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EPCC PT5-C
PETROLEUM EXPLORATION AND PRODUCTION CONCESSION CONTRACT
BETWEEN
THE GOVERNMENT OF MOAMBIQUE
AND
SASOL PETROLEUM MOZAMBIQUE EXPLORATION LIMITADA
AND
EMPRESA NACIONAL DE HIDROCARBONETOS E.P.
FOR EPCC AREA PT5-C
EPCC PT5-C
Contents
Article 1 EPCC Documents..................................................................................................................4
Article 2 Definitions............................................................................................................................5
Article 3 EPCC Rights and their duration............................................................................................6
Article 4 Work Commitment during Exploration Period....................................................................8
Article 5 Conduct of Petroleum Operations.....................................................................................13
Article 6 Commercial Discovery and Development..........................................................................14
Article? Relinquishment of Areas....................................................................................................14
Article 8 Export of Documentation and Samples.............................................................................15
Article 9 Cost Recovery and Production Entitlement.......................................................................15
Article 10 Valuation of Petroleum......................................................................................................17
Article 11 Fiscal Terms and Other Charges........................................................................................20
Article 12 Production Bonuses...........................................................................................................22
Article 13 Lifting Arrangements.........................................................................................................23
Article 14 Decommissioning Plan and Decommissioning Fund.........................................................24
Article 15 Insurance...........................................................................................................................25
Article 16 Employment, Training, and Institutional and Social Support Programmes......................28
Article 17 Indemnification and Liability.............................................................................................29
Article 18 Title....................................................................................................................................30
Article 19 Accounting and audits.......................................................................................................31
Article 20 Confidentiality....................................................................................................................31
Article 21 Assignment........................................................................................................................32
Article 22 Force Majeure....................................................................................................................32
Article 23 Nature and Extent of Rights of the Concessionaire...........................................................33
Article 24 Environmental Protection..................................................................................................36
Article 25 Surrender and Cancellation...............................................................................................36
Article 26 Consultation, Arbitration and Independent Expert...........................................................38
Article 27 Applicable Law...................................................................................................................41
Article 28 Language............................................................................................................................41
Article 29 Joint Operating Agreement...............................................................................................41
Article 30 Future Agreements............................................................................................................42
Article 31 Foreign Exchange...............................................................................................................42
Article 32 Prevention of Corruption...................................................................................................42r
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Article 33 Compliance with Law 15/2011, of 10 August 2011 and Decree n.° 16/2012, of 4 June
2012) ("Public Private Partnership Law")..............................................................................................43
Article 34 Stability of Economic Benefit.............................................................................................43
Article 35 Notices...............................................................................................................................43
EPCC PT5-C
Parties
This Exploration and Production Concession Contract ("EPCC") is entered into in accordance with
applicable law on the J..Z. day of October 2018:
THE GOVERNMENT OF THE REPUBLIC OF MOZAMBIQUE, hereinafter referred to as "the
Government" and herein represented by the Minister of Mineral Resources and Energy; and
Sasol Petroleum Mozambique Exploration, Lda., a company established in accordance with the laws
of the Republic of Mozambique hereinafter referred to as " Sasol" and herein represented by its
appointed representative; and
Empresa Nacional de Hidrocarbonetos. E.P., a company established in accordance with the laws of
the Republic of Mozambique, hereinafter referred to as "ENH" and herein represented by its
Chairman.
Sasol and ENH shall hereinafter be referred to as the "Concessionaires" or individually as "the
Concessionaire" as appropriate. The Concessionaires and the Government shall hereinafter
collectively be referred to as the "Parties" and individually as "Party".
Preamble
WHEREAS, applicable law provides that all Petroleum resources in the soil and the subsoil of the land
territory, in the seabed of internal waters and the territorial sea, in the exclusive economic zone and
on the continental shelf of Mozambique, are the property of the Republic of Mozambique;
WHEREAS, this EPCC was awarded through a competitive bidding process pursuant to applicable
Petroleum law;
WHEREAS, pursuant to applicable law, Government is competent to ensure the implementation of
the policy for Petroleum Operations and has for the purpose of this EPCC appointed the Ministry of
Mineral Resources and Energy, hereinafter referred to as "MIREME", to carry out certain functions
for and on behalf of the Government as hereafter specified;
WHEREAS, the Government desires to award to Sasol and ENH the right to undertake Petroleum
Exploration, Development and Production in certain areas subject to the jurisdiction of the Republic
of Mozambique;
WHEREAS, the Concessionaires are willing, on certain terms and conditions stipulated to undertake
Petroleum Exploration, Development and Production in the EPCC Area and have for such purpose
technical competence and adequate financial resources; and
WHEREAS, the Petroleum Law establishes that Petroleum Exploration, Development and Production
activities shall be performed pursuant to a concession contract.
NOW THEREFORE it has been concluded as follows:
Article 1 EPCC Documents
1.1 The EPCC consists of this EPCC main document and the following Annexes, which form an
integral part hereof:
EPCC PT5-C
Annex "A" Description of the EPCC Area
Annex"B" Map of the EPCC Area
Annex"C" Accounting and Financial Procedure
Annex"D" Form of Bank Guarantee
Annex"E" Parent Company Guarantee
Annex "F" Joint Operating Agreement
1.2 Subject to the conclusion of the EPCC, the Concessionaires shall submit a signed joint
operating agreement in the form substantially set out in Annex "F", for which Government
approval is a condition under this EPCC.
1.3 In the event of conflict between the provisions of the EPCC main document and its
Annexes, the EPCC main document shall prevail.
Article 2 Definitions
Definitions stipulated in the applicable Petroleum Law, currently Law no. 21/2014 of 18 August and
the Petroleum Operations Regulations, currently Decree No. 34/2015 of 31 December, apply to this
EPCC unless the context otherwise provides, together with words and phrases used in this EPCC
including its Annexes which shall have the following meanings:
"Permitted Assignee" means, for the purpose of this EPCC, the Government or a Mozambican Person
wholly owned and controlled by the Government or ENH.
"Effective Date" means the first day of the month following the date on which the terms stipulated in
Article 3.2 are satisfied.
"FOB" as defined by INCOTERMS 2010.
"Liquefied Natural Gas" or "LNG" means Natural Gas previously processed, in a liquid state at or
below its boiling point at atmospheric pressure.
"Petroleum Production Tax" means the "Imposto sobre a Produfao de Petroleo" as defined by
applicable law.
"INP" means the National Petroleum Institute, the regulating entity responsible for administering and
promoting Petroleum Operations in the Republic of Mozambique.
"Participating Interest" means the percentage interest portion, as further described in Article 3.2,
held by each Concessionaire in the rights, privileges, duties and obligations derived from this EPCC
and in an unincorporated joint venture established by the joint operating agreement.
"State Participating Interest" means the share of the Participating Interest owned by an entity
holding such share on behalf of the State.
"MIREME" means the Ministry with authority over the Petroleum sector in the Republic of
Mozambique.
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EPCC PT5-C
"Exclusive Petroleum Operations” mean those Petroleum Operations carried out pursuant to
applicable law and this EPCC which are chargeable to the account, benefit and liability of less than all
Concessionaires under this EPCC.
"Person" means any natural person or any company, association, partnership, joint venture or entity
which is considered a legal entity under the laws of Mozambique or the laws of the country pursuant
to which such company, association, partnership, joint venture or entity is governed.
"Expatriate Personnel" means any employee of any Concessionaire, Affiliated Company of any such
Concessionaire or of any Subcontractor, provided such employee is not a National Individual and
whose contract of employment provides for the payment or the reimbursement of the cost of his
passage to and from the Republic of Mozambique.
"Development and Production Period" means the period granted to the Concessionaires for the
conduct of Petroleum Operations under a Development Plan approved by the Government.
"Commercial Production" means Production of Petroleum and delivery of the same at the Delivery
Point under a programme of Production and sale as provided for in a Development Plan as amended
from time to time.
"Subcontractor" means any Person other than the Operator, retained by one or more Concessionaire
to carry out any part of Petroleum Operations.
Article 3 EPCC Rights and their duration
3.1 This EPCC is a concession awarded pursuant to Petroleum Law currently Law No. 21/2014
of 18 August, and the Petroleum Operations Regulations issued by Decree No. 34/2015 of
31 December, which;
(a) authorises the conduct of certain Petroleum Exploration, Development and Production
activities in the EPCC Area as defined herein; and
(b) confers to each Concessionaire, subject to applicable law and the terms and conditions
set forth in this EPCC, an exclusive right to conduct Petroleum Operations in order to
produce Petroleum from resources originating from one or more Petroleum Deposit in
the subsoil within the limits of the EPCC Area.
3.2 a) Prior to this EPCC reaching the Effective Date this EPCC is to be approved by the Council
of Ministers, the appurtenant agreements to this EPCC are to be signed by each
Concessionaire, and the ruling of the Administrative Tribunal has to be obtained.
b) On the Effective Date the respective Participating Interests of:
Sasol is 70 % (seventy percent)
ENH is 30 % (thirty percent).
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EPCC PT5-C
3.3 The rights and obligations of the Concessionaires shall commence on the Effective Date
and shall subsist:
(a) during the Exploration Period; and
(b) subject to terms and conditions as hereinafter provided, during the period for
Development and Production;
Thus, obligations of the Concessionaires accrued hereunder before the end of any
relevant sub-period of an Exploration Period ora relevant period for Development and
Production shall, notwithstanding that this EPCC has otherwise been cancelled subject to
applicable law or the terms and conditions of this EPCC, continue to be binding on the
Concessionaires for the period provided by the applicable law and for the purpose of any
claim in respect thereof, the provisions of Article 26 shall continue to apply.
3.4 The first sub-period of the Exploration Period shall commence on the Effective Date.
Unless the EPCC is terminated earlier in accordance with its terms, it shall continue for a
period of 48 ( forty eight) months.
3.5 Where the Concessionaires decide to enter into a subsequent sub-period of an
Exploration Period the Concessionaires shall give notification to MIREME. The notification
has to be given not later than thirty (30) days before the expiry of the first sub-period of
the Exploration Period, or any subsequent sub-period, or the Exploration Period would
otherwise expire.
Provided that the Concessionaires have fulfilled, or are deemed to have fulfilled, their
obligations under the first and any subsequent sub-period of the Exploration Period, the
Concessionaires are entitled:
(a) at the end of the first sub-period of the Exploration Period, to a second sub-period of
24 (twenty four) months; and
(b) at the end of the second sub-period of the Exploration Period, to a third sub-period
of 24 (twenty four.) months;
(c) to the rights provided in Article 3.6; and
(d) to such additional period of time that may be necessary to give effect to Article 22 on
force majeure.
3.6 The rights and obligations pursuant to this EPCC shall be retained in the following
situations:
(a) Where pursuant to applicable law and this EPCC the Concessionaires have notified
INP that they have made a Discovery, the rights and obligations pursuant to this EPCC
shall not, in respect of the Discovery Area to which that Discovery relates, terminate
provided a proposed Appraisal Programme is timely submitted to INP.
(b) Where INP has approved an Appraisal Programme the rights and obligations
pursuant to this EPCC shall not terminate in respect of the Discovery Area to which that
EPCC PT5-C
Appraisal Programme relates provided the appraisal report for such Discovery is timely
submitted to INP;
(c) Where the Concessionaires pursuant to applicable law and this EPCC have timely
submitted the appraisal report, the rights and obligations pursuant to this EPCC shall not
terminate in respect of the Discovery Area to which that appraisal report relates provided
a Declaration of Commerciality is timely submitted.
(d) Where pursuant to applicable law a Commercial Assessment Period has commenced
in respect of a Discovery of non-associated Natural Gas, the rights and obligations
pursuant to this EPCC shall not, in respect of the Discovery Area to which that Discovery
relates, terminate so long as that Commercial Assessment Period continues.
(e) Where the Concessionaires pursuant to applicable law and this EPCC has timely
submitted a Declaration of Commerciality, the rights and obligations of the
Concessionaires in respect of any Development and Production Area defined therein and
to which any such notice relates, shall continue until the Government's approval of the
timely submitted Development Plan by the Concessionaires.
3 7 Where the rights and obligations pursuant this EPCC has been retained pursuant to
paragraph 3.6 of this article and the Concessionaires have not in due time submitted the
required notification, programme, report, declaration or plan in accordance with
applicable law and this article, the Concessionaires shall have no further rights to the
relevant part of the EPCC Area (Discovery Area(s) or Development and Production
Area(s)), pursuant to this EPCC.
3 8 The period for Development and Production shall commence with respect to each
Development and Production Area on the date on which the Development Plan forthat
Development and Production Area has been approved in accordance with applicable law.
The period for Development and Production shall, unless this EPCC is sooner terminated
in accordance with its terms and applicable law, in respect of the Development and
Production Area continue to subsist for period of thirty (30) years and for additional
periods that may be necessary to give effect to Article 22.4.
Article 4 Work Commitment during Exploration Period
4.1 The Concessionaires shall carry out the Exploration work commitments stipulated in this
EPCC unless otherwise provided or pay to the Government the sums set forth below in
this Article. The Exploration work commitments may not be performed as Exclusive
Petroleum Operations.
Exclusive Exploration Petroleum Operations may only be carried out after the fulfillment
of the Exploration work commitments under this EPCC.
4.2 The Exploration Period shall be divided into 3 (three) sub-periods.
4.3 During the first sub-period of the Exploration Period of 48 (forty eight) months, the
Concessionaires shall conduct the following Exploration work commitment:
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EPCC PT5-C
(a) Acquisition of 1,600 km 2D Seismic
(b) Drill 2 (two) Exploration wells to a depth of approximately 1,750 meters TVD or to a
stratigraphic target of G6 - G12, whichever is first encountered.
(c) Other studies/Data: US$ 5.0 (five million United States Dollars) worth of seismic
interpretation, amplitude analysis, seismic modeling, basin modeling, detailed sequence
stratigraphy analysis and integration of drilling results completed.
In case of non-performance of any part of the Exploration work commitment described in
this Article 4.3, save for exemptions listed in this Article, the maximum amount of any
bank guarantee or the maximum amount to be paid by the Concessionaires to the
Government for this sub-period of the Exploration Period shall be USD 45,000,000.00
(forty five million United States dollars).
4.4 During the subsequent second sub-period of the Exploration Period of 24 (twenty four)
months, the Concessionaires shall conduct the following Exploration work commitment:
(a) Drill one (1) Exploration well to a depth of approximately 1,750 meters TVD or to a
stratigraphic target of G6 -G12, whichever is first encountered
(b) Other Studies/Data: US$ 5.0 (five million United States dollars)
In case of non-performance of any part of the Exploration work commitment described in
this Article 4.4, save for exemptions listed in this Article, and in the manner provided by
this Article, the maximum amount of any bank guarantee or the maximum amount to be
paid by the Concessionaires to the Government for this sub-period of the Exploration
Period shall be USD 17,500,000.00 (Seventeen million five hundred thousand United
States dollars).
4.5 During the subsequent third sub-period of the Exploration Period of 24 (twenty four)
months, the Concessionaires shall conduct the following Exploration work commitment:
(a) Drill one (1) Exploration well to a depth of approximately 1,750 meters TVD or to a
stratigraphic target of G6 -G12, whichever is first encountered.
(b) Other Studies: Complete US$ 5.0 (five million United States dollars) worth of seismic
interpretation, amplitude analysis, seismic modeling, basin modeling, detailed sequence
stratigraphy analysis and integration of drilling results completed
In case of non-performance of any part of the Exploration work commitment described in
this Article 4.5, save for exemptions listed in this Article, and in the manner provided by
this Article, the maximum amount of any guarantee or the maximum amount to be paid
by the Concessionaires to the Government for this sub-period of the Exploration Period
shall be USD 17,500,000.00 (Seventeen million five hundred thousand United States
dollars).
4.6 Should any Well forming part of the Exploration work commitments provided for in
Articles 4.3, 4.4 and 4.5 be abandoned, for any reason other than a reason specified in
EPCC PT5-C
Article 4.7 of this EPCC, before reaching the defined objectives of such Well, the
Concessionaires shall drill a substitute Well. In this event the relevant sub-period of the
Exploration Period shall be extended, by a reasonable period of time as MIREME may
agree to allow the drilling and evaluation of the substitute Well.
4.7 Unless otherwise approved by MIREME, any Well which forms part of the Exploration
work commitments provided for in Articles 4.3,4.3 and 4.5 shall be drilled to such depth
as set forth in those Articles, unless before reaching the required depth:
(a) further drilling would in the reasonable opinion of the Concessionaires present an
obvious danger, due to such events as, but not limited to, the presence of abnormal
pressure or excessive losses of drilling mud;
(b) impenetrable formations are encountered;
(c) Petroleum bearing formations are encountered which require protecting, thereby
preventing planned depths from being reached; or
(d) MIREME agrees to terminate the drilling operation.
4.8 In circumstances which the Concessionaires are permitted pursuant to Article 4.7 to drill
any Well to a lesser depth than required pursuant to Article 4.3,4.4, and 4.5, the
Concessionaires shall be deemed to have satisfied all the Concessionaires' obligations in
respect of that Well.
4.9 During the drilling of Exploration Wells hereunder, the Concessionaires shall, in
accordance with this EPCC and applicable law, keep MIREME informed of the progress of
each Well and shall:
(a) as soon as reasonably possible, inform INP of any proposed Well testing programme;
(b) test potentially commercially viable horizons, in the opinion of the Concessionaires
and after consultation with MIREME, within the EPCC Area indicated by wireline logging
or by other means of formation evaluation; and
(c) promptly undertake a technical evaluation of the said test results and of all other
relevant subsurface data, and submit the same to MIREME as soon as it has been
completed.
4.10 a) Exploration Work Commitment Bank Guarantee
The Concessionaires shall no later than thirty (30) days after the Effective Date, and prior
to the first day of any sub-period of the subsequent Exploration Period provide, in
substantially the form shown in Annex "D", an unconditional and irrevocable bank
guarantee in respect of the guaranteed amount for fulfilling the Exploration work
commitment for the relevant sub-period of the Exploration Period, as the same may have
been reduced by the provisions of Article 4.11.
b) Parent Company Guarantee
EPCC PT5-C
Without prejudice to the joint and several liability of all the Concessionaires, each
Concessionaire shall by no later than thirty (30) days after the Effective Date of this EPCC
provide, in substantially the form shown in Annex "E", an unconditional and irrevocable
parent company guarantee from the ultimate parent company or from a subsidiary
controlled by the ultimate parent company of the Concessionaire acceptable to MIREME in
respect of all its obligations under this EPCC beyond the scope of the Exploration work
commitment bank guarantee. A breach of the guarantor's obligations under the parent
company guarantee shall constitute a breach of the Concessionaires obligations pursuant to
this EPCC.
