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

RESTATED AND AMENDED

PRODUCTION SHARING CONTRACT

BETWEEN

THE REPUBLIC OF LIBERIA

BY AND THROUGH

NATIONAL OIL COMPANY OF LIBERIA



AND



EXXONMOBIL EXPLORATION AND PRODUCTION LIBERIA LIMITED

AND

CANADIAN OVERSEAS PETROLEUM (BERMUDA) LIMITED



LIBERIA, OFFSHORE BLOCK 13



Table of Contents

ARTICLE 1 DEFINITIONS ...............................................................................................2

ARTICLE 2 SCOPE OF THE CONTRACT ....................................................................12

ARTICLE 3 DURATION OF EXPLORATION PERIODS AND SURRENDERS ........14

ARTICLE 4 EXPLORATION WORK COMMITMENTS ..............................................16

ARTICLE 5 ESTABLISHMENT AND APPROVAL OF ANNUAL WORK

PROGRAMS AND BUDGETS ...................................................................18

ARTICLE 6 CONTRACTOR’S OBLIGATIONS IN RESPECT OF THE

EXPLORATION PERIODS; CONTRACTOR’S SAFETY,

HEALTH, ENVIRONMENTAL AND SOCIAL OBLIGATIONS ............20

ARTICLE 7 CONTRACTOR’S RIGHTS IN RESPECT OF THE

EXPLORATION PERIODS ........................................................................27

ARTICLE 8 ACTIVITY REPORTS DURING THE EXPLORATION PERIODS

AND SUPERVISION OF PETROLEUM OPERATIONS .........................28

ARTICLE 9 OCCUPATION OF LAND ..........................................................................33

ARTICLE 10 USE OF FACILITIES ................................................................................35

ARTICLE 11 APPRAISAL OF A PETROLEUM DISCOVERY,

DEVELOPMENT AND PRODUCTION PLAN.........................................36

ARTICLE 12 GRANT OF AN EXCLUSIVE EXPLOITATION

AUTHORIZATION .....................................................................................40

ARTICLE 13 DURATION OF THE EXPLOITATION PERIOD ...................................41

ARTICLE 14 EXPLOITATION OBLIGATION .............................................................43

ARTICLE 15 CONTRACTOR’S OBLIGATIONS AND RIGHTS IN RESPECT

OF EXCLUSIVE EXPLOITATION AUTHORIZATIONS........................43

ARTICLE 16 RECOVERY OF PETROLEUM COSTS AND PRODUCTION

SHARING ....................................................................................................46

ARTICLE 17 TAXATION................................................................................................49

ARTICLE 18 VALUATION OF PETROLEUM..............................................................53

ARTICLE 19 BONUSES, STATE PARTICIPATION AND LIBERIAN

CITIZEN PARTICIPATION .......................................................................56

ARTICLE 20 OWNERSHIP AND ABANDONMENT OF ASSETS .............................67

ARTICLE 21 NATURAL GAS ........................................................................................71



i



ARTICLE 22 FOREIGN EXCHANGE CONTROL ........................................................78

ARTICLE 23 APPLICABLE LAW ..................................................................................79

ARTICLE 24 MONETARY UNIT ...................................................................................79

ARTICLE 25 ACCOUNTING METHOD AND AUDITS ..............................................79

ARTICLE 26 IMPORT AND EXPORT ...........................................................................82

ARTICLE 27 DISPOSAL OF PRODUCTION ................................................................83

ARTICLE 28 PROTECTION OF RIGHTS......................................................................85

ARTICLE 29 PERSONNEL AND TRAINING ...............................................................86

ARTICLE 30 ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE

EXPLOITATION AUTHORIZATIONS .....................................................90

ARTICLE 31 ARBITRATION AND EXPERT DETERMINATION .............................92

ARTICLE 32 FORCE MAJEURE ....................................................................................96

ARTICLE 33 TERMINATION ........................................................................................97

ARTICLE 34 REPRESENTATIONS AND WARRANTIES ........................................100

ARTICLE 35 ASSIGNMENTS, TRANSFERS AND CHANGES OF CONTROL ......102

ARTICLE 36 STABILITY OF CONDITIONS ..............................................................107

ARTICLE 37 NOTICES .................................................................................................109

ARTICLE 38 MISCELLANEOUS .................................................................................111

ARTICLE 39 GUARANTEE..........................................................................................114

ARTICLE 40 EFFECTIVE DATE .................................................................................116

ANNEX I DESCRIPTION OF THE DELIMITED AREA ............................................121

ANNEX II ACCOUNTING PROCEDURE ...................................................................123

ANNEX III FORM OF GUARANTEE ..........................................................................135

ANNEX IV FORM OF ASSUMPTION OF RIGHTS AND OBLIGATIONS..............143



ii



RESTATED AND AMENDED

PRODUCTION SHARING CONTRACT

This Contract is made the 8th day of March 2013.

BETWEEN

The Republic of Liberia, represented for the purposes of this Contract by the National Oil

Company of Liberia (“NOCAL”), a statutory entity established under the laws of

Liberia;

AND

The Contractor, which at the Effective Date is:

ExxonMobil Exploration and Production Liberia Limited a company registered in

the Bahamas under company number 160196B whose registered office is Shirley

House, 50 Shirley Street, Nassau, Bahamas and authorized to do business in

Liberia (“ExxonMobil”)

and

Canadian Overseas Petroleum (Bermuda) Limited a company registered in

Bermuda under company number 45376, whose registered office is Clarendon

House, 2 Church Street, Hamilton, HM 11, Bermuda and authorized to do

business in Liberia (“COPL”).

WHEREAS

The discovery and exploitation of Petroleum are important for the interest and the

economic development of Liberia;

NOCAL has the rights in respect of Petroleum exploration and exploitation over

the entirety of available areas in Liberia including the Delimited Area defined hereinafter;

NOCAL wishes to undertake operations for exploration, exploitation,

transportation, storage, processing and marketing of Petroleum;

NOCAL wishes to promote the development of the Delimited Area for the

exploration and production of the potential resources within the Delimited Area, and

thereby encourage the economic growth and development of Liberia;



1



The Contractor desires to participate in the exploration for and production of

Petroleum resources within the Delimited Area with NOCAL, to which NOCAL has

consented;

The contractor under the Original Contract, Peppercoast Petroleum Plc, has

chosen and elected to transfer all of its rights, title, interest and obligations as contractor

under the Original Contract to COPL;

COPL desires, on the Trigger Event Date, to acquire all of the rights, title and

interest of the contractor under the Original Contract and to assume all of the obligations

of the contractor under the Original Contract;

NOCAL hereby consents to the novation of the Original Contract to COPL, and to

the transfer of all rights, title and interest therein to and the assumption of all obligations

thereunder by COPL on the Trigger Event Date;

COPL, on the Trigger Event Date, desires to transfer eighty percent (80%) of the

rights, title and interest it receives from Peppercoast Petroleum Plc to ExxonMobil and

ExxonMobil desires to acquire such rights, title and interest and to assume the obligations

thereunder; and NOCAL hereby consents to the novation and transfer of eighty percent

(80%) of such rights, title and interest to ExxonMobil and assumption of the obligations

thereunder by ExxonMobil on the Trigger Event Date; and

On the Trigger Event Date, NOCAL, COPL and ExxonMobil desire to restate and

amend the Original Contract so that their respective rights and obligations are as set forth

herein and not in the Original Contract.

NOW, THEREFORE, the Parties agree as follows:



ARTICLE 1

DEFINITIONS

1.1



The following terms used in this Contract shall have the following meaning:



Abandonment Fund has the meaning given in Article 20.1.

Abandonment Plan has the meaning given in Article 6.10(e).

Affiliate means (i) a company or any other Person that directly or indirectly Controls or

is Controlled by any Person participating in the Contractor; or (ii) a company or

any other Person that directly or indirectly Controls or is Controlled by a



2



company or any other Person that itself directly or indirectly Controls any Person

participating in the Contractor.

Annual Work Program means the document describing, item by item, the Petroleum

Operations to be carried out during a Calendar Year within or with respect to the

Delimited Area and in each Exploitation Perimeter, if any, established in

accordance with the Contract.

Appraisal Perimeter means any part of the Delimited Area where one or more

Petroleum discoveries have been made, and in respect of which NOCAL has

granted to the Contractor an exclusive appraisal authorization for the purpose of

determining the extent and value of said discoveries.

Arm’s Length means the relationship that exists between two (2) or more entities which

are not Affiliates or Controlled by related parties, where neither of such entities

exerts or is in a position to exert significant influence on any of the other entities

having regard to all relevant factors.

Associated Natural Gas means Natural Gas which exists in a reservoir in solution with

Crude Oil or which is or could be produced in association with Crude Oil.

Barrel means a U.S. barrel of 42 U.S. gallons measured at a temperature of 60°

Fahrenheit and 1 atmosphere of pressure (14.696 pounds per square inch absolute).

Block LB-13 means the area offshore Liberia of approximately 2,540 square kilometers,

as more specifically defined in Annex I (which area has already been adjusted to

reduce the delimited area of the Original Contract by the surrender following the

first exploration period).

Budget means the itemized cost estimates of the Petroleum Operations described in an

Annual Work Program.

Calendar Quarter means a period of three (3) consecutive months beginning on January

1, April 1, July 1 or October 1, and ending on the following March 31, June 30,

September 30 or December 31, respectively, according to the Gregorian calendar.

Calendar Year means a period of twelve (12) consecutive months beginning on January

1 and ending on the following December 31, according to the Gregorian calendar.

Change of Control means any assignment, sale, or transfer of interest of any type that

results in a change in possession of the power to Control a Person participating in

the Contractor. Any assignment, sale, or transfer of interest of any type that

results in a change in possession of the power to Control a Person that directly or



3



indirectly Controls a Person participating in the Contractor is a “Change of

Control” for the purposes of this Contract.

Commercial Production means regular and substantially continuous production of

marketable Petroleum from a Field. If the Petroleum produced is from the test of

an exploration or appraisal well and not part of a regular lifting program or if

substantially all produced Petroleum is used by the Contractor in Petroleum

Operations or re-injected into the Field, there is no Commercial Production.

Consolidated Fund means the fund established under the Liberia Public Finance

Management Act of 2009, that consolidates all the government revenues of the

Republic of Liberia, and is used for making disbursements, or any successor

general revenue account maintained by the Ministry of Finance.

Contract means this Restated and Amended Production Sharing Contract and its annexes

forming an integral part hereof, together with any extension, renewal, replacement,

amendment, supplement or modification hereto.

Contractor means COPL and ExxonMobil and their respective successors and permitted

assigns, acting together as the Contractor as contemplated by Articles 1.2 and 1.3

of this Contract.

Contract Year means a period of twelve (12) consecutive months beginning on the

Effective Date or on any anniversary thereof.

Control (including the terms “Controlled by” and “Controlling”) means the possession,

directly or indirectly, of the power to appoint a majority of the directors or

equivalent management body of or to direct the policies or operations of (or to

block action by) a Person. Without limiting the generality of the preceding

sentence, the ability to control a Person is presumed to exist if a second Person or

group of Persons acting in concert holds or can direct the exercise of at least forty

percent (40%) of the rights to select or direct the management of such first Person

and no third Person or group holds or can direct the exercise of a greater

percentage of such rights.

County means one of the fifteen (15) officially recognized territorial divisions of Liberia

exercising administrative, judicial and political functions.

Crude Oil means crude mineral oil, asphalt, ozokerite, and all kinds of petroleum and

bitumen, either solid or liquid in their natural condition or obtained from Natural

Gas by condensation or extraction, including condensates and natural gas liquids.

Deflator means the GDP Implicit Price Deflator as published and revised from time to

time by the U.S. Department of Commerce Bureau of Economic Analysis. If such



4



index is no longer published, NOCAL and the Contractor shall agree upon a

functionally and substantively similar replacement reference or otherwise agree

upon adjustments that will substantially preserve the economic impact and timing

of the periodic adjustments contemplated by Articles 19 and 29 during the

exploration and appraisal phases.

Delimited Area means the area in respect of which NOCAL, under this Contract and as

of the Effective Date, grants to the Contractor an exclusive exploration right. The

areas surrendered by the Contractor in accordance with the provisions of Articles

3.5 and 3.7 shall be deemed as excluded from the Delimited Area which shall be

reduced accordingly. Conversely, the Appraisal Perimeter(s) and the Exploitation

Perimeter(s) shall be integral parts of the Delimited Area during the term of the

relevant exclusive appraisal or exploitation authorization(s). The Delimited Area

as of the Effective Date represents the full amount of such area in the Original

Contract adjusted to reduce that area by the surrender following the first

exploration period and to match the coordinates in adjacent blocks.

Delivery Point means the outboard face of the flange of the loading facilities in the

Republic of Liberia where title, custody and possession of the Petroleum sold

transfers from a Party to a third party (or Affiliate of a Person participating in the

Contractor). With respect to the waterborne export sales of Crude Oil the

Delivery Point shall be the FOB point at which the loading port facilities connect

to the loading manifold of the vessel. With respect to the pipeline sales of Crude

Oil and pipeline sales or waterborne export sales of Natural Gas, the Delivery

Point(s) shall be the custody transfer point(s) as designated in an approved

development and production plan or as otherwise mutually agreed between

NOCAL and the Contractor.

Development and Production Period Project Linkages Plan has the meaning given in

Article 29.11.

Dollar or US$ means the currency of the United States of America.

Effective Date has the meaning given in Article 40.

EPA or Environmental Protection Agency means the Environmental Protection

Agency of Liberia or any successor entity that succeeds to its primary

environmental protection function.

ESIA or Environmental and Social Impact Assessment has the meaning given in

Article 6.10(a).

ESMP or Environmental and Social Management Plan has the meaning given in

Article 6.10(a).



5



Event of Default has the meaning given in Article 33.2.

Expert means a person appointed in accordance with Article 31.9 to resolve matters

submitted to it in accordance with this Contract.

Expert Determination means the decision of an Expert in accordance with the

provisions of Article 31.9.

Exploitation Perimeter means any part of the Delimited Area in respect of which

NOCAL has granted to the Contractor an exclusive exploitation authorization.

Exploration Period Project Linkages Plan has the meaning given in Article 29.10.

Fair Market Value means the price at which Crude Oil or Natural Gas could be sold, or

machinery, materials or services of similar quality could be supplied, on similar

terms at similar times and at similar location by parties under no compulsion to

buy or sell and trading on an Arm’s Length basis.

Field means a commercial accumulation of Petroleum in one (1) or several overlaying

horizons, which has been appraised in accordance with the provisions of Article

11. Where developed together at the same time or in sequence through a single

facility, a Field may contain several non-overlaying geologic structures or

horizons.

Final Investment Decision means, with respect to any Field, the approval by the

operating committee (or equivalent body) under the joint operating agreement (or

equivalent agreement) among the Persons participating in the Contractor to fund

fully the development of a Field under a development and production plan which

has been approved by NOCAL.

Gas Committee has the meaning given to it in Article 21.2(a).

Good International Petroleum Industry Environmental Practice means offshore

petroleum industry environmental practices and procedures generally required by,

or generally accepted as prudent practice in, OECD countries.

Good International Petroleum Industry Practice means all those uses and practices

that are, at the time in question, generally accepted in the international petroleum

industry as being good, safe, economical, diligent, environmentally sound and

efficient in exploring for, developing, producing, processing and transporting

Petroleum. They should reflect standards of service and technology that are

economically appropriate to the operations in question and should be applied

using standards in all matters that are no less rigorous than those in use by the

Operator in other global operations.



6



JOC or Joint Operations Committee has the meaning given in Article 5.5.

Law(s) means the Constitution of the Republic of Liberia, ratified treaties, laws, statutes,

decrees, rules, regulations, judicial acts or decisions, judgments, orders,

proclamations, directives, executive orders or other binding sovereign acts of the

State other than this Contract.

LEITI has the meaning given in Article 8.7.

Liberian Default Interest Rate means an annual interest rate equal to the US$ LIBOR

three (3) month rate as quoted by the Financial Times plus seven percent (7%) as

adjusted quarterly based on the US$ LIBOR three (3) month rate published on the

last business day of the previous Calendar Quarter. If such US$ LIBOR rate is no

longer quoted by the Financial Times, the parties shall agree upon a functionally

and substantively similar replacement reference.

Liberian Interest Rate means an annual interest rate equal to the US$ LIBOR ten (10)

year swap rate as published by the Financial Times plus four percent (4%) as

adjusted quarterly based on the US$ LIBOR ten (10) year swap rate published on

the last business day of the previous Calendar Quarter. The US$ ten (10) year

swap rate shall be the mid-point between the bid and ask rates quoted by the

Financial Times. If such US$ LIBOR rate is no longer quoted by the Financial

Times, the parties shall agree upon a functionally and substantively similar

replacement reference.

Marine Pollution means the introduction by the Contractor, any subcontractor or any

Person acting on behalf of the Contractor or any subcontractor, directly or

indirectly, of substances or energy, including toxic waste, oil spills or any other

solids, liquids or gases into the marine environment (including estuaries) in such

deleterious quantities as to harm living resources, create hazard to human health,

hinder marine activities including fishing and navigation, impair quality for use of

sea-water, or reduce amenities.

Market Price is determined as provided in Article 18.

Minister of Finance means the Minister of Finance of the Republic of Liberia from time

to time or any successor ministry or Person.

Minister of Justice means the Minister of Justice of the Republic of Liberia from time to

time or any successor ministry or Person.

Mortgage means a mortgage, charge or other lien or encumbrance on (a) any of the right,

title and interest in this Contract of any Person participating in the Contractor or

(b) any property of the Contractor or any Person participating in the Contractor



7



for the purpose of Petroleum Operations that is attached or tethered to the ground

or the sea bed, or otherwise is an integral component of the installations, fixtures

and equipment that recover Petroleum from under the sea bed, process it, store it

and transmit it to a Delivery Point and any related licenses or similar grant of

rights to intellectual property used in connection with such assets; the property

subject to a Mortgage is “Mortgaged Property”; and the holder of a Mortgage is

a “Mortgagee”.

Natural Gas means methane, ethane, propane, butane and dry or wet gaseous

hydrocarbons, whether or not associated with Crude Oil, as well as all gaseous

products extracted in association with petroleum, such as, without limitation,

nitrogen, hydrogen sulfide, carbon dioxide, helium and water vapor.

Natural Gas Market Price is determined as provided in Article 21.

Non-Associated Natural Gas means Natural Gas other than Associated Natural Gas.

Notice has the meaning given in Article 37.1.

Operator means the entity designated as Operator pursuant to Article 1.3 and any Person

subsequently participating in the Contractor approved as Operator under Article

1.3.

Original Contract means that certain Production Sharing Contract, entered into by the

National Transitional Government of Liberia on 16 June 2005 and as amended

and approved on 16 April 2007 and published in handbills on 22 May 2007,

relating to Block LB-13 (as defined in the Original Contract) between The

Republic of Liberia, represented for the purposes of the agreement by NOCAL

and Peppercoast Petroleum Plc (formerly named Broadway Consolidated Plc), a

company incorporated in the jurisdiction of The Isle of Man, such Original

Contract term running from the publication of the above mentioned handbill and

ending on the Trigger Event Date.

Parties means the State, NOCAL and each Person participating from time to time in the

Contractor; and Party means any of these entities.

Permitted Transferee is a Person who (i) is not a Prohibited Person, does not have an

officer or director who is a Prohibited Person, and is not Controlled by a

Prohibited Person, and (ii) as to which no Person or Persons holding as a Group

(x) in excess of five percent (5%) of the voting rights ordinarily empowered to

Control the management of such Person or (y) in excess of five percent (5%) of

the rights to share in the profits of such Person is or are Prohibited Persons.



8



Person means any natural person and any partnership, incorporated joint venture,

corporation, limited liability company, trust, estate or other organization or entity,

and any branch, division, political sub-division, instrumentality, authority or

agency of any government or state.

Petroleum means Crude Oil and Natural Gas.

Petroleum Cost Account has the meaning given in the accounting procedure in Annex II.

Petroleum Costs means all expenditures and costs actually incurred and paid by the

Contractor for the purposes of the Petroleum Operations, other than those

excluded from recovery in accordance with this Contract, including Annex II.

Petroleum Law means the Petroleum Law of the Republic of Liberia, published by

authority of the Ministry of Foreign Affairs on 2 July 2002, or any successor law,

as either may be amended from time to time.

Petroleum Operations means all the Petroleum exploration, appraisal, development,

production, handling, storage, processing and upstream transportation and

marketing operations, and more generally, any other operations approved by

NOCAL and directly associated therewith, carried out by or on behalf of the

Contractor under this Contract.

Prohibited Person is a Person (i) identified as such in published and readily available

regulations issued under the authority of the Ministry of Finance and the Ministry

of Justice and applicable to the holders of Liberia Petroleum rights, or (ii) who

has been identified as being subject to sanctions by any member organization of

which the State is a member, or (iii) who has been identified by the Minister of

Justice after a hearing as a Person that would pose a serious risk to the national

security, public health and safety or the economic or political stability of the State.

A “Prohibited Person” also includes any Person that issues bearer shares or other

instruments to evidence ownership of such Person that do not permit such Person

to identify the owners of such shares or other instruments.

Remaining Natural Gas Production has the meaning given in Article 16.5.

Remaining Oil Production has the meaning given in Article 16.4.

Revenue Code means Revenue Code of Liberia of 2000 and the Consolidated Tax

Amendment Act 2010 and the regulations made thereunder as from time to time

modified, amended or supplemented, except as expressly provided herein.

SHE has the meaning given in Article 6.4.



9



State means the Republic of Liberia, including all of the branches, divisions, Counties,

ministries, national directorates, departments, national institutes, provincial

government, provincial directorates, commissions, agencies, national, regional,

provincial, municipal or local authorities thereof under the direct or indirect

control of the government of the Republic of Liberia.

Transfer means and includes a partial or whole, direct or indirect (by way of a Change of

Control of any Person or otherwise), sale, assignment, pledge, mortgage or other

transfer, by operation of law or otherwise, of any right, title and interest in the

Contract. By way of example and not limitation, each of the following constitutes

a “Transfer”:

(1)



a transaction in which the ultimate owner of a Person participating in the

Contractor merges with another Person with the other Person being the

survivor of the merger;



(2)



a transaction in which a Person participating in the Contractor merges with

another Person, with the first Person being the survivor but as a result of

the merger a Change of Control has occurred with respect to such first

Person.



Trigger Events means the events listed in (1) to (6) of Article 40.5.

Trigger Event Date means the date on which Trigger Event Satisfaction occurs.

Trigger Event Satisfaction has the meaning given in Article 40.2.

Total Production means the total production of Crude Oil or the total production of

Natural Gas obtained from the whole Delimited Area (or the total production of

both Crude Oil and Natural Gas obtained from the whole Delimited Area, if the

context so requires) less the quantities used for the requirements of the Petroleum

Operations and any unavoidable losses, including permitted flared or re-injected

Natural Gas.

Wholly-Owned Subsidiary means, as to any Person, any other Person in which such

first Person or one (1) or more of its Wholly-Owned Subsidiaries or such first

Person and one (1) or more of its Wholly-Owned Subsidiaries owns all of the

equity and voting interests (except director’s qualifying shares).

1.2



The obligations and liabilities of the Contractor under this Contract are the

obligations and liabilities of all Persons participating in the Contractor from time

to time, jointly and severally, save as otherwise agreed under the terms of this

Contract.



10



1.3



There shall at all times be an Operator appointed by the Contractor.

(a)



The appointment of an Operator by the Contractor shall be subject to prior

approval by NOCAL. The initial Operator approved by NOCAL is

ExxonMobil. Any change in the Operator shall be subject to the prior

written approval of NOCAL.



(b)



Except with the prior written approval of NOCAL, the Contractor shall not

permit any person other than the Operator approved under this Article 1.3

to exercise any function of the Contractor under this Contract save that the

Operator may subcontract its obligations under this Contract to reputable

and financially responsible Persons in accordance with Good International

Petroleum Industry Practice. No such subcontracting shall relieve the

Contractor of any of its obligations or liabilities under this Contract or

shall require NOCAL to deal with any such subcontractor, and the acts

and omission of any such subcontractor shall be deemed the acts and

omissions of the Contractor.



(c)



For all purposes of this Contract (i) the Operator shall represent the

Contractor, and NOCAL may look solely to and rely solely upon the

Operator for the performance of all of the obligations and discharge of all

of the liabilities of the Contractor under this Contract, and (ii) the

obligations, liabilities, acts and omissions of the Operator are the

obligations, liabilities, acts and omissions of the Contractor.

Notwithstanding the foregoing, the Persons participating in the Contractor

are jointly and severally liable for the performance of the obligations of

the Contractor under this Contract as provided in Article 1.2.



(d)



The Operator shall under this Contract establish an office located in

Monrovia, Liberia within one hundred and eighty (180) days from the

Effective Date, or upon cause shown, a later date approved by NOCAL.



(e)



If, after Notice to the Contractor, NOCAL demonstrates on reasonable

grounds that the Person then serving as Operator is no longer financially

or technically capable of performing the obligations or discharging the

liabilities of the Contractor, NOCAL may, by Notice to such Person and to

the Contractor, revoke its approval, and the Contractor shall within one

hundred and eighty (180) days thereafter designate a new financially and

technically responsible Person as Operator which shall be reasonably

satisfactory to NOCAL. If such Person is not a Person participating in the

Contractor, it must become such prior to being designated the Operator.



