordance with the provisions of Article 34.4.



this



36.5

This Contract may be terminated prior to the end of the

Contract term, by express agreement of the Parties or in accordance

with the provisions of Article 4.2.

36.6

Upon the termination of this Contract by either Party all

rights granted to Contractor and all obligations imposed on

Contractor hereunder shall terminate, subject and without prejudice

to any rights which may have accrued to Minister or to Contractor

under this Contract.



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Deep Onshore

ARTICLE 37

ABANDONMENT PROGRAMME, BUDGET AND ESCROW ACCOUNT

37.1

Within sixty (60) days after cessation of production or

the sooner relinquishment of some or all of the Contract Area,

Contractor shall carry out to Minister's satisfaction an

abandonment programme agreed with Minister for all installations

and pipelines provided by Contractor under this Contract that

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

Article 24.1. With respect to the area being relinquished and/or

facilities thereon, such abandonment programme shall comply with

internationally accepted standards prevailing at the time of

abandonment.

37.2

Contractor shall establish an interest bearing escrow

account in the name of Minister at a financial institution approved

by Minister to accumulate cash reserves for use as a contingency

fund against possible pollution and eventual abandonment of wells

and decommissioning of facilities related to Petroleum Operations

in the Contract Area.

37.3

Contractor shall pay twenty five (25) cents in the

currency of the United States of America per barrel of oil

equivalent produced into said escrow account.

37.4

The Minister may at his sole discretion access funds from

the escrow account in the event that Contractor fails to effect

environmental clean-up during the term of this Contract, or

properly abandon wells, or decommission facilities to the

satisfaction of Minister upon termination of this Contract. Where

Minister accesses the escrow account as aforementioned Contractor

shall be required to pay into the account the sum used for said

purposes within sixty (60) days.

37.5



Not later than five (5) years before the earlier of:

(a)



the scheduled expiry of the term of the Contract; or



(b) Contractor's anticipated termination of Production of a

Field or of operation of a pipeline;

Contractor shall submit for Minister's approval a proposed

abandonment programme and budget covering all such installations

and pipelines provided by Contractor under this Contract.

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Deep Onshore

37.6

The Minister shall act without unreasonable delay in

reaching a decision on Contractor's proposal under Article 37.2 and

may approve or modify or impose conditions thereon.

Before

modifying or imposing conditions on the proposal, Minister shall

notify Contractor of the proposed modification or conditions and

give Contractor the opportunity to make written representations

within sixty (60) days thereafter about the proposed modifications

or

conditions.

After

taking

into

consideration

such

representations Minister and 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 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 33.

Until such time that the determination has been made, Contractor

shall make payments into the escrow account referred to in Article

37.5, based on its proposed abandonment programme and budget.

After the determination is made, Contractor shall adjust the

payments to such escrow account to reflect the abandonment

programme and budget so determined.

37.7

In the event that Contractor does not present a timely

proposal to Minister under Article 37.2 Minister, after giving

thirty (30) days notice to Contractor of his intention to do so,

may prepare an abandonment programme and budget for the Contract

Area if Contractor does not present a proposal by the end of the

thirty (30) day period.

When Minister has so prepared the

abandonment programme and budget, it shall have the same effect as

if it had been submitted by Contractor and approved by Minister.

37.8

The approved budget for carrying out the approved

abandonment programme shall be provided for by monies paid into the

escrow account established under Article 37.2. In addition to the

payments made under Articles 37.3 and 37.4 Contractor shall also

pay into the account a per unit of production assessment. If the

approved budget is less than the value of the escrow account,

Contractor shall pay the difference based on a per unit of

production assessment. The assessment shall be calculated dividing

the difference between the approved budget and the value in the

escrow account by the estimated units of production to be produced

and saved by Contractor between the date of Minister's approval and

the anticipated date of the abandonment.



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Deep Onshore

37.9

Upon determination of the Contract, where Contractor

fulfills all obligations in respect of environmental remediation,

abandonment of wells and decommissioning of facilities to the

satisfaction of Minister, all existing funds in the Escrow account

shall remain with Minister. If the escrowed amount is insufficient

to complete the approved programme, Contractor shall pay all such

additional required costs. In the event Minister elects to have

the facility delivered up to him, the escrow account shall be

transferred to Minister, who shall assume all responsibility for

the facility, its abandonment and hold Contractor harmless against

any liability with respect thereto accruing after the date of such

transfer to Minister.



94



Deep Onshore

ARTICLE 38

THE PETROLEUM ACT AND REGULATIONS

38.1

Pursuant to Section 6 (4) of the Act, the Parties

have agreed that this Contract sets out comprehensively the rights

and obligations of the Parties with regard to matters otherwise

covered by the Act and the Petroleum Regulations provided that any

provisions regarding safety incorporated in the Regulations, Rules

and/or Orders as Minister may issue from time to time shall apply

to Contractor.

38.2

So much only of the Act and the Regulations as are not

excluded by the Contract shall apply to Contractor, and where any

provision of the Act or the Regulations is modified by this

Contract for the purposes of this Contract, the Act and the

Regulations shall be read and construed accordingly, and where

there is any conflict or variance with reference to any matter

between the provisions of this Contract and the Act or the

Regulations, the provisions of this Contract shall prevail.



95



Deep Onshore

Article 39

Local Content

39.1

Contractor shall comply with the Government’s

Content Policy in force and as modified from time to time.



Local



39.2

Contractor shall maximize to the satisfaction of Minister

the level of usage of local goods and services, businesses,

financing and the employment of nationals of the Republic of

Trinidad and Tobago.