4.11 The amount of any Exploration work commitment bank guarantee given pursuant to
Article 4.10(a) shall be reduced by the Concessionaires in discharge of its obligations
under Articles 4.3,4.4 and 4.5 as follows:
(a) during the first sub-period of the Exploration Period:
• USD 15,000,000.00 (fifteen million United States Dollars) at completion of the
Exploration work commitment described in Article 4.3. a);
• USD 12,500,000.00 (twelve million five hundred thousand United States Dollars)
for each well at completion of the Exploration work commitment described in
Article 4.3b)
• Other Studies/Data: USD 5,000,000.00 (five million United States Dollars) at
completion of the Exploration work commitment described in Article 4.3(c,
(b) during the second sub-period of the Exploration Period:
• USD 12,500,000.00 (twelve million five hundred thousand United States Dollars)
at completion of the Exploration work commitment described in Article 4.4. a),
• Other Studies/Data: USD 5,000,000.00 (five million United States Dollars) at
completion of the Exploration work commitment described in Article 4.4(b),
(c) during the third sub-period of the Exploration Period:
• USD 12,500,000.00 (twelve million five hundred thousand United States Dollars)
at completion of the Exploration work commitment described in Article 4.5.a);
• Other Studies/Data: USD 5,000,000.00 (five million United States Dollars) at
completion of the Exploration work commitment described in Article 4.5(b),
4.12 If, at the end of the first or any subsequent sub-period of the Exploration Period the
Exploration work commitment to be fulfilled by the Concessionaires during that sub-
period pursuant to Article 4.3,4.4 and 4.5, is deemed by INP as not fulfilled, INP shall
notify the Concessionaires and shall unless the full amount has been met by the
Concessionaires within thirty (30) days of such notification call on the Exploration work
commitment bank guarantee for the payment thereunder of the cost of the fulfillment of
the remaining Exploration work commitment for such sub-period. • r
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EPCC PT5-C
4.13 In the event where the number of Wells drilled for the purpose of Exploration by the
Concessionaires and/or the amount of seismic data acquired during any sub-period of an
Exploration Period exceed the number of Wells and/or the amount of seismic data
acquired provided for in the work commitments forthat sub-period, as established in
Articles 4.3 and 4.4, the number of additional Exploration Wells drilled and/or the
additional amount of seismic data acquired by the Concessionaire during such sub-period
of the Exploration Period may be carried forward and treated as work undertaken in
discharge of the Concessionaires' commitment to drill Exploration Wells and/or acquire
seismic data during the succeeding sub-period of the Exploration Period. If by reason of
the provisions of this Article the Exploration work commitment of the Concessionaires for
any sub-period of the Exploration Period as specified in Articles 4.4 and 4.5 has been fully
discharged by the Concessionaires before that sub-period commences, the
Concessionaires, after consultation with MIREME, shall adopt a work commitment for the
sub-period in question so as to ensure the continuity of Petroleum Operations in, or in
connection with, the EPCC Area during that sub-period of the Exploration Period.
4.14 Except as otherwise provided, nothing in Article 4.12 or Article 4.13 shall be read or
construed as extinguishing, postponing or modifying any commitment of the
Concessionaires to carry out any Exploration work commitment, including seismic surveys
or to drill Exploration Wells pursuant to this Article.
4.15 Appraisal Wells and seismic surveys carried out pursuant to an Appraisal Programme
drawn up pursuant to applicable law and the expenditure incurred by the Concessionaires
in carrying out such Appraisal Programme shall not be treated as discharging in whole or
in part the minimum Exploration work commitment set out in Articles 4.3,4.4 and 4.5.
4.16 Within sixty (60) days of the Effective Date for so long as the Exploration Period subsists
and at least ninety (90) days prior to the end of each calendar year or at such other times
as may be approved in advance by INP, the Concessionaire shall prepare in detail and
submit to INP an Exploration work programme and budget for the remaining portion of
the calendar year or, for the subsequent calendar year(s), and a proposed structure for
the Concessionaire's organisation for the conduct of Exploration Operations in the EPCC
Area.
4.17 The Exploration work programme and budget prepared by the Concessionaires shall be
consistent with obligations under this EPCC and shall set forth the Petroleum Operations
which the Concessionaires proposes to carry out during the remaining portion of the
calendar year and for subsequent calendar year(s). The Concessionaires shall consider any
recommendations made by INP in respect thereof and, after making such revisions
thereto as the Concessionaire consider appropriate, submit the revised annual
Exploration work programme and budget to INP for information.
4.18 The Concessionaires may at any time amend the Exploration work programme and budget
submitted in accordance with Articles 4.16 and 4.17, provided that the amended work
programme and budget are:
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EPCC PT5-C
(a) prepared in detail and submitted to INP, once the Concessionaires have made the
appropriate alterations after consideration of recommendations made by INP; and
(b) consistent with the Concessionaires' obligations under this Article.
Article 5 Conduct of Petroleum Operations
5.1 Any obligation pursuant to this EPCC shall be a joint and several obligation of all of the
Concessionaires, save for those obligations which under applicable law or this EPCC is a
several obligation.
5.2 Sasol shall be the Operator. No change of the Operator may take effect unless it has been
approved by MIREME.
5.3 A Concessionaire shall no less than thirty (30) days counting from the Effective Date of this
EPCC have and maintain an organized structure that is appropriately staffed and with powers
to manage the Petroleum Operations and other aspects pursuant to applicable law and
related to this EPCC.
5.4 In fulfillment of the Regulation of Hiring Citizens of Foreign Nationality for Oil-Mining Sectors,
approved by Decree n.9 63/2011 of 7 December, the Concessionaire or any other Affiliated
Company of such Concessionaire or any Subcontractor, is authorized to keep applicable law
and fill a global and combined quota for foreign national workers distributed as follows:
(a) Each Concessionaire has the right related to hire five (5) foreign national workers, and
(i) In the Exploration phase, the number of additional foreign national workers to
be hired can be up to 50% of the total number of workers hired by the
Concessionaire, Affiliated Companies and Subcontractors authorized to do
business in Mozambique;
(ii) During the period of Development, for the implementation of the Plan of
Development, the number of additional foreign national workers be hired can
be up to 33% of the total number of workers hired by the Concessionaire,
Affiliated Companies and Subcontractors authorized to do business in
Mozambique;
(b) In case the number of foreign national workers is expected to exceed the proportion
of foreign national workers authorized in i) or ii), any additional hiring is subject to the
prior authorisation of the Minister responsible for labour.
Quotas applicable for the period in which a Plan of Development is being implemented or for the
Production period shall be stipulated in that Plan of Development recognising that the referred number
of foreign national workers will be progressively reduced, as stipulated, as soon as a Development
activity has been implemented and the Mozambican workers have been trained for technical and
services specialized positions.
EPCC PT5-C
Article 6 Commercial Discovery and Development
6.1 The Concessionaire shall pursuant to applicable law submit to MIREME for Government
consideration and approval a Development Plan for a proposed Development and Production
Area for one or more Discoveries so as to include, so far as the boundaries of the EPCC Area
permit, the entire area of the Petroleum Deposit or Deposits in respect of which a
Declaration of Commerciality has been given. MIREME shall, within twelve (12) months from
receipt of the proposed Development Plan submitted by the Concessionaire, give its views on
the matter.
6.2 If Commercial Production of Petroleum has not commenced within a period specified in an
approved Development Plan, from the date on which the Development Plan is approved,
then the rights and obligations of the Concessionaires over the Development and Production
Area to which the Discovery relates shall be extinguished as though the said area had been
surrendered pursuant to applicable law. Such period may be extended
(a) by any period that may be necessary to commence Commercial Production where
the Concessionaires commenced promptly to implement the Development Plan as soon as
the Development Plan was approved and has continued to diligently implement the
Development Plan but at the end of the period (s) prescribed in this Article 6.2, have not yet
commenced Commercial Production; or
(b) by the period of time that the commencement of Commercial Production has been
delayed for lack of any approval or permit required to be obtained from the Government or
any agency thereof after the implementation of the Development Plan has begun and prior
to the commencement of Commercial Production and such delay is not attributable to
actions or omissions which are within the reasonable control of the Concessionaire; or
(c) by any period that may be necessary to give effect to Article 22.4.
Article 7 Relinquishment of Areas
Where, at the end of any Exploration sub-period the Concessionaires request to enter into a new
Exploration sub-period, the Concessionaires shall pursuant to the rules of abandonment of areas in
applicable law relinquish its rights to a part of the EPCC Area in the following manner
(a) at the commencement of the second Exploration sub-period of 24 (twenty four) months in
respect of a portion of the EPCC Area so that the area retained, excluding what is already included in
Development and Production Areas or in Discovery Areas, does not exceed 80% (eighty per cent) of
the EPCC Area on the Effective Date;
(b) at the commencement of the third Exploration sub-period in respect of a portion of the
remaining EPCC Area so that the area retained, excluding what is already included in Development
and Production Areas or/in Discovery Areas, does not exceed 60% (Sixty per cent percent) of the
EPCC Area on the Effective Date; and
(c) at the end of the Exploration Period, in accordance with applicable law.
EPCC PT5-C
Article 8 Export of Documentation and Samples
Subject to applicable law and the approval of INP, each Concessionaire may export for processing or
laboratory examination or analysis documents, samples or other original materials including
documentation under Article 54 of the Petroleum Operations Regulations; provided that samples
equivalent in size and quality or copies of equivalent quality have first been delivered to INP.
Article 9 Cost Recovery and Production Entitlement
9.1 The Concessionaires shall bear and pay all costs incurred in carrying out the Petroleum
Operations in which the Concessionaires participate, and the Concessionaires shall recover
such costs within the limit of 60 % of the Disposable Petroleum ("Cost Petroleum"), to the
extent permitted by the EPCC including the provisions of Annex "C" of this EPCC, (hereinafter
referred to as "Recoverable Costs"), and shall be remunerated exclusively by means of an
entitlement to quantities of Petroleum to which the Concessionaires are entitled in
accordance with the terms of the Special Tax Law (Law no. 27/2014 of 23 September, as
amended by Law No. 14/2017 of 28 December) and of the respective Regulations approved
by Decree no. 32/2015 of 31 December and the IRPC code (Law No. 34/2007 of 31
December).
9.2 a) For the purpose that the Government or a Concessionaire may elect to take Profit
Petroleum in kind, the Concessionaires shall, for accounting and reporting purposes, record
Cost Petroleum separately:
i. in respect of each Development and Production Area; and
ii. in the form of liquids and gas, on a pro-rata basis relative to the volumes of
Petroleum Produced.
b) For the purposes of this EPCC, condensate shall be taken in Crude Oil or Natural Gas on the
basis of its character at the Delivery Point.
9.3 The Cost Petroleum for any quarter shall be calculated in the manner aforesaid shall be
increased by:
a) the amount of any contributions made by the Concessionaires into the Decommissioning
Fund during such quarter; and
b) the costs incurred by the Concessionaires during such quarter to implement an
approved Decommissioning Plan prepared pursuant to applicable law save to the extent
that, such costs have been funded by withdrawals from the Decommissioning Fund; and
c) provided that in no event shall the Cost Petroleum exceed 60 % of the Disposable
Petroleum.
9.4 Costs, to the extent permitted by the provisions of Annex "C" of this EPCC, approved by the
competent authority, subject to Article 9.6, shall be recovered from Cost Petroleum:
a) in respect of costs attributable to Exploration as stipulated in Annex "C" of this EPCC
(hereinafter referred to as "Exploration Costs"), by the recovery of the full amount in the
EPCC PT5-C
fiscal year in which they were incurred or in the fiscal year in which Commercial
Production commences, whichever is later; and
b) in respect of the amount of Development and Production Capital Expenditures
stipulated in Annex "C" of this EPCC incurred during each fiscal year by the recovery of
such Capital Expenditure, at a maximum yearly rate of twenty five per cent (25 %) on a
linear depreciation basis beginning in the fiscal year in which such amount is incurred or
in the fiscal year in which Commercial Production commences, whichever is later.
9.5 Costs, mentioned in article 9.4, incurred by Concessionaires to prepare an approved
Decommissioning Plan shall be considered, for the purpose of Corporate Income Tax (IRPC),
as operating costs pursuant to letter e) of article 19 of Law no. 27/2014 of 23 September.
9.6 The quantity of Cost Petroleum to which the Concessionaire is entitled in any year shall be
established on the basis of the value of the Petroleum Produced during such year, and
determined in accordance with applicable law and this EPCC.
9.7 The "Profit Petroleum", shall be shared between the Government and the Concessionaires
according to the following scale:
Government's Concessionaires'
R-Factor Portion Portion
Less than 1 15% 85%
Equal to or greater than 1 25% 75%
And less than 1.5
Equal to or greater than 1.5 35% 65%
and less than 2.0
Equal to orgreater than 2 and 50% 50%
less than 2.5
Equal to or greater than 2.5 60% 40%
9.8 The Concessionaires, excluding ENH or a Permitted Assignee, shall pay all costs properly
incurred under this EPCC in relation to the State Participating Interest of 30 % (thirty
percent) Participating Interest (herein referred to as "Carry") subject to the following
conditions:
(a) In the event of a third party, other than an entity holding a State Participating
Interest (Permitted Assignee), has acquired a Participating Interest in the EPCC from any
Concessionaire other than an entity holding a State Participating Interest, such third party
shall be obliged to take over a proportionate share of the Carry.
16
EPCC PT5-C
(b) A State Participating Interest totally or partially transferred to a non-Permitted
Assignee may only become effective provided all outstanding amounts as set out in Article
9.8 (e) relating to the transferred interest and not yet reimbursed to a Concessionaire subject
to Carry have been paid by the non-Permitted Assignee to the Concessionaires proportionally
to their respective Participating Interests. The share of any future Carry, to be paid by each
Concessionaire subject to Carry, shall be calculated according to the new composition of
Participating Interest of the Concessionaires subject to Carry.
(c) The Carry shall be limited to all costs incurred by the Concessionaire in discharging
their obligations under this EPCC, up to and including the date upon which the Development
Plan has been approved.
(d) The Carry shall be used exclusively to pay for costs properly incurred under this EPCC
in relation to the State Participating Interest. Save for in respect of a transfer to a Permitted
Assignee, ENH may not assign directly or indirectly the benefits derived under the Carry. Any
transfer of a Participating Interest subject to the Carry requires the prior approval of
MIREME.
(e) From the date of commencement of Commercial Production, ENH and any entity
designated by the Government to manage the State Participating Interest shall reimburse in
full the Carry in cash or in kind to the Concessionaires (other than ENH or a Permitted
Assignee). Such reimbursement shall be calculated as and taken from the Cost Petroleum of
ENH or a Permitted Assignee having benefited from the Carry. All Carry amounts owed up to
approval of the first Development Plan shall be subject to payment of interest in United
States dollars, compounded quarterly, calculated at the LIBOR rate plus one (1) percentage
point, from the date such costs are incurred by the Concessionaires (other than ENH or a
Permitted Assignee) until reimbursed in full.
9.9 The Concessionaires may re-inject Natural Gas which is not (i) taken by Government pursuant
to applicable law, (ii) used for Petroleum Operations or processed and sold by the
Concessionaires, or (iii) used by the Concessionaires for Concessionaires' purposes, and the
costs of such re-injection of Natural Gas shall be cost recoverable.
In respect of operating costs attributable to Petroleum Operations stipulated as Operating
Costs in Annex "C" to this EPCC (hereinafter referred to as "Operating Costs") (including any
contributions into the Decommissioning Fund pursuant to applicable law, and including any
costs incurred by the Concessionaires to implement an approved Decommissioning Plan save
to the extent, in either case, that such costs have been funded by withdrawals from the
Decommissioning Fund), by the recovery of the full amount in the calendar year in which
they were incurred.
Article 10 Valuation of Petroleum
10.1 The valuation of Petroleum used for the purpose of Petroleum Production Tax, to be settled
pursuant to the terms of the Special Tax Law (Law no. 27/2014 of 23 September, as amended
by Law No. 14/2017 of 28 December) and of the respective Regulations approved by Decree
no. 32/2015 of 31 December, and for Cost Petroleum and Profit Petroleum allocation
referred to in Article 9 and 11 shall, to the extent such Petroleum consists of Crude Oil, be -t
EPCC PT5-C
determined at the end of each calendar month commencing with the calendar month in
which Commercial Production of Crude Oil begins. To the extent that such Petroleum consists
of Natural Gas, the value of Natural Gas shall be determined at the end of each calendar
month commencing with the calendar month in which commercial delivery at the Delivery
Point begins.
10.2 The calculated value for each separate export grade of Crude Oil from Petroleum Deposits
within the EPCC Area for a calendar month shall be:
(a) in the case of sales of Crude Oil to non-Affiliated Companies, the weighted average price per
barrel at the Delivery Point of each separate export grade of Crude Oil, at which such Crude Oil
has been sold FOB by the Concessionaire during that calendar month; or
(b) if the Concessionaire sells the Crude Oil to a third party on terms different from FOB, then for
the purpose of this EPCC, a calculated net-back FOB price shall be applied. The net-back FOB
price shall be established by deducting from the agreed price the actual and direct costs incurred
by the Concessionaires in fulfilling the obligations under their sales contract in addition to those
obligations included under a FOB contract.
10.3 In the case of sales of Crude Oil to Affiliated Companies, such price as agreed between
MIREME and the Concessionaires on the basis of adding the following two factors together:
(a) the weighted average calendar month FOB price for Brent rated Crude Oil, or such other
appropriate marker Crude Oil for the production in question for the period in question. The
weighted average shall be based on the days in each calendar month when a closing price is
reported in "Platts Oilgram" price report. Days such as weekends and holidays with no price
reports shall be ignored; and
(b) a premium or discount to the price of the Brent rated Crude Oil, or such other appropriate
marker Crude Oil for the production in question to be determined by reference to the quality of
the Crude Oil Produced from the EPCC Area and the cost of moving such Crude Oil to the market.
10.4 In any case in which MIREME and a Concessionaire are unable to agree a price under Article
10.3, in order to determine the premium or discount referred to therein the following
procedures shall be undertaken:
(a) MIREME and the Concessionaire shall submit to each other their assessments of the
premium or discount together with an explanation of the key factors taken into
consideration in assessing the premium or discount;
(b) if the premium or discount submitted by each of MIREME and the Concessionaire are
within ten United States cents (10 US C) per barrel of each other the average will be taken for
the purposes of setting the final value of the Crude Oil;
(c) if the premium or discount submitted by each of MIREME and the Concessionaire
differ by more than ten United States cents (10 US C) per barrel each will resubmit a revised
premium or discount to the other on the third (3rd) business day after the first exchange of
information;
EPCC PT5-C
(d) if the premium or discount submitted by each of MIREME and the Concessionaire on
the second exchange of information are within ten United States cents (10 US C) per barrel of
each other the average will be taken for the purposes of setting the final value of Crude Oil;
(e) if the premium or discount submitted on the second exchange of information differ
by more than ten United States cents (10 US C) per barrel the matter shall, in accordance
with Article 26.6, be referred for determination by a sole expert who shall establish a price
based on the criteria set out in Article 10.3 but always within the range established by the
Parties under Article 10.4 (d).
10.5 The value calculated for Natural Gas Produced from Petroleum Deposits within the EPCC
Area for a calendar month shall be:
(a) in the case of sales of Natural Gas to non-Affiliated Companies in that calendar
month, the weighted average price per Gigajoule of Natural Gas of commercial specification
at the Delivery Point where such Natural Gas has been delivered by the Concessionaires
during such calendar month; or
(b) in the case of sales to Affiliated Companies:
i. the price stipulated for sales to non-Affiliated Companies, in Article 10.5 (a); or
ii. such price agreed between the Ministries who superintends the petroleum and the
Finance sectors jointly and the Concessionaires.