11



ARTICLE 2

SCOPE OF THE CONTRACT

2.1



This Contract is a Production Sharing Contract as provided for under Article 7.1

of the Liberian Petroleum Law. This Contract includes all the provisions of the

agreement between NOCAL and the State, on the one hand, and the Contractor on

the other, and as from the Trigger Event Date restates and amends the Original

Contract. The Parties expressly acknowledge and agree that:

(a)



all relevant obligations and liabilities of each of (i) the contractor under or

pursuant to the Original Contract and (ii) NOCAL and the State under or

pursuant to the Original Contract to be performed prior to or on the

Trigger Event Date have been or are deemed performed or discharged,

including without limitation the work commitments for the first

exploration period. NOCAL and the State hereby waive any claim,

demand, action or proceeding of whatsoever nature against the Contractor

under this restated and amended Contract or any Person Participating in

the Contractor (including any guarantor of the Contractor or Person

participating in the Contractor) under this restated and amended Contract

in relation to any matter arising out of or in connection with the Original

Contract including any breaches of Law related thereto and neither the

Contractor nor any Person participating in the Contractor (including any

guarantor of the Contractor or any Person participating in the Contractor)

under this restated and amended Contract shall have any liability whether

in contract or in law or otherwise for any matter arising out of or in

connection with the Original Contract or breaches of Law in relation

thereto; and



(b)



no irregularities or failures in the issuance, approval or performance of the

Original Contract will be deemed attributable under Law to the Contractor

or any Person participating in the Contractor, or may be the basis for any

claim, demand, action or proceeding against the Contractor or against any

Person participating in the Contractor or for any claim, demand, action or

proceeding challenging the validity of this restated and amended Contract

or the entitlement of the Contractor to any of the rights or benefits set forth

in this restated and amended Contract.



No Persons other than the Contractor under this restated and amended Contract

and the Persons participating in the Contractor (including any guarantor of the

Contractor or Person participating in the Contractor) under this restated and

amended Contract are entitled to the benefit of this Article 2.1.



12



2.2



NOCAL authorizes the Contractor to carry out the useful and necessary

Petroleum Operations in the Delimited Area on an exclusive basis, unless

otherwise provided in this Contract.



2.3



The Contractor undertakes, for all the work necessary for carrying out the

Petroleum Operations provided for hereunder, to comply with Good International

Petroleum Industry Practice and to be subject to Law unless otherwise provided

under this Contract.



2.4



The Contractor shall supply all financial and technical means necessary for the

proper performance of the Petroleum Operations.



2.5



The Contractor shall bear alone the financial risk associated with the performance

of the Petroleum Operations. The Petroleum Costs related thereto shall be

recoverable by the Contractor in accordance with the provisions of Article 16.3

and Annex II.



2.6



During the term hereof, in the event of production, the Total Production arising

from the Petroleum Operations shall be shared according to the terms set forth in

this Contract.



2.7



On the Effective Date, the Delimited Area shall be the area as defined in Annex I.



2.8



This Contract only authorizes the Contractor to engage in Petroleum Operations

and no expenditure in respect of other activities shall be a Petroleum Cost.



2.9



This Contract does not authorize the Contractor to explore, exploit, or otherwise

benefit from natural resources other than Petroleum in the Delimited Area.



2.10



NOCAL and the State confirm that the following transactions be and they are

hereby approved:

(a)



Transfer by Peppercoast Petroleum Plc to COPL of its one hundred

percent (100%) contractor’s interest in the Original Contract;



(b)



Transfer by COPL to ExxonMobil of eighty percent (80%) of its one

hundred percent (100%) contractor’s interest in the Original Contract; and



(c)



execution of this Contract by the Parties and, effective on the Trigger

Event Date, the resulting restatement and amendment of the Original

Contract so that the agreement among the Parties reads in its entirety as set

forth in this Contract.



13



ARTICLE 3

DURATION OF EXPLORATION PERIODS AND SURRENDERS

3.1



The exclusive exploration authorization is hereby granted to the Contractor for a

period of five (5) consecutive years from the Effective Date defined by two (2)

consecutive periods. Such period of five (5) years shall follow the first

exploration period which shall be deemed to have expired on the Effective Date.

This five (5) year period shall consist of a second exploration period of three (3)

Contract Years and a third exploration period of two (2) Contract Years in respect

of the entire Delimited Area.



3.2



If during the second exploration period set forth above the Contractor has fulfilled

the exploration work commitments for such period defined in Article 4, the

exclusive exploration authorization shall, at the Contractor’s request, be renewed

for a third exploration period of two (2) Contract Years.



3.3



The application referred to in Article 3.2 shall be made in writing to NOCAL at

least forty-five (45) days prior to the expiration of the second exploration period.



3.4



The Contractor shall surrender at least thirty-three percent (33%) of the surface

area of the Delimited Area, as it exists on the Effective Date, at the expiration of

the second exploration period. Such surrender is equivalent to twenty-five

percent (25%) of the surface area covered by the Original Contract.

Such surrender shall constitute a single block delimited by north-south and eastwest line segments or by the boundaries of the Delimited Area, with no segment

less than two (2) kilometers long. The Contractor may with the prior consent of

NOCAL surrender separate blocks in order to preserve within the remaining

Delimited Area locations the Contractor reasonably believes are prospective. Such

consent shall not be unreasonably withheld.

For the purpose of computing the surface to be surrendered, the surface in respect

of any Appraisal Perimeter or Exploitation Perimeter shall be deducted from the

surface of the Delimited Area.

Should any area be surrendered pursuant to the optional surrender provisions of

Article 3.5 prior to the surrender contemplated by this Article 3.4, the surfaces

previously surrendered pursuant to the provisions of Article 3.5 shall be

considered as a part of the Article 3.4 surrender such that the total amount

surrendered under Articles 3.4 and 3.5 may be combined to meet the thirty-three

percent (33%) requirement.



14



Subject to its compliance with the above-mentioned requirements, the Contractor

shall have the right to determine the area to be surrendered.

The Contractor shall furnish NOCAL within thirty (30) days prior to the end of

each exploration period (as such period may be extended as otherwise provided in

this Contract by virtue of a well in progress at the end of such period) with a

Notice of surrender containing a precise description of the proposed areas to be

surrendered and retained and a map showing the details of those areas. The

Contractor’s proposal shall be deemed accepted if NOCAL does not object within

twenty (20) days. Within sixty (60) days after the end of each exploration period

the Contractor shall deliver to NOCAL (i) a report specifying the work carried out

in the surrendered areas from the Effective Date, (ii) all seismic and other data

obtained with respect to the surrendered areas, and (iii) a technical evaluation of

the surrendered areas performed by or for the Contractor, in each case to the

extent not previously delivered to NOCAL.

3.5



The Contractor may at any time, on not less than sixty (60) days’ prior Notice to

NOCAL surrender any part of the Delimited Area. The Notice of surrender, the

information, maps reports and data delivered in connection therewith, and, if the

surrendered area is less than the total remaining Delimited Area, the shape of the

surrendered area shall all comply with the requirements of Article 3.4.

No surrender during or at the expiration of any exploration period shall reduce the

work commitment and the investment obligations set forth in Article 4 for that

exploration period.



3.6



In the event of the surrender of any portion of the Delimited Area or at the

expiration of the third exploration period, the Contractor shall have the exclusive

right to retain, for their respective terms, any surfaces in respect of Appraisal

Perimeters and Exploitation Perimeters which have been granted or which have

been duly applied for by the Contractor at the time of the surrender or expiration

and to carry out appropriate Petroleum Operations therein and with respect thereto.



3.7



At the expiration of the third exploration period set forth in Article 3.2, the

Contractor shall surrender the whole remaining surface of the Delimited Area

except as provided in Article 3.6, and shall comply with the last paragraph of

Article 3.4 with respect to the areas so surrendered.



3.8



If at the expiration of all the exploration periods the Contractor has not obtained

and is not in the process of duly applying for an exclusive appraisal authorization

or an exclusive exploitation authorization, this Contract shall terminate.

If an exploratory well is operating at the expiry of an exploration period, then

NOCAL shall grant the Contractor an extension of the exclusive exploration



15



authorization in order to evaluate the results of the well. Such extension shall be

no longer than is technically justified, and shall in any event expire sixty (60)

days after the exploratory well is terminated and the rig released.

3.9



The termination of this Contract, whatever the reason thereof, shall not relieve the

Contractor or NOCAL from the performance of any obligations or the discharge

of any liabilities under this Contract that were to be performed or that accrued

prior to the termination of this Contract, that arose because of the termination, or

that by the terms of this Contract are to be performed or discharged after

termination. If this Contract is terminated by reason of Force Majeure, the

Contractor is relieved from the performance of its obligations other than those

obligations that survive termination set forth in Article 38.9 the performance of

which is not itself prevented by reason of Force Majeure.



3.10



In addition to any other provision for the extension of an exploration period

contained in this Contract, NOCAL may at any time extend any exploration

period for good cause shown by up to six (6) months so long as the total

exploration period available under this Contract is not extended pursuant to this

Article 3.10 by more than twelve (12) months.



ARTICLE 4

EXPLORATION WORK COMMITMENTS

4.1



The Contractor, during the second exploration period defined in Article 3.1, shall

carry out a minimum work program at a cost of no less than ten million Dollars

(US$10,000,000) including a thorough analysis in accordance with Good

International Petroleum Industry Practice of the three dimensional seismic data

licensed by the contractor under the Original Contract in order to fulfill the first

exploration period minimum work program under the Original Contract and a

commitment to drill one (1) exploration well.



4.2



The Contractor, during the third exploration period defined in Article 3.1, shall

carry out a minimum work program at a cost of no less than ten million Dollars

(US$10,000,000) including a thorough analysis in accordance with Good

International Petroleum Industry Practice of all data obtained from the work done

through the second exploration period, to the extent not theretofore completed,

and a commitment to drill one (1) exploration well.



4.3



Each of the exploratory wells shall be drilled to a minimum depth of two thousand

(2,000) meters, after deduction of the water depth, or to a lesser depth if the



16



continuation of drilling performed in accordance with Good International

Petroleum Industry Practice is prevented for any of the following reasons:

(a)



the basement is encountered at a lesser depth than the minimum

contractual depth;



(b)



continuation of drilling presents an obvious danger due to the existence of

abnormal formation pressure;



(c)



rock formations are encountered the hardness of which prevents, in

practice, the continuation of drilling by the use of appropriate equipment;

or



(d)



Petroleum formations are encountered the crossing of which requires, for

their protection, the laying of casings preventing the minimum contractual

depth from being reached.



In the event that any of the above reasons occurs, the exploratory well shall be

deemed to have been drilled to the minimum contractual depth.

Notwithstanding any provision in this Article 4 to the contrary, NOCAL and the

Contractor may, at any time, for good cause shown agree to abandon the drilling

of a well at a lesser depth than the minimum contractual depth.

4.4



The Contractor will make the expenditure necessary in order to carry out the

exploration drilling defined in Articles 4.1 and 4.2 and the related work programs

in the best technical conditions in accordance with Good International Petroleum

Industry Practice without regard to the expenditure amounts referred to in Articles

4.1 and 4.2.



4.5



If during the exploration period the Contractor has performed its work

commitments for an amount lesser than the amount specified above, it shall be

deemed to have fulfilled its investment obligations relating to that period.

Conversely, the Contractor shall perform the entirety of its work commitments set

forth in respect of an exploration period even if it results in exceeding the amount

specified above for that period.



4.6



If at the expiration of any of the two (2) exploration periods defined in Article 3

or upon the date of surrender of the whole Delimited Area, or upon the date of

termination of this Contract, whichever is earlier, the Contractor has not fulfilled

its applicable work commitments set forth in this Article, it shall pay as

compensation to NOCAL, within thirty (30) days after that date of expiration,

surrender or termination, the unspent balance of the minimum exploration work

commitments amount above-defined for the current exploration period.



17



4.7



If the number of exploration wells drilled by the Contractor and/or the amount of

seismic and other data and samples acquired and analyzed or reanalyzed or

reprocessed during any exploration period in accordance with an approved

Annual Work Program or otherwise approved by NOCAL exceed the number of

wells and/or the amount of seismic and other data and samples provided for in the

work commitment for that period, as specified in this Article 4, the number of

additional exploration wells drilled and/or the amount of seismic data acquired

and analyzed or reanalyzed or reprocessed by the Contractor during such

exploration period may be carried forward and treated as a credit towards work

undertaken in discharge of the Contractor’s commitment for any following

exploration period to drill exploration wells or to acquire and analyze or reanalyze

or reprocess seismic and other data and samples acquired.



ARTICLE 5

ESTABLISHMENT AND APPROVAL OF ANNUAL WORK PROGRAMS AND

BUDGETS

5.1



At least three (3) months before the beginning of each Calendar Year, or for the

first year, within one (1) month from the Trigger Event Date, the Contractor shall

prepare and submit for approval to NOCAL an Annual Work Program together

with the related Budget for the entire Delimited Area, specifying in reasonable

detail the Petroleum Operations that the Contractor proposes to perform during

that Calendar Year and the budgeted cost for each identified component of such

Petroleum Operations.



5.2



If NOCAL wishes to propose any revisions or modifications to the Petroleum

Operations specified in said Annual Work Program, it shall, within thirty (30)

days after receipt of that Program, so notify the Contractor, presenting all

justifications deemed useful. In that event, NOCAL and the Contractor shall meet

as soon as possible to consider the proposed revisions or modifications and to

mutually establish in good faith the Annual Work Program and the related Budget

in its final form, in accordance with Good International Petroleum Industry

Practice. The Annual Work Program and the related Budget established pursuant

to the above meeting shall be deemed to be approved provided that compliance

with the obligations set forth in Article 4 and the requirements of Article 5.1 is

demonstrated.

The Contractor may not spend more than one hundred and ten percent (110%) of

the amount originally allocated to any line item in an approved Annual Work

Program Budget, or more than one hundred and five percent (105%) of the total

amount set forth in an approved Annual Work Program Budget without an



18



appropriate amendment to the approved Annual Work Program and the related

Budget unless the increased expenditure (i) is required to respond to health, safety

or environmental protection concerns or to mitigate the adverse effects of a force

majeure event, or (ii) is in performance of an approved item in the Annual Work

Program and is caused by circumstances reasonably beyond the Contractor’s

control, or (iii) is otherwise approved by NOCAL. NOCAL may after giving the

Contractor an opportunity to be heard determine that all or some portion of the

excess expenditure is not cost recoverable.

5.3



If NOCAL fails to notify the Contractor of its wish for revision or modification of

the initial submission of an Annual Work Program and related Budget within the

thirty (30) day period provided in Article 5.2, then such Annual Work Program

and the related Budget submitted by the Contractor shall be deemed approved by

NOCAL.

Whenever the Contractor desires to make changes to an approved (or deemed

approved) Annual Work Program and/or the related Budget not permitted under

clause (i) or (ii) of the second paragraph of Article 5.2, it shall submit the

proposed changes and their justification to NOCAL. If NOCAL fails to object to

the proposed changes within twenty one (21) days, the changes shall be deemed

approved by NOCAL. However, if it is commercially impractical or technically

imprudent to wait twenty one (21) days for a decision, the change involves only

an increase in the budget for a line item in an approved Budget, the expenditure is

in accordance with Good International Petroleum Industry Practice, and the

submission is conspicuously labeled “HIGH PRIORITY – PROMPT RESPONSE

REQUIRED,” the Contractor’s submission shall state the time within which a

decision is commercially or technically necessary and the expenditure shall be

deemed approved if NOCAL does not respond within the greater of five (5) days

and the time period for response stated in such submission.



5.4



Whenever NOCAL is required to exercise its discretion under this Contract or

NOCAL’s approval is required under this Contract, in either case under

circumstances in which this Contract or applicable Law does not prescribe a

different basis for decision, NOCAL shall exercise its discretion or grant its

approval on the basis of the efficient and economic conduct of Petroleum

Operations in respect of the Delimited Area in accordance with Good

International Petroleum Industry Practice.



5.5



At the Trigger Event Date NOCAL and the Contractor shall form a Joint

Operations Committee (“JOC”) consisting of not more than three (3) members

appointed by NOCAL and not more than three (3) members appointed by the

Operator. The purpose of this JOC will be to review present and future Petroleum

Operations and report jointly to NOCAL and the Contractor, and to carry out

these functions expressly assigned to it under this Contract.



19



5.6



The JOC shall meet twice every Calendar Year or as otherwise agreed by

NOCAL and the Operator at such locations as may be agreed by Operator and

NOCAL. No meeting of the JOC shall be held unless two (2) members each

appointed by the Contractor and NOCAL are present. The members appointed by

the Contractor shall each be employed by the Operator or Affiliates of the

Operator. If the Operator agrees, an individual designated by the entities other

than the Operator participating in the Contractor may attend solely as a nonparticipating observer.



5.7



The Contractor shall appoint the first chairperson of the JOC who shall hold

office until the second anniversary of the Effective Date. Thereafter, NOCAL and

the Contractor shall have the alternating right to nominate a chairperson of the

JOC who shall hold office for a period of two (2) years. The individual appointed

as the chairperson shall be one (1) of the six (6) members of the JOC.



5.8



The Contractor and NOCAL will each bear any travel and lodging costs of their

respective JOC members as well as their respective costs, which shall not be

Petroleum Costs; provided, however that the cost of having technical or other

experts attend any such meeting for the purpose of advising on issues properly

before the meeting shall be borne by the Contractor and shall constitute Petroleum

Costs.



ARTICLE 6

CONTRACTOR’S OBLIGATIONS IN RESPECT OF THE EXPLORATION

PERIODS; CONTRACTOR’S SAFETY, HEALTH, ENVIRONMENTAL AND

SOCIAL OBLIGATIONS

6.1



The Contractor shall provide all the necessary funds and purchase or hire all the

equipment, facilities and materials required to carry out the Petroleum Operations.



6.2



The Contractor shall provide all technical assistance, including the personnel

required to carry out the Petroleum Operations.



6.3



The Contractor shall be responsible for the preparation and performance of the

Annual Work Programs which shall be carried out in the most appropriate manner

in observance of Good International Petroleum Industry Practice.



6.4



With the goal of achieving safe and reliable operations in compliance with

applicable Safety, Health and Environment (“SHE”) Laws (including avoiding

significant and unintended impact on the safety or health of people, on property,



20



or on the environment), the Contractor shall in the conduct of Petroleum

Operations:

(a)



establish and implement a SHE plan in a manner consistent with standards

and procedures generally followed in the international petroleum industry

under similar circumstances;



(b)



design and operate Petroleum Operations consistent with the SHE plan;

and



(c)



conform with locally applicable SHE Laws and other SHE-related

statutory requirements that may apply.



6.5



NOCAL and/or EPA may from time to time review details of the Contractor’s

SHE plan and the Contractor’s implementation thereof without regard to whether

such plan has been previously approved. The Contractor will on request discuss

with NOCAL or EPA any changes NOCAL or EPA recommends or believes

necessary to comply with applicable Law.



6.6



In the conduct of Petroleum Operations, the Contractor shall establish and

implement a program for regular SHE assessments. The purpose of such

assessments is to periodically review SHE systems and procedures, including

actual practice and performance, to verify that the SHE plan is being implemented

in accordance with the policies and standards of the SHE plan. The Contractor

shall, at a minimum, conduct such an assessment before entering into significant

new Petroleum Operations and before undertaking any major changes to existing

Petroleum Operations. Upon reasonable Notice given to the Contractor, NOCAL

shall have the right to participate in such SHE assessments.



6.7



The Contractor shall make all reasonable efforts to require its contractors,

consultants and agents undertaking Petroleum Operations to manage SHE risks in

a manner consistent with the requirements of this Article 6 and the Contractor’s

SHE plan.



6.8



The Contractor shall establish and enforce rules consistent with those generally

followed in the international petroleum industry under similar circumstances

concerning the control of the use of drugs, alcohol firearms, ammunition,

explosives and weapons.



6.9



Without limitation of the obligations of the Contractor under Article 6.4 through

Article 6.8, the Contractor undertakes to take all the reasonable and practical steps

to:

(a)



ensure the protection of water-bearing strata encountered during its work;



21



(b)



carry out the necessary tests in accordance with Good International

Petroleum Industry Practice for determining the value of any show

encountered during drilling and the exploitability of any possible

Petroleum discoveries;



(c)



avoid losses, spills and unplanned discharges of Petroleum, produced

waters, chemicals or any other product used in the Petroleum Operations;



(d)



take reasonable preventative and corrective measures in accordance with

Good International Petroleum Industry Environmental Practice to avoid

Marine Pollution resulting from the conduct of Petroleum Operations and

otherwise to protect the environment from pollution, contamination or

impact beyond that anticipated in the relevant ESIA and ESMP resulting

from Petroleum Operations; and



(e)



evaluate any Marine Pollution, pollution, contamination or other

unanticipated impact on the environment resulting from Petroleum

Operations and rectify as economically as practical after consultation with

the EPA and other State agencies required by Law on the actions to be

taken.



With respect to clause (c) above, discharges during Petroleum Operations shall be

in accordance with Liberian regulations including An Act Adopting the

Environment Protection and Management Law of the Republic of Liberia, and in

the absence of discharge regulations or licensing requirements or if the

regulations have not been promulgated, discharges shall be in accordance with

Good International Petroleum Industry Environmental Practice.

6.10



The Contractor shall,

(a)



At the times and covering the matters set forth below in this clause (a),

submit to NOCAL and the EPA an Environmental and Social Impact

Assessment (“ESIA”) satisfying the requirements of An Act Adopting the

Environment Protection and Management Law of the Republic of Liberia

Part III or generally applicable Law then in effect, the Republic of Liberia

EPA Environmental Impact Assessment Procedural Guidelines (the “EIA

Guidance”), and Good International Petroleum Industry Environmental

Practice. In accordance with Law (currently Section 3.2.9 of the EIA

Guidance), special emphasis should be placed on the development of a

thorough Environmental and Social Management Plan (“ESMP”)

responsive to the issues identified in the ESIA. Each of the ESIA and

ESMP shall be presented in a manner that makes it possible for the reader

readily to separate environmental issues from socio-economic issues, such

as those discussed in Section 3.2.7 of the EIA Guidance.



22



The ESIA and ESMP shall be submitted:

(i)



sufficiently prior to exploration activities, including any seismic or

drilling work, such that final approvals under the Law can be

obtained prior to the start of work; and



(ii)



sufficiently prior to development and production such that all final

approvals under the Law can be obtained prior to the start of

construction.



Unless provided otherwise in the Law, seismic and drilling ESIAs and

ESMPs shall be prepared for the exploration phase. Unless provided

otherwise in the Law, the exploration seismic and drilling ESIA and

ESMP shall include all wells anticipated prior to declaration of

commerciality and if required be updated for appraisal activities. Unless

provided otherwise in Law, the development and production ESIA and

ESMP shall include an assessment of all subsequent development,

production, operations, support and export plans.

(b)



Each ESIA and ESMP submitted pursuant to Article 6.10 (a) shall take

account of the possible at-sea, coastal and on-shore issues arising from the

Petroleum Operations to be covered by such ESIA and ESMP.



(c)



The Contractor shall submit to NOCAL and the EPA modifications to the

then-current ESIA and ESMP whenever necessary to reflect material

changes in conditions not anticipated in the then current ESIA and ESMP

or material changes in Good International Petroleum Industry

Environmental Practice not reflected in the current ESIA and ESMP. The

updates shall be prepared in the screening format to identify possible

additional risks for the EPA to determine the extent of additional

assessments, if any.



(d)



Each ESMP must comply with applicable Law and Good International

Petroleum Industry Environmental Practice and must at a minimum (i) set

forth detailed plans consistent with the relevant ESIA for the mitigation of

environmental harm attributable to, and the restoration or remediation of

the environment to the extent affected by, the implementation of the

exploration, appraisal or development and production program, as the case

may be, and (ii) set forth detailed plans or procedures for limiting adverse

socio-economic consequences from the exploration, appraisal or

development and production program, as the case may be. If any aspect of

the proposed Petroleum Operations to be covered by a particular ESIA and

ESMP can reasonably be expected to require the relocation of residents or

the taking of subsistence agricultural land, or the development of one or



23



more new communities, the environmental and socio-economic

components of the ESIA and the ESMP shall be presented as separate

documents; in addition, if any aspect of the proposed Petroleum

Operations to be covered by a particular ESIA and ESMP can reasonably

be expected to require the relocation of residents or the taking of

subsistence agricultural land, the socio-economic component of the ESMP

must include a Resettlement Action Plan (“RAP”) component. The RAP

must provide for (but not be limited to) suitable area(s) of resettlement

with key emphasis on suitability of shelter and livelihood continuity, full

compensation and obtaining informed consent.

(e)



An Abandonment Plan (an “Abandonment Plan”) based on applicable

Law and Good International Petroleum Industry Practice at the time of

plan submission shall be provided with each ESMP. The exploration

Abandonment Plan shall address the abandonment of exploration wells.