39.3

Contractor shall ensure that sub-contracts are sized, as

far as it is economically feasible and practical to match the

capability (time, finance and manpower) of Local Enterprises and

shall manage the risk to allow their participation.

39.3

Contractor shall provide to Minister together with the

annual work programme and budgets required under Articles 14 and 15

a list of all projects to be undertaken as well as all goods and

services that are required for the conduct of Petroleum Operations.

The Minister and Contractor shall agree on a list of those

projects and goods and services which shall be published in at

least two local newspapers and on the Ministry’s website.

39.4

All tenders are to be advertised, evaluated and awarded

in Trinidad and Tobago. Contractor shall apply to Minister for

prior approval where the circumstances warrant that any part of the

tender process be conducted outside of Trinidad and Tobago.

39.5

Contractor shall

give

equal

treatment to

Local

Enterprises by ensuring access to all tender invitations and by

including high weighting on local value added in the tender

evaluation criteria.

39.6

Contractor shall give assurance to Local Enterprises in

respect of prompt payment for goods and services actually provided

to Contractor and its Subcontractors both foreign and local.

39.7

Contractor shall ensure the development of people by

imparting to nationals technology and business expertise in all

areas of energy sector activity including but not limited to:

(i)



Fabrication



96



Deep Onshore

(ii)

Information Technology support, including seismic

data acquisition, processing and interpretation support

(iii)



Operations and maintenance support



(iv)



Maritime services



(v)

Business support services, including accounting,

human resource services, consulting, marketing and

contract negotiations

(vi)



Financing



(vii) Trading

39.8

Contractor shall ensure that nationals are selected and

trained consistent with Contractor’s performance standards in

relation to activities referred at 39.7.

39.9

In addition to the requirements in Article 39.7

Contractor shall ensure that the development of people in key areas

allow nationals to take more value-added, analytical and decision

making roles in areas:

(a) of a technical or professional nature including general

management, design engineering, project management, seismic

data processing, human resource development, legal; and

(b) business strategic skills including leadership, business

development, executive management, commercial, analytical,

negotiating, strategy development and trading know how and

acumen.

39.10

In accordance with its obligations under Article 10.4

Contractor shall maintain records to facilitate the determination

of the Local Content of expenditure incurred in respect of

Petroleum Operations.

These records shall include supporting

documentation certifying the cost of local materials, labour and

services used and shall be subject to audit by Minister.

39.11

Pursuant to Article 13 of Annex C Contractor shall

prepare and submit reports to Minister in accordance with the

specified timeframe.



97



Deep Onshore

ARTICLE 40

MISCELLANEOUS

40.1

This Contract may not be amended, or any provision hereto

waived, except by a written amendment executed with the same

formality as this Contract by the Parties hereto and expressly

stated to be a modification or waiver of this Contract.

40.2

The headings of this Contract are for convenience of

reference only and shall not be taken into account in interpreting

the terms of this Contract. A reference to the singular in this

Contract includes a reference to the plural and vice versa.

40.3

The provisions of this Contract shall inure to the

benefit of and be binding upon the Parties and their permitted

assignees and successors in interest.

40.4

No waiver by any Party

defaults by any other Party in

shall operate or be construed as

or defaults whether of a like or



of any one or more obligations or

the performance of the Contract

a waiver of any other obligations

of a different character.



40.5

In case any one or more of the provisions contained in

this Contract should be invalid, illegal or unenforceable in any

respect, the validity, legality and enforceability of the remaining

provisions contained herein shall not in any way be affected or

impaired thereby provided that the remaining provisions are

enforceable and the invalid, illegal or unenforceable provision or

provisions are not fundamental to this Contract.

40.6

No deemed approval under Articles 13, 14 or 15 or

otherwise of this Contract shall result in the extension of any

phase of this Contract.

40.7

This Contract supersedes and replaces any previous

agreement or understanding between the Parties whether oral or

written on the subject matter hereof, prior to the date of this

Contract.



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Deep Onshore

AS WITNESS WHEREOF --------------------, Director of Surveys acting

on behalf of His Excellency George Maxwell Richards, the President

of the Republic of Trinidad and Tobago has hereunto set his hand

the

day of

, 2006 and Senator Dr. the

Honourable Lenny Saith, Minister of Energy and Energy Industries

has hereunto set his hand the

day of

2006. The Corporate Seal of -------------------------------- was

hereunto affixed the

day of

, 2006.

SIGNED AND DELIVERED by the

within-named ------------------Director of Surveys, as

and for the act and deed of the

President of the Republic of

Trinidad and Tobago in the

presence of:



)

)

)

)

)

)

)



And of me,



SIGNED AND DELIVERED by the

)

within-named, Senator Dr. the Honourable

LENNY SAITH, Minister of

Energy and Energy Industries as and for

his act and deed in the presence of:



)

)

)

)



And of me,

___________________________________

Attorney-at-Law



99



Deep Onshore

The Corporate Seal of



)

)

)



was

hereunto affixed by



)

)

)



Manager,

in the presence of:



)



)

Vice President

in conformity with the Articles

of Incorporation of said

Company as and for the act and

deed of the said Company in the

presence of:



)

)

)

)

)

)



)

Manager



)

)



)



The Corporate Seal of



)

)

)



was

hereunto affixed by

)

Manager

Attorney-in-fact pursuant to a

Power of Attorney, Registered as

No.

of

dated

,



)

)

)

)

)



)

in conformity with the By-Laws

)

of the said Company as and for the )

act and deed of the said Company

)

in the presence of:

)

)

)

And of me,

100