(c) In the case of sales of Natural Gas delivered as LNG in a calendar month:
i. in the case of sales to non-Affiliated Companies, the weighted average net LNG sales
price in US Dollars per mmbtu calculated as the total revenue due in respect of all
sales of LNG delivered during that calendar month less the aggregate of the
Deductions (in accordance with Annex "C" of this EPCC) incurred in respect of those
sales divided by the total volume, in mmbtu of LNG loaded during the month in
respect of such sales; and
ii. in the case of sales to a Concessionaire or any Affiliated Companies, such price shall
be either (i) calculated in the same manner as stipulated in Article 10.5 (c) (i) above
for sales to non-Affiliated Companies or (ii) such price agreed between the Ministries
with authority over the Petroleum sector and over the Finance sector and the
Concessionaire.
10.6 In the event that the Government and/or its authorised representative enters into a
commercial sales and purchase agreement for Petroleum with the Concessionaires for the
purchase by the Government, the sales price shall not exceed the price of Petroleum sold to
Affiliated Companies as determined in Article 10.3,10.4, 10.5 (b) or 10.5 (c).
10.7 For supply of Petroleum by the Concessionaires to the domestic market, the sales price shall be
based on:
EPCC PT5-C
(a) For Crude Oil: The net-back FOB price per barrel of the Crude Oil based on the reference
price as quoted on Platts for the day in question, adjusted with any price demium or premium as
appropriate to the relevant specific quality. If the relevant reference price is not quoted on Platts
on the day in question, the price quoted by Argus Media shall be used instead.
(b) For Natural Gas: The price of such gas shall be set out in the sales and purchase contracts to
be agreed by the parties. Where the parties to such contract cannot agree on the price, the price
of the Natural Gas shall be calculated with reference to the average price of Natural Gas in at
least five internationally recognised LNG Markets, netted back to the delivery point for Natural
Gas (and net of any liquefaction costs, as applicable) supplied to the domestic market in
Mozambique.
Article 11 Fiscal Terms and Other Charges
11.1 Each Concessionaire and its Subcontractors shall, save to the extent they are exempt
therefrom, be subject to applicable legislation of the Republic of Mozambique which impose
taxes, duties, levies, charges, fees or contributions.
11.2 During the five (5) years from the approval of the Development Plan related to this EPCC,
each Concessionaire and its Subcontractors are entitled to the rights of Law No. 27/2014, of
23 September (as amended by Law No. 14/2017 of 28 December) and the respective
Regulations approved by Decree no. 32/2015 of 31 December, regulating tax and fiscal
benefits for Petroleum Operations. Each Concessionaire and its Subcontractors shall be
exempt from:
(a) Customs duties with regard to the importation of goods destined to be used in
Petroleum Operations, classified as class "K" in the customs tariff in accordance with article
35 of the Law No. 27/2014, of 23 September;
(b) Customs duties with regard to importation of explosives, detonators, rakes and
similar machines and devices to blow explosives, as well as equipment and devices for
topographical, geodesic and geological recognition on shore and offshore to be used for
Petroleum Operations and other supplies classified as class "K" in accordance with Annex II,
article 35 of the Law No. 27/2014, of 23 September.
11.3 Each Concessionaire and its Subcontractors shall be exempt from duties and custom and
fiscal charges on goods temporarily imported to be used in Petroleum Operations in
accordance with applicable fiscal regulation (Pauta Aduaneira), approved by the Decree No.
34/2009, of 26 December.
11.4 The Expatriate Personnel of each Concessionaire and its Subcontractors shall be exempt
under this EPCC from customs duties and other levies payable on the importation of personal
and household effects of Expatriate Personnel and their dependents imported into the
Republic of Mozambique on first arrival, provided that those customs duties shall become
payable on such items upon their sale in the Republic of Mozambique to a person who is not
exempt from such duties. The Expatriate Personnel shall have the right to export from the
EPCC PT5-C
Republic of Mozambique free of any customs duties and levies the aforesaid personal and
household effects imported by them, within the conditions stipulated in the customs
clearance rules approved by by Decree No. 9/2017, of 6 April.
11.5 For the purpose of this EPCC, the matters listed below shall be treated in the following
manner:
(a) (The Corporate Income Tax (IRPC), including incidence, rate of tax (32%) and fiscal benefits
in accordance with Law No. 34/2007 of 31 December and as applicable to this EPCC pursuant
to Article 15 (1) of Law No. 27/2014, of 23 September, as amended by Law 14/2017 of 28
December and as the same may be amended from time to time but always without prejudice
to Article 11.8 of this EPCC, and shall be payable by each Concessionaire who shall be
separately assessed and charged. The following provisions shall apply to IRPC levied in
respect of income derived from Petroleum Operations hereunder:
(i) In determining the net income of each Concessionaire for the purposes of calculating IRPC in
any fiscal year, in addition to the deductions already made for the purpose of recovery of costs,
and Profit Petroleum and Cost Petroleum calculation pursuant to Article 9, depreciation shall be
deducted at the rates indicated below, beginning in the year in which the expenditure is incurred
or Commercial Production commences, whichever year is the later:
in respect of expenditure on Exploration, including the drilling of Exploration and
Appraisal Wells, at one hundred percent (100%);
in respect of Capital Expenditure on Development and Production at the annual rate of
twenty five percent (25%) of such expenditure on a linear depreciation basis;
(ii) For the purpose of calculating liability for IRPC, a loss incurred by the Concessionaire
in any year may be carried forward for up to 5 (five) years after the year in which
such loss is incurred.
(iii) In order to determine IRPC taxable base, the competent authority in the Ministry with
authority over the Finance sector can proceed with correction in accordance with Law n.s
34/2007, of 31 December which approves the IRPC Code, when the prices of transfer and
sub-capitalization resulting from special transactions between Affiliated Companies differ
from those with third parties.
(b) Pursuant to Article 28 of Law no. 27/2014 of 23 September, the Concessionaires shall
by way of payment of income tax on amounts due, withhold at source 10 per cent (10%) of the
total amount of any payment made by the Concessionaire to a non-resident Subcontractor for
services contracted for the performance of Petroleum Operation pursuant to this EPCC. The
amount of such income tax withheld by the Concessionaires shall be paid to the competent
entity in the Ministry with authority over the finance sector in accordance with procedures of
applicable law.
Foreign non-resident Subcontractors are not subject to, and shall not be the object of
withholding of any other taxes in relation to any payment made to them, except for the taxes
provided for in this Article 11.5. ps.
EPCC PT5-C
11.6 a) In accordance with the applicable legislation and unless otherwise instructed pursuant to
Article 11.6 (c), each Concessionaire shall pay in cash to the Government a Petroleum
Production Tax based on the value at the Delivery Point pursuant to the valuation provisions
in Article 10:
1. in respect of Natural Gas produced from Petroleum Deposits in the EPCC Area, an
amount in cash corresponding to six percent (6%) of Natural Gas extracted, but not re-
injected;
2. in respect of Crude Oil produced from Petroleum Deposits in the EPCC Area, an
amount in cash corresponding to ten percent (10%) of Petroleum extracted;
The Government may, instead of receiving the Petroleum Production Tax in cash referred to
in Article 11.6 a), by 12 months' notice, require the Concessionaire to pay each month fully or
partly in kind the quantities of the Crude Oil and the Natural Gas which has been produced,
and to which the Government has a right, from the EPCC Area in that month.
b) The payments in cash of Petroleum Production Tax for a given calendar month in respect
of Crude Oil and Natural Gas produced during such month shall be made by the 20th
(twentieth) of the following calendar month.
c) Payment in kind of the percentage specified in the relevant notice given under Article
11.6(a) shall continue until the Government delivers a further written notice as provided in
Article 11.6(a) providing revised instructions to the Concessionaire.
11.7 In the exercise of its rights and benefits regarding the exemption from customs duties on
import and export stipulated under this Article, the Concessionaires shall comply with the
applicable procedures and formalities duly imposed by applicable law.
11.8 The fiscal stability in Article 40 of Law No. 27 /2014 of September 23, as amended by Law No.
14/2017 of 28 December, is applicable for this EPCC.
The option to extend the period of fiscal stability established in Article 40 (3) of Law No. 27/2014
of September 23 shall be exercised not later than the end of the eighth year after
commencement of commercial production.
Article 12 Production Bonuses
12.1 The Concessionaires are obligated to pay the following Production bonuses, which payments
shall not be considered as Recoverable Costs for the purposes of Annex "C" of this EPCC:
22
EPCC PT5-C
Occurrence Production Bonuses payable
in United States dollars
At the Commencement of Commercial Production USD 1,000,000.00 (one milion
United States dollars)
When Production from the EPCC Area first reaches USD 5,000,000.00 (five milion
twenty five thousand 25,000 (twentyfive thousand) United States dollars)
BOE per day average for a month
When Production from the EPCC Area first reaches USD 5,000,000.00 (five milion
each further tranche of fifty thousand 50,000 (fifty United States dollars)
thousand) BOE per day average for a month
12.2 For the purpose of the Production bonus calculation:
"Commencement of Commercial Production" means the date on which Commercial
Production has been sustained for a period of thirty (30) consecutive days from the EPCC
Area.
Article 13 Lifting Arrangements
13.1 a) The Concessionaire shall, subject to provisions regulating the Production and sale of
Petroleum and subject to applicable law and this EPCC, including any right that the
Government may have under the laws of Mozambique for imperative reasons in the national
interest to acquire Petroleum to which the Concessionaires hold title, be entitled to lift,
dispose and export freely its entitlement to Petroleum Produced under this EPCC.
b) Each Party shall take its entitlement to Petroleum consistent with Good Petroleum
Industry Practices at an approximately regular rate throughout each calendar year.
c) Not later than ninety (90) days prior to the date scheduled for the commencement of
Commercial Production, the Parties shall establish off-take procedures covering the
scheduling, storage and lifting of Petroleum and such other matters as the Parties shall agree.
Such procedures shall be consistent with Good Petroleum Industry Practices.
13.2 Notwithstanding applicable law, the Government may by twelve (12) months’ notice given to
the Concessionaires or Operator, instruct the Concessionaires or Operator to sell on behalf of
the Government during the succeeding calendar year(s) the whole or any portion of the
quantity of Petroleum Production Tax taken in kind, and when applicable. Profit Petroleum
not previously committed to which the Government is entitled pursuant to this EPCC during
said succeeding calendar year(s). The quantity of such Petroleum Production Tax taken in
kind and of Profit Petroleum, which the Government desires to sell, shall be specified in said
notice. The Concessionaires or Operator shall sell that quantity of Petroleum on the open
market at the best price reasonably obtainable and shall remit the proceeds of the sale .
23
EPCC PT5-C
directly and forthwith to the Government. The Concessionaires or Operator shall not charge
any fees incurred for selling Petroleum of the Government.
13.3 Whenever possible, based on the results of market research as required under applicable
law, the Parties shall jointly market Natural Gas produced from any Development and
Production Area under this EPCC.
Article 14 Decommissioning Plan and Decommissioning Fund
14.1 The Concessionaires shall in accordance with applicable law prepare and submit a
Decommissioning Plan and implement the Government approved Decommissioning Plan.
14.2 At the time of establishment of the account for the Decommissioning Fund the
Concessionaires shall deposit as an opening amount of the account US fifty thousand dollars
(USD 50,000.00) or equivalent if an alternative currency is agreed in order to maintain the
account until the date funding is required pursuant to the Decommissioning solution
pursuant to Article 14.3 and Annex C Article 2.6.
Subject to approval by the Bank of Mozambique, a Decommissioning Fund interest bearing
account shall be opened in a bank of international standing licensed to operate in
Mozambique with a long term debt rating of at least A by Standard & Poor's, or A2 by
Moody's Investors Service, or an equivalent rating by a successor entity to either agency. If,
at the time of opening such account, no bank in Mozambique directly meets these
requirements, the Concessionaires may open the account in a bank licensed to operate in
Mozambique whose parent company bank meets the requirements provided that the parent
company bank provides adequate guarantees for the balance in the account at any time.
Should the rating of the bank that holds such Decommissioning Fund interest bearing
account change, the Bank of Mozambique may require the Concessionaire to move such
account to a bank that fulfils the criteria of the previous paragraph.
No alternate currency shall be considered for this account which does not have a significant
history of stable exchange rates as against the US Dollar. In the event such debt rating should
fall below this standard, another bank meeting such standard shall be agreed. All investment
for the account shall be using a stable currency selected for the account and in low risk
securities assets approved by the Ministry of Finance with a long term debt rating of at least
A+ by Standard & Poor's, or Al by Moody's Investors Service, or an equivalent rating by a
successor entity to either agency.
14.3 MIREME shall, based on the proposals from the Concessionaires, select a preliminary
Decommissioning solution towards the Decommissioning Plan to form the basis for the
calculation of Decommissioning costs to be covered by a Decommissioning Fund, created for
the purpose of covering these costs.
24
EPCC PT5-C
14.4 For the estimation and proper escalation of the total estimated Decommissioning cost, to be
used as basis for the calculation of payment into the Decommissioning Fund pursuant to
applicable law and this EPCC, the "Producers Price Index for the Drilling of Oil and Gas Wells"
as published by the United States Bureau of Labour Statistics shall be used. The annual index
to be used in year "n" shall be determined by difference between the annual index relating
to the year in which the latest approved estimate is determined and the same annual index
relating such year "n". In the event the United States Bureau of Statistics (Bureau of Labour
Statistics) ceases, for any reason whatsoever, to publish the "Producers Price Index for the
Drilling of Oil and Gas Wells" or when an alternative currency is selected, INP approves upon
proposal by the Concessionaires either an alternative independent internationally recognised
source or an alternative representative index.
14.5 The Concessionaires shall not withdraw money from the Decommissioning Fund without the
prior written approval of the INP and save for the purpose of meeting the costs of
implementing an approved Decommissioning Plan and all statements relating to the
Decommissioning Fund provided by the bank from time to time shall be copied to MIREME.
14.6 Procedures on the administration and the governance of the Decommissioning Fund shall be
proposed by the Concessionaire and subject to the approval of the INP, following the minimum
standards defined in Article 14.2.
14. 7 Any funds which have been cost recovered remaining in the Decommissioning Fund after the
approved Decommissioning Plan has been completed shall be treated as Profit Petroleum and the
remaining balance shall be shared between the Concessionaires and the Government in accordance
with the provision of Article 9.6. Funds paid from contributions of the Concessionaire which have not
been cost recovered but remain in the Decommissioning Fund after the approved Decommissioning
Plan has been completed shall be shared exclusively among Concessionaires, proportionate to their
respective Participating Interest.
Article 15 Insurance
15.1 The Concessionaires shall establish and maintain all insurance required in respect of
Petroleum Operations in accordance with applicable Mozambican law and such other
insurance as imposed by INP and observe best practices of the insurance industry applicable
to the oil and gas industry.
15.2 The insurance shall at least include insurance against the following risks:
a) loss or damage to all installations and equipment which are owned or used by the
Concessionaires in the Petroleum Operations;
b) pollution caused in the course of the Petroleum Operations by the Concessionaire for
which the Concessionaire may be held responsible;
c) property loss or damage or physical injury suffered by any third party in the course of
the Petroleum Operations by the Concessionaires for which the Concessionaire may be liable
to indemnify third parties or the Government; \
EPCC PT5-C
d) cost of removing wrecks and cleaning-up operations following an accident in the
course of the Petroleum Operations by the Concessionaires; and
e) the Concessionaires' and the Operator's liability for its employees engaged in the
Petroleum Operations.
15.3 In relation to Petroleum Operations, the Concessionaire shall submit to INP a programme for
the provision of an "All Risks" insurance which shall without prejudice to applicable law, inter
alia, cover physical damage to the Facilities under construction and installation and liabilities
arising out of the Petroleum Operations.
15.4 The Concessionaires shall, in cooperation with the appropriate insurers capable of
performing insurance activities in Mozambique, procure insurance for civil automotive
against third parties, work accident insurance, work-related illness insurance and by any
other mandatory insurance law, provided such insurance is of general applicability and not
specific to Petroleum Operations.
15.5 The Concessionaires or the Operator shall, when requested by INP, present the insurance
policy or documents proving that all insurance required under this EPCC or applicable law has
been obtained.
15.6 Except as provided for in Article 15.4, any insurance required to be effected by the
Concessionaire pursuant to Articles 15.1 and 15.2 may be provided by one or more of the
following options:
a) Self-insurance, in which case, each Concessionaire or one of its Affiliated Companies
supports the risk and no premium is charged;
b) insurance through an insurance company being subject to reinsurance through an
insurance company held in whole or in part by the Operator or by a Concessionaire in which
case the premia charged shall be in accordance with rates as practiced in the international
insurance market;
c) insurance relating to Facilities must be issued by an insurer licensed to carry out
insurance business in Mozambique, including under a fronting regime utilizing captives or
non-captives. The Operator shall communicate to INP within twenty-four (24) hours
regarding such procurement.
d) the Concessionaire utilising for the benefit of Petroleum Operations insurance which
is placed as part of a global coverage in which case the premia charged shall be at the rates
obtained for such global coverage through the mechanisms provided for in paragraph b) and
c).
15.7 The Concessionaire shall competitively tender all renewable insurances at least once every
three (3) years.
26
EPCC PT5-C
15.8 The contracting of insurance outside the Republic of Mozambique is subject to prior
authorization from the Insurance Supervision Institute of Mozambique, at least ten (10)
business days in advance, relative to the date of the contracting of the insurance in question;
the above request must be filed with the following documents:
i. proof of refusal of underwriting of risk by at least three (3) insurance companies
licensed to operate in Mozambique, with the financial capacity to accept high risks,
or proof of the lack of response of three insurance companies in the period of seven
(7) business days to be counted from the respective request for underwriting, in the
form of a statement from the entity that intends to contract the insurance; and
ii. information regarding the foreign insurance company that will be contracted, the
coverage amount and main policy conditions.
15.9 Except in relation to reinsurance or captive insurance relating to Petroleum Operations,
construction or to Facilities, the Concessionaires shall give preference to Mozambican
insurers, when:
a) the insurance, including fronting arrangements, available from insurers licensed to
carry out insurance business in Mozambique are comparable to international insurance
standards in terms of:
i. types of coverages,
ii. terms and conditions of such coverages,
iii. financial strength of the insurer,
iv. claim handling; and
v. underwriting capability.
b) such insurance, including fronting arrangements available from insurers licensed to
carry out insurance business in Mozambique can be placed at prices that do not exceed the
price of comparable insurance coverages by more than ten percent (10%) from international
insurance markets, inclusive of taxes and related fees.
15.10 Concessionaires shall not be required to utilize local brokers or insurers if their rates exceed
those available in international markets by more than 10%.
15.11 In the event that any type of insurance coverage necessary for the Petroleum Operations
cannot be procured from or fronted by a Mozambican source as provided in this Article, the
Concessionaires shall have the right to obtain such insurance from the international markets
in a Transparent Jurisdiction.
15.12 The Concessionaires shall require its Subcontractors to carry equivalent insurance of the type
and in such amount as is required by applicable law and standards in the Petroleum industry,
in accordance with Good Petroleum Industry Practices.
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EPCC PT5-C
Article 16 Employment, Training, and Institutional and Social Support Programmes
16.1 Subject to the Government's security review of any individual entering Mozambique and the
procedures and formalities of the law relating to immigration the Government shall provide
the necessary permits or other approvals required for the employment and admission into
the Republic of Mozambique of Expatriate Personnel employed by the Concessionaires or its
Subcontractors for the purpose of this EPCC. The hiring and training of employees for
Petroleum Operations is regulated by the Labour Law, and the Petroleum Operations
Regulations, approved by Decree no. 34/2015 of 31 December.