The development and production Abandonment Plan shall address the

abandonment of the facilities contemplated by the relevant development

and production plan in accordance with Good International Petroleum

Industry Practice. The development and production Abandonment Plan

shall focus on abandonment upon the end of the useful life of the Field or

Fields covered by the proposed development and production plan.

Each Abandonment Plan shall be approved by NOCAL and as may

otherwise be required by Law and shall provide for the remediation or

restoration of the Delimited Area and all onshore areas that were utilized

for Petroleum Operations (whether utilized by the Contractor, its Affiliates,

or third party suppliers or contractors) in each case in accordance with

applicable Law and Good International Petroleum Industry Environmental

Practice. Subject to the above, each Abandonment Plan may permit the

Contractor to leave offshore installations in place if such installations will

not endanger navigation. It is the responsibility of NOCAL to consult and

obtain the views of the Liberian Maritime Authority with respect to

navigational issues posed by any offshore installations proposed to be left

in place. If there is a disagreement between NOCAL and the Contractor

as to the identification of offshore facilities that may be left in place,

NOCAL and the Contractor shall submit the disagreement to Expert

Determination in accordance with Article 31.9.



(f)



The Contractor’s liability for decommissioning and abandonment of Fields

is provided for in Article 20; however, the Contractor shall have no

liability to restore on-shore sites that:

(i)



are suitable for continued use by third parties for their intended

purposes,



24



(ii)



are free from pollution or other contamination that would require

remediation under applicable Law, and



(iii)



are transferred to or then owned by third parties that have

committed to the continued productive use of such properties for

their intended purposes and that reasonably appear to have the

financial capacity to do so.



Nothing in this Article 6.10 limits the Contractor liability for any adverse

environmental impact (in excess of any that may have been identified in

the ESIA or ESMP as acceptable) that is attributable to actions or culpable

inaction of the Contractor, its subcontractors or agents occurring prior to

the transfer of assets.

(g)



Each Abandonment Plan included within an ESMP submitted pursuant to

this Article 6.10 must include an assessment of risks and any uncertainties

associated with the stage of the Petroleum Operations covered by such

ESMP, identify the preferred abandonment option for such operations,

summarize the reasons for the selection of the preferred abandonment

option, address the social aspects of abandonment and rehabilitation, and

provide a process for participation by the relevant community and other

stakeholders in abandonment management and monitoring.



(h)



Public hearings and public consultations in support of the ESIA and the

ESMP process shall be in accordance with An Act Adopting the

Environment Protection and Management Law of the Republic of Liberia

Part III Section 18 and the EIA Guidelines. The hearings and

consultations shall be publicized and conducted in accordance with

generally applicable regulations. The Contractor shall make and publish a

record of:

(i)



the means taken to publicize the hearings;



(ii)



an indication of the numbers of persons who attended each such

hearing and their affiliations;



(iii)



a summary of the issues raised at each such hearing; and



(iv)



a discussion of the actions taken by the Contractor in response to

the issues raised at such hearings.



Whenever a public hearing is required to be held with respect to a proposed ESIA

and ESMP pursuant to An Act Adopting the Environment Protection and

Management Law the Law shall be deemed to require that such a hearing must be



25



held in Monrovia, in the largest coastal town of each of Margibi and Grand Bassa

Counties, and in the County seat of any County in which significant onshore

installations are expected to be located. The EPA may by regulation set forth

additional standards for the location of, notification of and conduct of such

hearings.

6.11



The Contractor shall commission periodic environmental audits as required to

ensure compliance of the Contractor with the ESMP. External audits will be in

accordance with An Act Adopting the Environment Protection and Management

Law of the Republic of Liberia Part III Section 25 and Good International

Petroleum Industry Environmental Practice; however, sediment sampling for

wells drilled shall not be required unless the engineer supervising the audit

determines, on the basis of the facts and circumstances known or revealed at the

time and after considering available alternative investigation techniques, that such

sediment sampling would be prudent. The external audit shall be performed or

supervised by an environmental engineer with at least ten (10) years of experience

in making environmental compliance assessments and audits in the offshore

petroleum industry. Such environmental engineer shall be selected by the

Contractor and approved by EPA and NOCAL; failing such approval, the

appointment of the environmental engineer shall be subject to Expert

Determination in accordance with Article 31.9. The Contractor shall bear the cost

of audits performed pursuant to this Article 6.11, and such costs shall constitute

Petroleum Costs.



6.12



The Contractor shall require in its contracts with its subcontractors and suppliers

that they comply with its ESIA, ESMP and other associated plans such as waste

management plans and oil spill response plans that are required by Law. As

between NOCAL and the Contractor, the Contractor is responsible for the

consequence of any failure of any such subcontractor or supplier to comply with

any such plan.



6.13



All works and facilities erected by the Contractor hereunder shall, according to

their nature and to the circumstances, be built, placed, signaled, marked, fitted and

preserved so as to allow at any time and in safety free passage to navigation, and

without prejudice to the foregoing, the Contractor shall, in order to facilitate

navigation, install the sound and optical devices approved or required by the

competent authorities and Good International Petroleum Industry Practice and

maintain them in a manner satisfactory to said authorities (and if there are no

existing approved or required devices, shall utilize such devices as a prudent and

careful operator would use in like circumstances).



6.14



In the exercise of its rights to build, carry out work and maintain all facilities

necessary for the purposes hereof, the Contractor shall not disturb any existing

graveyard or building used for religious purposes, or cause a nuisance to any



26



government or public building, except with the prior written consent of NOCAL

and in compliance with an approved ESIA and ESMP, and shall make good the

damage caused by it in that event.

6.15



NOCAL and the EPA or their authorized representatives shall have open access to

the Delimited Area and the Contractor’s installations related to Petroleum

Operations with reasonable advance Notice in order to inspect the Contractor’s

compliance with the SHE plan, SHE practices and performance relative to the

relevant ESIA(s) or ESMP(s). Such inspections shall not interfere in any material

way with the Contractor’s Petroleum Operations or be conducted in such a

manner as to introduce SHE hazards. It is understood that “reasonable advance

Notice” in the context of safety and similar inspections may be only such notice

as to provide for safe transportation and the safety of the inspection or individuals

involved in the inspection itself.

During such inspections the Contractor shall provide transportation, food and

housing at the relevant locations to NOCAL and/or the EPA’s representatives

under the same conditions as it provides such transportation, food and housing to

its own personnel. NOCAL and EPA representatives shall use the Contractor’s

transportation to offshore facilities within the Delimited Area to ensure the safety

of the NOCAL and EPA representatives. Such transportation, food and housing

costs shall be considered Petroleum Costs.



ARTICLE 7

CONTRACTOR’S RIGHTS IN RESPECT OF THE EXPLORATION PERIODS

7.1



7.2



Without prejudice to the provisions hereof, the Contractor shall have the right to

carry out the Petroleum Operations within the Delimited Area. Such right

includes, inter alia:

(a)



full responsibility for, management of and control over all the Petroleum

Operations in accordance with this Contract; and



(b)



authority to exercise any of the rights conferred hereby through Affiliates,

agents and independent subcontractors, and to pay accordingly any of their

expenses and costs in the place and in the currency chosen by the

Contractor.



To the extent provided for in the then-current ESIA and ESMP, and in compliance

with Law and Article 9 of this Contract, the Contractor shall have the right with

respect to land use rights acquired by it to clear the ground, dig, perforate, drill,



27



build, erect, place, supply, operate, manage and maintain ditches, pools, wells,

trenches, excavations, dams, canals, water conduits, plants, tanks, basins,

maritime and other storage facilities, primary distillation units, first extraction

gasoline separator units, sulfur plants, Natural Gas liquefaction facilities and other

facilities for Petroleum production, together with the pipelines, pumping stations,

generator units, power plants, high voltage lines, telephone, telegraph, radio and

other communication facilities, factories, warehouses, offices, employees’

housing, hospitals, premises, ports, docks, harbors, dikes, jetties, dredges, sea

walls, under water piers and other facilities, ships, vehicles, railways, warehouses,

workshops, foundries, repair shops and all the auxiliary services which are

necessary for or useful to the Petroleum Operations or in connection therewith;

and all additional facilities which are or may become necessary for or reasonably

subsidiary to the carrying out of the Petroleum Operations. Subject to Article 20,

the Contractor is responsible to the extent set out in Law for all damage, including

pollution and other environmental damage, caused to the owners or occupants of

adjacent properties (including coastal properties) from the carrying out of

Petroleum Operations or any of the foregoing activities in connection with

Petroleum Operations.

7.3



The agents, employees and representatives of the Contractor or its subcontractors

shall have the right, for the purposes of the Petroleum Operations, to enter into or

leave the Delimited Area and shall have free access to all the facilities set up by

the Contractor. The foregoing undertaking is not a guarantee that land use rights

acquired by the Contractor from the State or third parties will have access to

public rights of way. To the extent land owned by the State and not subject to

conflicting uses is available for right of way purposes, the State will make such

land available to the Contractor for such purposes under the terms of Article 9.



7.4



The Contractor may take or use the water necessary for the Petroleum Operations,

provided that existing irrigation or navigation are not impaired and that land,

houses or watering places for livestock are not deprived of a reasonable quantity

of water. The Contractor shall keep NOCAL informed of the locations from

which it is taking fresh water and the quantities taken.



ARTICLE 8

ACTIVITY REPORTS DURING THE EXPLORATION PERIODS AND

SUPERVISION OF PETROLEUM OPERATIONS

8.1



Subject to the terms of Articles 8.6, 8.7 and 8.8, NOCAL shall own or have

license rights to and may freely use all the original data and documents provided

under this Contract relating to the Petroleum Operations such as, but without



28



limitation, records, samples, geological, geophysical, petrophysical, drilling and

operating reports. The Contractor shall have the right to use such original data

and documents.

8.2



8.3



The Contractor undertakes to furnish NOCAL with the following periodic reports

together with such other reports as may be reasonably required by NOCAL in

regulations generally applicable to all offshore petroleum operations:

(a)



daily reports on drilling operations;



(b)



weekly reports on seismic operations;



(c)



within thirty (30) days after each Calendar Quarter, a report on the

Petroleum Operations carried out together with a detailed statement on

Petroleum Costs incurred and Petroleum Costs recovered in respect of the

preceding Calendar Quarter; and



(d)



prior to the end of February of each Calendar Year, an annual report,

certified that to the best of its knowledge, the information contained is

complete and correct in all material respects and complies with the

requirements of this Contract, on the Petroleum Operations carried out

during the previous Calendar Year, together with a detailed statement,

complying in all respects with the Contract, on Petroleum Costs incurred

and Petroleum Costs recovered in respect of the preceding Calendar Year.



In addition, the following reports or documents acquired pursuant to Petroleum

Operations shall be furnished to NOCAL as soon as they are prepared or

obtained:

(a)



a copy of all geological surveys and syntheses together with the related

maps;



(b)



a copy of all geophysical surveys, measurement and interpretation reports,

map profiles, sections or other documents related thereto, as well as, at

NOCAL’s request, the originals or a true copy of all recorded seismic data

where such is owned or licensed by the Contractor or NOCAL;



(c)



a copy of the drilling location and completion report for each well together

with a complete set of recorded logs;



(d)



a copy of all drill tests or production tests together with any study relating

to the flow or production of a well;



(e)



a copy of all reports relating to core analyses.



29



8.4



A representative portion of the cores and cuttings removed from each well, as

well as samples of fluids produced during drill tests or production tests shall also

be supplied to NOCAL within a reasonable period after the materials involved

become available to the Contractor. Where practical, all maps, sections, profiles,

logs and all other geological or geophysical documents shall be supplied to

NOCAL in an electronic format reasonably acceptable to NOCAL. No

information provided shall be falsified. The Contractor shall upon request

provide up to five (5) hard copies of any document submitted electronically in a

word processing, spreadsheet or comparable format if such document can

reasonably be presented and understood in a hard copy format.



8.5



The Contractor shall maintain the original samples and data related to Petroleum

Operations in its custody and shall provide access to NOCAL or a representative

of NOCAL not affiliated with another upstream oil company upon its request at

reasonable times and locations. If such samples and data are not stored in Liberia,

the cost of access shall be for the account of the Contractor as Petroleum Costs.

Upon expiration or in the event of surrender or termination of this Contract, all

such original samples and data related to Petroleum Operations not already

provided to NOCAL shall be provided to NOCAL in Liberia at the cost of the

Contractor.



8.6



The Contractor shall keep NOCAL informed of its activities through the duly

designated representative of the latter. In particular, the Contractor shall notify

NOCAL as soon as possible and in any event at least fifteen (15) days in advance

of all projected Petroleum Operations, such as any geological surveys, seismic

surveys, commencement of drilling and installation of a platform. In the event the

Contractor decides to abandon a drilling operation, it shall notify NOCAL thereof

within at least forty-eight (48) hours prior to such abandonment, unless

operational safety demands a lesser notice period.



8.7



This Contract and all amendments and modifications of and supplements to this

Contract are public documents. All financial information required to be disclosed

under the Liberian Extractive Industries Transparency Initiative Act of 2009

(“LEITI”) may be disclosed to the public. The Contractor may, and NOCAL and

the State expect to, make public information relating to the timing and amount of

royalties and other payments specifically due or paid under the terms of this

Contract or of taxes, fees and other levies payable or paid by the Contractor, and

relating to the rates at which royalties, taxes, fees and other levies become due or

are assessed, as well as information (other than geological, reservoir engineering

and other technical information) that is reasonably necessary in computing the

amount of such royalties, taxes, fees and other levies becoming due within two (2)

years from publication. The Contractor does not under this Article 8.7 have any

obligation to make available for publication its estimates of production, revenues,



30



royalties, taxes, fees and other levies becoming due more than two (2) years in

advance.

8.8



Save as set out in Article 8.7, all data, information, documents, reports and

statistics including interpretation and analysis supplied by the Contractor to

NOCAL or by NOCAL to the Contractor pursuant to this Contract (“Confidential

Information”) shall be treated as confidential and shall not be disclosed by any

Party or by the State to any other Person without the express written consent of

the Contractor and NOCAL for a period of fifteen (15) years from receipt thereof

by NOCAL or the Contractor as the case may be.

The confidentiality obligation set out in this Article 8.8 does not apply to any

information or part thereof which:



8.9



(a)



is or becomes part of, the public domain otherwise than by breach of this

Contract;



(b)



is lawfully obtained by NOCAL from another person without any

restriction as to use and disclosure; or



(c)



was in NOCAL’s possession prior to disclosure to it by the Contractor.



The provisions of Article 8.8 shall not prevent disclosure

(a)



By NOCAL or the State:

(i)



to any agency of the State or to any advisor or consultant to

NOCAL;



(ii)



to a bona fide potential assignee of all or part or NOCAL’s interest

hereunder;



(iii)



to banks, investors or other lending institutions for the purpose of

seeking external financing;



(iv)



for the purpose of complying with the State’s international

obligations for the submission of statistics and related data;



(v)



to the arbitrators in any proceeding under Article 31;



(vi)



to any Person in the case of information relating to geological

conditions beneath the seabed of areas surrendered by the

Contractor, unless subject to an obligation of confidentiality to a

third party disclosed to NOCAL at the time such information is

delivered to NOCAL, after the later of the date of surrender and



31



the second anniversary of the date of receipt by NOCAL of such

information;

(vii)



to government agencies for obtaining necessary rulings, permits,

licenses and approvals; and



(viii) as may be required by applicable law or financial stock exchange,

accounting or reporting practices.

(b)



By the Contractor or by any Person participating in the Contractor:

(i)



to its Affiliates, advisors or consultants;



(ii)



to a bona fide potential assignee of all or part or the Contractor’s

interest hereunder;



(iii)



to banks, investors or other lending institutions for the purpose of

seeking external financing;



(iv)



to non-Affiliates who shall provide services for the Petroleum

Operations, including subcontractors, vendors, and other service

contractors, where this is essential for their provision of services;



(v)



to government agencies for obtaining necessary rulings, permits,

licenses and approvals;



(vi)



as may be required by applicable law or financial stock exchange,

accounting or reporting practices;



(vii)



where Article 8.9(a)(vi) is applicable; or



(viii) to the arbitrators in any proceeding under Article 31.

Any Party disclosing Confidential Information to a third party under the terms of

this Article 8.9, other than pursuant to any of Articles 8.9(a)(v), 8.9(a)(vi),

8.9(a)(vii), 8.9(a)(viii), 8.9(b)(v), 8.9(b)(vi), 8.9(b)(vii) or 8.9(b)(viii), shall

require such persons to agree in writing to obligations of confidentiality in respect

of such Confidential Information no less protective than the provisions of this

Contract.



32



ARTICLE 9

OCCUPATION OF LAND

9.1



The State shall make available to the Contractor, and only for the purposes of the

Petroleum Operations, any land which it owns that is suitable for the activities

intended to be carried out thereon and does not conflict with land use rights

already granted to third parties or the existing use by the State of such land. The

Contractor shall have the right to utilize such land to build the facilities necessary

for the Petroleum Operations and the obligation to maintain, above and below the

ground, such facilities in good working order. NOCAL acknowledges that any

need for the Contractor to acquire by contract land rights from private parties may

increase Petroleum Costs, and will seek to make State-owned land available

where practicable.

The State shall authorize the Contractor to build, use and maintain telephone,

telegraph and piping systems required for Petroleum Operations above and below

the ground and along land belonging to the State, if such construction, use or

maintenance does not conflict with land use rights already granted to third parties

or the existing use by the State of such land. By constructing such systems the

Contractor assumes the obligation to maintain them, above and below the ground,

in good working order and assumes the risk of loss or damage attributable to the

construction, use and maintenance of such facilities.



9.2



9.3



Rights on land held by third parties that the Contractor determines to be necessary

for the carrying out of the Petroleum Operations shall be acquired by direct

agreement between the Contractor and the private person concerned as follows:

(a)



The Contractor may acquire, from parties other than the State and in

accordance with Law, land use rights or interests in existing buildings,

facilities or structures, sufficient to enable it to construct, install and

operate onshore operations that the Contractor deems necessary or

appropriate to carry out its Petroleum Operations under this Contract. If

an agreement cannot be reached between the Contractor and the person or

persons concerned, the Contractor may request the State to facilitate the

process of negotiation between the private owner and the Contractor for

the acquisition of the necessary rights or interests with just compensation.



(b)



The Contractor must report annually to NOCAL on its land acquisition

and compensation activities, specifying all payments made and the

purpose for each payment. Such report shall be a public document.



The Contractor shall indemnify the State for any damage caused to the land by the

construction, use and maintenance of its facilities on land provided by the State



33



directly or through the operation of Article 9.2(a), and in accordance with the Law

shall be liable to the owners or users of lands adjacent to lands occupied or used

by the Contractor for any damage to such lands and to the improvements or crops

thereon caused by such construction, use or maintenance. The responsibilities of

the Contractor to third parties who have by contract provided the Contractor with

rights or interests in land shall be governed by the terms of those contracts and by

generally applicable Law, if any.

9.4



The costs and expenses of the Contractor incurred pursuant to this Article 9 shall

be considered cost recoverable and shall be treated as Petroleum Costs.



9.5



When determining the value of rights or interests to be acquired by, or to be taken

for use by, the Contractor, no consideration shall be given to the Contractor’s

purpose for acquiring them and the State agrees that no Law or procedure for said

acquisition shall have the effect of attributing to any such rights or interests a

value based on the proposed use to be made of such rights or interests by the

Contractor.



9.6



Any rights or interests acquired by the State for use by the Contractor under

Article 9.2(a) shall be held or registered, as the case may be, in the name of the

State, but the Contractor shall be entitled to benefit therefrom for the purposes of

the Petroleum Operations. During the entire term of this Contract, the State will

ensure that the Contractor is protected in the use and occupation of such land just

as if it owns the property rights thereto.



9.7



The Contractor shall have the right, subject to the payment of fees applicable in

Liberia and to compliance with Laws applicable to the forestry industry or the

extraction of building and industrial materials (as defined in the Liberia Minerals

and Mining Law or in any successor legislation), to remove and use for Petroleum

Operations purposes, from land over which the Contractor has acquired land use

rights in accordance with this Article 9, the surface soil, mature timber, clay, sand,

limestone, gypsum, stones and other similar materials which may be necessary for

the performance of the Petroleum Operations. The Contractor’s rights under this

paragraph are subject to any restrictions on such activities with respect to land

rights acquired by the Contractor from private parties. With the consent of the

competent administrative services, the Contractor may make reasonable use of

such materials for the performance of the Petroleum Operations, subject to

payment of fees applicable in Liberia, when they are located on land owned by

the State and placed in the vicinity of the land where said Petroleum Operations

are taking place.



34



ARTICLE 10

USE OF FACILITIES

10.1



For the purposes of the Petroleum Operations, the Contractor shall have the right

to use, in accordance with applicable Law, any public railroad, tramway, road,

airport, landing strip, canal, river, bridge, waterway and any telephone or

telegraph network in Liberia whether owned by the State or by any private

enterprise, subject to the payment of fees then in effect or mutually agreed upon

which in the case of State-owned facilities will not be in excess of the prices and

tariffs charged to third parties for similar services. The Contractor shall also have

the right to use for the purposes of the Petroleum Operations any land, sea or air

transportation means for the transportation of its employees or equipment, subject

to compliance with the laws and regulations which generally govern the use of

such means of transportation.

The State may limit the access of the Contractor to any such existing public

utilities and facilities to the extent necessary to meet the demands of the general

public. In any case of insufficient capacity to provide for the needs of both the

general public and the Contractor (and users similarly situated with the

Contractor), NOCAL and the Contractor (and such similarly situated users) shall

in good faith consider how additional capacity for such similarly situated users

can be provided in a manner that fairly allocates to the Contractor (and others

similarly situated) the additional costs of providing and operating capacity in

excess of that required by the general public and the Contractor shall pay its share

of such additional costs as needed to fund construction of such excess capacity,

and shall recover its share of such additional costs as Petroleum Costs.



10.2



The State shall have the right to use for exceptional matters any transportation and

communication facility installed by the Contractor, subject to a fair compensation

mutually agreed upon which will not be in excess of the prices and tariffs charged

to third parties for similar services provided that such use does not unreasonably

interfere with Petroleum Operations.



10.3



Nothing in this Contract shall limit the State’s right to build, operate and maintain

on, under and along the land made available to the Contractor under Article 9 for

the purposes of the Petroleum Operations, roads, railroads, airports, landing strips,

canals, bridges, pipelines, useful telephone and telegraph lines, provided that such

right is not exercised in a manner which restricts or hinders in any material

respect the Contractor’s rights hereunder, or the Petroleum Operations.



35



ARTICLE 11

APPRAISAL OF A PETROLEUM DISCOVERY, DEVELOPMENT AND

PRODUCTION PLAN

11.1



In the event the Contractor discovers Petroleum, it shall, as promptly as possible,

notify NOCAL thereof and submit to it, within thirty (30) days after the date of

the temporary plugging or abandonment of the discovery well, a report including

all available information relating to said discovery and the initial conclusions the

Contractor believes may be drawn from such discovery. Such report shall by its

nature be subject to the work that will be undertaken to determine the extent and

nature of the discovery following more precise studies and appraisal.



11.2



If the Contractor wishes to undertake appraisal work relating to the

abovementioned Petroleum discovery, it shall promptly notify NOCAL of its

intent to do so (without thereby incurring any obligation to do so) and thereafter

shall submit for approval to NOCAL, within six (6) months after the date of

notification of said discovery, the appraisal work program and the estimate of the

related budget.

The provisions of Article 5 shall be applicable, mutatis mutandis, to said program

as regards its approval and performance, it being understood that the submitted

program shall comply with Good International Petroleum Industry Practice.

If NOCAL considers that the submitted program and related budget does not

comply with the requirements of the preceding paragraph, NOCAL may propose

revisions or modifications thereto by notifying the Contractor of the substance of,

and its justification for, the proposed revision(s) or modification(s). In that event,

NOCAL and the Contractor shall meet as soon as possible in order to consider the

proposed revisions or modifications and establish by mutual agreement the plan in

its final form. Should NOCAL fail to notify the Contractor of its wish for

revision or modification or of its approval within the above-mentioned ninety (90)

day period, the program and related budget submitted by the Contractor shall be

deemed to be approved by NOCAL at the expiration of said period.



11.3



If the Contractor meets the conditions referred to in Article 11.2, and has

complied with its obligation under the Law concerning Petroleum Operations and

under this Contract, NOCAL shall grant in writing, an exclusive appraisal

authorization for a duration of two (2) years from the date of approval or deemed

approval of the appraisal work program and the related budget, in respect of the

Appraisal Perimeter specified in said program.

Except as otherwise provided by this Article, the Contractor shall, during the term

of said exclusive appraisal authorization, be subject to the same terms and



36



conditions in this Contract as that applicable to the exclusive exploration

authorization.

(a)



The Contractor shall diligently carry out the appraisal work program for

the discovery in question; in particular it shall drill the appraisal wells,

acquire the seismic and carry out the production tests specified in the

approved appraisal work program.

At the Contractor’s request, with notification to NOCAL at least thirty

(30) days prior to the expiration of the appraisal period above-defined, the

duration of said period may be extended by a maximum of six (6) months,

provided that the Contractor demonstrates such extension is justified by (i)

the results that can reasonably be expected from continuation of the

appraisal program, or (ii) delays beyond the reasonable control of the

Contractor.