16.2 During the Exploration Period, the Concessionaires shall pay to INP the amount of USD
250,000.00 (two hundred and fifty thousand United States dollars ) per year, to be spent on
training support programmes for employees in the public institutions involved in Petroleum
Operations. The first payment shall be made to INP within thirty {30) days from the Effective
Date and the subsequent payments shall be made within thirty (30) days of every subsequent
anniversary of the Effective Date.
16.3 Each Concessionaire shall co-operate with MIREME in giving an agreed number of technicians
in the management of petroleum resources, the monitoring and control of Petroleum
Operations the opportunity to participate in training activities provided by the
Concessionaire or any of its Affiliated Companies.
16.4 In order for MIREME to monitor the fulfilment of the employment and training obligations
pursuant to applicable law and this EPCC, the Concessionaires shall annually submit its
recruitment and training programmes to MIREME.
16.5 The Concessionaires shall pay to INP the amount of USD 500,000.00 (five hundred thousand
United States dollars), per year for the duration of this EPCC to be used as institutional
support to the entities involved in the promotion and administration of Petroleum
Operations. The first payment shall be made to INP within thirty (30) days from the Effective
Date and the subsequent payments shall be made on the subsequent anniversaries of the
Effective Date.
16.6 The Concessionaires shall pay to MIREME USD 250,000.00 (two hundred and fifty thousand
United States dollars) per year for the duration of this EPCC, for social support projects for
communities in areas where Petroleum Operations take place. The Concessionaire may
recommend social support programmers to be financed by the Concessionaire and, where
agreed with the Government, the agreed amount for such financing will be credited to the
social support obligations in the following year. The first payment shall be made to MIREME
within 30 (thirty) days from the Effective Date and the subsequent payments shall be made
within 30 days of every subsequent anniversary of the Effective Date.
16.7 The sums expended by the Concessionaire to satisfy the obligations contained in this Article
are Recoverable Costs for the purpose of Annex "C" of this EPCC.
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EPCC PT5-C
Article 17 Indemnification and Liability
17.1 Each Concessionaire shall indemnify and hold the Government harmless from and against
any and all claims instituted against the Government by third parties in respect of injury, loss
or damage caused by the Concessionaires in the conduct of the Petroleum Operations,
provided that the claims are duly qualified by a third party or the Government. In no case
shall the Concessionaire's liability under this Article include punitive damages.
17.2 The Government shall indemnify and hold each Concessionaire, its Subcontractors and any of
its Affiliated Companies harmless from and against any and all claims instituted against the
Concessionaire, its Subcontractors and any of its Affiliated Companies by third parties in
respect of injury, loss or damage caused by the acts or omissions of the Government in its
commercial capacity.
17.3 Except as provided for in Article 17.8 no Party hereto shall settle or negotiate any claim for
which another Party is responsible hereunder without the prior written consent of such other
Party, and in the event that it does so, the indemnity aforesaid shall not have effect in
relation to the claim so settled or compromised.
17.4 Unless otherwise provided in this EPCC, each Concessionaire, its Subcontractors and any of
its Affiliated Companies carrying out such Petroleum Operations on behalf of the
Concessionaires shall not be liable to the Government and the Government shall not be liable
to a Concessionaire, for consequential loss or damage including but not limited to inability to
produce Petroleum, loss of Production or loss of profit.
17.5 Subject to Article 17.4, in carrying out Petroleum Operations under this EPCC each
Concessionaire shall be liable for any injury, loss or damage suffered by the Government and
caused by the Concessionaires or by any Affiliated Company or Subcontractor carrying out
Petroleum Operations on behalf of the Concessionaires if the injury, loss or damage is the
result of the Concessionaire's, the Affiliated Company's or the Subcontractor's failure to meet
the standards required by this EPCC and the applicable law.
17.6 Any claim pursued by any third parties which would entitle any of the Parties (together the
"Indemnified Party") of this EPCC to be indemnified by any of the other Parties of this EPCC
(together the "Indemnifying Party") shall be promptly communicated by notice to the
Indemnifying Party so that the Indemnifying Party may promptly intervene in the claim and
pursue its defence. The notice shall include a description of the third party claim and shall be
accompanied by copies of all relevant papers received by the Indemnified Party and its
counsel with respect to such third party claim. The Indemnified Party shall cooperate with
the Indemnifying Party and its counsel in contesting such third party claim. If the Indemnified
Party fails promptly to communicate by notice as provided above and thereby causes the
Indemnifying Party not to be able to properly pursue its defense, the Indemnified Party shall
lose its rights to the indemnification under this Article.
17.7 If within thirty 30 (thirty) days of receipt of such claim notice, the Indemnifying Party notifies
the Indemnified Party that it elects to assume the defense of such claim, then the
Indemnifying Party shall have the rights to defend, at its cost and expense, such claim by all i
appropriate proceedings including compromise or settlement thereof, so long as any
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EPCC PT5-C
settlement agreement does not provide for or result in any continuing liability or obligation
on the Indemnified Party in respect of such third party claim.
17.8 If the Indemnifying Party fails timely to elect to assume the defense of such claim, then the
Indemnified Party shall have the right to defend at the sole cost and expense of the
Indemnifying Party the third party claim by all appropriate proceedings including any
compromise or settlement thereof.
Article 18 Title
18.1 The State and each Concessionaire shall own the Petroleum extracted jointly, and in
undivided shares, until each takes individual title to and delivery of its entitlement of
Petroleum Produced at the Delivery Point.
18.2 The Concessionaires shall finance the cost of all Facilities and equipment used in Petroleum
Operations. Subject to applicable law and this Article each Concessionaires has the right to
use such Facilities and equipment for Petroleum Operations during the term of this EPCC and
any extensions thereof until the EPCC expires, is surrendered or cancelled, in which case the
title to said Facilities and equipment at the option of the Government and without additional
compensation may be transferred to the State.
18.3 The Concessionaires are the owners of Facilities and necessary appurtenant equipment for
the purpose and use in Petroleum Operations under this EPCC unless otherwise approved by
the Government.
The provisions of Article 18.2 above with respect to the title of property passing to the State
shall not apply to Facilities approved by the Government as belonging to third parties,
however rights according to contract to use such Facilities shall pass to the Government if
such use is related to Facilities that if owned by Concessionaire would have passed to the
State. Moveable Facilities and equipment owned by foreign third parties may be freely
exported from the Republic of Mozambique in accordance with the terms of the respective
contract.
18.4 Third parties may, subject to terms and conditions stipulated by applicable law and this EPCC,
have the right to the use available spare capacity of Facilities and appurtenant equipment on
terms and conditions to be agreed between the commercial parties and acceptable to the
Government. Such terms and conditions shall include a tariff that shall represent the
payment for the Concessionaires' cost of additional investments required for facilitating such
third party use as well as operational costs and a profit element reflecting the risk taken by
the owner of the Facilities and appurtenant equipment. The tariff for third party use of
Facilities and appurtenant equipment shall be subject to approval by the Government.
18.5 Subject to Good Petroleum Industry Practices, third party use of Facilities shall only take
place when such third party use is not materially negatively affecting Concessionaires
Petroleum Operations and is feasible from a technical, environmental and safety point of
view.
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Article 19 Accounting and audits
19.1 Each Concessionaire shall be responsible for maintaining accounting records of all costs,
expenses and credits of the Petroleum Operations in accordance with the provisions of
Annex "C" of this EPCC. The said accounting records shall be kept in the Republic of
Mozambique.
19.2 The competent authorities of the Government have a right to audit and inspect the
Concessionaires' accounting records in accordance with the provisions of Annex "C".
Article 20 Confidentiality
20.1 This EPCC, the Documentation and other records, reports analyses, compilations, data,
studies and other materials directly related to the Petroleum Operations conducted pursuant
to this EPCC (in whatever form maintained, whether documentary, computer storage or
otherwise) shall be deemed confidential (hereinafter referred to as "Confidential
Information"), to the extent it contains information which individually or collectively is of
strategic commercial importance or has influence on the position of the Concessionaire or its
Affiliated Companies in a competition perspective. Except as authorised by applicable law or
this Article Confidential Information shall not be disclosed to any third party without the
prior written consent of the Parties hereto, which consent shall not be unreasonably
withheld or delayed.
20.2 Nothing in this Article shall prevent the disclosure of Documentation, excluding the
Concessionaires' interpretations and assessments, to a third party by MIREME:
(a) if it relates to acreage which is no longer part of the EPCC Area; or
(b) if, in the judgment of Government, the Documentation might have significance for
the assessment of Exploration in an adjoining area over which Government is offering
Exploration rights.
20.3 Restrictions on disclosure imposed by this Article shall not apply to a disclosure made
reasonably:
(a) if it is required for the purpose of any arbitration or legal proceedings or claim
relating to this EPCC or to the Petroleum Operations;
(b) to a Subcontractor, or consultant in connection with the conduct of Petroleum
Operations;
(c) by a Concessionaire or Operator to a third party where such disclosure is essential to
the safe conduct of Petroleum Operations;
(d) to an Affiliated Company;
(e) by a Concessionaire to a third party for the purpose of entering into a contract for
data exchange with another entity operating in Mozambique where all data exchanged
relates to Petroleum Operations within Mozambique;
EPCC PT5-C
(f) by any Concessionaire to a bona fide intending assignee of a Participating Interest in
this EPCC or an interest in the Concessionaire;
(g) to a third party in connection with and for the purpose of the sale or proposed sale of
Petroleum from the EPCC Area;
(h) to a third party in connection with the financing or proposed financing of Petroleum
Operations;
(i) which is required by any applicable law or by the rules or regulations of any
recognised stock exchange on which shares of the disclosing Party or any of its Affiliated
Companies are listed; or
(j) if, and to the extent that, it is already public knowledge without improper disclosure
hereto.
Any Confidential Information disclosed pursuant to paragraphs (b), (d), (e), (f), (g) or (h) of
Article 20.3 shall be disclosed on terms that ensure that such Confidential Information is
treated as confidential by the recipient.
20.4 None of the Concessionaires are required to disclose any of its proprietary technology or that
of their Affiliated Companies or proprietary technology of a third party licensed to the
Concessionaire or the Operator.
Article 21 Assignment
21.1 Any assignment of direct or indirect interest in this EPCC or in a Concessionaire holding a
Participating Interest share in this EPCC shall be subject to approval by the Minister with
authority over the Petroleum sector pursuant to applicable law.
21.2 No unitisation pursuant to this EPCC or applicable law or any adjustment to the portion of
the unitised Discovery allocated to the EPCC Area is considered to be an assignment under
this Article.
21.3 A Concessionaire may not assign a Participating Interest that represents less than ten percent
ten percent (10%) of the EPCC total Participating Interest, unless the assignment is to
another Concessionaire to this EPCC or subsequent to a Government approved unitisation.
21.4 Save for the case of unitisation, each Concessionaire shall at any time hold at least a
Participating Interest in this EPCC often percent (10 %).
21.5 The Concessionaire who has been appointed and assumed position as Operator shall at any
time hold at least a Participating Interest in this EPCC of twenty-five percent (25 %), save for
the case of unitisation.
Article 22 Force Majeure
22.1 The non-performance or delay in performance, wholly or in part, by the Government or any
Concessionaire of any obligation under this EPCC except an obligation to make payments
hereunder, shall be excused if, and to the extent that, such non-performance or delay is
caused by Force Majeure. _
EPCC PT5-C
22.2 For the purpose of this EPCC, the term Force Majeure means any cause or event beyond the
reasonable control of, and not brought about at the instance of, the Party claiming to be
affected by such event, and which has caused the non-performance or delay in performance.
Without limitation to the generality of the foregoing, events of Force Majeure shall include
natural phenomena or calamities including but not limited to, epidemics, earthquakes,
storms, lightning, floods, fires, blowouts, wars declared or undeclared, transboundary
hostilities, blockades, civil unrest or disturbances, labour disturbances, strikes, quarantine
restrictions and unlawful acts of Government.
22.3 The Party claiming suspension of its obligations under this EPCC on account of Force
Majeure:
a) promptly notifies the other Parties of the occurrence thereof;
b) takes all actions that are reasonable and if necessary, legal actions, to remove the
cause of Force Majeure but nothing herein shall require the Concessionaires, subject to
applicable law, to resolve any labour dispute except on terms satisfactory to the
Concessionaires; and
c) upon removal or termination of Force Majeure, promptly notifies the other Parties
and takes all reasonable action for the resumption of the performance of its obligations
under this EPCC as soon as possible after the removal or termination of Force Majeure.
22.4 Where under this EPCC a Concessionaire is required or has the right to do any act or to carry
out any programme within a specified period, or the rights of a Concessionaire hereunder are
to subsist for a specified period, the specified period shall be extended so as to take
reasonable account of any period during which by reason of Force Majeure the
Concessionaire has been unable to carry out the programme necessary to exercise a right,
carry out its obligations or enjoy its rights hereunder.
22.5 Where a Force Majeure situation continues for more than fifteen (15) consecutive days, the
Parties shall meet forthwith in order to review the situation and to agree on the measures to
be taken for the removal of the cause of Force Majeure and for the resumption in
accordance with the provisions of this EPCC of the performance of the obligations hereunder.
Article 23 Nature and Extent of Rights of the Concessionaire
23.1 The right of the Concessionaires to use the land, maritime areas or sea bed is subject to
applicable law and continues to apply to acreage initially included within the EPCC Area, but
subsequently relinquished in accordance with the terms of this EPCC, where such use is
reasonably necessary for purposes of conducting Petroleum Operations in the EPCC Area
then remaining under this EPCC.
23.2 Where in the course of conducting Petroleum Operations in the EPCC Area the
Concessionaires causes disturbance to the rights of the lawful occupier of any land or causes
damage to his growing crops, trees, buildings, livestock or works, the Concessionaires shall
pay to the lawful occupier compensation in respect of such disturbance or damage as
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EPCC PT5-C
Concessionaires may be adjudged liable to pay as a result of final, non-appealable order or
judgement of a court or arbitral body under Mozambican jurisdiction.
23.3 Where in the course of conducting Petroleum Operations in the EPCC Area the
Concessionaires causes disturbance to the rights of a Person having their fishing fields or
grounds occupied, aquaculture activities limited, fishing or aquaculture equipment moved to
less favourable locations from a maritime resource management or commercial point of
view, as well as having their equipment, catch or harvest polluted or damaged the
Concessionaires shall pay to the Person affected such compensation in respect of such
demonstrable disturbance or damage as the Concessionaires may be adjudged liable to pay
by final, non-appealable order or judgement of a court or arbitral body under Mozambican
jurisdiction.
23.4 For the purposes described in this Article subject to applicable law, in accordance with the
provisions of the applicable work programme related thereto and with the consent of, and
subject to any terms and condition agreed with any Person having such right, the following
rights are granted to the Concessionaires:
(a) to drill for and have the use of water and impound surface waters and to establish
systems for the supply of water for the Petroleum Operations and for consumption by its
employees and its Subcontractors;
(b) extract, dispose and use minerals for Petroleum Operations in Mozambique,
materials such as gravel, sand, lime, gypsum, stone and clay;
(c) to erect, set up, maintain and operate engines, machinery, pipelines, gathering lines,
umbilicals, storage tanks, compressor stations, pumping stations, houses, buildings and all
other constructions, installations, works, platforms, other facilities and auxiliary equipment
which are required in furtherance of its Petroleum Operations;
(d) to erect, set up, maintain and operate all communication and transportation systems
and Facilities but shall not, save for temporary purposes, do so unless drawings of and
locations for their sites have been submitted to and approved by the Government, under
reasonable conditions of installation and operation of such systems and Facilities;
(e) to erect, maintain and operate harbours and terminals for use exclusively in
Petroleum Operations, together with the necessary means of communication and transport
between such Facilities and any part of the EPCC Area;
(f) with respect to lands located outside of the EPCC Area, to have the right of way over
land not in the beneficial occupation of any Person and in the case of land in the beneficial
occupation of the State or any State Company, agency or instrumentality of the Government
to have right of way on such reasonable terms and conditions as the Government and the
Concessionaire may agree; and
(g) with respect to lands located outside of the EPCC Area, to have, otherwise than
aforesaid, the use of land necessarily required for the conduct of Petroleum Operations with
the approval of the Person having an affected right, including a legitimate occupier of the (
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EPCC PT5-C
land or, in the case of unoccupied land or land occupied by the Government or any State
Company, agency or instrumentality of the Government on such reasonable terms and
conditions as the Government shall specify.
23.5 If the use of the rights by the Concessionaires referred to in Article 23.4 is to be of a
temporary nature, not exceeding one (1) year, the Government shall authorise such
temporary use upon deposit by the Concessionaires with the Government of a sum by way of
compensation to such Person holding the right for loss of use and damage to its interest.
If the use is to be for a period longer than one (1) year, the Government shall authorise the
use by the Concessionaire of the right in question upon deposit by the Concessionaires with
the Government of such sum by way of compensation and shall direct appropriate
proceedings to grant the Concessionaires the right to use and legally utilize the right under
the applicable law from time to time in force as if the Petroleum Operations were in all
respects a work of public utility.
23.6 In the event that the Government exercises any right it may have under the laws of
Mozambique to acquire Petroleum for imperative reasons in the national interest the
Government shall:
(a) endeavour to not affect the normal execution of long-term gas sales contracts
approved by Government;
(b) take Petroleum, in the following priority
i. any Petroleum taken in kind as Petroleum Production Tax;
ii. the Government's Profit Petroleum;
iii. ENH's Profit Petroleum;
iv. Concessionaires' Profit Petroleum;
v. Cost Petroleum;
(c) give not less than forty five (45) days’ notice in regard of Crude Oil and ninety (90)
days in regard of Natural Gas of the exercise of such right and of the volumes it
wishes to acquire, and the Concessionaires shall supply the volumes so notified from
the Petroleum to which the Concessionaires are entitled under this EPCC at the
Delivery Point or such point that may be agreed or such point within Mozambican
jurisdiction designated by the Government. Additional cost incurred by the
Concessionaire in order to deliver such Petroleum at any other point than the
Delivery Point with facilities and equipment in place shall be reimbursed to the
Concessionaires by the Government and the cost of any new facilities and equipment
to be used for such delivery shall be paid by the Government;
EPCC PT5-C
(d) pay the Concessionaires the full market value of the Petroleum so acquired
determined in accordance with Article 10.7. Payment for the Petroleum so acquired
in any calendar month shall be made in United States dollars within thirty (30) days
after the end of that calendar month. The Concessionaire may receive, remit and
retain abroad and freely dispose of all or any part of the sums so paid;
(e) where the normal execution of committed spot gas sales contracts approved by
Government is affected, such acquisition is subject to compensation of proven
documented foreseeable emerging losses ("danos emergentes"); and
(f) where the normal execution of committed long term gas sales contracts approved by
Government are affected, then such acquisition is subject to compensation of proven
documented emerging losses and foreseeable loss of profits ("danos emergentes e
lucres cessantes").
Article 24 Environmental Protection
24.1 The provisions of applicable law regarding protection of the environment, prevention of
pollution, and protection of objects of historical, cultural and natural value, shall apply to
Petroleum Operations authorised and conducted pursuant to this EPCC.
24.2 The specific conditions regarding protection of the environment, prevention of pollution and
protection of objects of historical, cultural and natural value, including issues as outlined in
the invitation to apply for Exploration and Production Concession Contracts, shall apply for
Petroleum Operations pursuant to this EPCC.
24.3 If the Concessionaires fail to comply with applicable law and this EPCC with regard to
environmental protection within a reasonable period of time the Government may, after
giving the Concessionaires written notice of such failure to comply and a reasonable period
of time necessary to take corrective action, take any action which may be necessary to cure
such failure, and recover, immediately after having taken such action, all expenditure
incurred in connection with such action from the Concessionaires together with interest at
the prevailing LIBOR rate plus 1 (one) percentage point compounded quarterly and
calculated from the date such expenditure is made until repaid.
Article 25 Surrender and Cancellation
25.1 The Concessionaires may pursuant to applicable law:
a) surrender its rights in respect of the entire EPCC Area if its obligations in respect of
any Exploration sub-period have been fulfilled, with the consequence that no new
obligations will thereafter accrue; and
b) at any time, surrender their rights in respect of any acreage forming part of the EPCC
Area with the consequence that no new obligations will thereafter accrue in respect of such
acreage, provided, however, that no surrender by the Concessionaires of their rights over
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EPCC PT5-C
any part of the EPCC Area shall relieve the Concessionaire of any of its obligations as set out
in Article 4.
25.2 The Government may revoke this EPCC observing the following procedures:
The Government shall communicate its intention to revoke this EPCC by ninety (90) days
prior notice. Such notice shall be served on the Concessionaire with recorded delivery, stating
in detail the alleged breach relied upon by the Government.
The Concessionaire shall within thirty (30) days from its receipt of such notice as mentioned
above remedy whatever default of the Concessionaire.
A declaration of revocation of this EPCC may be issued for reasons provided in applicable law
and in this EPCC, including the following:
a) False or inaccurate information deliberately or grossly negligently submitted in
relation to any application for this EPCC, permit, approval of plan, which has been
determinant for the granting of the Petroleum right;
b) Deviation of the purpose of the EPCC;
c) Bankruptcy of the Concessionaire;
d) Substantial or repeated breach or non-compliance with applicable law or the terms
and conditions of the EPCC;
e) A Concessionaire fails to comply with any final administrative court, arbitral or
independent expert decision;
f) Where there is only one Concessionaire in this EPCC, and an order is made or a
resolution is passed by a court of competent jurisdiction winding up the affairs of the
Concessionaire unless the winding up is for the purpose of amalgation or
reorganisation and the Government has been notified of the amalgation or
reorganisation, or without the approval of the Government ,the majority of the
shares in the Concessionaire are acquired by third parties other than an Affiliated
Company;
g) Abandonment of the EPCC Area for a period exceeding three hundred and sixty five
(365) days; and
h) Other causes set forth in this EPCC.
The Government may by notice require that a Concessionaire that is in breach as provided
for above shall assign its Participating Interest to the Government or to the other
Concessionaires holding Participating Interest.
Where a notice of assignment has been served on a Concessionaire that Concessionaire shall
forthwith, unconditionally, without consideration and free from all encumbrances assign its
undivided Participating Interest to the other Concessionaires in proportion to the undivided
Participating Interest in which the receiving Concessionaires hold their Participating Interest.
Each of the receiving Concessionaires is obliged to accept the assignment. A Concessionaire
37
EPCC PT5-C
receiving such assignment is not responsible for any obligations of the assigning
Concessionaire which accrued prior to the assignment.
The Minister with authority over the petroleum sector may revoke this EPCC forthwith if the
Concessionaire within sixty (60) days from Concessionaire's receipt of such notice of breach
of law or the EPCC terms and conditions
a) Has not cured or removed such substantial breach as specified in the notice for
revocation; or
b) Has not paid the damages demanded by the Government in the notification; or
c) The Concessionaire has not commenced court or arbitration proceedings pursuant to
Article 26.
Any dispute may be referred to an independent expert, court or arbitration tribunal on the
question of whether the EPCC may be revoked, whether the requirements of this Article have
been satisfied, whether the Concessionaire has remedied or removed a ground for
revocation or notice of assignment which are impossible to remedy or remove.
Where a dispute has been brought before court or arbitration tribunal the EPCC may not be
revoked until all matters in dispute have been resolved by final, non-appealable order or
judgment and in that event only if revocation is consistent with the order or judgement
rendered.
Where the existence of a breach of the terms and conditions of the EPCC relates to a matter
in dispute between the Government and a Concessionaire which has been referred for
determination by a sole expert pursuant to the EPCC, a notice served on the Concessionaire
pursuant to this Article may not rely upon that matter as a reason for the intended
revocation of the EPCC until the sole expert has determined the matter and in that event only
if to do so would be consistent with the way in which the matter has been so determined.
Abandonment is deemed to take place whenever the Concessionaire, without justified
reasons and for a period of no less than three (3) months, ceases to conduct Petroleum
Operations in the EPCC Area.
25.3 In the event that there is more than one Concessionaire, and there are justified grounds for
revocation of the EPCC by Government pursuant to applicable law, the Government may not
revoke this EPCC unless the grounds for the revocation apply to all of the Concessionaires. If
the grounds for revocation apply to less than all Concessionaires the Government may only
revoke the respective Concessionaire's Participating Interest of that Concessionaire in
material breach.
Article 26 Consultation, Arbitration and Independent Expert
26.1 For the purpose of this article, there are two Parties, the Government and the
Concessionaire. Any dispute between the Parties shall be subject to this Article.
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26.2 A dispute shall be resolved, if possible, by negotiation between the Parties. A notice of the
existence of a dispute shall be given by a Party to another in accordance with the provisions
of notices in Article 33. In the event that no agreement is reached within ninety (90) days
after the date one Party notifies the other that a dispute exists, or such longer period that is
specifically provided for elsewhere in this EPCC, either Party shall have the right to have such
dispute determined by arbitration or an expert as provided for in this Article 26. Arbitration
and expert determination as aforesaid shall be the exclusive method of determining a
dispute under this EPCC.
26.3 Subject to the provisions of this Article 26, and save for any matter to be referred to a sole
expert as provided in Article 26.6, the Parties shall submit any dispute arising out of or in
connection with this EPCC which cannot be resolved by negotiation, including the
compensation for expropriation which may be set by a panel acting pursuant to Article 45 of
the Petroleum Law as provided in Article 26.2 to arbitration as hereinafter provided:
(a) all disputes referred to arbitration shall be finally settled under the United Nations
Commission on International Trade Law ("UNCITRAL") Arbitration Rules in force at the
Effective Date;
(b) the seat of the arbitration shall be Geneva in Switzerland, the administrative law of
the arbitration shall be Swiss law and the substantive law of the arbitration shall be
Mozambican law.
(c) The arbitration shall be conducted in the English language. Notwithstanding Article
28, the English version of this EPCC initialized by the Parties as a supporting document shall
be used as the official translation in arbitral proceedings;
(d) an award by an arbitrator or arbitrators shall be final and binding on all Parties;
(e) the arbitral panel shall be composed of 3 (three) arbitrators to be appointed in
accordance with the UNCITRAL Rules, provided that, upon mutual agreement of both Parties,
the arbitration is to be conducted by a sole arbitrator appointed under the UNCITRAL Rules.
Unless both Parties have agreed that the dispute shall be settled by a sole arbitrator, the
claimant Party shall nominate in the request for arbitration, and the respondent Party shall
nominate within 30 (thirty) days of the registration of the request, one (1) arbitrator
pursuant to the UNCITRAL Rules. Within a period of 30 (thirty) days from the date when both
arbitrators have accepted their appointments the arbitrators so appointed shall agree on a
third arbitrator, who shall act as Chairman of the arbitral tribunal. If either Party fails to
nominate an arbitrator as provided above, or if the arbitrators nominated by the Parties fail
to agree on a third arbitrator within the period specified above, then the appointing
authority, which shall be the Permanent Court of Arbitration in The Hague, upon request of
either Party shall make such appointments as necessary in accordance with the UNCITRAL
Rules. If both Parties have agreed that the dispute shall be settled by a sole arbitrator, the
sole arbitrator shall be nominated by agreement between them subject to acceptance by the
nominated arbitrator; provided that if the Parties are unable to agree on a nominee for sole
arbitrator within 30 (thirty) days from the date when the notice of arbitration was given to
the respondent Party, then the Secretary-General of the Permanent Court of Arbitration
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EPCC PT5-C
upon request of either Party shall appoint the sole arbitrator in accordance with the
UNCITRAL Rules;
(f) insofar as practicable, the Parties shall continue to implement the terms of this EPCC
notwithstanding the initiation of arbitral proceedings and any pending disputes;
(g) the provisions set out in this Article 26 shall continue after the termination of this
EPCC; and
(h) neither any sole expert nor any arbitrator of the arbitral tribunal, as applicable, shall
be of the same nationality as any Party.
26.4 An award or a decision, including an interim award or decision, in arbitral proceedings
pursuant to this Article 26 shall be binding on the Parties and judgment thereon may be
entered in any court having jurisdiction for that purpose. Each of the Parties shall hereby
irrevocably waive any defenses based upon sovereign immunity and waives any claim to
immunity:
a) in respect of proceedings in aid of arbitration or to enforce any such award or
decision including, without limitation, immunity from service of process and from the
jurisdiction of any court; and
b) in respect of immunity from the execution of any such award or decision against the
property of the Republic of Mozambique held for a commercial purpose.
"Parties" in this Article 26.4 shall be understood to include each of the Concessionaires.
26.5 Any matter in dispute of a technical nature not involving interpretation of law or the
application of this EPCC and which is required to be referred to a sole expert for
determination under the provisions of this EPCC, including on valuation in Article 10.4 (e) of
this EPCC and Article 2.1 (e) of Annex "C", or other issues of a substantially equivalent nature
to said provisions, or with respect to any other matter which the Parties may otherwise agree
to so refer, shall be referred to a sole expert for determination by a Party giving notice to
such effect pursuant to Article 33. Such notice shall contain a statement describing the
dispute and all relevant information associated therewith. A sole expert shall be an
independent and impartial person of international standing with relevant qualifications and
experience appointed pursuant to the mutual agreement of the Parties. Any sole expert
appointed shall act as an expert and not as an arbitrator or mediator and shall be instructed
to endeavour to resolve the dispute referred to him within thirty (30) days of his
appointment, but in any event within sixty (60) days of the appointment. Upon the selection
of the sole expert, the Party receiving the notice of referral above shall submit its own
statement containing all information it considers relevant with respect to the matter in
dispute. The decision of the sole expert shall be final and binding and not subject to any
appeal, save for fraud, corruption or manifest disregard of applicable procedure of this EPCC.
If the Parties are unable to agree on the appointment of a sole expert within twenty (20)
days after a Party has received a notice of referral under this Article the sole expert shall be
selected by the President of the Institute of Energy, London, and the person so selected shall
be appointed by the Parties. J*
EPCC PT5-C
26.6 The sole expert shall decide the manner in which any determination is made, including
whether the Parties shall make oral or written submissions and arguments, and the Parties
shall co-operate with the sole expert and provide such documentation and information as
the sole expert may request. All correspondence, documentation and information provided
by a Party to the sole expert shall be copied to the other Party, and any oral submissions to
the sole expert shall be made in the presence of all Parties and each Party shall have a right
of response. The sole expert may obtain any independent professional or technical advice as
the sole expert considers necessary. The English version of this EPCC initialized by the Parties
as a supporting document shall be used as the official translation in any determination by the
sole expert. The fees and expenses of a sole expert appointed under the provisions of Article
26.5 shall be borne equally by the Parties.
26.7 The Parties hereby agree not to exercise any right to institute proceedings to set aside any
interim or final arbitral award made pursuant to this Article 26, except that nothing in this
Article 26.7 shall be read or construed as imposing any limitation or constraint on either
Party's right to seek to contest enforcement any such interim or final arbitral award (a)
rendered by an arbitral tribunal appointed in accordance with this Article 26 on the limited
grounds and in accordance with the procedure set forth in Article V of the New York
Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Article 27 Applicable Law
This EPCC shall be governed by and construed in accordance with the laws of the Republic of
Mozambique.
Article 28 Language
This EPCC is drawn up in three (3) originals in the Portuguese language, for signature by the
Government and the Concessionaires. One signed Portuguese original will be retained by each of the
Parties. An English language translation is to be prepared and initialed as a supporting document by
the Parties to this EPCC. However, in case of conflict between the Portuguese original text and the
English translation, the Portuguese original text shall prevail.
Article 29 Joint Operating Agreement
29.1 A Joint Operating Agreement shall be signed between the Concessionaires immediately upon
entering into this EPCC.
29.2 The Joint Operating Agreement is subject to the approval of the Government and such an
approval is a condition for the EPCC.
29.3 Every other agreement than the Joint Operating Agreement relating to the Petroleum
Operations made between the Concessionaires shall be consistent with the provisions of this
EPCC and shall be submitted to MIREME for approval as soon as the same has been
executed.
29.4 INP appoints representatives that shall have the right to attend as observers in any meeting
of the Operating Committee established pursuant to the Joint Operating Agreement (JOA).
The same shall apply for any sub-committee established under the JOA and the Operating
41
EPCC PT5-C
Committee and any sub-committee established pursuant to an unitisation agreement. The
Operator shall copy the INP all notices and documentation concerning the meetings,
including minutes regarding such meetings. The appointed governmental observers shall only
act as observers and not interfere or participate in any discussions or decisions during such
meetings, or offer advice or views on the issues raised or discussed.
29.5 Each Party and the INP representative shall pay their own cost of attending any such
meetings.
Article 30 Future Agreements
It is understood that any written agreement which may at any time be concluded between the
Concessionaires, on one side, and the Government, on the other, as may be required or desired
within the context of this EPCC shall be deemed to have been approved to the same extent in
accordance with applicable law as if it was originally included in this EPCC.
Article 31 Foreign Exchange
For the purpose and term of this EPCC, matters regarding foreign exchange operations are regulated
by the Law 11/2009 of 11 March and as further regulated by Aviso N.? 20/GBM/2017, of 27 December
as well as by other regulations issued by the Bank of Mozambique in force at the time of signature of
the EPCC
Article 32 Prevention of Corruption
32.1 The Government and the Concessionaire shall cooperate on preventing corruption. The
Parties undertake to take administrative disciplinary actions and rapid legal measures in their
respective responsibilities to stop, investigate and prosecute in accordance with national law
any person suspected of corruption or other intentional resource misuse.
32.2 No offer, gift, payments or benefit of any kind, which constitutes an illegal or corrupt practice
pursuant to applicable law of the Republic of Mozambique, shall be given or accepted, either
directly or indirectly, as an inducement or reward for the execution of this EPCC or for doing
or not doing any action or making any decision in relation to this EPCC.
32.3 The paragraph above is equally applicable to the Concessionaire, their Affiliated Companies,
agents, representatives, Subcontractors or consultants when such offer, gift, payments or
other benefit of any kind violates:
a) the applicable laws of the Republic of Mozambique;
b) the laws of the country of formation or principal place of business of the
Concessionaire's Parent Company exercising direct or indirect control of a Concessionaire; or
c) the laws of the country of formation or principal place of business of agents,
representatives, Subcontractors or consultants or any entity exercising direct or indirect
control over such agents, representatives, Subcontractors or consultants ; or
d) any other applicable anti-corruptions laws; or
42
EPCC PT5-C
e) the principles described in the United Nation Convention on Combating Bribery of Foreign
Public Officials in International Business Transactions, signed in Paris 17 December 1997, and which
entered into force 15 February 1999, including the Conventions commentaries.
Article 33 Compliance with Law 15/2011, of 10 August 2011 and Decree n.° 16/2012, of 4 June
2012) ("Public Private Partnership Law")
33.1 All of the requirements of the Law 15/2011, of 10 August 2011 and Decree n.° 16/2012, of 4
June 2012 have been fulfilled, including the requirement regarding the participation of Mozambican
nationals which shall be ensured through the entity holding the State Participating Interest.
Article 34 Stability of Economic Benefit
34.1 In the event of any change in legislation affecting Petroleum Operations that causes a
material adverse impact to the expected economic benefit of the Concessionaire or of the
Government under this EPCC, the Parties shall, following enactment of such change in legislation,
meet to verify and seek agreement on adjustments required to restore the economic benefit the
Concessionaire or the Government would have derived if such legislation had not been enacted.
34.2 The provisions of this Article are not applicable to changes in legislation pertaining to health,
safety, labour, social security or the environment as in line with international practice or to the
elements that are subject to fiscal stability under Article 40 of Law No. 27 /2014 of September 23 of
2014, as amended by Law No. 14/2017 of 28 December.
For the purposes of this Article 34
(a) "material adverse impact" shall mean a decrease of annual expected economic
benefits as defined below and under the EPCC of at least twenty-five (25) million
USD in the annual aggregate.
(b) "expected economic benefits" shall mean the expected net value calculated as the
difference between the total expected revenue and the total expected costs for the
Concessionaires or the Government as the case may be.
Article 35 Notices
33.1 All notices, invoices and other communications hereunder shall be deemed to have been
properly given or presented, if delivered in writing in person or by courier or sent by
facsimile confirmed by courier at the addresses indicated in this Article 33.2 with the charges
associated with the delivery of the notice, invoice or other communication being paid by the
sender.
33.2 All such notices shall be addressed to the Government or the Concessionaire, as the case
may be, as follows:
(a) The Government:
MINISTERIO DOS RECURSOS MINERAIS E ENERGIA
Predio Montepio, Avenida Fernao de Magalhaes, 34,1st floor
Caixa Postal 4724
Maputo, Mozambique
Copy to: Chairman of the National Petroleum Institute
EPCC PT5-C
Address: Rua dos Desportitas, no 259, Aterro da Maxaquene, Parcela E
Telephone: +258 21320618
Telefax: +258 21320620
(b) Sasol Petroleum Mozambique Exploration Limitada
Address: Rua dos Desportistas, n. 833,
Predio JAT V-3, lie & 12° Andares
Maputo, Mozambique
Copy to: Country Manager
Telephone: +258 2135 74 00
Fax: +258 21311710
Peter.manoogian@sasol.com
(c) Empresa Nacional de Hidrocarbonetos. EP
Address: Av. 25 de Setembro, n.e 270
Times Square, Bloco 1, 2.9 Andar
CP 4787 Maputo, Mozambique
Telephone: +258 21429456, +258 21 429467
Fax : +258 21 324808
Email: Omar.Mitha@enh.co.mz
33.3 Subject to Article 33.4 each Party hereto may substitute or change the aforesaid addresses
by giving written notice thereof to the others.
33.4 Each Concessionaire shall at all times maintain an address in Maputo for the purpose of
service of notice.
44
EPCC PT5-C
IN WITNESS WHEREOF, the Government and each Concessionaire have signed this EPCC in
three (3) Portuguese language originals as of the date first herein above stated.
The Government
Ernesto Max Elias Tonela
Minister of Mineral Resources and Energy
Date:
Empresa National de Hidrocarbonetos, E.P.
By:
Omar Mitha
Chairman
Date:
By:
Tavares Martinho
Vice President Exploration and Production
Date: ...
Sasol Petroleum Mozambique Exploration, Lda.