Further extensions of the appraisal period may be requested by the

Contractor and reviewed and approved by NOCAL if the Contractor has

diligently performed the approved appraisal work program up to that time

and reasonably demonstrates that further geological, geophysical,

subsurface, facilities or commercial work is justified in order to establish

whether the Field corresponding to the Petroleum discovery is commercial.



(b)



As soon as practical after the completion of appraisal evaluation, and no

later than thirty (30) days prior to the expiration of the appraisal period,

the Contractor shall provide NOCAL with a detailed report giving all the

then available information relating to the discovery and the appraisal

thereof. If the Contractor is of the opinion that the discovery is not

commercial, the report shall set forth the salient facts causing the

Contractor to hold that opinion, including its evaluation of the recoverable

reserves and the estimated development and operating costs. An

evaluation of the future price of Petroleum is not a requirement of this

report. Upon expiration of the appraisal period in the absence of a report

indicating that the Contractor is of the opinion the discovery is

commercial, or may become commercial under circumstances which are

reasonably foreseeable, the rights of the Contractor with respect to such

area shall be the rights of the Contractor with respect to areas within the

Delimited Area prior to the expiration of the third exploration period

unless the third exploration period has already terminated, in which case

the Contractor shall have no further rights with respect to such area.

Requests by the Contractor for further extensions of the appraisal period in

the event of a Non-Associated Natural Gas discovery will be governed by

the terms of Article 21.2.



37



(c)



If, after having carried out the appraisal work, the Contractor considers

that the Field corresponding to the Petroleum discovery is commercial, it

shall submit to NOCAL, together with the previous report, an application

for an exclusive exploitation authorization accompanied by a detailed

development and production plan for said Field, specifying inter alia:

(i)



the planned delimitation of the Exploitation Perimeter applied for

by the Contractor, so that it covers the area defined by the seismic

closure(s) of the Field concerned, together with all the technical

justifications with respect to the extent of said Field;



(ii)



an estimate of the reserves in place, the proven and probable

recoverable reserves and the corresponding annual productions,

together with a study on the methods of recovery;



(iii)



the possible valuation of the Petroleum products to be produced for

Crude Oil and Natural Gas;



(iv)



proposed Delivery Point(s) for Crude Oil and/or Natural Gas;



(v)



procedures for measuring production for royalty determination if

production is anticipated from water depths greater than and less

than one thousand five hundred (1,500) meters;



(vi)



procedures for measuring Total Production at the Delivery

Point(s);



(vii)



item by item, the description of equipment and work necessary for

production, such as the number of development wells, the number

of platforms, pipelines, production, processing, storage and loading

facilities together with their specifications;



(viii) as applicable, a marketing plan for Natural Gas pursuant to

guidelines in Article 21, which may include the Contractor’s

proposal to structure the project as an integrated or segmented gas

project (including gathering, treating, and conditioning of Natural

Gas for sale);

(ix)



an estimated schedule for plan implementation including estimated

date of the Contractor’s Final Investment Decision and the

projected date of production start-up;



(x)



estimates of all capital expenditures and operating costs, including

necessary infrastructure; and



38



(xi)

(d)



a plan for developing the ESIA and ESMP then required by Law

and Article 6 of this Contract.



The commercial nature of one or more Petroleum Fields shall be

determined by the Contractor, provided that it shall, at the end of appraisal

work, submit to NOCAL an economic study demonstrating the

commercial nature of said Field or Fields.

A Field may be declared commercial by the Contractor if, after taking into

account the provisions of this Contract and the submitted development and

production plan, the projected incomes and expenses determined in

accordance with Good International Petroleum Industry Practice confirm

the commercial nature of said Field.



(e)



For the purposes of evaluating the commercial nature of said Field or

Fields, NOCAL and the Contractor shall meet within thirty (30) days after

the submission of the development and production plan accompanied by

the economic evaluation.



(f)



The development and production plan submitted by the Contractor shall be

subject to the approval of NOCAL. Within ninety (90) days after the

submission of said plan, NOCAL may propose revisions or modifications

thereto by notifying the Contractor of the substance of, and its justification

for, the proposed revision(s) or modification(s). In that event, NOCAL

and the Contractor shall meet as soon as possible in order to consider the

proposed revisions or modifications and establish by mutual agreement the

plan in its final form. If the Contractor proposal is acceptable to NOCAL,

NOCAL shall provide written approval of such proposal on the date of

such agreement, such approval shall not be unreasonably withheld.

NOCAL shall respond to the submittal of a revised plan within forty-five

(45) days of receipt.

Should NOCAL fail to notify the Contractor of its wish for revision or

modification or of its approval within the above-mentioned ninety (90)

day or forty-five (45) day period (as the case may be), the plan submitted

by the Contractor shall be deemed to be approved by NOCAL at the

expiration of said period.



(g)



The Contractor may not begin construction under a development and

production plan approved or deemed approved by NOCAL until it has

received all approvals required by applicable Law of its ESIA and ESMP

for the development, which approvals shall not be unreasonably withheld.



39



11.4



Upon a showing of reasonable technical justification for delay and a showing that

the delay could not reasonably have been avoided by the Contractor in the

exercise of reasonable diligence, the Contractor may request and shall receive an

extension of up to six (6) months in the outside date for delivery of its proposed

appraisal work program under Article 11.2, and an extension of up to twelve (12)

months in the outside date for delivery of its proposed development and

production plan under Article 11.3(c). If the Contractor fails to deliver either its

proposed appraisal work program or its proposed development and production

plan within the outside time required under this Article 11, taking into account

any extensions granted under this Article 11.4, NOCAL may require that the

Contractor surrender all its rights in respect of the area deemed to encompass said

discovery without any compensation for the Contractor. If, within ninety (90)

days after NOCAL’s request, the Contractor has not delivered its proposed

appraisal work program or its proposed development and production plan, as the

case may be, complying with the applicable requirements of this Contract, it shall

surrender said area and will forfeit all its rights on Petroleum which could be

produced from said discovery, and any area so surrendered shall be deducted from

the surfaces to be surrendered under Article 3.5.



ARTICLE 12

GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION

12.1



A commercial Petroleum discovery shall entitle the Contractor to an exclusive

right, if it so requests pursuant to the conditions set forth in Article 11.3, to obtain,

in respect of the Field concerned, an exclusive exploitation authorization covering

the related Exploitation Perimeter.

NOCAL shall diligently review the

development and production plan submitted with the Contractor’s request for an

exclusive exploitation authorization and shall grant the authorization as promptly

as possible following the earlier of the agreement on the plan or the failure of

NOCAL to timely seek modifications to or revisions of the plan as contemplated

by Article 11.3(f).



12.2



If the Contractor makes several commercial discoveries in the Delimited Area,

each such discovery shall, in accordance with the provisions of Article 12.1 give

rise to an exclusive exploitation authorization each corresponding to an

Exploitation Perimeter. The number of exclusive exploitation authorizations and

related Exploitation Perimeters within the Delimited Area shall not be limited.



12.3



If in the course of work carried out after the grant of an exclusive exploitation

authorization, it appears that the area defined by the seismic closure(s) of the

Field concerned is larger than originally estimated pursuant to Article 11.3(c)(i),



40



NOCAL shall grant to the Contractor, as part of the exclusive exploitation

authorization already granted, an additional area so that the entirety of said Field

is included in the Exploitation Perimeter, provided, however, that the Contractor

supplies NOCAL, together with its application with the technical evidence of the

extension so required and provided, further, that the above mentioned extension is

an integral part of the Delimited Area as defined at the time of said application.

12.4



Where a Field extends beyond the boundaries of the Delimited Area, NOCAL

may require the Contractor to exploit said Field in association with the rights

holder of the adjacent area under the provisions of a unitization agreement.

Within six (6) months after NOCAL has notified its request, the Contractor shall

submit to its approval the development and production plan of the Field

concerned which shall be prepared in agreement with the rights holder of the

adjacent area.



ARTICLE 13

DURATION OF THE EXPLOITATION PERIOD

13.1



The duration of an exclusive exploitation authorization during which the

Contractor is authorized to carry out the exploitation of a Field declared

commercial is set at twenty-five (25) years from its date of issue.

If upon expiration of the exploitation period of twenty-five (25) years abovedefined a commercial exploitation of a Field remains possible, NOCAL may

authorize the Contractor, at the latter’s request submitted at least twelve (12)

months prior to said expiration, to continue under this Contract the exploitation of

said Field during an additional period of no more than ten (10) years, provided

that the Contractor has fulfilled all its obligations during the current exploitation

period. If, upon expiration of that additional exploitation period, a commercial

exploitation of said Field remains possible, the Contractor may request from

NOCAL, at least twelve (12) months prior to said expiration the authorization to

continue the exploitation of said Field under this Contract, during an additional

period to be agreed upon, provided that the Contractor has fulfilled all its

obligations during the then current exploitation period.

For the avoidance of doubt, NOCAL is under no obligation to extend any

exclusive exploitation authorization under the terms and conditions in this

Contract or under new terms and conditions.



41



13.2



The Contractor may, at any time, fully or partially surrender any exclusive

exploitation authorization by giving at least ninety (90) days prior Notice which

may be reduced with NOCAL’s consent. Following such Notice, any Field then

existing within the surrendered area shall be administered under the provisions of

Article 20.



13.3



Interruption for a consecutive period of at least six (6) months without NOCAL’s

consent of (i) development work on an area covered by an exclusive exploitation

authorization or (ii) production of a Field which has produced Commercial

Production, or abandonment of the exploitation of a Field, may give rise to the

withdrawal of the exclusive exploitation authorization concerned. For the

purposes of the preceding sentence, (1) development work includes work

necessary for the performance of the development program performed outside of

the Delimited Area including, by way of example and not limitation, obtaining of

financing following Final Investment Decision, letting of development work

contracts, design and engineering work, construction and fabrication, and

transportation, assembly and installation, and (2) production is not considered to

be interrupted by work such as maintenance, repairs and overhauls, so long as

such work, including the planning and contracting therefore, is being performed

in accordance with Good International Petroleum Industry Practice and with

reasonable diligence. Where NOCAL has approved a development and

production plan that includes a sequencing of development operations within the

Delimited Area for purposes such as staging production, use of the production to

fill ullage in a facility or as otherwise required in order to maximize economic

recovery of Petroleum, delays in or other cessation of development or production

attributable to such sequencing do not constitute “interruptions” for the purposes

of this Article 13.3. In the event of any disagreement between NOCAL and the

Contractor regarding the circumstances of the interruption, the JOC shall meet to

resolve the disagreement prior to any resort to arbitration under Article 31. The

six (6) months period referred to above may be extended to the extent any event

of Force Majeure made the Contractor unable to recommence development work

or production, as the case may be, following the end of such period.



13.4



Upon expiration, surrender or withdrawal of the last exclusive exploitation

authorization granted to the Contractor, this Contract shall terminate and any

Field then existing shall be administered under the provisions of Article 20.



42



ARTICLE 14

EXPLOITATION OBLIGATION

14.1



For any Field in respect of which an exclusive exploitation authorization has been

granted, the Contractor undertakes to perform, at its sole cost and its own

financial risk, all the Petroleum Operations useful and necessary for the

exploitation of said Field.



14.2



However, if the Contractor can provide commercial, technical, financial or

accounting evidence, during either the development period or the production

period, that the exploitation of a Field cannot be commercially profitable,

notwithstanding that an exclusive exploitation authorization has been granted in

accordance with the provisions of Article 12.1, NOCAL agrees not to force the

Contractor to continue the exploitation of such Field.

In that event, if the Contractor does not surrender such exclusive exploitation

authorization voluntarily, NOCAL, in its discretion, may withdraw the exclusive

exploitation authorization concerned from the Contractor without any

compensation for the latter, by giving sixty (60) days’ prior Notice.



ARTICLE 15

CONTRACTOR’S OBLIGATIONS AND RIGHTS IN RESPECT OF EXCLUSIVE

EXPLOITATION AUTHORIZATIONS

15.1



The Contractor shall commence development work not later than six (6) months

after approval of the development and production plan referred to in Article

11.3(f) and shall continue it with maximum diligence. For the avoidance of doubt,

development work shall include the detailed engineering and design work

customarily undertaken in accordance with Good International Petroleum Industry

Practice prior to the Final Investment Decision and construction activities. The

Contractor shall notify NOCAL when a Final Investment Decision is taken with

respect to any approved development and production plan.



15.2



The provisions of Articles 5, 6, 7, 8, 9 and 10 are also applicable, mutatis

mutandis, in respect of any exclusive exploitation authorization.



15.3



The Contractor shall have the right to build, use, operate and maintain all the

Petroleum storage and transportation facilities which are necessary for the

production transportation and sale of Petroleum produced, pursuant to the

conditions specified in this Contract.



43



Subject to the maintenance of free travel for existing and expected future

commercial navigation, the Contractor may determine the route and location of

any pipeline inside Liberia that is under the waters within the jurisdiction of the

State and is necessary for the Petroleum Operations, provided that it shall submit

plans to NOCAL for approval prior to the commencement of work. If the

Contractor needs to acquire rights in land from third parties to construct any

pipeline, the provisions of Article 9 shall apply. Any pipeline crossing or running

alongside roads or passageways (other than those used exclusively by the

Contractor) shall be built so as not to hinder the passage on those roads or

passageways.

15.4



The Contractor may, to the extent and for the duration of the excess capacity of a

pipeline or processing, transportation or storage facility built for the purposes of

the Petroleum Operations, be obligated to accept the flow of Petroleum coming

from exploitations other than those of the Contractor, provided that such flow

shall not cause prejudice to the Petroleum Operations, and provided, further, that

a reasonable tariff covering a normal remuneration for capital invested and cost of

said capital in respect of the pipeline or facility concerned, cost of preparing or

altering the facility to accommodate such third party use or disconnect from use

and a proportionate allocation of attributable operating and maintenance costs

shall be paid by the user. The Contractor’s obligation under the preceding

sentence does not limit the ability of the Contractor to interrupt third party use

when the Contractor determines in good faith that interruption is necessary to

avoid loss or damage to facilities or equipment engaged in Petroleum Operations

or for health, safety or environmental protection reasons.



15.5



Following the grant of an exclusive exploitation authorization, the Contractor

undertakes to proceed diligently with the approved development and production

plan. Development wells shall be spaced in a manner so as to ensure, in

accordance with Good International Petroleum Industry Practice, the maximum

economic recovery of the Petroleum contained in the Field in question.



15.6



The Contractor shall, in the conduct of development and production operations,

comply with all Good International Petroleum Industry Practice which in

particular ensures the good conservation of Fields and maximum economic

recovery of Petroleum.

The Contractor shall, inter alia, carry out enhanced recovery studies and use such

recovery processes if they may lead to an increase in Petroleum recovery rate

under economic conditions.



15.7



The Contractor undertakes to produce every year from each Field quantities of

Petroleum in accordance with the provisions of Article 15.6.



44



The annual production rates of each Field shall be submitted by the Contractor

together with the Annual Work Programs and related Budgets for the approval of

NOCAL which shall not be withheld provided that the Contractor gives proper

technical and economic grounds.

15.8



The following provisions govern the measurements of Total Production and

related inspection rights.

(a)



The Contractor shall measure the volume and quality of Total Production

at the Delivery Point, using the measurement appliances and procedures in

accordance with Good International Petroleum Industry Practice and the

relevant development and production plan. Total Production measurement

appliances shall be installed, maintained and operated by the Contractor. If

the Contractor wishes to change said measurement appliances or

procedures, the Contractor shall obtain prior written approval from

NOCAL. The Contractor shall periodically calibrate equipment and the

period for calibration shall be mutually agreed.

NOCAL’s authorized representatives shall have the right to be present at

and to observe Delivery Point Total Production measurement and to

examine or inspect the measurement appliances or procedures used.

NOCAL shall have the right to authorize an internationally recognized

inspection company to conduct such inspections and examinations.

NOCAL inspections and examinations shall not interfere in any material

way with the Contractor’s Petroleum Operations or be conducted in such a

manner as to introduce SHE hazards. During NOCAL inspections, the

Contractor shall provide transportation, food and housing at the relevant

locations to NOCAL representatives under the same conditions as it

provides such transportation, food and housing to its own personnel.

NOCAL representatives shall use the Contractor’s transportation to

offshore facilities within the Delimited Area to ensure the safety of the

NOCAL representatives.



(b)



The rate(s) of the royalty payable under Article 17.5 varies in accordance

with the water depth from which the relevant production is produced. For

the purposes of determining the rate(s) applicable, the Contractor shall

carry out well directional surveys and measure completion depths. If

production is commingled between wells or intervals with water depths

which are both greater and lesser than one thousand five hundred (1,500)

meters, then the production from each water depth shall be metered as

required to determine the applicable royalty rate(s) pursuant to Article

17.5. All such measurements shall be conducted in accordance with Good

International Petroleum Industry Practice.



45



The Contractor shall provide NOCAL with all relevant information used

to determine the applicable royalty rate(s). The Parties recognize that the

required measurement may occur on the seafloor and that the location of

the devices may introduce practical limits with regard to periodic

inspection. If required, a more detailed methodology for metering,

auditing, inspecting, and calibrating measurement of Total Production for

determining the applicable royalty rate(s) and confirming the accuracy of

such measurement shall be detailed in the relevant development and

production plan.

(c)



In the event that a measuring error is discovered by either NOCAL or the

Contractor, the Contractor shall use its best efforts to determine the correct

Total Production figures for the period during which there was a

measuring error and the corrected figures shall be used. The Contractor

shall submit for NOCAL’s approval a report detailing the source and

nature of the measuring error and the corrections to be applied. Where the

appliances and procedures used have caused an overstatement or

understatement of measured quantities, the error shall be deemed to have

existed since the date of the last calibration of the appliances, unless the

contrary can be justified by the Contractor or NOCAL. Retrospective

adjustments to related payments and Petroleum Cost Account balances

shall be made within thirty (30) days of the determination of the amount of

the error when necessary.

In the event that NOCAL and the Contractor disagree over a measurement

issue, they may submit this issue to Expert Determination in accordance

with Article 31.9.

All costs relating to the measurement, maintenance, calibration, inspection,

error determination (other than adjustment of revenues) and audit of Total

Production and all other costs contemplated in this Article 15.8 shall be

considered Petroleum Costs.



ARTICLE 16

RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING

16.1



From the start of Commercial Production, the Contractor shall market the Total

Production of Crude Oil and Natural Gas obtained from the Delimited Area in

accordance with the provisions hereinafter defined, subject to the right of NOCAL

under Article 16.7 to elect to take certain production in kind.



46



16.2



The Contractor shall pay a royalty to the State in accordance with Article 17.5.



16.3



For the purposes of recovery of Petroleum Costs, the Contractor may freely take

each calendar month in Crude Oil and/or Natural Gas, at the Delivery Point, up to

seventy percent (70%) of the value of the Total Production of Crude Oil during

that calendar month, less amounts paid as a royalty pursuant to Article 17.5 with

respect to such Total Production , and up to seventy percent (70%) of the value of

the Total Production of Natural Gas during that calendar month, less amounts

paid as a royalty pursuant to Article 17.5 with respect to such Total Production,

provided that the Contractor may never take any amount in excess of that

necessary and sufficient to recover Petroleum Costs remaining unrecovered.

The value of such portion of Total Production allocated to the recovery of

Petroleum Costs by the Contractor, as defined in the preceding paragraph, shall be

calculated in accordance with the provisions of Article 18 in the case of Crude Oil,

or, in the case of Natural Gas, Article 21.4.

If during a Calendar Year Petroleum Costs not yet recovered by the Contractor

under the provisions of this Article 16.3 exceed the equivalent of seventy percent

(70%) of the value of Total Production of Crude Oil less amounts paid as a

royalty pursuant to Article 17.5 and seventy percent (70%) of the value of Total

Production of Natural Gas less amounts paid as a royalty pursuant to Article 17.5,

as calculated above, the excess shall be carried forward in the following Calendar

Year or Calendar Years until full recovery of Petroleum Costs or until the

expiration of this Contract.



16.4



The quantity of Crude Oil from the Delimited Area remaining after the Contractor

has taken from the Total Production the portion permitted under Article 16.3 to be

allocated to the recovery of Petroleum Costs and that required under Article 17.5

to pay royalty, hereinafter referred to as “Remaining Oil Production”, shall be

shared between NOCAL and the Contractor according to the levels of daily Total

Production (as measured pursuant to Article 16.6) from the Delimited Area as

follows:

Increments of average

daily Crude Oil

Total Production

(in Barrels per day)

From 0 to 100,000

From 100,001 to

150,000

Over 150,001



NOCAL’s Share of

Remaining Oil

Production



Contractor’s share of

Remaining Oil

Production



40%

50%



60%

50%



60%



40%



47



16.5



The quantity of Natural Gas from the Delimited Area remaining during each

calendar month after the Contractor has taken from the Total Production the

portion permitted under Article 16.3 to be allocated to recovery of Petroleum

Costs and that required under Article 17.5 to pay royalty, hereinafter referred to as

“Remaining Natural Gas Production”, shall be shared between NOCAL and the

Contractor according to the levels of daily Total Production (as measured

pursuant to Article 16.6) from the Delimited Area as follows:

Average Daily Natural

Gas Total Production

Total Production



NOCAL’s share of

Remaining Natural

Gas Production

35%



Contractor’s share of

Remaining Natural

Gas Production

65%



16.6



For the purpose of this Article 16, the levels of daily Total Production of Crude

Oil or Natural Gas for any calendar month shall be the average daily rate of Total

Production during that calendar month.



16.7



NOCAL may receive its share of production as defined in Article 16.4 and 16.5

either in kind or in cash.



16.8



(a)



If NOCAL elects to receive in kind all or part of its share of Remaining

Oil Production, NOCAL shall notify the Contractor of its election in

writing at least ninety (90) days prior to the beginning of the Calendar

Quarter concerned, specifying the precise quantity that it wishes to receive

in kind during said Calendar Quarter. NOCAL shall receive such oil in

kind at the Delivery Point using procedures and equipment/vessels

consistent with required operational and safety standards as established in

the lifting procedure.



(b)



If NOCAL elects to receive in kind all or part of its share of Remaining

Natural Gas Production, NOCAL shall notify the Contractor of its election

in writing within thirty (30) days following the Contractor’s submittal of a

detailed development and production plan pursuant to Article 11.3(c),

specifying the percentage share that it wishes to receive in kind during the

exploitation period for the subject Natural Gas Field.



Unless NOCAL has timely notified the Contractor of its decision to receive its

share of production in kind pursuant to Article 16.7, the Contractor shall market

NOCAL’s share of production to be taken in cash for the calendar month

concerned, cause said share to be lifted during such calendar month and pay to

NOCAL within thirty (30) days after the end of the calendar month, an amount in

cash equal to the quantity in Barrels corresponding to NOCAL’s share of

production to be taken in cash multiplied by the Market Price defined in Article



48



18 for Crude Oil or, in the case of NOCAL’s share of Remaining Natural Gas

Production, defined in Article 21.4.

NOCAL may require payment, for sales of its share of production sold by the

Contractor, in Dollars or in the foreign currency in which the sale has been made.



ARTICLE 17

TAXATION

17.1



Unless otherwise provided for in this Contract the Contractor shall, in respect of

its Petroleum Operations, be subject to the Revenue Code and in the event of any

discrepancy between the Revenue Code and the specific provisions of this

Contract that are inconsistent with the Revenue Code as in effect on the Effective

Date, this Contract shall govern.

(a)



It is specifically acknowledged that the Persons participating in the

Contractor are individually liable for income tax and that provisions of

this Article 17 relating to income tax shall apply individually to any

Person participating in the Contractor under this Contract.



(b)



The Contractor shall keep separate accounts for each Calendar Year in

respect of the Petroleum Operations, enabling in particular the

establishment of a profit and loss account as well as a balance sheet

showing both the results of said Petroleum Operations and the asset and

liability items allocated or related thereto.



17.2



Upon Trigger Event Satisfaction, all Liberian filings have been made and all

Liberian taxes, including all income taxes, all withholdings and all duties and fees

or charges of any nature due from ExxonMobil, COPL or the contractor under the

Original Contract in relation to the transactions which transferred the interest of

such contractor in the Original Contract to COPL and then partially to

ExxonMobil have been paid in full, and none of ExxonMobil, COPL or the

contractor under the Original Contract will have any further liability for any such

filings, taxes, withholdings, fees, charges or duties.



17.3



Income tax shall be calculated pursuant to the provisions of the Revenue Code,

including the specific Petroleum provisions of the Consolidated Tax Amendments

Act of 2010 in Subpart B of Part II, Chapter 7 and the other Petroleum-related

provisions of such Act. Tax return filing requirements, tax records, Ministry of

Finance audit rights and other tax administration and procedural matters shall be



49



governed by the Revenue Code, including the specific processes and procedures

under Tax Administration and Procedure under Part I, Chapter 1, Subchapter B.

17.4



The following provisions of the Revenue Code are deleted or modified as

provided below:

(a)



The Contractor or any contractors and subcontractors are exempt from

payment of import, export, or re-export duties, fees or levies for goods

under the Revenue Code.