By:
Name:
Title:
Date:
45
PT-5C EPCC ANNEX A
ANNEX A
Description of EPCC Area
Area PT5C 3.012 km2
Vertex Longitude Latitude
1 34° 36' 03.960" E 21° 30' 00.000" S
2 34° 45' 00.000" E 21° 30' 00.000" S
3 34° 45'0 0.000" E 21° 35' 00.240" S
4 34° 50' 00.240" E 21° 35' 00.240" S
5 34° 50' 00.240" E 21° 30' 00.000" S
6 34° 55' 00.840" E 21° 30' 00.000" 5
7 35° 00' 00.000" E 21° 30' 00.000" S
8 35° 00' 00.000" E 21° 22' 59.880" S
9 34° 57' 00.000" E 21° 22' 59.880" S
10 34’ 57' 00.000" E 21° 20' 10.320" S
11 35° 00' 00.000" E 21° 20' 10.320" S
12 35° 00' 00.000" E 21° 15' 00.000" S
13 35° 02' 42.000" E 21° 15' 00.000" S
14 35° 02’ 42.000" E 21° 19' 28.920" S
15 35° 06' 00.000" E 21° 19' 28.920" S
16 35° 06' 00.000" E 21° 23' 20.400" 5
17 35° 06' 48.600" E 21° 23' 20.400" S
18 35° 06' 48.600" E 21° 25’ 53.400" S
19 35° 08' 11.760" E 21° 25' 53.400" S
20 35° 08’ 11.760" E 21° 30' 00.000" S
21 35° 10' 35.040" E 21° 30’ 00.000" S
22 35° 10' 36.120" E 21° 31' 39.360" S
23 35° 11' 48.120" E 21° 31'39.360" S
24 35“ 11‘ 48.120" E 21° 35' 10.320" S
25 35° 05' 00.240" E 21° 35’ 10.320" S
26 35° 05' 02.400" E 21° 39' 00.000" 5
27 34“ 57' 00.000" E 21° 39' 00.000" 5
28 34° 57' 00.000" E 21° 40' 01.200" S
29 34° 55' 09.480" E 21° 40' 01.200" 5
30 34° 55' 09.480" E 21° 55' 20.280" S
31 35° 04' 59.880" E 21° 55' 20.280" S
32 35° 04' 59.880" E 21° 55' 00.120“ S
33 35° 06’ 00.000" E 21° 55' 00.120" S
34 35° 06' 00.000“ E 21° 50’ 11.400" S
35 35° 10' 01.200" E 21° 50'11.400" S
36 35° 10' 01.200" E 21° 55' 19.200" S
37 35° 18’ 27.360“ E 21° 55' 19.200" S
38 35° 18' 27.360" E 22° 00' 00.000" S
39 35° 15’ 00.000" E 22° 00' 00.000" S
40 35° 00' 00.000" E 22° 00' 00.000" S
41 34° 45' 00.000" E 22° 00' 00.000" S
42 34° 33’ 45.360" E 22° 00' 00.000" S
43 34° 33' 46.800” E 21° 37' 59.520" S
44 34° 36' 03.960" E 21° 37' 59.520" S
PT-5C EPCC ANNEX B
ANNEX B
Map of Contract Area PT5-C
Coordinate System: WGS 1984 UTM Zone 36S
Projection: Transverse Mercator
Datum: WGS 1984
False Easting: 500,000.0000
False Northing; 10,000.000.0000
Central Meridian: 33.0000
Scale Factor 0.9996
Latitude Of Origin: 0.0000
Units: Meter
2T2-0-S- 0 32
KXZHHCZZZBHi Km
ss’strci
PT5-C Annexe
Annex "C"
EPCC Accounting and Financial Procedure
This Annex is attached to and made part of the Exploration and Production Concession Contract
dated [ 20...] entered into between the Government of the Republic of Mozambique
and Sasol Petroleum Mozambique Exploration, Limitada (Sasol) and Empresa National de
Hidrocarbonetos, E.P. (ENH) (hereinafter referred to as "the EPCC").
Section 1 General Provisions
1.1 Definitions
l.lFor the purposes of this EPCC Accounting and Financial Procedure the terms used herein which
are defined in applicable law, the EPCC or the Joint Operating Agreement shall have the same
meaning when used in this EPCC Accounting and Financial Procedure.
1.2 Statements required to be submitted by the Concessionaires
1.2(a) Within ninety (90) days of the Effective Date, the Concessionaires shall submit to the
Government a proposed outline of charts of accounts, operating records and reports,
which outline shall be in accordance with applicable law and generally accepted and
recognised accounting principles, used in the international petroleum industry.
Within ninety (90) days of receiving the above submission Government shall either
indicate its approval of the proposal or request revisions to the proposal.
Within one hundred and eighty (180) calendar days after the Government has approved
the Concessionaires' proposals, the Concessionaires and Government shall approve an
outline charts of accounts, operating records and reports which shall describe the basis
of the accounting system and procedures to be developed and used under the EPCC.
Following such approval, the Concessionaires shall expeditiously prepare and provide the
Government with formal copies of the comprehensive charts of accounts related to the
accounting, recording and reporting functions, and allow Government to examine the
Concessionaires1 manuals, if any, and to review procedures which are, and shall be,
observed under the EPCC.
1.2(b) Notwithstanding the generality of the foregoing, the Concessionaires are required to
make regular statements relating to the Petroleum Operations. These Statements are as
follows:
(i) Production Statement (see Section 5 of this Annex);
PT5-C Annexe
(ii) Value of Production and Petroleum Production Tax Statement (see Section 6 of
this Annex);
(iii) Cost Recovery Statement (see Section 7 of this Annex);
(iv) LNG Price Statement (see Section 7 of this Annex);
(v) Statement of Expenditures and Receipts (see Section 8 of this Annex);
(vi) Final End-of-Year Statement (see Section 9 of this Annex);
(vii) Budget (see Section 10 of this Annex);
(viii) Long Range Plans (see Section 11 of this Annex).
(c) All reports and statements will be prepared in accordance with the EPCC, applicable law
and, where there are no relevant provisions in either of these, in accordance with generally
accepted and recognised accounting principles used in the international petroleum industry.
1.3 Language and Units of Account
(a) Accounts shall be maintained in United States dollars and such other currency as may be
required under the applicable law. For cost recovery purposes, the currency of reference
shall be the US Dollar. Metric units and barrels shall be employed for measurements
required under this Annex.
(b) Concessionaires may, subject to the authorization of the Minister responsible for the area
of Finance, opt for the use of US dollars as presentation currency, and this option shall
not be changed during the life of the project provided that:
(i) the investments realised are equivalent or in excess of United States
Dollars 500,000,000.00. Such investments are deemed to include all costs
incurred as per the Cost Recovery Statement, and
(ii) at least 90 per cent of the Concessionaire's transactions are carried out in
United States Dollars. The currency of the transactions is deemed to be the
payment currency for the transactions.
(c) Once the authorization of the Minister responsible for the area of Finance has been
obtained, the accounting considered will be those in US Dollars, from the effective date
of the Contract, and there is no need to convert the accounts in Meticais to US Dollars
(d) For the purposes of the preceding paragraph, the Concessionaire shall submit, since the
effective date, to the competent entities of the Government the accounting in Meticais
and in US Dollars
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PT5-C Annexe
(e) The language used will be English and any other language that may be required under
applicable law. When necessary, for clarification, the Concessionaire may also maintain
accounts and records in other languages, units of measurement and currencies.
(f) These Accounting and Financial Procedures are intended to ensure that neither the
Government nor the Concessionaire obtain any gain or suffer any loss from the exchange
rate variation to the detriment or benefit of the other. However, should any gain or loss
occur as a result of a currency conversion, it will be credited or debited to accounts under
the EPCC.
(g) Amounts received and costs and expenditures made in Mozambican Meticais or in United
States dollars shall be converted from Mozambican Meticais into United States dollars or
from United States dollars into Mozambican Meticais on the basis of the average of the
buying and selling exchange rates between the currencies in question as published by
Banco de Mozambique or in accordance with the applicable law, prevailing on the actual
day of the transaction on which such amounts are received and costs and expenditures
are paid, or as agreed by the Parties.
(h) Amounts received and costs and expenditures incurred in currencies other than
Mozambican Meticais or in United States dollars shall be converted into United States
dollars on the basis of the average of the buying and selling exchange rates between the
currencies in question as published by the Wall Street Journal, or if not published by the
Wall Street Journal, then by the Financial Times, prevailing on the actual day of the
transaction on which such amounts are received and costs and expenditures are paid, or
as agreed by the Parties.
1.4 Payments
Except as provided in Subsections 1.4(b) and (c), all payments between the Parties shall,
unless otherwise agreed, be in United States dollars and through a bank designated by
each receiving Party.
(b) Payment of any tax by a Concessionaire shall be made in accordance with the provisions
of the EPCC and the applicable law.
(c) Discharge of a Concessionaire's obligation with respect to the Petroleum
Production Tax and the Government's share of Profit Petroleum shall be made in
accordance with the EPCC.
(d) All sums due and payable in Meticais by a Concessionaire to the Government under the
EPCC during any calendar month shall, for each day such sums are overdue during such
3
PT5-C Annex C
month, bear interest compounded daily at an annual rate as required by Mozambican
law.
(e) All sums due and payable in other currencies by a Concessionaire to the Government
under the EPCC during any calendar month shall, for each day such sums are overdue
during such month, bear interest compounded daily at an annual rate equal to LIBOR or
equivalent plus three (3) percentage points.
1.5 Audit and Inspection Rights of the Government
(a) Upon giving the Concessionaires thirty (30) calendar days' notice, the competent
authority of the Government shall have the right to audit the Concessionaires' accounts
and records maintained hereunder with respect to each calendar year within 5 (five) years
from the end of each such calendar year. Notice of any exception to the Concessionaires'
accounts of any calendar year must be submitted to the Concessionaires within five (5)
years from the end of such calendar year. For purposes of auditing, the Government may
examine and verify at reasonable times all charges and credits relating to the Petroleum
Operations such as books of account, accounting entries, material records and any other
documents, correspondence and records necessary to audit and verify the charges and
credits. Furthermore, the auditors shall have the right in connection with such audit to
visit and inspect, subject to reasonable notification, all sites, plants, facilities, warehouses
and offices of the Concessionaires serving the Petroleum Operations including visiting
personnel associated with those operations.
(b) Without prejudice to the finality of matters as described in Subsection 1.5(a) all
documents referred to in that sub-section shall be maintained and made available for
inspection and audit by the Government for such a time as prescribed by the applicable
law.
(c) In the event that Government does not conduct an audit with respect to a calendar year
or conducts the audit but does not issue an audit report within the time specified in
Subsection 1.5 (a) above, Government shall be deemed not to have objected to the Cost
Recovery Statement prepared and maintained by the Concessionaires and such Cost
Recovery Statement shall be considered true and correct for Cost Recovery purposes for
such calendar year save for manifest disregard of applicable procedure, fraud or wilful
misconduct. In case where Government conducts a review and issues an audit report,
Government shall be deemed not to have objected to the Cost Recovery Statement and
such Cost Recovery Statement shall be considered true and correct for Cost Recovery
purposes for such calendar year with respect to each item which is not the subject of an
exception in such audit report, save for manifest disregard of applicable procedure, fraud
or wilful misconduct.
4
PT5-C AnnexC
Section 2 Classification, Definition and Allocation of Costs and Expenditures
All expenditures relating to the Petroleum Operations shall, subject to applicable law be
classified, defined and allocated as follows:
2.1 Exploration Costs
Are all direct and allocated indirect costs incurred in relation to Exploration in the EPCC Area,
including but not limited to:
(a) Aerial, geophysical, geochemical, paleontological, geological, topographical and seismic
surveys and studies and their interpretation.
(b) Core hole drilling and drilling of water-Wells related to the Petroleum Operations.
(c) Labour, materials and services used in drilling Wells with the object of finding new
Petroleum Deposits or for the purpose of appraising the extent of Petroleum Deposits
already discovered provided such Wells are not completed as Production Wells.
(d) Facilities used solely in support of these purposes including access roads and purchased
geological and geophysical information.
(e) Service Costs allocated to the Exploration operations pursuant to applicable law or in
absence of such law agreed to between the Government and the Concessionaires on a
systematic basis and, failing agreement, to be determined by a sole expert in accordance
with Article 26 of the EPCC.
(f) General and Administrative Expenses allocated to the Exploration Operations pursuant to
applicable law or in absence of such law agreed to between the Government and the
Concessionaires on a systematic basis and, failing agreement, to be determined by a sole
expert in accordance with Article 26 of the EPCC.
2.2 Development and Production Capital Expenditures
These shall consist of all expenditures incurred for Development and Production, including but
not limited to:
(a) Drilling of Wells which are completed as producing Wells and drilling of Wells for purposes
of Production from a Petroleum Deposits already discovered whether these Wells are dry
or producing.
(b) Completing of Wells by way of installation of casing or equipment or otherwise after a
Well has been drilled for the purpose of bringing the Well into use as a producing Well.
(c) Intangible drilling costs such as labour, consumable material and services having no
salvage value which are incurred in drilling and deepening of Wells for Production
purposes.
5
PT5-C Annexe
(d) The costs of construction and installation of Facilities for Petroleum Operations pursuant
to the approved Development Plan, such as: flow lines, Production and treatment units,
Wellhead equipment, subsurface equipment, enhanced recovery systems, offshore
platforms including floating units, onshore or offshore liquefaction, storage and offloading
Facilities, Petroleum storage facilities, export terminals and piers, harbours and related
facilities, access roads for Production activities.
(e) Engineering and design studies for Facilities for Petroleum Operations.
(f) Service Costs allocated to Development and Production on a basis determined by
applicable law or in absence of such law agreed to between the Government and the
Concessionaires on a systematic basis and, failing agreement, to be determined by a sole
expert in accordance with Article 26 of the EPCC.
(g) General and Administrative Expenses allocated to the Development and Production on a
basis determined by applicable law or in absence of such law, agreed to between the
Government and the Concessionaires on a systematic basis and, failing agreement, to be
determined by a sole expert in accordance with Article 26 of the EPCC.
2.3 Operating Costs
These are all expenditures incurred in the Petroleum Operations after the start of the Commercial
Production which are other than Exploration Costs, Development and Production Capital
Expenditures, General and Administrative Expenses and Service Costs, including but not limited
to:
(a) Operating, servicing, maintaining and repairing Production and injection Wells and all
Facilities for Petroleum Operations pursuant to the approved Development Plan, which
are completed during the Development and Production.
(b) Planning, producing, controlling, measuring and testing the flow of Petroleum and
collecting, gathering, treating, storing and transferring the Petroleum from the Petroleum
Deposits to the Delivery Point.
(c) The balance of General and Administrative Expenses and Service Costs not allocated to
the Exploration operations or the Development and Production.
2.4 Service Costs
These are direct and indirect expenditures in support of the Petroleum Operations including
warehouses, offices, camps, piers, marine vessels, vehicles, motorised rolling equipment,
aircraft, fire and security stations, workshops, water and sewage plants, power plants, housing,
community and recreational facilities and furniture, tools and equipment used in these activities.
Service costs in any calendar year shall include the total costs incurred in such year to purchase
and/or construct said facilities as well as the annual costs to maintain and operate the same. All
6
PT5-C Annexe
Service Costs will be regularly allocated as specified in Subsections 2.1(e), 2.2(g) and 2.3 to
Exploration Costs, Development and Production Capital Expenditures and Operating Costs.
Service Costs incurred during the period commencing with the Effective Date and ending with
the date of approval by MIREME of the first Development Plan for a proposed Development and
Production Area, shall be fully allocated to Exploration Cost. Commencing with the date of
approval by MIREME of the first Development Plan for a proposed Development and Production
Area, and if it becomes necessary allocate Service Costs to or between Petroleum Operations,
such allocation shall be made on an equitable basis in accordance with applicable law, or in
absence of such law, agreed to between the Government and the Concessionaires on a
systematic basis and, failing agreement, the allocation to be determined by a sole expert in
accordance with Article 26 of the EPCC.
The Concessionaires shall furnish a description of its allocation procedures pertaining to Service
Costs, along with each proposed Development Plan.
2.5 General and Administrative Expenses
(a) All main office, field office and general administrative costs in the Republic of
Mozambique including but not limited to supervisory, accounting and employee relations
services.
(b) An overhead charge for services rendered outside the Republic of Mozambique for
managing the Petroleum Operations and for staff advice and assistance including
financial, legal, accounting and employee relations services. This charge shall be five
percent (5%) of contract costs up to five million US dollars (US$5,000,000), three percent
(3%) of that portion of contract costs between five million US dollars (US$5,000,000) and
ten million US dollars (US$10,000,000) and one and one half percent (1.5%) of contract
costs which are in excess of ten million US dollars (US$10,000,000). The contract costs
referred to herein shall include all Exploration Costs, Development and Production Capital
Expenditures, Operating Costs and Service Costs.
(c) All General and Administrative Expenses will be regularly allocated as specified in
Subsections 2.1(f), 2.2(h) and 2.3 to Exploration Costs, Development and Production
Capital Expenditures and Operating Costs.
General and Administrative Expenses incurred during the period commencing with the Effective
Date and ending with the date of approval by the Government of the first Development Plan for
a proposed Development and Production Area, shall be fully allocated to Exploration Cost.
Commencing with the date of approval by the Government of the first Development Plan for a
proposed Development and Production Area, if it becomes necessary to allocate General and
Administrative Expenses to or between Petroleum Operations, such allocation shall be made on
an equitable basis agreed between the Parties in accordance with applicable law, failing
agreement, the allocation to be determined by a sole expert in accordance with Article 26 of the
EPCC. zx
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PT5-C Annexe
Concessionaires shall furnish a description of its allocation procedures pertaining to
General and Administrative Expenses, along with each proposed Development Plan.
2.6 Decommissioning Fund
For the purpose of costs related to the implementation of a Decommissioning Plan a
Decommissioning Fund shall be established for each Development and Production Area,
commencing from the calendar quarter in whichever of the following situations first occur:
a) the Petroleum Produced has reached 50% of the aggregate recoverable reserves as
determined in an approved Development Plan and any successive reappraisal of such
initial recoverable reserves; or
a) five (5) years prior to the expiry or surrender of this EPCC or the use of any facility for the
purpose of extracting Petroleum from a Production and Development Area within this
EPCC is permanently terminated.
For every subsequent calendar quarter in which Petroleum is produced, the Concessionaires shall
charge as Operating Costs a portion of the estimated future cost of Decommissioning.
The amount to be deposited in the Decommissioning Fund for a calendar quarter shall be charged
as Operating Costs subject to the Cost Recovery limitation stipulated in applicable law and Article
9.6 of the EPCC and calculated in the following manner:
QD = (ECA X CPP/EPR) - DFB where:
QD is the amount of funds to be transferred to the Decommissioning Fund in respect of the
relevant calendar quarter;
ECA is the estimated cost of Decommissioning pursuant to the preliminary Decommissioning Plan
approved by the Government;
EPR is the estimated remaining Petroleum reserves to be recovered from the Development and
Production Area to which the preliminary Decommissioning Plan apply, at the end of the calendar
quarter in which the Decommissioning Fund was opened;
CPP is the cumulative Production of Petroleum from the Development and Production Area
to which the preliminary Decommissioning Plan apply from the end of the calendar quarter in
which the Decommissioning Fund was opened.