(b)



The Contractor will pay a lump sum annual payment of three hundred

thousand Dollars (US$300,000) in lieu of customs user fees under the

Revenue Code to the Consolidated Fund within thirty (30) days of the

Trigger Event Date of this Contract and thirty (30) days after the start of

each Contract Year thereafter.



(c)



The Contractor is exempt from withholding with regards to dividends to

non residents. The exemption includes exemption from tax and any filing

requirements arising from those payments.



(d)



Withholding on services:



(e)



(i)



Amounts paid to contractors and subcontractors for the

performance of services, the costs of which are Petroleum Costs,

are subject to withholding at six percent (6%) to the extent that

payments made for these services are classified as Liberia source

under section 805 of Revenue Code as in effect on the Effective

Date.



(ii)



The Contractor is exempt from withholding on payments for

services for Petroleum Operations charged at cost provided by the

Operator and/or its Affiliates as demonstrated by an audit report

provided under Article 25.3. The exemption includes exemption

from withholding tax, income tax, any other taxes, duties, and fees,

and any filing requirements arising from those payments.



Any sale, assignment, transfer, conveyance, redemption or other disposal

of a right or interest in this Contract, directly or indirectly, made in

accordance with this Contract, (i) between a Person participating in the

Contractor and its Affiliates which are wholly owned directly or indirectly

by that Person’s ultimate parent (except for director’s qualifying shares),

or (ii) between Persons participating in the Contractor which occur by

reason of operation of the default provisions or the “conduct of Petroleum

Operations by less than all parties” provisions of the joint operating



50



agreement among the Persons participating in the Contractor (a copy of

which has been provided to NOCAL) shall not be subject to any tax, levy

or fee of any kind imposed by the State, and no taxes or other payments

shall be due to the State on account of any gain or deemed gain relating to

such sale, assignment, transfer, conveyance, redemption, contribution or

other disposal as aforesaid.

(f)

17.5



Tax books and records will be kept in a location that is in accordance with

the provisions of this Contract.



A royalty in the proportion of that shown in the table in this Article 17.5 and

based on the water depth from which the production is located shall be paid by the

Contractor to the State by deposit into the Consolidated Fund on the value of

Total Production of Petroleum before the deduction of any costs. The value of

Total Production shall be calculated in accordance with the provisions of Article

18 in the case of Crude Oil, and in accordance with Article 21 in the case of

Natural Gas. The location of production shall be determined as provided in

Article 15.8(b).

Water Depth

0 meters to

1,500 meters

1,501 meters

and above



Royalty rate

10%

5%



The royalty shall be payable from the start of Commercial Production, in cash,

thirty (30) days after the end of each calendar month on Total Production for that

calendar month.

The royalty shall also be paid on any Petroleum sold by the Contractor prior to the

start of Commercial Production. Notwithstanding Articles 15.8 and 18, the value

of any such pre-Commercial Production sale shall be the actual selling price, as

determined by the Contractor in good faith and notified to NOCAL, and the water

depth shall be based on the depth of the well head at the sea floor without regard

to the completion location. The royalty for each such pre-Commercial Production

sale shall be paid within thirty (30) days of the date the Contractor receives

payment for such Petroleum, and shall be adjusted to the extent any payment

received by the Contractor is thereafter adjusted, except that any overpayment

shall be adjusted only by deductions to future royalties coming due.

17.6



Surface rentals shall be payable to the Consolidated Fund per square kilometer of

the area remaining at the beginning of each Calendar Year as part of the

Delimited Area, in the amounts as set out below:



51



Category of Operation



Surface Rentals Per Annum



Second Exploration Period



US$50 per sq. km



Third Exploration Period



US$75 per sq. km



Development & Exploitation Perimeters



US$100 per sq. km



For the purposes of determining the liability of the Contractor for surface rentals:

(a)



the second exploration period shall be deemed to continue until the earlier

of the commencement of the third exploration period or the surrender by

the Contractor of the entire Delimited Area,



(b)



the third exploration period shall be deemed to continue (with respect to

areas not subject to a development and production plan) until such time as

all of the Delimited Area has become subject to one or more Exploitation

Perimeters, has been surrendered by the Contractor, or has been

extinguished as a consequence of the termination of the third exploration

period, and



(c)



the surface rental rate for any Appraisal Perimeter is the rate of the then

current exploration period, and if the third exploration period terminates

under circumstances in which the Contractor is permitted to continue

appraisal activities with respect to an Appraisal Perimeter, surface rental

shall continue to accrue at the third exploration period rate for such

Appraisal Perimeter until the relevant area is surrendered or converted into

an Exploitation Perimeter.



Exploitation Perimeters shall be subject to the development and exploitation

period rate regardless of whether other areas still within the Delimited Area are

subject to the relevant exploration period rate. In such case, the area subject to

the relevant exploration period rate shall be the area of the Delimited Area less the

area of all Exploitation Perimeters.

17.7



Notwithstanding any general exemption from import duties applicable to the

Contractor under the Revenue Code and this Contract, the Contractor shall be

subject to the Economic Community of West African States (ECOWAS) Trade

Levy on all goods from non-ECOWAS states which it imports into Liberia at the

rate established by applicable Law.



17.8



Notwithstanding any exclusion contained elsewhere in this Contract, this Contract

does not exempt anyone from the payment of fees in relation to driver’s licenses,

vehicle registrations, corporate registration, employees’ residency permits and



52



work permits and other license, registrations and permits incidental to doing

business or conducting activities in Liberia.



ARTICLE 18

VALUATION OF PETROLEUM

18.1



For the purposes of this Contract, the Crude Oil price basis shall be the FOB

“Market Price” at the Delivery Point, expressed in Dollars per Barrel and

payable within thirty (30) days after the date of the bill of lading, as determined

hereinafter. Where sales of Crude Oil are made on bases other than FOB at the

Delivery Point, all costs of delivery and shipment including freight, insurance,

incremental interest on inventory in transit, and demurrage will be subtracted

from payments received to arrive at an equivalent FOB Market Price.



18.2



The Market Price applicable to liftings of Crude Oil during a calendar month shall

be calculated at the end of that calendar month and shall be equal to the volumeweighted average of the invoiced prices obtained by the Contractor for Crude Oil

sold to independent purchasers during that calendar month, provided that the

quantities so sold to Arm’s Length purchasers during that calendar month

represent at least seventy percent (70%) of the Total Production of Crude Oil

obtained from all the Fields under this Contract and sold during said calendar

month.



18.3



In the event such sales to Arm’s Length purchasers are not made during the

calendar month in question, or represent less than seventy percent (70%) of the

Total Production of Crude Oil obtained from all the Fields under this Contract and

sold during said month, the Market Price shall be determined as the Fair Market

Value of such sales. Fair Market Value of Crude Oil shall be determined by

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

and any other relevant conditions, including the prevailing market conditions for

Crude Oil. Where different grades of Crude Oil are being produced from the

Delimited Area, the Fair Market Value shall be determined and applied for each

grade of such Crude Oil. In the event that different grades of such Crude Oil are

blended together for sale then the price of such a blend shall prevail.

One (1) year prior to the anticipated start of Commercial Production, NOCAL and

the Contractor shall meet to agree on a formula which will be used to determine

the Fair Market Value of monthly sales volumes in the event that a Market Price

cannot be established under the terms of Article 18.2. The following principles

shall apply in determining the monthly Fair Market Value of Crude Oil:



53



(a)



A marker crude commonly used to price crudes from the region (such as

dated Brent) will be selected whose widely traded and transparent price is

reported daily by major independent market publications. An average of

such a marker crude price calculated over a period of five (5) days

following the loading date will form the base value of the Fair Market

Value for each cargo,



(b)



A basket of reference oils similar in quality to the Crude Oil to be valued

and sourced from the same region (such as West Africa) shall be selected

and the international market prices of these crudes, customarily quoted as

a differential to the marker crude, shall be used to derive a differential to

the marker crude for the Crude Oil to be valued. This differential will be

established with due consideration for differences (versus the chosen

basket) of known measures of crude oil quality (e.g. sulphur, API gravity,

viscosity and total acid number) as well as refining value (derived from

pre-production distillation assays and expected refinery yields of

marketable fuels and calculated using the appropriate monthly average

spot product prices) in the consuming markets,



(c)



In the event that one or more of the crude oils comprising an agreed basket

no longer meets the requirements of Article 18.3(b), a replacement crude

oil basket shall be determined by agreement between NOCAL and the

Contractor.



The formula may also take into account other considerations deemed relevant by

NOCAL and the Contractor.

If NOCAL and the Contractor cannot agree on an appropriate formula (or an

appropriate replacement formula under clause (c) of this Article 18.3), such

disagreement shall be subject to Expert Determination in accordance with Article

31.9.

At the request of NOCAL or the Contractor, the formula shall be reviewed

quarterly in the first year of Commercial Production and every five (5) years

thereafter.

18.4



The following transactions shall, inter alia, not be considered Arm’s Length sales

in determining the Market Price under the constraints of Article 18.2:

(a)



sales in which the buyer is an Affiliate of the seller;



(b)



sales between Persons participating in the Contractor;



54



(c)



sales in exchange for other than payment in freely convertible currencies;

and



(d)



sales fully or partially made for reasons other than the usual economic

incentives involved in Crude Oil sales on the international market, such as

exchange contracts, sales from government to government or to

government agencies.



18.5



Within fifteen (15) days following the end of each calendar month, the Contractor

shall determine in accordance with the provisions of Article 18.2 and Article 18.3

the Market Price applicable for the liftings during that month, and shall notify

NOCAL of that value, indicating the method of calculation and all data used in

the calculation of that Market Price. Payments under Article 17.5, Article 16.8,

and adjustments to the Petroleum Cost Account will be made using this Market

Price.



18.6



Within fifteen (15) days following the end of each Calendar Quarter, the

Contractor shall provide NOCAL with information regarding any adjustments to

the invoiced prices paid by independent purchasers under Article 18.2 during that

Calendar Quarter. Retrospective adjustments shall be made if needed to all

payments made during the preceding Calendar Quarter under Article 17.5 and

Article 16.8 and to the Petroleum Cost Account. In the event of an overpayment,

it shall be adjusted as a credit against subsequent payments due under Article 17.5

and Article 16.8 of this Contract. If there is an underpayment, it shall be adjusted

by payment by the Contractor to NOCAL or the State within thirty (30) days from

such determination.



18.7



Within fifteen (15) days following receipt of the information referred to in Article

18.6, NOCAL shall notify the Contractor of its acceptance of or objections to the

determination of the Market Price applicable to liftings made during that Calendar

Quarter. Failing notification from NOCAL within that fifteen (15) day period, the

Market Price provided for in the Contractor’s Notice referred to in Article 18.5

and Article 18.6 shall be deemed to have been accepted by NOCAL.

If NOCAL has notified objections to the Market Price determined by the

Contractor under Article 18.5 or Article 18.6 for the Calendar Quarter, NOCAL

and the Contractor shall meet within ten (10) days following NOCAL’s

notification to mutually agree on the Market Price. If NOCAL and the Contractor

fail to agree on the Market Price of the Crude Oil lifted for a given Calendar

Quarter within thirty (30) days after the end of that Calendar Quarter, NOCAL or

the Contractor may submit the determination of the Market Price for that Calendar

Quarter to Expert Determination in accordance with Article 31.9.



55



18.8



In the event of any adjustment to the prices paid to the Contractor for sales of

Crude Oil to Arm’s Length purchasers in a given Calendar Quarter which occur

after adjustments under Article 18.6 have been made, NOCAL and the Contractor

shall “true-up” any payment made under Article 16.8 and Article 17.5 and make

appropriate adjustments to the Petroleum Cost Account. In the event of an

overpayment, it shall be adjusted as a credit against subsequent payments due

under Article 17.5 and Article 16.8 of this Contract. If there is an underpayment,

it shall be adjusted by payment by the Contractor to NOCAL or the State within

thirty (30) days from such determination.



18.9



All payments made under this Contract shall be made in accordance with

protocols laid down by LEITI and shall be reported in the manner required under

the rules and regulations of LEITI.



ARTICLE 19

BONUSES, STATE PARTICIPATION AND LIBERIAN CITIZEN

PARTICIPATION

19.1



The Contractor shall pay to NOCAL the following bonuses:

(a)



Twenty one million two hundred and

(US$21,250,000) on the Trigger Event Date.



fifty thousand



Dollars



(b)



Two million Dollars (US$2,000,000) when the Total Production of Crude

Oil from the Delimited Area first reaches the average rate of thirty

thousand (30,000) Barrels per day during a period of thirty (30)

consecutive days.



(c)



Three million Dollars (US$3,000,000) when the Total Production of

Crude Oil from the Delimited Area first reaches the average rate of fifty

thousand (50,000) Barrels per day during a period of thirty (30)

consecutive days.



(d)



Five million Dollars (US$5,000,000) when the Total Production of Crude

Oil from the Delimited Area first reaches the average rate of one hundred

thousand (100,000) Barrels per day during a period of thirty (30)

consecutive days.



Each of the amounts referred to in (b), (c) and (d) above shall be paid within thirty

(30) days following the expiration of the reference period of thirty (30)

consecutive days.



56



19.2



These bonuses shall not be recoverable and shall therefore not be treated as

Petroleum Costs.



19.3



HYDROCARBON DEVELOPMENT FUND



19.4



(a)



To stimulate research in the field of hydrocarbons, most especially in

continental areas, and to assist the State in its overall goal of achieving

energy sustainability, a Hydrocarbon Development Fund, to be managed

by NOCAL, has been established. Within thirty (30) days of the Trigger

Event Date of this Contract, the Contractor shall make a one-time

contribution of five hundred thousand Dollars (US$500,000) to this fund.



(b)



The contribution to the Hydrocarbon Development Fund referred to in

Article 19.3(a) will not be recoverable and shall therefore not be treated as

Petroleum Costs.



RURAL ENERGY FUND

(a)



In accordance with the National Energy Policy, a Rural Energy Fund

(REFUND) has been established, inter alia, to integrate renewable energy

technologies into rural development. Considering that oil is a finite

resource, it is the policy of the State that oil resources be used to support

the development of renewable energy resources in order to ensure energy

security and sustainability upon cessation of petroleum production.

The Contractor shall therefore make an annual contribution of one

hundred thousand Dollars (US$100,000) during exploration and

production through NOCAL to the REFUND. The first payment shall be

made within thirty (30) days of the Trigger Event Date of this Contract

and thirty (30) days after each subsequent anniversary of the Effective

Date.



(b)



The amounts payable pursuant to Article 19.4(a) during the

exploration and appraisal phase shall be adjusted annually for inflation for

each payment after the initial payment in proportion to the change in

Deflator over the Contract Year ending on the last day of the Calendar

Quarter for which a Deflator has been published immediately prior to the

due date of each payment. The contribution to the REFUND referred to in

Article 19.4(a) will not be recoverable and shall therefore not be treated as

Petroleum Costs.



57



19.5



STATE PARTICIPATION

The State, through NOCAL, shall have the right to receive a ten percent (10%)

transfer of the Contractor’s interest in the Contract from the Persons then

participating in the Contractor that are not wholly State-owned Persons (such

NOCAL interest referred to as the “State Carried Participation” and such

Persons, including their successors in interest, “Non-State Parties”). In order to

exercise this right, NOCAL must give Notice of its decision to exercise such right

to the Non-State Parties during the three (3) month period ending on the date on

which Commercial Production begins within the Delimited Area. The Contractor

shall keep NOCAL fully informed of the date on which Commercial Production

from the Delimited Area is expected to begin such that NOCAL shall have at least

one hundred and eighty (180) days’ Notice of such anticipated date. If NOCAL

elects to receive the State Carried Participation, NOCAL and any subsequent

holder thereof shall be, with respect to the State Carried Participation, a Person

participating in the Contractor for all purposes of the Contract.

The State Carried Participation shall be transferred to NOCAL at no charge to

NOCAL. All costs allocable in accordance with the accounting procedure in

Annex II to the State Carried Participation relating to exploration, appraisal or

development of each Field developed, including satellite or deeper horizon

developments in an approved development and production plan but not the

subject of the initial development under the plan whether incurred before or after

the transfer (herein called “State Participation Carried Costs”), shall be paid by

the Non-State Parties. The State Participation Carried Costs shall accrue interest

at the Liberian Interest Rate compounded annually from the time that such costs

are paid until the time that such costs are recovered by the Non -State Parties

(“Interest on State Carried Costs”). Such Interest on State Carried Costs, as it

accrues, is recoverable as Petroleum Costs. The Non-State Parties that paid the

State Participation Carried Costs shall recover such costs (in proportion to their

payments) plus Interest on State Carried Costs from the share of the State Carried

Participation in the portion of Total Production allocated to the recovery of

Petroleum Costs in accordance with Article 16.3.

All costs of carrying out Petroleum Operations (other than State Participation

Carried Costs and Interest on State Carried Costs) including Production costs for

any Field, such as reservoir maintenance, production well work-overs, in-fill

drilling after the completion of the initial development operations of the Field,

general operating costs of the Field after the start of Commercial Production and

cash advances paid into an Abandonment Fund are herein called “State

Participation Non-Carried Costs”. All State Participation Non-Carried Costs

are to be borne by the State Carried Participation and shall be paid by NOCAL on

behalf of the State in respect of the State Carried Participation whenever a cash



58



call is made under the joint operating agreement provided for below in this Article

19.5 for the payment of such costs.

However, if NOCAL does not pay the amount due from it for State Participation

Non-Carried Costs pursuant to any such cash call within forty-five (45) days’ of

Notice under such joint operating agreement of such cash call (it being understood

that NOCAL on behalf of the State Carried Participation may honor such cash

calls directly or indirectly through third party arrangements or as might be agreed

between NOCAL and the Contractor), then the other Persons participating in the

Contractor who are Non-State Parties shall provide the funding.

Any State Participation Non-Carried Costs paid by Non-State Parties shall accrue

interest at the Liberian Default Interest Rate compounded annually from the time

that such costs are paid until the time that such costs are recovered by the NonState Parties (“Interest on State Non-Carried Costs”). Such Interest on State

Non-Carried Costs, as it accrues, is a recoverable Petroleum Cost pursuant to the

accounting procedure in Annex II. The Non-State Parties that paid State

Participation Non-Carried Costs shall recover such State Participation NonCarried Costs (in proportion to their payments) plus Interest on State Non-Carried

Costs from the share of the State Carried Participation in the portion of Total

Production allocated to the recovery of Petroleum Costs in accordance with

Article 16.3.

The following additional principles govern the State Carried Participation:

(a)



Within sixty (60) days of the NOCAL Notice to the other Persons

participating in the Contractor of its election to receive the State Carried

Participation, it will enter into the then existing international joint

operating agreement (including accounting procedures and the terms

provided for in Article 19.5(c)) with the other Persons participating in the

Contractor. Such agreement will be consistent with Good International

Petroleum Industry Practice and the joint operating agreement between the

Persons participating in the Contractor that is in force on the Trigger Event

Date. A copy of the joint operating agreement in force on the Trigger

Event Date has been provided to NOCAL.



(b)



Within sixty (60) days of the NOCAL Notice to the Non-State Parties of

its election to receive the State Carried Participation, NOCAL shall enter

into the lifting agreement provided for in Article 27.4 to provide for the

handling of the State Carried Participation’s share of Total Production.

Until such time that NOCAL becomes party to the lifting agreement, the

Operator shall market the State Carried Participation’s share of Total

Production and remit payment for production to NOCAL in accordance

with the terms of Article 16.8.



59



(c)



The joint operating agreement to be effective on the Trigger Event Date

provides for the following:

(i)



governance of the above described relationship and the finances;



(ii)



pro-rata cash calls based upon interests in the Contractor;



(iii)



the voting rights for the State Carried Participation and Citizen

Carried Participation to be maintained in one (1) voting block such

that NOCAL Controls the vote for the full fifteen percent (15%)

interest notwithstanding any sale or other transfer of any portion of

or interest in the State Carried Participation or the Citizen Carried

Participation;



(iv)



the right of NOCAL to withdraw from any Field, provided any

contribution made to the Abandonment Fund that is associated

with the interest shall transfer to the Party accepting such interest

and the right to recover previously paid Petroleum Costs associated

with the interest shall remain with the Non-State Parties having

paid such costs and that such right to recover shall also be on a norecourse basis as provided in 19.5(f) below;



(v)



the payment obligations of the Non-State Parties in regard to the

State Participation Carried Costs and State Participation NonCarried Costs; and



(vi)



a provision adjusting the voting and participation rights of the

Person holding the State Carried Participation to reflect Article

19.5(m).



(d)



There shall be no withholding, income tax, duty, levy, charge, fee or tax of

any kind whatsoever due from the Contractor or the transferor relative to

the initial Transfer of the State Carried Participation or in relation to future

Transfers where the transferee is a one hundred percent (100%) State

owned corporation or a ministry or other agency of the State.



(e)



NOCAL, on behalf of the State, shall be responsible for payment of

income taxes and other taxes and all income tax return preparation and

filing compliance obligations attributable to the State Carried Participation

as required by Law.



(f)



Any funding of the State Carried Participation by the other Persons

participating in the Contractor shall be on a no-recourse basis to the State

or NOCAL. Repayment for all costs and expenses attributable to the State



60



Carried Participation shall be paid exclusively from the portion of Total

Production provided for recovery of Petroleum Costs under Article 16.3.

(g)



The State or NOCAL may not pledge, mortgage or otherwise encumber

the State Carried Participation’s portion of Total Production provided for

the recovery of Petroleum Costs under Article 16.3.



(h)



NOCAL shall have the right to sell all or an undivided proportionate

interest in the State Carried Participation to any Person not wholly Stateowned subject to a right of first negotiation in favor of the Non-State

Parties. If NOCAL wishes to sell any or all of the State Carried

Participation to any Person not wholly State-owned, NOCAL shall provide

Notice to the Non -State Parties of the desired sale including an indicative

summary of the proposed terms of the sale. The indicative summary shall

include all key terms of the proposed sale to enable a Person participating

in the Contractor to decide whether to acquire such portion of the State

Carried Participation. If a Person or Persons participating in the Contractor

wishes to discuss the possibility of purchasing the indicated portion of the

State Carried Participation from NOCAL, NOCAL and such Person(s)

shall negotiate on an exclusive basis for a thirty (30) day period following

such Notice to the Contractor to reach final agreement regarding the terms

and conditions for such sale. If the sale is not consummated within thirty

(30) days after the date of agreement between NOCAL and such Person(s)

participating in the Contractor, or if no agreement is reached, NOCAL

shall be free to dispose of such portion of the State Carried Participation

within the following one hundred and eighty (180) days as long as such

sale is at least the same price and on no more favorable terms and

conditions to the buyer than those contained in the indicative summary.



(i)



The obligation of the Non-State Parties to pay the State Participation

Carried Costs and any State Participation Non-Carried Costs to the extent

such State Interest Non-Carried Costs are not funded by NOCAL shall

cease on any portion of the State Carried Participation subject to a

Transfer to a Person not wholly State-owned. Such Person shall thereafter

have only the rights and obligations of a Person participating in the

Contractor under the then-applicable joint operating agreement subject to

the limitations provided for in this Article 19.5.



(j)



In the case of any future Transfer of all or any portion of the State Carried

Participation, any State Participation Carried Costs, Interest on State

Carried Costs, State Participation Non-Carried Costs and Interest on State

Participation Non-Carried Costs attributable to the transferred portion of

the State Carried Participation that were funded by the Non-State Parties

prior to such Transfer shall continue to be recovered by such Non-State



61



Parties from the transferred portion of the State Carried Participation share

of the portion of Total Production allocated for the recovery of Petroleum

Costs in accordance Article 16.3.



19.6



(k)



The State and NOCAL shall not permit either legal or beneficial title to

the State Carried Participation or any part thereof to Transfer to any

Person if such Transfer would cause another Person participating in the

Contractor to be in violation of the laws of its home country or the laws of

the home country of its ultimate parent company. The Contractor shall

provide NOCAL with the information reasonably necessary for the day-today administration of this requirement by the State and NOCAL and any

entity holding such interest on behalf of the State.



(l)



In the event of a breach of Article 19.5(k) with respect to any portion of

the State Carried Participation, the State shall re-purchase at cost such

portion or allow the other Persons participating in the Contractor to repurchase such portion at cost. For the purpose of this provision, at cost

shall mean the amount paid by the holder to the State for its portion of the

State Carried Participation plus the amount of any unrecovered investment

by such holder on account of the costs of Petroleum Operations properly

allocable to such portion of the State Carried Participation.



(m)



The Person holding the State Carried Participation shall not participate in

Contractor’s decision to enter into arbitration proceedings or Expert

Determination under Article 31 and shall have no part in the guidance of

any such arbitration proceedings or Expert Determination, including any

strategic or tactical planning as a member of Contractor; however, it shall

bear its proportionate share of the benefit or burden of any decision made

thereunder.



LIBERIAN CITIZEN PARTICIPATION

The State, through NOCAL, shall have the right to receive a five percent (5%)

transfer of the Contractor’s interest in the Contract from the Persons then

participating in the Contractor that are not wholly State-owned Persons (such

NOCAL interest referred to as the “Citizen Carried Participation” and such

Persons, including their successors in interest, “Non-State Parties”). In order to

exercise this right, NOCAL must give Notice of the State’s decision to exercise

such right to the Non-State Parties during the three (3) month period ending on

the date on which Commercial Production begins within the Delimited Area. The

Contractor shall keep NOCAL fully informed of the date on which Commercial

Production from the Delimited Area is expected to begin such that NOCAL shall

have at least one hundred and eighty (180) days’ Notice of such anticipated date.

If the State, through NOCAL, elects to receive the Citizen Carried Participation,



62



NOCAL and any subsequent holder thereof shall be, with respect to the Citizen

Carried Participation, a Person participating in the Contractor for all purposes of

this Contract.

The Citizen Carried Participation shall be transferred to NOCAL at no charge to

NOCAL. All costs allocable in accordance with the accounting procedure in

Annex II to the Citizen Carried Participation relating to exploration, appraisal or

development of each Field developed, including satellite or deeper horizon

developments in an approved development and production plan but not the

subject of the initial development under the plan whether incurred before or after

the transfer (herein called “Citizen Participation Carried Costs”), shall be paid

by the Non-State Parties. The Citizen Participation Carried Costs shall accrue

interest at the Liberian Interest Rate compounded annually from the time that such

costs are paid until the time that such costs are recovered by the Non -State

Parties (“Interest on Citizen Carried Costs”). Such Interest on Citizen Carried

Costs, as it accrues, is recoverable as Petroleum Costs. The Non-State Parties

that paid the Citizen Participation Carried Costs shall recover such costs (in

proportion to their payments) plus Interest on Citizen Carried Costs from the

share of the Citizen Carried Participation in the portion of Total Production

allocated to the recovery of Petroleum Costs in accordance with Article 16.3.

All costs of carrying out Petroleum Operations (other than Citizen Participation

Carried Costs and Interest on Citizen Carried Costs) including Production costs

for any Field, such as reservoir maintenance, production well work-overs, in-fill

drilling after the completion of the initial development operations of the Field,

general operating costs of the Field after the start of Commercial Production and

cash advances paid into an Abandonment Fund are herein called “Citizen

Participation Non-Carried Costs”. All Citizen Participation Non-Carried Costs

are to be borne by the Citizen Carried Participation and shall be paid by NOCAL

on behalf of the State in respect of the Citizen Carried Participation whenever a

cash call is made under the joint operating agreement provided for below in this

Article 19.6 for the payment of such costs.

However, if NOCAL does not pay the amount due from it for Citizen

Participation Non-Carried Costs pursuant to any such cash call within forty-five

(45) days’ of Notice under such joint operating agreement of such cash call (it

being understood that NOCAL on behalf of the Citizen Carried Participation may

honor such cash calls directly or indirectly through third party arrangements or as

might be agreed between NOCAL and the Contractor), then the other Persons

participating in the Contract who are Non-State Parties shall provide the funding.

Any Citizen Participation Non-Carried Costs paid by Non-State Parties shall

accrue interest at the Liberian Default Interest Rate compounded annually from

the time that such costs are paid until the time that such costs are recovered by the



63



Non -State Parties (“Interest on Citizen Non-Carried Costs”). Such Interest on

Citizen Non-Carried Costs, as it accrues, is a recoverable Petroleum Cost pursuant

to the accounting procedure in Annex II. The Non-State Parties that paid Citizen

Participation Non-Carried Costs shall recover such Citizen Participation NonCarried Costs (in proportion to their payments) plus Interest on Citizen NonCarried Costs from the share of the Citizen Carried Participation in the portion of

Total Production allocated to the recovery of Petroleum Costs in accordance with

Article 16.3.

The following additional principles govern the Citizen Carried Participation:

(a)



Within sixty (60) days of the NOCAL Notice to the other Persons

participating in the Contractor of the State’s election to receive the Citizen

Carried Participation, it will enter into the then existing international joint

operating agreement (including accounting procedures and the terms

provided for in Article 19.6(c)) with the Non-State Parties. Such

agreement will be consistent with Good International Petroleum Industry

Practice and the joint operating agreement between the Persons

participating in the Contractor that is in force on the Trigger Event Date.

A copy of the joint operating agreement in force on the Trigger Event

Date has been provided to NOCAL.



(b)



Within sixty (60) days of the NOCAL Notice to the other Persons

participating in the Contractor of the State’s election to receive the Citizen

Carried Participation, NOCAL shall enter into the lifting agreement

provided for in Article 27.4 to provide for the handling of the Citizen

Carried Participation’s share of Total Production. Until such time that

NOCAL becomes party to the lifting agreement, the Operator shall market

the Citizen Carried Participation’s share of Total Production and remit

payment for production to NOCAL in accordance with the terms of

Article 16.8.



(c)



The joint operating agreement to be effective on the Trigger Event Date

provides for the following:

(i)



governance of the above described relationship and the finances;



(ii)



pro-rata cash calls based upon interests in the Contractor;



(iii)



the voting rights for the State Carried Participation and Citizen

Carried Participation to be maintained in one (1) voting block such

that NOCAL Controls the vote for the full fifteen percent (15%)

interest notwithstanding any sale or other transfer of any portion of



64



or interest in the State Carried Participation or the Citizen Carried

Participation;

(iv)



the right of NOCAL, on behalf of the Citizen Carried Participation,

to withdraw from any Field, provided any contribution made to the

Abandonment Fund that is associated with the interest shall

transfer to the Party accepting such interest and the right to recover

previously paid Petroleum Costs associated with the interest shall

remain with the Person Participating in Contractor that paid such

costs and that such right to recover shall also be on a no-recourse

basis as provided in 19.6(f) below;



(v)



the payment obligations of the Non-State Parties in regard to the

Citizen Participation Carried Costs and Citizen Participation NonCarried Costs; and



(vi)



a provision adjusting the voting and participation rights of the

Person holding the Citizen Carried Participation to reflect Article

19.6(m).



(d)



There shall be no withholding, income tax, duty, levy, charge, fee or tax of

any kind whatsoever due from the Contractor or the transferor relative to

the initial Transfer of the Citizen Carried Participation or in relation to

future Transfers where the transferee is (i) a one hundred percent (100%)

State owned corporation or a ministry or other agency of the State, or (ii) a

trust company or other established fiduciary entity described in Article

19.6(h).



(e)



NOCAL, on behalf of the State, shall be responsible for payment of

income taxes and other taxes and all income tax return preparation and

filing compliance obligations attributable to the Citizen Carried

Participation as required by Law.



(f)



Any funding of the Citizen Carried Participation by the Non-State Parties

shall be on a no-recourse basis to the State or NOCAL. Repayment for all

costs and expenses attributable to the Citizen Carried Participation shall be

paid exclusively from the portion of Total Production provided for

recovery of Petroleum Costs under Article 16.3.



(g)



The State or NOCAL may not, pledge, mortgage or otherwise encumber

the Citizen Carried Participation’s portion of Total Production provided

for the recovery of Petroleum Costs under Article 16.3.



65



(h)



The ownership of the Citizen Carried Participation shall be structured such

that ultimate beneficial ownership of the Citizen Carried Participation can

be made available to citizens of Liberia, and shall be administered in a

manner that an inter-ministerial commission appointed by the President of

the Republic of Liberia has determined will ensure a continuing broad

participation of Liberian citizens in the benefits of the Citizen Carried

Participation. So long as there is compliance with the preceding sentence,

NOCAL may Transfer the Citizen Carried Participation (i) to a one

hundred percent (100%) State owned corporation or a ministry or other

agency of the State, or (ii) to a trust company or other established

fiduciary entity with a well-established capacity to maintain and

administer large numbers of shareholder or investor accounts pursuant to a

program of facilitating the issuance through such entity to Liberian

citizens of rights in the Citizen Carried Participation. If there is a

separation of bare legal title from beneficial ownership, the rights of the

legal titleholder shall not thereafter be transferred in any way that will

adversely affect the ultimate beneficial ownership of the Citizen Carried

Participation by citizens of Liberia. The State shall develop processes to

reverse or rescind any transfer of a beneficial interest in the Citizen

Carried Participation to any Person who is not a Liberian citizen, and to

recover any such interest from any Person demonstrated to be holding

such interest for the direct or indirect benefit of a Person who is not a

Liberian citizen. Any interest in the Citizen Carried Participation so

reversed, rescinded or recovered shall be held and applied in the manner

required by the first sentence of this paragraph.



(i)



The obligation of the Non-State Parties to pay the Citizen Participation

Carried Costs and any Interest on Citizen Non-Carried Costs to the extent

such Citizen Participation Non-Carried Costs are not funded by NOCAL

shall cease on the occurrence of a Transfer of any portion of the Citizen

Carried Participation to a Person not permitted under clause (i) or clause

(ii) of Article 19.6(h). Such Person shall thereafter have only the rights

and obligations of Non-State Parties under the then-applicable joint

operating agreement and shall be subject to the limitations provided for in

this Article 19.6.



(j)



In the case of any future Transfer of all or any portion of the Citizen

Carried Participation, any Citizen Participation Carried Costs, Interest on

Citizen Participation Carried Costs, Citizen Participation Non-Carried

Costs and Interest on Citizen Participation Non-Carried Costs attributable

to the transferred portion of the Citizen Carried Participation subject to a

Transfer that were funded by the Non-State Parties prior to such Transfer

shall continue to be recovered by such Non-State Parties from the



66



transferred portion of the Citizen Carried Participation share of the portion

of Total Production allocated for the recovery of Petroleum Costs in

accordance Article 16.

(k)



The State and NOCAL shall not permit either legal or beneficial title to

the Citizen Carried Participation or any part thereof to Transfer to any

Person if such Transfer would cause another Person participating in the

Contractor to be in violation of the laws of its home country or the laws of

the home country of its ultimate parent company. The Contractor shall

provide NOCAL with the information reasonably necessary for the day-today administration of this requirement by the State and NOCAL and any

entity holding such interest on behalf of the State.



(l)



In the event of a breach of Article 19.6(k) with respect to any portion of

the Citizen Carried Participation, the State shall re-purchase at cost such

portion or allow the other Persons participating in the Contractor to repurchase such portion at cost. For the purpose of this provision, at cost

shall mean the amount paid by the holder to the State for its portion of the

Citizen Carried Participation plus the amount of any unrecovered

investment by such holder on account of the costs of Petroleum

Operations properly allocable to such portion of the Citizen Carried

Participation.



(m)



The Person holding the Citizen Carried Participation shall not participate

in Contractor’s decision to enter into arbitration proceedings or Expert

Determination under Article 31 and shall have no part in the guidance of

any such arbitration proceedings or Expert Determination, including any

strategic or tactical planning as a member of Contractor; however, it shall

bear its proportionate share of the benefit or burden of any decision made

thereunder.



ARTICLE 20

OWNERSHIP AND ABANDONMENT OF ASSETS

20.1



When each Field has reached fifty percent (50%) of productive capacity, which,

for the sake of clarity means that fifty percent (50%) of the estimated recoverable

Petroleum has been produced from such Field, the Contractor shall submit a

revised Abandonment Plan and budget for such Field to be approved by NOCAL.

Within ninety (90) days of said approval, the Contractor shall establish an

abandonment fund in Dollars to be held in an interest-bearing escrow account

with an escrow agent approved by the Ministry of Finance, NOCAL and the



67



Contractor (“Abandonment Fund”). The account shall be established at an

international bank of good financial standing and a long term debt rating of not

less than “AA” by Standard & Poor’s Corporation or “Aa2” by Moody’s Investor

Service or a comparable rating by another mutually agreed rating service. The

same Abandonment Fund shall receive the funds for all Fields.

Each year following the establishment of the Abandonment Fund, the Contractor

will pay into the account a per unit of production assessment for each Field

calculated by dividing the approved abandonment budget by the estimated units

of production to be produced between the approval date and the anticipated date

of abandonment. All monies paid into the Abandonment Fund shall be

recoverable as Petroleum Costs. If there is any dispute as to the yearly amount to

be funded into the Abandonment Fund, either NOCAL or the Contractor may

submit the question as to the amount to be funded to Expert Determination in

accordance with Article 31.9.

The Abandonment Fund shall be used solely for the purposes of paying for

abandonment operations. No Party shall mortgage, pledge, encumber or

otherwise use such Abandonment Fund for any purpose whatsoever except as

expressly provided herein. The Abandonment Fund shall establish an investment

policy approved by the Contractor and the Minister of Finance.

Following full decommissioning and abandonment of all of the Fields, any

portion of the Abandonment Fund not required for the Abandonment Plan shall be

transferred to NOCAL for the benefit of the State. If the Abandonment Fund is

insufficient to complete the approved Abandonment Plan, then the Contractor

shall pay all such additional required costs and these additional costs shall be

recoverable as Petroleum Costs if there is available Petroleum provided for under

the provisions of Article 16.3. If it is anticipated by the Contractor that there shall

not be sufficient funds in the Abandonment Fund to fully decommission and

abandon all of the Fields, the Contractor may request that the funding of the

Abandonment Fund be increased, such request may not be unreasonably denied

by NOCAL. If NOCAL elects to take ownership of assets pursuant to this Article,

the Abandonment Fund shall be transferred to NOCAL, which shall assume

responsibility for the assets and their decommissioning and abandonment,

including all liability for reclamation of environmental damages which occur after

the transfer of such assets as provided in Article 20.3.

20.2



Upon expiration, surrender or termination of this Contract, whatever the reason

thereof, in respect of all or part of the Delimited Area, or at the end of exploitation

of a Field, the Contractor shall offer in writing to transfer at no cost to NOCAL

the ownership of all assets, movables and immovables, used for the requirements

of the Petroleum Operations carried out in the area so surrendered, located

whether inside or outside the Delimited Area, such as wells and their equipment,



68



all other offshore equipment and facilities, buildings, warehouses, docks, lands,

offices, plants, machinery and equipment, bases, harbors, wharfs, jetties, buoys,

platforms, pipelines, roads, bridges, railroads and other facilities to including title

to all such assets owned by the Contractor or any Person participating in the

Contractor and sufficient rights to all leased property then used by the Contractor

in the conduct of Petroleum Operations not then readily available in the West

African marketplace and material to the continued conduct of Petroleum

Operations with respect to the Delimited Area to permit NOCAL or a successor

contractor to continue the use thereof on normal commercial terms and conditions

for a reasonable period of time following such expiration, surrender or

termination.

Such offer shall include:

(a)



identification of all licenses or use rights necessary to enable NOCAL or a

successor contractor selected by NOCAL to operate such movables and

immovables for their intended purposes;



(b)



the transfer of all such licenses or use rights to NOCAL or any such

successor contractor, to the extent transferable under such licenses or use

rights;



(c)



in the case of non-transferable licenses or use rights, information sufficient

to enable NOCAL or any such successor contractor to acquire any such

licenses or use rights, and the projected cost of acquiring such rights.



20.3



The Contractor shall seek to acquire any such licenses or use rights required for

the conduct of Petroleum Operations on the basis that such rights are freely

transferrable to any successor user of the related assets, and must do so if the

marginal cost of acquiring such rights on such terms is not material in comparison

to the cost of acquiring such rights solely for use by the Contractor and the

conditions imposed in connection with the granting of such extended rights are

not unduly burdensome to the Contractor. The Contractor shall have no obligation

to supply license or use rights to the Contractor proprietary technology or knowhow for the purpose above, and if such license or use rights to the Contractor

proprietary technology would be required for the purpose above, the Contractor

shall provide similar third party technology or an alternate movable or immovable

asset with accompanying technology or know-how.



20.4



The written offer required in Article 20.2 shall be delivered at least sixty (60)

days prior to the end of the term of this Contract through expiration or early

surrender by the Contractor, or within sixty (60) days following the end of the

term, in the case of termination for any other reason, and shall identify the assets

involved in sufficient detail to permit NOCAL to form a reasonable opinion as to



69



the utility to NOCAL of the various components thereof. NOCAL shall have

sixty (60) days from the date of delivery of such written offer to elect by Notice

delivered to the Contractor to retain any such property. Any property not

specifically elected by NOCAL shall be removed or abandoned pursuant to

Article 20.8. The Contractor shall transfer good title and possession to all such

property to NOCAL by an instrument or instruments reasonably satisfactory to

NOCAL at the time specified in NOCAL’s Notice of election, which shall be not

more than sixty (60) days after its delivery of such Notice.

20.5



Such transfer of ownership shall cause the automatic cancellation of any security

or surety concerning those assets, or which those assets constitute, and any

security or surety on any assets of the Contractor that does not by its terms so

provide shall constitute a breach of this Contract unless NOCAL has otherwise

agreed in writing.



20.6



The Contractor shall remain responsible for insuring and maintaining all assets to

be taken by NOCAL until possession thereof is actually transferred to NOCAL,

which expense shall be a recoverable Petroleum Cost until the Contract terminates

and shall be reimbursed by NOCAL to the extent not recovered by the Contractor.



20.7



No surrender pursuant to this Article 20 shall excuse the Contractor from

responsibility for any conditions existing at the time of transfer; provided that the

Abandonment Fund shall be utilized to remediate any such environmental

conditions that have caused or may cause environmental damage.



20.8



Not more than three (3) months prior to delivery of any written offer pursuant to

Article 20.2, the Contractor shall commission an independent environmental audit

to be performed with respect to all assets to be covered by such offer and with

respect to the land on which, or the ocean around which, they are located. The

results of such audit shall be furnished to NOCAL together with the Notice

referred to in Article 20.3. The external audit shall be performed or supervised by

an environmental engineer with at least ten (10) years of experience in making

environmental compliance assessments and audits in the offshore petroleum

industry. Such environmental engineer shall be selected by the Contractor and

approved by NOCAL; failing such approval, the appointment of the

environmental engineer shall be subject to Expert Determination in accordance

with Article 31.9. The cost of the audit shall be paid from the Abandonment Fund

by the Contractor (or if the Abandonment Fund is anticipated to be insufficient,

from the Contractor who may recover such costs as Petroleum Costs). If there are

sufficient funds in the Abandonment Fund after the anticipated cost of

abandonment to rectify the environmental damage, the Contractor shall be

released from any liability for same. If there are not sufficient funds in the

Abandonment Fund to rectify the environmental damage after the anticipated cost

of abandonment, the Contractor shall be liable for such shortfall.



70



20.9



If NOCAL for any reason accepts only some or none of the assets and other

property offered to it under this Article 20, the Contractor shall in accordance

with Good International Petroleum Industry Practice, perform abandonment

operations in accordance with the Contractor’s approved Abandonment Plan and

to remove all such offered and unaccepted assets except as otherwise permitted in

accordance with the Contractor’s approved Abandonment Plan. The costs under

this Clause 20.9 shall be taken from the Abandonment Fund, or if the

Abandonment Fund is anticipated to be insufficient, from the Contractor who may

recover such costs in advance of actual spend as Petroleum Costs. Contractor

shall account to NOCAL for the expenditure of all such costs recovered in

advance, and if actual costs incurred are less than the advance recovered costs,

Contractor shall promptly pay to NOCAL the amount of such excess.



ARTICLE 21

NATURAL GAS

21.1



Provisions common to Associated and Non-Associated Gas

(a)



In the event of a Natural Gas discovery, the Contractor shall engage in

discussions with NOCAL with a view to determining whether the

appraisal and exploitation of said discovery is of a potentially commercial

nature.



(b)



In addition, the Parties shall jointly evaluate the possible outlets for the

Natural Gas, both on the local market and for export, together with the

necessary means for its marketing, and they shall consider the possibility

of a joint marketing of their shares of production in the event the Natural

Gas discovery would not otherwise be commercially exploitable.



(c)



Following completion of appraisal work, in the event the Parties should

jointly decide that the exploitation of that discovery is justified to supply

the local market, or in the event the Contractor should undertake to

develop and produce that Natural Gas for export, the Contractor shall

submit prior to the expiration of the appraisal period an application for an

exclusive exploitation authorization which NOCAL will grant under the

terms provided by Article 12.1.



(d)



The Contractor shall have the right to dispose of its share of production of

Natural Gas, in accordance with the provisions of this Contract. It shall

also have the right to proceed with the separation of liquids from all

Natural Gas produced, and to transport, store as well as sell on the local



71



market or for export its share of liquid Petroleum so separated which will

be considered as Crude Oil for the purposes of their sharing between

NOCAL and the Contractor under Article 16.

(e)



21.2



In order to encourage the exploitation of Natural Gas, NOCAL and the

Contractor undertake to negotiate in good faith with a view to reaching

agreement on terms for the commercialization of Natural Gas determined

to be present in potentially commercial quantities. NOCAL shall consult

with the Ministry of Finance and the Ministry of Justice regarding any

revised terms for Natural Gas development. Any agreement regarding the

terms for the commercialization of Natural Gas shall take into account the

legitimate interest of the State as the resource owner.



Non-Associated Natural Gas

(a)



(b)



Pursuant to Article 11, if the Contractor has applied for and been granted

an exclusive appraisal period for a Non-Associated Natural Gas discovery,

then within the first ninety (90) days of the initial appraisal period

NOCAL and the Contractor shall establish a consultative committee (“Gas

Committee”) which shall have the following responsibilities:

(i)



to evaluate the possible outlets for Non-Associated Natural Gas,

both on the local market and for export, together with the

necessary means for its marketing;



(ii)



to evaluate the merits of an integrated value chain approach to

Natural Gas commercialization;



(iii)



to determine whether joint marketing of their shares of NonAssociated Natural Gas production may be justified or if marketing

of individual shares should be implemented;



(iv)



to define the methodology for calculating the Natural Gas Market

Price in accordance with Article 21.4(a)(ii);



(v)



to ensure the coordination of the Natural Gas project value chain;

and



(vi)



to facilitate the project’s evaluation and implementation.



Governance of the Gas Committee shall be conducted using the same

principles in Article 5 that govern the Joint Operating Committee, except

that the Contractor shall appoint the permanent chairperson of the Gas

Committee.



72



(c)



If, despite their reasonable endeavors during the initial appraisal period,

the Gas Committee is unable to define a commercially viable market for

the exploitation of the Non-Associated Natural Gas discovery, the

Contractor may, prior to the expiry of the term of the exclusive appraisal

authorization, request a five (5) year extension of the exclusive appraisal

authorization for the Appraisal Perimeter of the Non-Associated Natural

Gas discovery and NOCAL will not unreasonably withhold its approval

for said extension.



(d)



If the Contractor is of the view that the Non-Associated Gas Discovery in

question is non-commercial as a standalone development but can

demonstrate that there is sufficient prospectivity in the region to support a

combined development of current discovered reserves and future

exploration prospects, the Contractor may request a further three (3) year

extension of the exclusive appraisal authorization for the Appraisal

Perimeter of the Non-Associated Natural Gas discovery and NOCAL will

not unreasonably withhold its approval for said further extension.



(e)



If the Contractor does not timely apply for an exclusive appraisal

authorization for appraisal of the Non-Associated Natural Gas discovery

concerned, NOCAL may require the Contractor to surrender its rights to

all Non-Associated Natural Gas which could be produced from said

discovery, with respect to the area encompassing said discovery.



(f)



Following completion of appraisal work for the Non-Associated Natural

Gas discovery, in the event the Parties should jointly decide that the

exploitation of the Non-Associated Natural Gas discovery is justified, the

Contractor shall submit an application for an exclusive exploitation

authorization which NOCAL will grant under the terms provided by

Article 12.1.



(g)



So long as the Contractor is in compliance with applicable Law and the

obligations under this Contract, the Contractor shall then have the right

and obligation to proceed with the development and production of that

Natural Gas in accordance with the approved development and production

plan contemplated by Article 11.3 and the provisions of this Contract

applicable to Crude Oil shall apply, mutatis mutandis, to Natural Gas,

unless otherwise specifically provided.



(h)



However, if the Contractor, after completion of appraisal works, fails

within twenty-four (24) months thereafter to declare the Non-Associated

Natural Gas discovery to be commercial and does not timely submit a

development and production plan, NOCAL may by Notice to the

Contractor terminate the Contractor’s rights to all Non-Associated Natural



73



Gas which could be produced from said discovery, with respect to the area

encompassing said discovery. The Contractor shall have one hundred and

eighty (180) days from the date of receipt of said Notice from NOCAL to

remove its property and equipment from the area encompassing such

discovery, provided that if the Contractor is also appraising or developing

a Crude Oil discovery in said area, the Contractor shall make

arrangements (reasonably satisfactory to NOCAL) to ensure that a third

party would have sufficient access to the area to appraise and develop such

Non-Associated Natural Gas discovery provided such operations do not

affect or prejudice in any material way the Contractor’s operations to

appraise or develop its Crude Oil discovery.

In either case, the Contractor shall forfeit its rights to all Non-Associated

Natural Gas which could be produced from said discovery, and subject to

the priority rights of any Crude Oil operations as aforesaid, NOCAL may

then carry out, or cause to be carried out, all the appraisal, development,

production, processing, transportation and marketing work relating to that

discovery, without any compensation for the Contractor.