DFB is the Decommissioning Fund balance at the end of the previous calendar quarter.
PT5-C Annexe
Section 3 Costs, Expenses, Expenditures and Credits of the Concessionaires
3.1 Costs recoverable without further approval of the Government
Subject to the provisions of the EPCC and applicable law, the Concessionaires shall bear and pay
the following costs and expenses in respect of the Petroleum Operations. These costs and
expenses will be classified under the headings referred to in Section 2. They are recoverable by
the Concessionaires under the EPCC and include, but are not limited to the following:
(a) Surface Rights
This covers all direct costs attributable to the acquisition, renewal or relinquishment of
surface rights acquired and maintained in force for the EPCC Area.
(b) Labour and Associated Labour Costs
(i) gross salaries and wages including bonuses and premiums of the
Concessionaire's employees directly engaged in the Petroleum Operations,
irrespective of the location of such employees, it being understood that in
the case of those personnel only a portion of whose time is dedicated to
the Petroleum Operations, only that pro-rata portion of applicable salaries,
wages and fringe benefits will be charged;
(ii) the Concessionaire’s costs regarding holiday, vacation, sickness, severance
unless for dismissal of an employee without cause as determined by a court
or arbitral body of competent jurisdiction and disability, retirement and
survival payments applicable to the salaries and wages chargeable under
(i) above. In respect of the severance, retirement, and survival payments
mentioned above, the amount that will be cost recoverable shall be in
proportion of the total time the employee was directly engaged in the
Petroleum Operations on a full time basis to the employee's total tenure
with the Concessionaire and its Affiliates. If it becomes necessary to
allocate these amounts to or between Petroleum Operations, such
allocation shall be made on an equitable basis in accordance with
applicable law, in the absence of such law as agreed between the
Government and the Concessionaires and, failing agreement, the
allocation to be determined by a sole expert in accordance with Article 26
of the EPCC;
(iii) expenses or contributions made pursuant to assessments or obligations
imposed under the applicable law which are applicable to the
Concessionaire's cost of salaries and wages chargeable under (i) above;
(iv) the Concessionaire's cost of established plans for employees' life
insurance, hospitalisation, pensions, and other benefits of a like nature
customarily granted to the Concessionaire's employees;
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PT5-C Annexe
(v) reasonable travel and personal expenses of employees of the
Concessionaire including those made for travel and relocation of the
expatriate employees and their families assigned to the Republic of
Mozambique, all of which shall be in accordance with the Concessionaire's
normal practice;
(c) Transport of employees and materials
The cost for transport of employees, equipment, materials and supplies necessary for
the conduct of the Petroleum Operations.
(d) Charges for Services
i. Third Party Contracts
Subject to the rules defined in applicable law, the actual costs of contracts for
technical and other services entered into by the Concessionaires for the
Petroleum Operations, made with third parties other than Affiliated Companies
of the Concessionaires are recoverable, provided that the prices paid by the
Concessionaires are no higher than those generally charged by other
international or domestic suppliers for comparable work and services.
ii. Affiliated Companies of a Concessionaire
Without prejudice to the charges to be made in accordance with Subsection 2.5,
in the case of services rendered to the Petroleum Operations by an Affiliated
Company of a Concessionaire, the charges will be based on actual costs and will
be competitive. The charges will be no higher than the most favourable prices
charged by the Affiliated Company to third parties for comparable services under
similar terms and conditions elsewhere. The Concessionaire shall specify the
amount of the charges which contributes an allocated proportion of the general
material, management, technical and other costs of the Affiliated Company, and
the amount which is the direct cost of providing the services concerned. If
necessary, certified evidence regarding the basis of prices charged may be
obtained from the auditors of the Affiliated Company.
(e) Materials
i. General Principle
Subject to applicable law and so far as is practicable and consistent with efficient,
economical and internationally accepted operational requirements, only such
material shall be purchased or furnished by the Concessionaires for use in the
Petroleum Operations as may be required for use in the reasonably foreseeable
future and to the extent that such purchase or supply are in accordance with the
EPCC.
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PT5-C Annexe
ii. Warranty of Material
The Concessionaires does not warrant material beyond the supplier's or
manufacturer's guarantee and, in case of defective material or equipment, any
adjustment received by the Concessionaires from the suppliers/ manufacturers or
their agents will be credited to the accounts under the EPCC.
iii. Value of material charged to the accounts under the EPCC
(a) Except as otherwise provided in (b) below material purchased by the
Concessionaires for use in the Petroleum Operations shall be valued to include
invoice price less trade and cash discounts {if any), purchase and procurement fees
plus freight and forwarding charges between point of supply and point of
shipment, freight to port of destination, insurance, taxes, customs duties, consular
fees, other items chargeable against imported material and where applicable
handling and transportation expenses from point of importation to warehouse or
operating site, and its costs should not exceed those currently prevailing in normal
arms-length transactions on the open market.
(b) Materials purchased from Affiliated Companies of a Concessionaire shall
be charged at the prices specified in items (1) and (2) hereof.
(1) New material (condition "A") shall be valued at the current international
price which should not exceed the price prevailing in normal arms-length
transactions on the open market.
2) Used material (conditions "B" and "C")
(i) material which is in sound and serviceable condition and is suitable for
reuse without reconditioning shall be classified as condition "B" and priced
at seventy-five percent (75%) of the current price of new materials defined
in (1) above.
(ii) material which cannot be classified as condition "B" but which:
(a) after reconditioning will be further serviceable for original function
as good second-hand material condition "B", or
(b) is serviceable for original function but substantially not suitable for
reconditioning, shall be classified as condition "C" and priced at fifty
percent (50%) of the current price of new material as defined in (1)
above. The cost of reconditioning shall be charged to the
reconditioned material provided that the condition "C" material
value plus the cost of reconditioning does not exceed the value of /
condition "B" material. (x
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PT5-C Annexe
(iii) material which cannot be classified as condition "B" or condition "C" shall
be priced at a value commensurate with its use.
(iv) material involving erection costs shall be charged at the applicable
percentage, in accordance to its condition, of the current dismantled price
of new material as defined in (1) above.
(v) when the use of material is temporary and its service to the Petroleum
Operations does not justify the reduction in price as provided for in
(2) (ii) hereof, such material shall be priced on a basis that will result in
a net charge to the accounts under the EPCC consistent
(f) Rentals, Duties and Other Assessments
All rentals, taxes, levies, charges, fees, contributions and any other assessments and
charges by the Government or entities of its political subdivisions, agencies and
instrumentalities, to the extent that they have or may acquire the power to do so, in
connection with the Petroleum Operations and paid directly or indirectly by the
Concessionaires with the exception of the Corporate Income Tax imposed on the
Concessionaires.
(g) Insurance and Losses
Insurance premia and costs incurred for insurance arranged in accordance with the EPCC
provided that if such insurance is wholly or partly placed with an Affiliated Company of
the Concessionaires, such premia and costs shall be recoverable only to the extent
generally charged by insurance companies other than an Affiliated Company of the
Concessionaires. Costs and losses incurred as a consequence of events which are, and in
so far as, not made good by insurance obtained under the EPCC are recoverable under
the EPCC.
(h) Legal Expenses
All costs and expenses of litigation and legal or related services necessary or expedient
for the procuring, perfecting, retention and protection of the EPCC Area, and in defending
or prosecuting lawsuits involving the EPCC Area or any third party claim arising out of
activities under the EPCC, or sums paid in respect of legal services necessary or expedient
for the protection of joint interest of the Government and the Concessionaires are
recoverable. Where legal services are rendered in such matters by salaried or regularly
retained lawyers of the Concessionaires or an Affiliated Company of the Concessionaires,
such compensation will be included instead under Subsection 3.1(b) or 3.1(d) above, as
applicable.
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PT5-C Annexe
(i) Training Costs
All costs and expenses incurred by the Concessionaires in training of its employees located
in Mozambique and engaged in the Petroleum Operations pertaining to activities in the
EPCC Area and such other training as required under the EPCC or applicable law.
(j) General and Administrative Expenses
The costs described in Subsection 2.5(a) and the charge described in Subsection 2.5(b).
(k) The costs of any guarantee required by the Government under the EPCC.
(l) Payments into the Decommissioning Fund and cost incurred for decommissioning
according to applicable law and the EPCC.
3.2 Costs not recoverable under the EPCC
(a) Petroleum marketing or transportation costs of Petroleum beyond the Delivery Point.
(b) Costs of arbitration and the independent expert under Article 26 of the EPCC.
(c) Petroleum Production Tax and Corporate Income Tax.
(d) Fines and penalties imposed by any public authority in the Republic of Mozambique or
elsewhere.
(e) Interests and other financial costs.
3.3 Recoverability and Deductibility
The determination of whether the costs and expenses set forth herein are recoverable or non-
recoverable shall apply only to this EPCC, and shall not be interpreted to preclude the
Concessionaires from deducting said amounts in computing its net income from the Petroleum
Operations for Corporate Income Tax purposes under applicable law.
3.4 Credit under the EPCC
The net proceeds of the following transactions will, subject to applicable law, be credited to the
accounts under the EPCC:
(a) The net proceeds of any insurance or claim in connection with the Petroleum Operations
or any assets charged to the accounts under the EPCC when such operations or assets
were insured and the premia charged to the accounts under the EPCC.
(b) Revenue received from outsiders for the use of property or assets charged to the accounts
under the EPCC.
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PT5-C Annexe
(c) Any adjustment received by the Concessionaires from the suppliers/manufacturers or
their agents in connection with defective material the cost of which was previously
charged by the Concessionaires to the accounts under the EPCC.
(d) Rentals, refunds or other credits received by the Concessionaires which apply to any
charge which has been made to the accounts under the EPCC.
(e) The amounts received for inventory materials under the EPCC and subsequently exported
from the Republic of Mozambique without being used in the Petroleum Operations.
(f) Legal expenses charged to the accounts under Subsection 3.1(h) and subsequently
recovered by the Concessionaires.
3.5 Duplication of Charges and Credits
Notwithstanding any provision to the contrary in this Accounting and Financial Procedure, there
shall be no duplication of charges or credits in the accounts under the EPCC.
3.6 Priority of Recoverable Costs
Costs recoverable pursuant to applicable Mozambican Petroleum law and the EPCC shall be
recovered in the following order of priority:
(a) Operating Costs pursuant to Section 2.3
(b) Exploration Costs pursuant to Section 2.1;
(c) Development and Production Capital Expenditures pursuant to Section 2.2;
(d) Payments into the Decommissioning Fund pursuant to Section 2.6; (e) Any
other costs recoverable pursuant to Subsection 2.4,2.5
Section 3-A Deductions
3-A.l For purposes of Article 10.5 of the EPCC (Valuation of Petroleum), Deductions are the
following items to the extent incurred by Concessionaires:
a) for Petroleum Production Tax, only costs of Transportation, (including loading and
unloading), and insurance for shipping LNG cargos to LNG buyers
b) for Disposable Petroleum:
shipping costs (such as payments under charter party agreements for LNG
vessels, including any associated idle shipping charges), if any;
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PT5-C Annexe
ii) any costs, expenses, losses or liabilities incurred in connection with, or
arising from, performance under relevant LNG sales and purchase
agreements with third party LNG buyers; and
iii) any other deductions as agreed between the Government and the
Concessionaires.
3-A.2 To the extent any of the above amounts are incurred as a result of Gross Negligence or
Wilful Misconduct of Concessionaires, Operator or an Affiliated Company, such amounts
are not permitted as Deductions.
3-A.3 Where a Deduction is an amount payable to an Affiliated Company, in accordance with
Subsection 3.l(d)(ii) shall apply, mutatis mutandis, in determining such Deduction.
3-A.4 Costs incurred by Concessionaires which are within the scope of the overhead charge in
subsection 2.5(b) shall not be charged as Deductions.
Section 4 Records and Valuation of Assets
4 The Concessionaires shall maintain detailed records of property in use for the Petroleum
Operations in accordance with applicable law and normal practice in Exploration and
Production activities of the international petroleum industry. At reasonable intervals but at
least once a year with respect to movable assets with an individual value equal to or greater
than US$ 10,000 (ten thousand US dollars) per unit and once every five (5) years with respect
to immovable assets, inventories of the property under the EPCC shall be taken by the
Concessionaires. The Concessionaires shall give the INP at least thirty (30) days written notice
of its intention to take such inventory and the IN P shall have the right to be represented when
such inventory is taken. The Concessionaires will clearly state the principles upon which
valuation of the inventory has been based. When an assignment of rights under the EPCC
takes place a special inventory may be taken by the Concessionaires at the request of the
assignee provided that the costs of such inventory are borne by the assignee.
Section 5 Production Statement
5.1 Subsequent to the commencement of Commercial Production from the EPCC Area, the
Concessionaires shall submit a monthly Production statement (hereinafter referred to as the
"Production Statement") to the INP showing the following information for each Development
and Production Area:
(a) The quantity of Crude Oil produced.
(b) The quantity of Natural Gas produced.
PT5-C AnnexC
(c) The quantities of Petroleum used for the purposes of Petroleum Operations, without prejudice
to the specificities of item 5.1 (g) (iii) below.
(d) The quantities of Natural Gas flared.
(e) The size of Petroleum stocks held at the beginning of the month.
(f) The size of Petroleum stocks held at the end of the month;
(g) Where Natural Gas sold as LNG:
(i) quantities of Natural Gas delivered at the inlet flange, expressed in MMscf
/ MMsm3;
(ii) quantities loaded into LNG vessels at the Delivery Point, net of vapour
return, expressed in m3;
(iii) quantities used or lost in the LNG plant, expressed in m3;
(iv) the size of stocks of LNG held at the beginning of the month, expressed in
m3;
(v) the size of stocks of LNG held at the end of the month, expressed in m3;
(h) Any other relevant information as may be required under the applicable law.
5.2 The Production Statement of each calendar month shall be submitted to the Government no
later than twenty (20) calendar days after the end of such calendar month.
Section 6 Value of Production and Petroleum Production Tax Statement
6.1 The Concessionaires shall prepare and submit to the Ministries with authority over the
Petroleum sector and the finance sector a statement covering the determination of the
fair market value of Crude Oil and Natural Gas (including LNG), respectively, produced
during each calendar month and the value of the Petroleum Production Tax payable to
the Government. This statement shall contain the following information:
(a) The quantities and prices realised therefor by the Concessionaires a result of sales of
Crude Oil and Natural Gas respectively to third parties made during the calendar month
in question.
(b) The quantities and the prices realised therefor by the Concessionaires as a result of sales
of Crude Oil and Natural Gas respectively made during the calendar month in question,
other than to third parties.
(c) The quantity of stocks of Crude Oil and if applicable Natural Gas at the end of the
preceding calendar month. z
16
PT5-C AnnexC
(d) The quantity of stocks of Crude Oil and if applicable Natural Gas at the end of the calendar
month in question.
(e) The total Petroleum Production Tax liability for Crude Oil and Natural Gas respectively for
the calendar month.
(f) Published information available to the Concessionaires, when requested by the
Government, concerning the prices of Crude Oil or Natural Gas produced by the main
petroleum producing and exporting countries including contract prices, discounts and
premia, and prices obtained on the spot markets.
6.2 The statement of Value of Petroleum Produced and Petroleum Production Tax Statement
of each calendar month shall be submitted to the Ministries with authority over the
Petroleum sector and the finance sector not later than twenty (20) calendar days after the
end of such calendar month.
6.3 In the case of Natural Gas or LNG sales and delivery on terms other than free on board
(FOB), the Value of Production and Petroleum Production Tax Statement:
(i) shall be based on sales for which the delivery fell in the calendar month in
question;
(ii) shall show the quantities of LNG loaded and unloaded, and quantities of
LNG boil-off, used as fuel or lost in transporting LNG and heel quantities,
and the inventory of LNG afloat; and
(iii) shall refer to the statement of Deductions.
Section 7 Cost Recovery Statement
7.1 The Concessionaires shall prepare and submit to the Ministries with authority over the
sector and the finance sector with respect to each calendar quarter a cost recovery
statement (hereinafter referred to as the "Cost Recovery Statement") containing the
following information:
(a) Recoverable costs carried forward from the previous quarter, if any.
(b) Recoverable costs for the quarter in question.
(c) Total recoverable costs for the quarter in question (Subsection 7.1(a) plus Subsection
7.1(b)).
(d) Quantity and value of Cost Petroleum taken proportionally in Crude Oil and Natural Gas
(including LNG) by each Concessionaire for the quarter in question.
(e) EPCC costs recovered for the quarter in question.
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PT5-C Annexe
(f) Total cumulative amount of EPCC costs recovered upto the end of the quarter in question.
(g) Amount of recoverable EPCC costs to be carried forward into the next quarter.
7.2 The Cost Recovery Statement of each quarter shall be submitted to the Ministries with
authority over the Petroleum sector and the finance sector no later than sixty (60) calendar
days after the end of such quarter.
Section 7A Crude Oil, Natural Gas or LNG Price Statement
7A.1 Where Crude Oil or Natural Gas, including as LNG is delivered, the Concessionaires shall
prepare with respect to each calendar month and submit to the Ministries with authority
over the Petroleum and the finance sector a Price Statement which will include the
following:
(a) the basis on which the price is calculated for each sale under the relevant sales
and purchase agreement;
(b) Deductions incurred and attribution of Deductions to the calendar month in
question;
(c) quantities loaded at the Delivery Point; and
(d) a calculation of the value based on (a) to (c) above.
In the event Concessionaires discovers an error or omission in a previous period, if any,
such adjustment will be made to the following Price Statement.
7A.2 The Price Statement of each calendar month shall be submitted to the Ministries with
authority over the Finance sector and the Petroleum sector within ten (10) business days
after the end of such calendar month.
Section 8 Statement of Expenditure and Receipts
8.1 The Concessionaires shall prepare with respect to each calendar quarter a statement of
expenditures and receipts under the EPCC (hereinafter referred to as the "Statement of
Expenditure and Receipts"). The statement will distinguish between Exploration Costs,
Development and Production Capital Expenditures and Operating Costs and
Decommissioning costs including amounts drawn from the Decommissioning Fund and
will identify major items of expenditures within these categories. The statement will show
the following:
(a) Actual expenditures and receipts for the quarter in question
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PT5-C Annexe
(b) Cumulative expenditure and receipts for the budget year in question.
(c) Latest forecast cumulative expenditures at the year end.
(d) Variations between budget forecast and latest forecast and explanations
thereof.
8.2 The Statement of Expenditure and Receipts of each calendar quarter shall be submitted
to the Government no later than thirty (30) calendar days after the end of such quarter.
Section 9 End-of-Year Statement
9 The Concessionaires will prepare an End-of-Year Statement. The statement will contain
information as provided in the Production Statement, Value of Production and Petroleum
Production Tax Statement, Cost Recovery Statement and Statement of Expenditures and
Receipts but will be based on actual quantities of Petroleum produced and expenses incurred.
Based upon this statement, any adjustments that are necessary will be made to the payments
made by the Concessionaires under the EPCC. The End-of-Year Statement of each calendar
year shall be submitted to the Government within ninety (90) calendar days of the end of
such calendar year.
Section 10 Budget
10.1 The Concessionaires shall prepare an annual budget statement (hereinafter referred to as
the "Budget")- This will distinguish between Exploration Costs, Development and
Production Capital Expenditures and Operating Costs and will show the following:
(a) Forecast expenditures and receipts for the budget year under the EPCC.