21.3



Associated Natural Gas

(a)



In the event of a commercial discovery of Crude Oil, the Contractor shall

inform NOCAL if it considers that the production of Associated Natural

Gas is likely to exceed the quantities necessary for the requirements of the

Petroleum Operations related to the production of Crude Oil (including

reinjection operations and field or platform use), and if it considers that

such excess is capable of being produced in commercial quantities. In the

event the Contractor shall have informed NOCAL of such an excess, the

Parties shall jointly evaluate the possible outlets for that excess Associated

Natural Gas, both on the local market and for export (including the

possibility of joint marketing), together with the means necessary for its

marketing.

If the Parties agree that the development of the excess Associated Natural

Gas is justified, or in the event the Contractor wishes to develop and

produce that excess Associated Natural Gas, the Contractor shall indicate

in the development and production plan referred to in Article 11.3(c) the

additional facilities necessary for the development and exploitation of that

excess and estimate the costs related thereto.

The Contractor shall then have the right to proceed with the development

and production of that excess in accordance with the development and

production plan approved by NOCAL under the terms provided by Article

11.3(f), and the provisions of the Contract applicable to Crude Oil shall



74



apply, mutatis mutandis, to the excess of Natural Gas, unless otherwise

specifically provided by this Article 21.

A similar procedure shall be applicable if the sale or marketing of

Associated Natural Gas is decided during the exploitation of a Field.

(b)



After NOCAL and the Contractor have decided that the development of

excess Associated Natural Gas is justified pursuant to Article 21.3(a), if

the Contractor does not submit a development and production plan

providing for the development and production thereof or if the Contractor

does not wish to participate in the development of excess Associated

Natural Gas and therefore there has been no decision that the development

of excess Associated Natural Gas is justified, and if NOCAL wishes to

utilize such excess Associated Natural Gas, NOCAL shall notify the

Contractor thereof, in which event:

(i)



NOCAL shall present the Contractor with a development and

production plan for such excess Associated Natural Gas. NOCAL

shall use its best efforts to take into consideration any documented

concerns of the Contractor regarding the technical feasibility of

simultaneous operations or any additional costs to be incurred by

the Contractor thereto, further subject to the requirement that such

work or the operation of such facilities by NOCAL will not

prejudicially affect (other than on a short term temporary basis

attributable to the construction or placing of such facilities) the

production, lifting and transportation of Crude Oil by the

Contractor. If the Contractor has any concerns regarding such plan,

NOCAL and the Contractor shall work together in good faith to

resolve any outstanding concerns regarding the technical feasibility

and risks of simultaneous operations and the additional costs to be

incurred by the Contractor;



(ii)



NOCAL and the Contractor may elect to convene the Gas

Committee in order to facilitate the production of Associated

Natural Gas by NOCAL;



(iii)



the Contractor shall make available to NOCAL free of charge at

the Crude Oil and Natural Gas separation facilities all or part of the

excess Associated Natural Gas that NOCAL wishes to lift;



(iv)



NOCAL shall be responsible for all the costs for the gathering,

processing, compressing and transporting of the excess Associated

Natural Gas from the Contractor’s above mentioned separation



75



facilities, and shall bear any additional costs related thereto

separate to the provisions agreed to in this Contract; and

(v)



(c)



21.4



the design, placement and construction of NOCAL’s facilities

referred to above, together with the lifting of that excess by

NOCAL, shall be carried out in accordance with Good

International Petroleum Industry Practice, subject to the

requirement that such work or the operation of such facilities will

not prejudicially affect (other than on a short term temporary basis

attributable to the construction or placing of such facilities) the

production, lifting and transportation of Crude Oil by the

Contractor.



Any excess of Associated Natural Gas which is not utilized under Article

21.3(a) and Article 21.3(b) shall be reinjected by the Contractor. However,

the Contractor shall have the right to flare said gas in accordance with

Good International Petroleum Industry Practice, provided that the

Contractor furnishes NOCAL with a report demonstrating that said gas

cannot be economically utilized by means of reinjection to improve the

rate of recovery of Crude Oil pursuant to the provisions of Article 15.6.

NOCAL’s approval is required for said flaring, which approval shall not

be unreasonably withheld. Flaring of gas shall be permitted for operational

reasons only if the Contractor reasonably demonstrates that the failure to

do so would prejudicially affect the production, lifting and transportation

of Crude Oil.



Natural Gas Market Price and Sales

(a)



For the purposes of this Contract, “Natural Gas Market Price”,

expressed in Dollars per million BTU, shall be agreed by the Gas

Committee as part of the preparation of the development and production

plan for a Field, provided that if at the relevant time no Gas Committee

has been formed, references to the "Gas Committee" in this Article 21.4

shall be deemed to refer to the JOC.

(i)



With respect to Natural Gas export sales to Arm’s Length

purchasers, the Natural Gas Market Price shall be equal to the price

obtained by the Contractor for quantities of Natural Gas sold to

such purchasers in an invoiced transaction.



(ii)



With respect to Natural Gas sales transactions that are non-Arm’s

Length, including all domestic sales, the Natural Gas Market Price

shall be determined using the following considerations:



76



(i)



publicly available information regarding international

market prices of natural gas similar in quality to the gas to

be valued;



(ii)



the market destination of the Natural Gas;



(iii)



the price of alternative Natural Gas at the final destination;



(iv)



ancillary costs required to produce and market gas, such as

gathering, treating or processing costs, distribution costs or

taxes;



(v)



an assumption of sound marketing practices;



(vi)



an assumption of efficient operations;



(vii)



provision for an economic return commensurate with that

of international gas development projects; and



(viii) any other relevant considerations.

(iii)



(b)



At the request of one or more of the Parties, the formula used to

determine the Natural Gas Market Price may be reviewed by the

Gas Committee one (1) year prior to the commencement of

Commercial Production and every five (5) years after the

commencement of Commercial Production. In the event the Gas

Committee cannot reach agreement within one hundred and twenty

(120) days of the initiation of said price review, the disagreement

shall be resolved by Expert Determination in accordance with the

provisions of Article 31.9.



As provided in Article 16.1, the Contractor shall market NOCAL’s

allocation of Total Production of Natural Gas, except where provided

otherwise pursuant to Article 16.7 or Article 21.3(b). At least one hundred

and eighty days (180) days prior to the start of Commercial Production,

the Contractor shall provide all Parties with a model Gas Sales and

Purchase Agreement (GSPA) which shall be used as the template for a

mutually agreed GSPA covering all such sales of Natural Gas. The GSPA

shall be mutually agreed by the Parties. The GSPA shall contain contract

terms for sales of Natural Gas, including the monthly invoicing and

remittance process, an invoice review and dispute procedure, and a

settlement provision to periodically “true-up” any overpayments or

underpayments to NOCAL or the State and adjustments to the Petroleum

Cost Account.



77



(c)



Payments under Article 16.8 and Article 17.5 adjustments to the

Petroleum Cost Account shall be made using the Natural Gas Market Price.

Whenever a re-determination of the Natural Gas Market Price has been

completed pursuant to Article 21.4(a)(iii), the revised Natural Gas Market

Price shall be used for future transactions.



ARTICLE 22

FOREIGN EXCHANGE CONTROL

22.1



The Contractor shall comply with the foreign exchange control regulations,

subject to the provisions of this Article.



22.2



The Contractor shall have the right to retain abroad all currencies arising from

sales of all Petroleum to which it is entitled under this Contract, or from

assignments, as well as equity, incomes from loans and more generally, all assets

acquired abroad by it, and to freely dispose of such foreign currencies or assets to

the extent that they may exceed its requirements for its operations in Liberia.



22.3



No restriction shall be exercised on importation by the Contractor of funds

intended for the performance of the Petroleum Operations.



22.4



For the purpose of facilitating transactions in connection with the performance of

Petroleum Operations and in furtherance of the performance of its obligations

under this Contract, the Contractor shall have the right with respect to transactions

relating to Petroleum Operations to purchase currencies of Liberia with foreign

currencies, and freely exchange into foreign currencies of its election any funds

held by it in Liberia in excess of its local requirements at exchange rates which if

directly or indirectly fixed by the State shall not be less favorable than those

generally applicable to any other buyer or seller of foreign currencies.



22.5



The Contractor shall have the right to pay for services and assets for Petroleum

Operations sourced from outside Liberia in foreign currency from accounts

outside of Liberia.



78



ARTICLE 23

APPLICABLE LAW

23.1



Except as explicitly provided in this Contract, the Contractor shall be subject to

the Laws of the Republic of Liberia as in effect from time to time.



23.2



This Contract and the rights, obligations and duties of the Parties hereunder shall

be governed by and construed and interpreted in accordance with the Laws of the

Republic of Liberia.



ARTICLE 24

MONETARY UNIT

24.1



The registers and accounting books relating to this Contract shall be maintained

and recorded in Dollars. Said registers and accounting books shall be used to

determine the Petroleum Costs, gross income, exploitation costs and net profits

for the purpose of the preparation of the Contractor’s tax return; they shall contain,

inter alia, the Contractor’s accounts showing the sales of Petroleum under this

Contract.



24.2



Whenever it is necessary to convert into Dollars expenses and incomes expressed

in another currency, the exchange rates to be used shall be equal to the arithmetic

average of the daily closing rates for the purchase and sale of said currency during

the month when the expenses were paid and the income received.



24.3



The registers and accounting books relating to this Contract shall be supported by

detailed documents with respect to receipts and Petroleum Costs.



ARTICLE 25

ACCOUNTING METHOD AND AUDITS

25.1



Each Person participating in the Contractor shall have all of its financial

statements for each Calendar Year audited in accordance with international

accounting and auditing standards by an internationally recognized independent

auditor to be appointed by the Contractor. The audited financial statements for

each such Person shall be delivered to NOCAL within one hundred and eighty

(180) days after the end of each Calendar Year.



79



25.2



Insofar as a charge from any of its Affiliates is included as a Petroleum Cost

under this Contract or is otherwise relevant to the determination of the taxable

income of the Contractor, each Person Participating in the Contractor shall make

available to NOCAL the results of audits carried out in accordance with

international accounting and auditing standards by an internationally recognized

independent auditor of the books and records of each such Affiliate in relation to

the work performed under this Contract, the costs incurred, the allocation of costs,

and the quantity and value of all Petroleum produced and saved from the

Delimited Area and not used in Petroleum Operations, in order to verify the

accuracy of the Contractor’s books and records and compliance with the terms of

this Contract. An audit report from an accredited international auditor that such

Affiliate’s cost excludes any element of profit and any duplication of costs and

that its profit and cost allocation principles are consistent in application to all of

its activities shall be sufficient to fulfill this requirement. All costs of audit

pursuant to this Article 25.2 that are requested by NOCAL and would not

otherwise be incurred shall be Petroleum Costs.



25.3



The Contractor shall maintain its accounts in accordance with the regulations in

force in Liberia and with the provisions of the accounting procedure set out in

Annex II attached hereto forming an integral part of this Contract. The accounts

shall be maintained for each Calendar Year in respect of Petroleum Operations,

enabling in particular the establishment of a profit and loss account as well as a

balance sheet showing both the results of said Petroleum Operations and the asset

and liability items allocated or related thereto. The Contractor must maintain all

books, records, and documents maintained under this Article and make the

aforesaid available for inspection in accordance with the terms of this Article 25

until the later of:



25.4



(a)



three (3) years after the termination of each Calendar Year;



(b)



if any cost or amount is under dispute, the time at which that dispute has

been resolved; and



(c)



such longer period as may be legally required.



The Contractor shall keep the registers and accounting books referred to in Article

24.1 at the location at which the Contractor has established regional or

international group accounting operations from time to time. The Contractor shall

maintain copies of such registers and accounting books in Liberia after the

Operator has established a local office in accordance with the provisions of

Article 1.3(d).

At any time, with sixty (60) days’ Notice to the Contractor, NOCAL or the

Ministry of Finance, at its sole expense except as provided in this Article 25.4 and



80



in Article 25.5, may, acting in accordance with international accounting and

auditing standards and through an internationally recognized independent auditor,

cause an independent financial audit or review of the books and records of any

Person participating in the Contractor (with respect to its interest in the

Contractor) or of the Contractor. The Contractor or such Person will cooperate to

provide copies of the information, books and records needed to complete the

review or audit.

If NOCAL or the Ministry of Finance nonetheless determine it necessary for any

part of such audit to be performed outside of Liberia, the cost of associated travel

will be borne by the State except to the extent that the Contractor or such Person

is unable to provide or procure the provision of the information, books or records

needed to complete the audit in Liberia, in which case the Contractor or such

Person, as the case may be, shall bear both the reasonable travel cost of a

reasonable number of auditors to travel to the place where such information,

books and records may be obtained and their accommodation costs for a

reasonable amount of time necessary to complete their review, and such costs

shall not be included in Petroleum Costs. Any request for the inspection of

information, books or records outside of Liberia shall be reasonable and the

justification thereof well-documented.

Except as expressly provided in this Article 25.4, costs incurred by the Contractor

under this Article 25.4 are Petroleum Costs.

25.5



NOCAL and the Ministry of Finance shall have a period of three (3) years

following the end of each Calendar Year to carry out those inspections or audits

relating to said year and may submit its objections to the Contractor for any

contradictions or errors found during such inspection or audits. If any such

inspection or audit is finally determined to have overstated Petroleum Costs or

understated revenue derived from Total Production by more than three percent

(3%), all costs of the inspection or audit shall be borne or reimbursed by the

Contractor and no portion of such costs of inspection or audit may be included in

Petroleum Costs. Appropriate adjustments in payments and cumulative

recoverable costs shall be made to adjust for all misstatements identified as a

result of any such inspection or audit.

Should NOCAL and the Ministry of Finance fail to make any claim within the

above-mentioned period of three (3) years, no further objection or claim shall be

made by either for the Calendar Year concerned, provided however, that if in a

subsequent period an issue or error is identified that indicates fraud or willful

misconduct to have occurred in relation to any period, NOCAL shall have the

right to re-examine reports and statements otherwise considered final or not

previously audited.



81



ARTICLE 26

IMPORT AND EXPORT

26.1



The Contractor and its contractors and subcontractors shall be exempt from all

duties, taxes and fees on imports and exports as provided under Article 17.4(a).

(a)



The Contractor shall have the right to import into Liberia, in its own name

or on behalf of its contractors and subcontractors, all the technical

equipment, materials, machinery and tools, goods and supplies necessary

for the proper conduct and achievement of the Petroleum Operations

according to Good International Petroleum Industry Practice. Such

imports include but are not limited to, drilling, exploration, development,

production, transportation, sales and marketing, equipment, pipelines,

tanks, geological and geophysical tools, boats, ships, launches, drilling

barges, ships and platforms, production platforms, civil engineering and

telecommunication equipment, power plants and all related equipment,

aircraft, automotive equipment and other vehicles, instruments, tools,

spare parts, alloys and additives, camping equipment, protective clothing

and equipment, medical, surgical and sanitary equipment, supplies and

instruments necessary for the installation and operation of hospitals and

dispensaries, documentation equipment, construction materials of all types,

lumber, office furniture and equipment, automobiles, explosives,

chemicals, fuels, ship supplies, pharmaceutical products, and medicines.



(b)



The Contractor shall have the right to import into Liberia, in its own name

or on behalf of its contractors or subcontractors, the furniture, clothing,

household appliances and all personal effects for all the foreign employees

and their families assigned to work in Liberia for the Contractor or its

contractors or subcontractors.



(c)



However, subject to Article 29.9, the Contractor, its agents, contractors

and subcontractors undertake not to proceed with the imports mentioned in

Article 26.1(a) insofar as such items are available in Liberia under

equivalent conditions of quantity, quality, price, delivery and terms of

payment, unless specific requirements or technical emergencies are

presented by the Contractor. For purposes of this Article 26.1(c), an

imported item shall be taken as an entire shipment and not considered on a

piece by piece basis where the purpose of the imported item is to function

as a unit.



(d)



The Contractor, its agents, contractors and subcontractors shall have the

right to re-export from Liberia any items imported under Article 26.1(a)

and (b) that are no longer necessary for the Petroleum Operations unless



82



those items have become the property of the State under the provisions of

Article 20.

(e)



In the event of a duly justified emergency, the equipment, materials, tools

and machinery, goods and supplies will be placed at the disposal of the

users as soon as they arrive in Liberia and the administrative

regularization relating to their admission will be made later and as soon as

possible.



26.2



The Contractor, its agents, contractors and subcontractors shall, provided that they

inform the Ministry of Finance in advance of their intent to sell and subject to the

provisions of Article 20, have the right to sell in Liberia, all equipment, materials,

machinery and tools, goods and supplies which they have imported when they are

considered as surplus and no longer necessary for the Petroleum Operations,

except that they may not sell explosives, gasoline or diesel within Liberia to third

parties without the consent of the Ministry of Finance after consulting the

Ministry of Lands, Mines and Energy. If any such imported equipment, materials,

machinery and tools, goods and supplies were exempted in all or part from taxes

and duties on import into Liberia, then such items are deemed imported on the

date of sale and the seller must upon their sale pay to the general revenue account

of the State those taxes and duties payable on such items under applicable Law in

effect on the date of sale calculated on the actual sales price on the date of sale

and fulfill all formalities required by Law in connection with such sales. For

purposes of determining the applicable taxes and duties, the sales price in regard

to sales to Affiliates shall be deemed to be the Fair Market Value of the item.



26.3



During the term of this Contract, the Contractor, its customers and their carriers

shall have the right to export freely at the export point selected for that purpose,

free of all duties and taxes and at any time, the portion of Petroleum to which the

Contractor is entitled in accordance with the provisions of this Contract, after

deduction of all deliveries made to the State.



ARTICLE 27

DISPOSAL OF PRODUCTION

27.1



Each Calendar Year, up to a total of ten percent (10%) of the share of Crude Oil

production to which the Contractor is entitled, shall be sold to NOCAL by the

Contractor for the purpose of satisfying the needs of the domestic market of

Liberia. Such contribution of the Contractor shall be in proportion of its share of

production to the total Crude Oil production in Liberia.



83



The quantity of Crude Oil the Contractor shall be obligated to sell to NOCAL

shall be notified to it by NOCAL at least three (3) months prior to the beginning

of each Calendar Quarter.

27.2



The price of the Crude Oil sold to NOCAL under Article 27.1 for the needs of the

domestic market shall be the Market Price for the month in which the sale

occurred as determined pursuant to Article 18.

That Crude Oil price shall be payable to the Contractor in Dollars not later than

thirty (30) days after receipt of the invoice unless otherwise agreed between

NOCAL and the Contractor. The provisions of 18.6 shall be applicable if

payment is due under this Article 27.2 prior to the final determination of the

Market Price for such sale under Article 18.



27.3



The transfer of title to, and risk of, the share of Petroleum production to which

NOCAL and the Persons participating in the Contractor are entitled shall be made

at the Delivery Point. The Contractor shall insure against risk of loss in regard to

shipments of any Petroleum sold for the account of NOCAL or the State, other

than when such risk of loss passes to the purchaser at the Delivery Point and such

insurance costs shall constitute Petroleum Costs.



27.4



Except where NOCAL has elected or is deemed to have elected to receive cash as

provided in Articles 16.7 and 16.8, NOCAL and each of the Persons participating

in the Contractor shall have the right and obligation to dispose of and lift the share

of Petroleum to which it is entitled under this Contract. Such share shall be lifted

on as regular a basis as possible, it being understood that NOCAL and each of the

Persons participating in the Contractor, within reasonable limits, will be

authorized to lift more (overlift) or less (underlift) than its share of Petroleum

produced and unlifted by the lifting day to the extent that such overlift or underlift

does not infringe on the rights of the other Party and is compatible with the Field

production rate and the storage capacity of the facilities.

In the establishment of the sequence of liftings, priority will be given to

whichever of NOCAL and the Persons participating in the Contractor has the

largest share of produced and unlifted quantity of Petroleum at a given time. At

least ninety (90) days prior to the start of Commercial Production, NOCAL and

the Persons participating in the Contractor shall meet to establish a lifting

program on the basis of the principles above-described and taking into account the

wishes of NOCAL and the Persons participating in the Contractor as regards to

the dates and quantities of their liftings, provided that those wishes are compatible

with said principles. Such lifting program shall include provisions permitting

periodic adjustment compatible with said principles to reflect changing

circumstances.



84



ARTICLE 28

PROTECTION OF RIGHTS

28.1



The Contractor shall perform its duties and obligations under this Contract with

that degree of skill, diligence and prudence and foresight which would reasonably

and ordinarily be expected from a skilled and experienced Person engaged in the

same type of activities under the same or similar circumstances and conditions.



28.2



NOCAL shall take all reasonable steps requested by the Contractor to assist,

facilitate and expedite the implementation by the Contractor of the objectives of

this Contract. The State shall take all reasonable steps to protect the property and

operations of the Contractor, its employees and agents in the territory of Liberia.



28.3



If the Contractor has acquired (with the assistance of the State when requested

under Article 9) reasonable buffer zones around areas that will contain hazardous

materials or in which the Contractor will carry out hazardous activities, then at the

request of the Contractor, the State shall prohibit the construction of new

structures or the implementation of new uses in such zones including

development operations in relation to Natural Gas by NOCAL and/or third parties

pursuant to Article 21. If as a result of changed circumstances, greater buffer

zones become appropriate, the State will assist the Contractor in providing for

such zones when requested under Article 9. The State shall also take all

reasonable precautions to prohibit anchoring in the vicinity of submerged

pipelines at river passages, and to prohibit any hindrance to the use of any other

installation necessary for the Petroleum Operations whether on land or offshore.



28.4



The Contractor shall take out and cause to be taken out by its contractors and

subcontractors, in respect of the Petroleum Operations, all insurances of the type

and for such amounts customarily carried in accordance with Good International

Petroleum Industry Practice, including without limitation, third party liability

insurance and insurances to cover damage to property, facilities, equipment and

materials, without prejudice to such insurances which would be required under

Law. Subject to the Contract and Law, the Contractor will be provided the

opportunity to self-insure or underwrite any or all of the insurance required by

this Article 28.4 through one or more insurance Affiliates of Persons participating

in the Contractor or, if such direct insurance is not permitted, through reinsurance

policies to such Affiliate insurance companies provided that the security and

creditworthiness of such self-insurance or insurance arrangements have been

disclosed to and are reasonably satisfactory to NOCAL. The Contractor shall

furnish NOCAL with evidence of such coverage before Petroleum Operations

begin and thereafter at least annually. The premiums paid for such insurance are

recoverable and shall be treated as Petroleum Costs.



85



ARTICLE 29

PERSONNEL AND TRAINING

29.1



The Contractor shall employ Liberian citizens in the performance of Petroleum

Operations in Liberia whenever suitably qualified and available for employment.

In furtherance of this requirement:

(a)



the Contractor shall hire only citizens of Liberia for unskilled labor

positions within Liberia;



(b)



the Contractor shall provide skill training and employment opportunities

to Liberians for semi-skilled and skilled labor positions; and



(c)



the Contractor shall give preference to the employment of competent and

suitably qualified citizens of Liberia as managers, technicians, engineers,

accountants, geologists, geophysicists, scientists, chemists, drillers,

foremen, mechanics, skilled workers, secretaries and executive employees

as and when such positions become available unless and to the extent that

such competent and suitably qualified citizens are not available for such

positions, in which case non-Liberians may be hired for such positions.



Employment practices of the Contractor, including number of working hours,

working conditions, salaries and any other matters relating to employment

conditions shall conform to the Law. The Contractor will require its contractors or

subcontractors to comply with this Article 29.1 with respect to their own

employment practices within Liberia.

29.2



Nothing in this Contract shall bar the Contractor from employing its own key

personnel in appropriate positions.



29.3



Upon commencement of the Petroleum Operations, the Contractor shall provide

funding for training programs and for that purpose the Contractor shall devote an

annual training budget of:

(a)



One hundred thousand Dollars (US$100,000) during each year of the

exploration and appraisal period; and



(b)



Seven hundred and fifty thousand Dollars (US$750,000) during each year

of the exploitation period.



Additionally and subject to appropriate safeguards and confirmations as to the

eventual destination and recipient of such funding, the Contractor shall make an

annual contribution during the term of the Contract of one hundred and fifty



86



thousand Dollars (US$150,000) to the University of Liberia for the enhancement

of programs in geology, mining engineering and environmental studies.

29.4



29.5



Upon commencement of the Petroleum Operations, the Contractor shall provide

funding for social and welfare programs in Liberia and for that purpose the

Contractor shall devote an annual social and welfare budget of:

(a)



One hundred and fifty thousand Dollars (US$150,000) during each year of

the exploration and appraisal period; and



(b)



Five hundred thousand Dollars (US$500,000) during each year of the

exploitation period.



Pursuant to the Revenue Code, all funds referred to in Articles 29.3 and 29.4,

except for the amount payable to the University of Liberia shall be paid into the

Consolidated Fund and shall be held in separate training and education subaccounts established for the purpose of holding the contributions made under this

Contract. The Contractor, the Ministry of Finance and NOCAL shall agree on the

standards for release of such funds and no such funds may be disbursed from such

account until such standards are agreed and made public. Subject to the terms of

Article 29.3, the annual contribution to the University of Liberia shall be paid

directly to such institution. In addition, the Contractor may request that the

University of Liberia demonstrate at least annually that the funds contributed for

the prior calendar year have been used for the purpose stated in Article 29.3. If the

University is unable to do so for two (2) consecutive Calendar Years, the

Contractor may thereafter add such funds to the contributions required under

clauses (a) and (b) of Article 29.3.