(b) Forecast cumulative expenditures and receipts to the end of the said
budget year.
(c) A schedule showing the most important individual items of forecast
Development and Production Capital Expenditures for the said budget
year.
10.2 The Budget Statement shall be submitted to the Government with respect to each budget
year no less than ninety (90) calendar days before the start of the year except in the case
of the first year of the EPCC when the Budget Statement shall be submitted within sixty
(60) calendar days of the Effective Date.
10.3 It is recognised by the Concessionaires and the Government that the details of the Budget
Statement may require changes in the light of existing circumstances and nothing herein
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PT5-C Annexe
contained shall limit the flexibility to make such changes. Consistent with the foregoing,
the revision of said Statement is provided for annually.
10.4 Where Natural Gas is sold as LNG the Budget Statement shall include forecast Deductions.
Section 11 Long Range Plan and Forecast
The Concessionaires shall prepare and submit to the Government either one or both of the
following two (2) long range plans, whichever is appropriate:
11.1 Exploration Plan
During the Exploration Period, the Concessionaires shall prepare an Exploration Plan for the
current year and next calendar year commencing as of the first day of January following the
Effective Date (hereinafter referred to as the "Exploration Plan") which shall contain the following
information:
(a) Estimated Exploration Costs showing outlays for each of the calendar years
covered by the Exploration Plan.
(b) Details of seismic operations planned for each such year.
(c) Details of all drilling activities planned for each such year.
(d) Details of infrastructure utilisation and requirements.
The first such Exploration Plan shall also include the above information for the period starting on
the Effective Date and ending on the last day of December of that calendar year.
The Exploration Plan shall be revised at the beginning of each calendar year following of the
Effective Date. The Concessionaires shall prepare and submit to the Government the first
Exploration Plan within sixty (60) calendar days of the Effective Date and thereafter shall prepare
and submit to the Government no less than ninety (90) calendar days before the end of each
calendar year following the Effective Date a revised Exploration Plan.
11.2 Development Forecast
The Concessionaires shall prepare a development forecast for each period of five (5) calendar
years (hereinafter referred to as the "Development Forecast") commencing as of the first day of
January following the date when the first Development Plan is approved and the Concessionaires
commences the implementation of such plan.
The Development Forecast shall contain the following information:
(a) Forecast of Development and Production Capital Expenditures for each of the five
(5) calendar years.
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PT5-C Annexe
(b) Forecast of Operating Costs for each such calendar year.
(c) Forecast of Petroleum Production for each such calendar year.
(d) Forecast of number and types of personnel employed in the Petroleum Operations
in the Republic of Mozambique.
(e) Description of proposed Petroleum marketing arrangements and marketing
strategy.
(f) Description of main technologies employed.
(g) Description of working relationship of the Concessionaires to the Government.
The Development Forecast shall be revised at the beginning of each calendar year commencing
as of the second year of the first Development Forecast. The Concessionaires shall prepare and
submit to the Government the first Development Forecast within one hundred and twenty (120)
calendar days of the date when the first Development Plan is approved and the Concessionaires
commences the implementation of such plan and thereafter shall prepare and submit a revised
Development Forecast to the Government no later than forty-five (45) calendar days before each
calendar year commencing as of the second year of the first Development Forecast.
11.3 Changes of Plan and Forecast
It is recognised by the Concessionaires and the Government that the details of the Exploration
Plan and Development Forecast may require changes in the light of existing circumstances and
nothing herein contained shall limit the flexibility to make such changes. Consistent with the
foregoing the revision of said Plan and Forecast is provided for annually.
Section 12 Revision of Accounting and Financial Procedures
The provisions of this Accounting and Financial Procedure may be amended only in accordance
with the EPCC. Any such amendments shall be made in writing and shall state the date upon
which the amendments shall become effective.
Section 13 Conflict with the EPCC
In the event of any conflict between the provisions of this Accounting and Financial Procedure
and the EPCC, the provisions of the EPCC shall prevail.
PT5-C EPCC Annex D
ANNEX“D”
Bank Guarantee
[Date]
Ministry of Mineral Resources and Energy
The Minister of Mineral Resources and Energy
Av. Fernao de Magalhaes, 34, 1st Floor
Maputo, Mozambique
1. We understand that on 2017, the Government of the Republic of
Mozambique, Empresa Nacional de Hidrocarbonetos, (ENH) E.P and Sasol Petroleum
Mozambique Exploration, Lda. (Sasol) (the latter also the “Guaranteed Party”) entered
into an Exploration and Production Concession Contract for Area PT5-C in
Mozambique (the “EPCC”). For purposes of this Bank Guarantee, ENH and the
Guaranteed Party are collectively referred to as the “Concessionaires'. Capitalised
words not defined in this Bank Guarantee shall have the meaning ascribed to them in
the EPCC.
2. We, the undersigned [BANK LEGAL NAME] (the “Bank”), hereby, save for the
conditions stipulated below in clause 5, unconditionally and irrevocably guarantee in
favour of the Government of the Republic of Mozambique (the “Government”) the due
and punctual payment of all sums owed to the Government and unpaid by the
Guaranteed Party in respect of the Concessionaires’ failure to fulfil the Exploration
work commitment in relation to the sub-period of the Exploration Period,
up to a maximum of United States Dollars (US$
000,000).
3. The guarantee amount referred to in clause 2 above shall be reduced from time to
time upon delivery to the Bank of a certificate from the Guaranteed Party
countersigned on behalf of the Government setting forth the amount of such reduction
based on completion of the corresponding items of the Exploration work commitment
determined according to Article 4 of the EPCC.
Page 1 of 2
PT5-C EPCC Annex D
4. This Bank Guarantee shall become effective on the Effective Date of the EPCC and
shall terminate on the expiry of the sub-period of the Exploration Period,
or such earlier time as the total of the reductions during such sub-period of the
Exploration Period equal the guarantee amount referred to in clause 2 above.
5. Demands may be made under this Bank Guarantee by the Government by delivering
to the Bank a Government’s written statement setting forth the amount claimed and
certifying that the amount claimed represents the amount due and owed by the
Guaranteed Party in respect of the Concessionaire’s failure under the EPCC to fulfil
the Exploration work commitment in relation to the sub-period of the
Exploration Period, and that:
(a) the Concessionaire has failed to complete the Exploration work commitment in
relation to the relevant Exploration Period;
(b) the Guaranteed Party has been notified, in writing, by the Minister of Mineral
Resources and Energy, by registered letter or courier (a copy of which to be
attached to such written statement), of Concessionaire’s non-compliance and
the details thereof, and has been advised that a drawing is being made against
this unconditional and irrevocable Bank Guarantee; and
(c) the Concessionaire has been provided a minimum of fourteen (14) days to
correct the conditions of non-compliance and has failed to do so.
6. Upon its cancellation or expiry, this Bank Guarantee shall be returned to the
Guaranteed Party.
The duly authorised representative of the Bank has executed this Bank Guarantee on this
day of 20[ ].
Very truly yours,
for and on behalf of
[BANK LEGAL NAME]
Page 2 of 2
PT5-C EPCC Annex E
ANNEX“E”
Parent Company Guarantee
THIS GUARANTEE is made the day of 20[ ]
BY
(1) Sasol Africa (Pty) Ltd, a limited liability company established under the laws of the
Republic of South Africa| (the "Guarantor"), in favour of
(2) THE GOVERNMENT OF THE REPUBLIC OF MOZAMBIQUE, herein represented by
the Minister for Mineral Resources and Energy (the "Government" or “Beneficiary”);
WHEREAS
A On , the Government, Sasol Petroleum Mozambique
Exploration, Lda (Sasol) and Empresa Nacional de Hidrocarbonetos, E.P. (ENH)
entered into an Exploration and Production Concession Contract for Area PT5-C,
onshore of Mozambique (the "EPCC").
B The Guarantor is the parent company of Sasol (the “Company”)
c The Government requires that the due and proper performance of the Company
Obligations shall be guaranteed by the Guarantor under the terms of this Guarantee
and the Guarantor is willing to grant this Guarantee.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1 DEFINITIONS AND INTERPRETATION
1.1 The definitions stipulated in the Petroleum Law, the Petroleum Operations
Regulations and the EPCC main document applies to this document. Words
referred to in the singular shall include the plural and vice versa. The following
words and terms including derivatives thereof shall have the meaning in this
Guarantee ascribed to them below:
1.2 "Company Obligations"
means all the obligations, including right of recourse against the Company, that the
Company at any time has committed to fulfil and all liability for loss or damages
suffered or incurred by the Government, including claims by third parties against
the Government, under the EPCC and the applicable law and related to or arising
out of the Company’s activities or omissions during any period of the EPCC
including final implementation of Decommissioning and disposal of Facilities and
related responsibilities thereto.
2 GUARANTEE
2.1 The Guarantor irrevocably and unconditionally guarantees that if the Company
fails, in whole or in part, to perform any of the Company Obligations or if the
Company is in breach of any Company Obligation the Guarantor shall following
a demand made in accordance with clause 3, take such steps as shall £e
necessary:
PT5-C EPCC Annex E
(a) to perform such Company Obligation or remedy such breach of a Company
Obligation; or
(b) where such failure or breach is not capable of remedy, restore performance of
the breached Company Obligation.
2.2 This Guarantee shall become effective thirty (30) days after the Effective Date
of the EPCC and shall remain in full force and effect up until and including the
date when all Company Obligations and liabilities have been fulfilled and all
relevant Petroleum Operations subject to the applicable law and the EPCC
have been completed, including the full completion of the Decommissioning
Plan.
2.3 Upon termination of this Guarantee the Guarantor shall have no further liability
whatsoever to the Beneficiary under or in connection with this Guarantee save
in respect of any breach notified by the Beneficiary in accordance with clause
3 this Guarantee prior to its termination.
3 DEMANDS
3.1 The Beneficiary shall notify the Guarantor in writing if the Company fails, in
whole or in part, to perform a Company Obligation or if a breach of a Company
Obligation has occurred or if a claim by a Third Party Claimant has not been
satisfied and such notice shall contain a description of such failure to perform,
such breach or such claim.
3.2 Subject to clauses 4 and 7 of this Guarantee, if the Company fails to perform
or remedy a breach specified in a notice given under clause 3.1 within fourteen
(14) days of receipt of such notice by the Guarantor, the Beneficiary may then
make a demand in writing to the Guarantor that shall (i) set out the alleged
failure to perform or breach of the Company Obligation(s) or (ii) describe the
alleged claim of a Third Party Claimant that has not been satisfied, and (iii)
require the Guarantor to take such steps as are provided in clause 2.1 of this
Guarantee.
4 RIGHTS AND OBLIGATIONS
4.1 The Beneficiary shall be obliged before exercising any of the rights, powers or
remedies conferred upon it in respect of the Guarantor by this Guarantee or by
law:
4.1.1 to notify the Company of the failure to perform or the breach of a Company
Obligation;
4.1.2 if the Company disputes the breach or claim notified by the Government, to have
obtained an arbitral award or expert determination confirming such breach by the
Company or such claim notified by Government; and
4.1.3 to make or file any claim or proof in winding-up or dissolution of the Company (to
the extent applicable).
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PT5-C EPCC Annex E
5 LIMITATIONS
5.1 The obligations of the Guarantor under this Guarantee shall not be discharged
or impaired by any act or omission or any other event or circumstances
whatsoever (whether or not known to the Company, the Guarantor or the
Beneficiary) which would or might (but for this clause 5) operate to impair or
discharge the Guarantor's liability under this Guarantee, including, but without
limitation:
5.1.1 any of the Company Obligations being or becoming illegal or invalid, in any
respect;
5.1.2 any granting of time (or other indulgence) to the Company or any other
person; or
5.1.3 any amendment to or variation, waiver or release of, any of the terms of the
EPCC to the extent that such amendment, variation, waiver or release is
made with the Guarantor's prior written consent.
6 ASSIGNMENT AND SUCCESSORS
6.1 Any benefit of this Guarantee shall not be assignable by the Beneficiary to any
person.
6.2 The Guarantor may not assign its rights and obligations under this Guarantee
without the prior written consent of the Government.
7 LIMITATION AND MAXIMUM LIABILITY OF GUARANTOR
7.1 Notwithstanding any other provisions of this Guarantee, the Guarantor shall
have all of the rights, limitations and defences including, without limitation, all
rights of set off, available to the Company under the EPCC in relation to any
demand made under clause 3.2 of this Guarantee. In no circumstances shall
the Guarantor be liable to pay any amount under this Guarantee which is
greater than the Company would have been liable to pay if the Company had
performed the Company Obligations.
7.2 Notwithstanding any other provision of this Guarantee, the Beneficiary prior to
making any demand or any attempt to collect under this Guarantee, shall first
pursue collection from the Company and shall exhaust all recourse against and
liquidation of the Company assets, including but not limited to any applicable
insurance coverage available to satisfy any Company Obligations.
8 GOVERNING LAW AND DISPUTE RESOLUTION
8.1 This Guarantee shall be governed by and construed in accordance with the
laws of the Republic of Mozambique.
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PT5-C EPCC Annex E
8.2 Any dispute between the Parties to this Guarantee shall be subject to this Article
8.
8.3 A dispute shall be resolved, if possible, by negotiation between the Parties. A
notice of the existence of a dispute shall be given by a Party to another in
accordance with the provisions of notices in Article 10. In the event that no
agreement is reached within ninety (90) days after the date one Party notifies
the other that a dispute exists either Party shall have the right to have such
dispute determined by arbitration as provided for in this Article 8. Arbitration
shall be the exclusive method of determining a dispute under this Guarantee.
8.4 Subject to the provisions of this Article 8, the Parties shall submit any dispute
arising out of or in connection with this Guarantee which cannot be resolved by
negotiation as hereinafter provided:
8.4.1 all disputes referred to arbitration shall be finally settled under the United
Nations Commission on International Trade Law (“UNCITRAL”) Arbitration
Rules in force at the date of this Guarantee;
8.4.2 the seat of the arbitration shall be Geneva in Switzerland, the administrative
law of the arbitration shall be Swiss law and the substantive law of the
arbitration shall be Mozambican law;
8.4.3 the arbitration shall be conducted in the English language. Notwithstanding
Article 9, the English version of this Guarantee initialized by the Parties as
a supporting document shall be used as the official translation in arbitral
proceedings;
8.4.4 an award by an arbitrator or arbitrators shall be final and binding on all
parties;
8.4.5 the arbitral panel shall be composed of 3 (three) arbitrators to be appointed
in accordance with the UNCITRAL Rules, provided that, upon mutual
agreement of both Parties, the arbitration is to be conducted by a sole
arbitrator appointed under the UNCITRAL Rules. Unless both Parties have
agreed that the dispute shall be settled by a sole arbitrator, the claimant
Party shall nominate in the request for arbitration, and the respondent Party
shall nominate within 30 (thirty) days of the registration of the request, 1
(one) arbitrator pursuant to the UNCITRAL Rules. Within a period of 30
(thirty) days from the date when both arbitrators have accepted their
appointments the arbitrators so appointed shall agree on a third arbitrator,
who shall act as Chairman of the arbitral tribunal. If either Party fails to
nominate an arbitrator as provided above, or if the arbitrators nominated by
the Parties fail to agree on a third arbitrator within the period specified
above, then the appointing authority, which shall be the Permanent Court
of Arbitration in The Hague, upon request of either Party shall make such
appointments as necessary in accordance with the UNCITRAL Rules. If
both Parties have agreed that the dispute shall be settled by a sole
arbitrator, the sole arbitrator shall be nominated by agreement between
them subject to acceptance by the nominated arbitrator; provided that if the
Parties are unable to agree on a nominee for sole arbitrator within 30 (thirty)
days from the date when the notice of arbitration was given to the
PT5-C EPCC Annex E
respondent Party, then the Secretary-General of the Permanent Court of
Arbitration upon request of either Party shall appoint the sole arbitrator in
accordance with the UNCITRAL Rules;
8.4.6 insofar as practicable, the Parties shall continue to implement the terms of
the EPCC notwithstanding the initiation of arbitral proceedings and any
pending disputes under this Guarantee;
8.4.7 the provisions set out in this Article 8 shall continue after the termination of
this Guarantee; and
8.4.8 no arbitrator of the arbitral tribunal shall be of the same nationality as any
Party.
8.5 An award, including an interim award, in arbitral proceedings pursuant to this
Article 8 shall be binding on the Parties and judgment thereon may be entered
in any court having jurisdiction forthat purpose. Each of the Parties shall hereby
irrevocably waive any defence based upon sovereign immunity and waives any
claim to immunity:
8.5.1 in respect of proceedings in aid of arbitration or to enforce any such award
or decision including, without limitation, immunity from service of process
and from the jurisdiction of any court; and
8.5.2 in respect of immunity from the execution of any such award or decision
against the property of the Republic of Mozambique held for a commercial
purpose.
8.6 The Parties hereby agree not to exercise any right to institute proceedings to
set aside any interim or final arbitral award made pursuant to this Article 8,
except that nothing in this Article 8.6 shall be read or construed as imposing
any limitation or constraint on either Party's right to seek to contest enforcement
of any such interim or final arbitral award rendered by an arbitral tribunal
appointed in accordance with this Article 8 on the limited grounds and in
accordance with the procedure set forth in Article V of the New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards.
9 LANGUAGE
9.1 This Guarantee is drawn up in two (2) originals in the Portuguese language, for
signature by the Government and the Guarantor. One signed Portuguese
original will be retained by each of the Parties. An English language translation
is to be prepared and initialled as a supporting document by the Parties to this
Guarantee. However, in case of conflict between the Portuguese original text
and the English translation, the Portuguese original text shall prevail.
10 NOTICES
10.1 Any notice to be given by either Party to the other under this Guarantee shall
be in writing and shall be delivered by hand to the Guarantor or the Beneficiary,
as the case may be, or sent to such recipient by recorded delivery letter or
facsimile addressed to such recipient at such address and for the attention of
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PT5-C EPCC Annex E
such person as the Guarantor or the Beneficiary, as the case may be, shall
from time to time designate by notice, and until such notice shall be given the
addresses of the Guarantor and the Beneficiary shall be as follows:
The Guarantor
Sasol Africa (Pty) Ltd
50 Katherine Street, Sasol Place, Johannesburg, 2196, South Africa
Attention: Christiaan Oldewage
Telephone: +27 10 344 5000
Telefax: N/A
The Government
Ministerio dos Recursos Minerais e Energia
Ministro dos Recursos Minerais e Energia
Av. Fernao de Magalhaes, 34, 1.° andar
Maputo, Mozambique
Copy to: The Chairman of the Board of Directors of the National Petroleum
Institute
Telephone: +258 21 320 935
Fax: +258 21 430 850
Email:
9.2 All notices delivered by recorded delivery or hand shall be deemed to be effective
upon receipt. Notices given by facsimile shall be deemed to have been received
where there is confirmation of uninterrupted transmission by a transmission report
and where there has been no telephonic communication by the recipient to the
senders (to be confirmed in writing) that the facsimile has not been received in
legible form within twenty-four (24) hours of sending.
IN WITNESS WHEREOF this Guarantee has been executed by the Guarantor and has
been accepted by the Government on the date specified above.
for and on behalf of Sasol Africa (Pty) Ltd
for and on behalf of THE GOVERNMENT OF
THE REPUBLIC OF MOZAMBIQUE
6