The training requirements shall be developed by NOCAL and the Contractor with

the understanding that NOCAL shall provide seventy percent (70%) of the

training candidates and the Contractor shall provide thirty percent (30%) of the

candidates for approval by NOCAL and the Contractor.

The training and social and welfare programs shall be mutually agreed by

NOCAL and the Contractor.

The training and social and welfare expenses borne by the Contractor shall be

included in recoverable Petroleum Costs. Funding for the training and social and

welfare programs shall be paid within thirty (30) days of the Trigger Event Date.

Thereafter, payments shall be made within thirty (30) days of each anniversary of

the Effective Date.



29.6



The amounts payable pursuant to Article 29.3 (a), 29.4 (a) and the exploration and

appraisal phase contributions to the University of Liberia under Article 29.3 shall



87



be adjusted annually for inflation for each payment after the initial payment in

proportion to the change in Deflator over the year ending on the last day of the

Calendar Quarter immediately prior to the due date of each payment.

29.7



Except to the extent any such Person may be disqualified by applicable Law, the

State shall promptly furnish to each officer, director, employee and consultant of

the Contractor, or of its Affiliates, contractors and subcontractors, who is not a

citizen of Liberia, and to the spouse and minor children of each such Person, all

documents and visas necessary to enable such Person to enter and to leave, or to

work and travel within, the territory of Liberia for the purpose of assisting in the

performance of the Petroleum Operations.

At the request of the Contractor, the State shall facilitate and as appropriate waive

any immigration formalities with the Immigration Bureau, at the points of entry

into and exit from Liberia, in respect of the Contractor’s employees, contractors,

subcontractors and agents, and their families, all without undue delays.



29.8



All the employees required for the conduct of the Petroleum Operations shall be

under the Contractor’s authority or that of its contractors, subcontractors and

agents, in their capacity as employers. Subject to Article 29.1, their work, number

of working hours, salaries and any other matters relating to their employment

conditions shall be determined by the Contractor or its contractors, subcontractors

and agents. The Contractor is a private business enterprise and contracts awarded

by the Contractor or its subcontractors are not subject to applicable Law relating

to procurement by ministries, agencies and departments of the Government of

Liberia, such as the Amendment and Restatement of the Public Procurement and

Concessions Act, 2005 and any similar successor legislation.



29.9



The Contractor and its subcontractors shall be obligated to give preference to

enterprises and goods provided by Liberian citizens or business entities

Controlled by Liberian citizens, if conditions of price, quality, delivery time and

terms of payment are similar to those from other countries or from non-Liberian

sources. When purchasing goods and services related to Petroleum Operations,

the Contractor must organize its procurement practices to give meaningful

opportunities to bid for contracts to those entitled to preference pursuant to this

Article 29.9.



29.10 Within no more than one hundred and eighty (180) days following the Trigger

Event Date, the Contractor shall provide NOCAL a project linkages plan (the

“Exploration Period Project Linkages Plan”) which:

(a)



identifies the potential for local suppliers, contractors and service

providers to provide goods and services to Petroleum Operations;



88



(b)



identifies key interventions to grow Liberian services to the oil and gas

sector;



(c)



sets out a local project purchase plan complying with the requirements of

this Article 29 with clear milestones identified in terms of an increasing

percentage of local purchases of goods and services, and providing for

bidding preferences for local suppliers, contractors and service providers

(provided that such Persons offer quality, terms, delivery, service, quantity

and price at least comparable to those obtainable from other sources); and



(d)



sets forth reasonable goals within the context of such plan, provides

procedures for regular monitoring and reporting of the Contractor’s

performance against such plan, and establishes reasonable economic

sanctions for failures to achieve such goals.



The Contractor shall update the Exploration Period Project Linkages Plan for

appraisal activities.

29.11 Concurrently with the filing of each development and production plan under

Article 11.3, the Contractor shall provide NOCAL with a project linkages plan or

an updated project linkages plan, as the case may be (The “Development and

Production Period Project Linkages Plan”) which:

(a)



identifies the potential for local suppliers, contractors and service

providers to provide goods and services to Petroleum Operations;



(b)



identifies key interventions to grow Liberian services to the oil and gas

sector;



(c)



sets out a project local purchase plan complying with the requirements of

this Article 29 with clear milestones identified in terms of an increasing

percentage of local purchases of goods and services, and providing for

bidding preferences for local suppliers, contractors and service providers

(provided that such Persons offer quality, terms, delivery, service, quantity

and price at least comparable to those obtainable from other sources);



(d)



sets out plans to train Liberian citizens (through, among other things,

internal training and counterpart understudy programs) in the full range of

managerial and technical activities involved in the performance by the

Contractor of its obligations under this Contract, including without

limitation, engineering design, information technology, petroleum geology

technology (particularly relating to the obtaining, processing and

interpretation of seismic and other geological data), production facility



89



operations and maintenance,

management; and

(e)



contract



negotiation



and



contract



sets forth reasonable goals within the context of such plan, provides

procedures for regular monitoring and reporting of the Contractor’s

performance against such plan, and establishes reasonable economic

sanctions for failures to achieve such goals.



29.12 The linkage plans required by Article 29.10 and 29.11 shall be subject to the

review and approval of NOCAL, which may be given only after consultation with

the Ministry of Labor but which shall not be unreasonably withheld.

29.13 The Contractor shall prepare and submit annually to NOCAL by the end of

February each year, commencing in February 2014, a report setting forth:

(a)



the manner in which the Contractor has complied with the requirements of

this Article 29 (other than those relating to the linkages plans required by

this Article); and



(b)



a statement specifying the number of Operator’s employees and workers,

broken down by employment category, their qualification and their

nationality, together with a report on the medical care and training

provided to them.



At the time that the reporting requirements are to be established for a linkage plan,

NOCAL and the Contractor shall seek to integrate the report requirements under

this Article 29.13 with any annual reports required under such linkage plan.

29.14 The Contractor shall cause its major contractors to comply with the requirements

of Article 29.9 and with the linkage plans required by Articles 29.10 and 29.11.

A “major contractor” for the purposes of this Article 29 is a supplier or contractor

or subcontractor who received in any year more than five million Dollars

(US$5,000,000) directly or indirectly from the Contractor for activities related to

Petroleum Operations performed in Liberia in that year.



ARTICLE 30

ACTIVITY REPORTS IN RESPECT OF

EXCLUSIVE EXPLOITATION AUTHORIZATIONS

30.1



The provisions of Article 8 shall apply, mutatis mutandis, to any exclusive

exploitation authorizations. In addition, the following periodic activity reports



90



shall, inter alia, be furnished in respect of each Field, together with such other

reports as may be reasonably required by NOCAL in regulations generally

applicable to all offshore Petroleum operations:

(a)



daily production reports;



(b)



monthly reports stating the quantities of Petroleum produced and those

sold during the previous month together with information on such sales;



(c)



monthly reports stating monthly allocated Crude Oil and Natural Gas

production volumes at the well level along with the basis for the

allocation;



(d)



half-yearly Field reservoir pressure report.



30.2



Unless NOCAL gives its written consent, the information which NOCAL and the

Contractor agree is confidential information relating to a Field under exploitation,

except statistical data about activity, shall be considered as confidential to the

extent provided in Article 8. The Contractor shall cooperate with the LEITI

initiative whenever appropriate, provided that all sensitive information of the

Contractor of a technical and/or operational nature shall be kept secret and

confidential at all times and shall not be subject to any LEITI disclosure, except

as otherwise provided in Article 8.



30.3



The Contractor shall forthwith notify NOCAL of any material damage whatsoever

caused to its Petroleum Operations or the Fields being developed or exploited

pursuant to such operations, and shall take all necessary steps to terminate the

cause thereof and carry out the necessary repairs.



30.4



From the year of granting an exclusive exploitation authorization, the annual

report referred to in Article 8.2 shall also include the following:

(a)



information on all development and production operations carried out

during the previous Calendar Year, including the quantities of Petroleum

produced and those sold, if any; and



(b)



information on all transportation operations relevant to the determination

of Petroleum Costs or the value of Petroleum production together with the

location of the main facilities built by the Contractor, if any.



91



ARTICLE 31

ARBITRATION AND EXPERT DETERMINATION

31.1



Any dispute, controversy, or claim arising out of, relating to, or in connection

with this Contract, including with respect to the formation, applicability, breach,

termination, validity or enforceability thereof (a “Dispute”), other than a Dispute

that is required to be resolved by Expert Determination as provided in Article 31.9,

shall, if not settled by negotiation as provided in Article 31.2, be finally settled by

arbitration between the State (including NOCAL as appropriate and referred to as

“NOCAL” for the purposes of this Article 31) and the Contractor (together the

“Parties to the Arbitration”) as provided in Articles 31.3 through 31.8, provided

that no Party may submit any Dispute to arbitration unless and until it has

complied with its obligations under Article 31.2.



31.2



Where either NOCAL or the Contractor wish to submit any Dispute to arbitration,

it shall first serve Notice on the other Party to the Arbitration setting forth a

description of the Dispute and requesting that NOCAL and the Contractor meet to

negotiate an amicable settlement. Following any such Notice, the Parties to the

Arbitration shall use reasonable endeavors to reach such a settlement and, without

limiting the generality of the foregoing, representatives of NOCAL and the

Contractor shall meet and attempt in good faith to negotiate a settlement.



31.3



If within three (3) months from the date of Notice of a Dispute requesting

negotiations in accordance with Article 31.2, NOCAL and the Contractor have

not reached settlement, either NOCAL or the Contractor may by Notice to the

other, commence arbitration under this Article 31 with respect to the Dispute

which is the subject of such Notice, whether the meetings provided for in Article

31.2 have occurred or not. Any Dispute concerning the propriety of the

commencement of arbitration shall be settled finally by arbitration pursuant to this

Article 31.



31.4



Any arbitration commenced under this Article 31 shall be conducted in

accordance with the UNCITRAL Arbitration Rules in effect at the Effective Date

except as they may be modified herein or by mutual agreement of the Parties.

The seat of the arbitration shall be in London, England, and the arbitration shall

be conducted in the English language. Unless the Parties to the Arbitration agree

that a Dispute shall be resolved by a single arbitrator, the number of arbitrators

shall be three (3). In the event the Parties to the Arbitration cannot agree on a

third arbitrator, or a party has not appointed its arbitrator, or the Parties to the

Arbitration cannot agree on a single arbitrator and the Parties to the Arbitration

continue to desire a single arbitrator to resolve the dispute, the appointing

authority for such arbitrator shall be the London Court of International Arbitration



92



as provided in Articles Eight (8) to Ten (10) of the UNCITRAL Arbitration Rules

2010, as in effect at the Effective Date. All hearings shall be held in London,

England or in such other location(s) as the Parties to the Arbitration may agree.

The Parties to the Arbitration irrevocably submit to the jurisdiction of the English

courts for the limited purpose of enforcing this Article 31. For the avoidance of

doubt, the arbitrators shall, in accordance with Article 41 of the UNCITRAL

Arbitration Rules, as in effect at the Effective Date, determine appropriate cost

allocation for the arbitration, provided that such costs shall not be Petroleum

Costs.

31.5



The chairman of the arbitral tribunal shall not have the same nationality as any of

the Parties to the Arbitration, and for the purposes of this Article 31.5, the

Contractor shall be deemed to have the nationality of the ultimate controlling

entity of the Operator and of the ultimate controlling entity of each Person

participating in the Contractor that has an interest of twenty percent (20%) or

more in the Contractor. The arbitration award shall be final and binding on the

Parties to the Arbitration. Each Party to the Arbitration agrees to carry out any

award against it without delay and waives its right to any form of recourse based

on grounds other than those contained in the United Nations Convention on the

Recognition and Enforcement of Foreign Arbitral Awards of 1958 insofar as such

waiver can validly be made.



31.6



A Party’s duty to perform any obligation under this Contract that is the subject

matter of a Dispute submitted to arbitration under this Article or any obligation

under this Contract which a Party cannot reasonably be expected to perform

having regard to the commercial circumstances with such a Dispute outstanding

shall be suspended during the arbitration proceedings until a final arbitration

award is made by the arbitral tribunal and all time periods applicable to such

obligations in the Contract shall be extended by the period of the arbitration

proceedings. However, in the aggregate, the duration of the Contract shall not be

extended by more than four (4) years. Any issue between the Parties as to

whether a Party can reasonably be expected to comply with contractual time

limits relating to an obligation under this Contract during the arbitration

proceedings shall be referred to the arbitral tribunal formed for the Dispute to be

dealt with in a final award in respect of the Dispute.



31.7



Each of the State and NOCAL agrees not to make, and hereby irrevocably waives,

in relation to any Dispute, whether relating to acts of a sovereign or governmental

nature or otherwise, all claims of immunity (sovereign or otherwise) by it or on its

behalf from the jurisdiction of, and from the enforcement of any arbitral award

rendered by, an arbitral tribunal constituted pursuant to this Contract as well as all

claims of immunity from the service of process or the jurisdiction of any court in

aid of the jurisdiction of such arbitral tribunal or in connection with the



93



enforcement of any such award. Notwithstanding the foregoing, no award may be

enforced against assets of the State used to maintain national security or for

military or diplomatic purposes. The Contractor must enforce an arbitral award

against the State and/or NOCAL first against the assets of NOCAL, and if such

assets are insufficient to fully satisfy such award or enforcement of the award

against the assets of NOCAL does not take place within a reasonable time, then

the award may also be enforced against the assets of the State, provided that, to

the extent the award is enforced against the State, after the date on which

Commercial Production has been reached under this Contract and all development

expenditures have been recovered by or paid to the Contractor in accordance with

the terms of this Contract, an award may be enforced only against the oil and gas

assets and revenues of the State, including (i) royalties and income taxes paid by

contractors of Liberian oil and gas blocks, (ii) cash in hand and liquid assets

arising from oil and gas revenues, (iii) oil and gas production (iv) oil and gas

infrastructure owned by the State; and (v) State participating interests or equity

holdings in Liberian oil and gas blocks, all of which are within, arise out of or are

under the jurisdiction of the Republic of Liberia.

31.8



All Notices required under this Article 31 shall be given as provided in Article 37.



31.9



Expert Determination

(a)



An Expert is a person appointed in accordance with this Article to resolve

an issue subject to Expert Determination in accordance with this Contract.



(b)



Whenever an issue is subject to Expert Determination, NOCAL and the

Contractor shall agree on the appointment of an independent Expert with

the relevant qualifications and experience for the particular issue to be

resolved by Expert Determination and shall agree on the terms of the

Expert’s appointment.



(c)



If NOCAL and the Contractor are unable to agree on an Expert or the

terms of the Expert’s appointment within twenty (20) days of either

NOCAL or the Contractor serving details of a suggested expert and

proposed terms of appointment on the other, either of them shall then be

entitled to request the International Centre of Expertise of the International

Chamber of Commerce (the “Centre”) to appoint an Expert in accordance

with its Rules of Expertise.



(d)



The Expert is required to prepare a written decision and give Notice

(including a copy) of the decision to NOCAL and the Contractor within a

maximum of thirty (30) days of the matter being referred to the Expert by

NOCAL and the Contractor or such further period as may reasonably be

requested by the Expert and (if more than fifteen (15) days) agreed to by



94



NOCAL and the Contractor. If the Expert is appointed by the Centre

under the Centre’s Rules of Expertise, the time period in the previous

sentence shall run from the establishment of the Expert’s mission in

accordance with such rules.

(e)



If the Expert dies or becomes unwilling or incapable of acting, or does not

deliver the decision within the time required by this Article then:

(i)



if NOCAL and the Contractor cannot agree on the discharge of

such Expert and the appointment of a replacement Expert or if the

original Expert was appointed by the Centre, then either NOCAL

or the Contractor may apply to the Centre to discharge the Expert

(if appointed by the Centre) and to appoint a replacement Expert in

accordance with the Rules of Expertise; and



(ii)



this Article 31.9 shall apply to the new Expert as if such Expert

were the first Expert appointed.



(f)



All matters under this clause must be conducted and the Expert’s decision

shall be written in the English language.



(g)



NOCAL and the Contractor are each entitled to make submissions to the

Expert, including oral submission if the Expert concludes that they will

assist in reaching a determination, and each of them shall timely provide

the Expert with such assistance and documents available to it as the Expert

reasonably requires for the purpose of reaching a decision.



(h)



To the extent not provided for by this Article, the Expert may, in the

exercise of reasonable discretion, determine such other procedures to

assist with the conduct of the determination as the Expert considers just or

appropriate.



(i)



Each of NOCAL and the Contractor shall with reasonable promptness

supply the other with all documents and other information and material

available to it on which it relies in support of its position on the matter to

be determined.



(j)



The Expert shall act as an expert and not as an arbitrator. The Expert’s

written decision on the matters referred to the Expert shall be final and

binding on the Parties in the absence of manifest error or fraud.



(k)



The costs in relation to the reference to the Expert shall be borne by the

Contractor and shall constitute Petroleum Costs.



95



(l)



All matters concerning the process and result of the determination by the

Expert shall be kept confidential among the Parties and the Expert.



(m)



Each of NOCAL and the Contractor shall act reasonably and co-operate to

give effect to the provisions of this Article 31.9 and otherwise do nothing

to hinder or prevent the Expert from reaching a determination.



ARTICLE 32

FORCE MAJEURE

32.1



No delay or default of a Party in performing any of its obligations under this

Contract shall be considered as a breach of this Contract if such delay or default is

caused by a case of Force Majeure.

If in the event of Force Majeure the performance of any of the obligations under

this Contract is delayed, other than an obligation of the Contractor to make

payments to the State, that delay extended by the period of time required to repair

the damage caused during such delay and to resume the Petroleum Operations,

shall be added to the period provided by this Contract for the performance of said

obligation, and the exclusive exploration or exploitation authorizations shall be

extended by that period as regards the area concerned by Force Majeure.

However, the exploitation period shall be extended as a result of a Force Majeure

event only if such event causes the interruption of a material component of

Petroleum Operations during the exploitation period.



32.2



The term “Force Majeure” as used in this Contract shall mean acts of God,

accidents, wars, acts of war, invasions, insurrections, riots, acts of public or

foreign enemies, civil war, hostilities (whether war is declared or not), restrictions

on trade or other activities imposed by any sovereign nation or state, embargoes,

blockades, revolutions, riots, civil commotions, acts of terrorism, sabotage,

nationwide official or unofficial strikes and/or other nationwide industrial, labor

or employer-employee disputes including works to rule and go slows lockouts or

other industrial unrest (if not cured for a period of more than two (2) months),

fires, explosions, earthquakes, tempests, hurricanes, tidal waves, cyclones,

tornados, lightening or any other natural disasters, expropriation of facilities or

goods, ionizing radiations or contamination by radioactivity, radio-active toxic

explosion, chemical or biological contamination, pressure waves caused by

aircraft or other aerial devices travelling at supersonic speeds, epidemics, plagues,

public health emergencies and any similar cause, provided any such cause was not

within the reasonable control of the Party claiming the benefit of force majeure



96



and could not have been avoided or overcome by such Party through the exercise

of due diligence.

32.3



Where a Party considers it is prevented from performing any of its obligations by

the occurrence of Force Majeure, it shall forthwith notify the other Party thereof

by specifying the grounds for establishing Force Majeure, and take all necessary

and useful steps to ensure the normal resumption of the performance of the

concerned obligations upon termination of the event constituting the Force

Majeure.

Obligations other than those affected by Force Majeure shall continue to be

performed in accordance with the provisions of this Contract.



32.4



Notwithstanding Article 32.2, for so long as one or more events of Force Majeure

constituting or arising out of war, act of war, invasion, act of public enemies,

hostilities (whether war is declared or not), revolution, riot, civil commotion, or

acts of terrorism prevent the Contractor from carrying out Petroleum Operations

and provided that such events have been continuing for a period of more than

ninety (90) days, the Contractor shall be excused from the payment of surface

rents or payments due under Article 19.3, 19.4, 29.3 or 29.4 during such period,

and any previous payments of surface rent or such other payments allocated to the

period of stoppage shall be credited to subsequent accruals of surface rent or other

relevant payments.



32.5



Nothing in this Article 32 shall, in and of itself, be construed to require the

Contractor to settle any strike, lockout or other labor or industrial dispute except

as may be required by applicable Law.



ARTICLE 33

TERMINATION

33.1



Termination by the Contractor

The Contractor may (i) during the exploration period, on not less than ninety (90)

days’ prior Notice to NOCAL; or (ii) during the exploitation (development and

production) period, on not less than one hundred and eighty (180) days’ prior

Notice to NOCAL, terminate this Contract, surrender all of its rights in respect of

the then-existing Delimited Area, and be relieved of all of its obligations under

this Contract, except as provided in Article 38.9.



97



33.2



Termination by NOCAL

Subject to the provisions of Article 31, NOCAL shall have the right to terminate

this Contract if any of the following events (hereinafter called “Events of

Default”) shall occur and be continuing:

(a)



Where the Contractor shall fail to make any of the payments described in

this Contract due to NOCAL or the State on the due payment date, and

such default is not cured within thirty (30) days after Notice of such

default by NOCAL to the Contractor or within such longer periods as may

be specified in said Notice; or



(b)



Where the Contractor shall materially fail to comply with its work

commitments and other material conditions in this Contract and such

failure is not cured within ninety (90) days after Notice by NOCAL to the

Contractor or such longer period of time as is reasonably required to

accomplish such cure; or



(c)



Where

(i)



the Operator: (i) enters into any agreement or composition with, or

assignment for the benefit of its creditors generally, or otherwise

seeks the benefit of any law for the reorganization or restructuring

of a debtor to relieve it from or reduce its liabilities to creditors, (ii)

files, or consents by answer or otherwise to the filing against it of a

petition for relief or reorganization or arrangement or any other

petition in bankruptcy, for liquidation or to take advantage of any

bankruptcy, insolvency, reorganization, moratorium or other

similar law of any jurisdiction, (iii) consents to the appointment of

a custodian, receiver, trustee or other officer with similar powers

with respect to it or with respect to any substantial part of its

property, (iv) is adjudicated as insolvent or to be liquidated, or (v)

takes corporate action for the purpose of any of the foregoing; or



(ii)



a court or state authority of competent jurisdiction enters an order

appointing, without consent by Operator, a custodian, receiver,

trustee or other officer with similar powers with respect to it or

with respect to any substantial part of its property, or constituting

an order for relief or approving a petition for relief or

reorganization or any other petition in bankruptcy or for

liquidation or to take advantage of any bankruptcy or insolvency

law of any jurisdiction, or ordering the dissolution, winding-up or

liquidation of the Operator, or any such petition shall be filed



98



against the Operator and such petition shall not be dismissed

within sixty (60) days; or

(iii)



any event occurs with respect to the Operator which under the laws

of any jurisdiction is analogous to any of the events described in

clause (i) or (ii) of this Article 33.2(c), provided that the applicable

grace period, if any, which shall apply shall be the one applicable

to the relevant proceeding which most closely corresponds to the

proceeding described in clause (i) or (ii) of this Article 33.2(c);



and in any such case a new Operator is not appointed in accordance with

the requirements of this Contract within one hundred and eighty (180)

days thereafter; or

(d)



Where the Contractor fails to carry out exploration as required by Article 4,

or ceases exploration work for a period of six (6) consecutive months or

ceases production with respect to all production areas for a period of

twenty four (24) consecutive months, unless such failure or cessation is

consented to by NOCAL or is caused by an event of Force Majeure.

Work includes studies and preparatory work to actual operations.



33.3



If an Event of Default has occurred and is continuing, NOCAL shall be entitled to

give the Contractor and the Ministry of Justice a Notice in respect thereof (a

“Default Notice”) setting forth therein the circumstances alleged to constitute

such Event of Default, and offering the Contractor the opportunity within ten (10)

days thereafter (or such longer period as the Contractor may request) to present its

views and any actions it proposes to take. NOCAL may not terminate this

Contract unless it has first given the Contractor Notice of intent to terminate and

given the Contractor at least sixty (60) days to cure such Event of Default. The

Notices referred to in the two (2) preceding sentences may but need not be

combined into a single Notice. If such Event of Default is uncured and

continuing at the end of the stated cure period and has not been permanently

waived, NOCAL may give the Contractor a Notice (a “Termination Notice”) that

the Contract will terminate effective no less than thirty (30) days following the

date of such Notice and, subject to Article 33.4, this Contract will terminate on

the day specified in such Notice.



33.4



Disputes Regarding Events of Default

At any time after NOCAL has delivered a Default Notice and prior to the thirtieth

day following the date of a Termination Notice based on an Event of Default

described in such Default Notice, the Contractor may refer to arbitration the

question of whether such Event of Default in fact exists and, if it does exist,

whether Contractor is liable. If the dispute is timely referred, then termination of



99



this Contract shall not take effect until the finality of, and in accordance with, an

arbitration award upholding NOCAL’s right to terminate in respect of such Event

of Default.

33.5



The Contractor shall deliver, with respect to the Delimited Area affected by any

termination under this Article 33, all of the information, maps, reports and data

required under Article 3.4 in connection with the surrender of any portion of the

Delimited Area.



ARTICLE 34

REPRESENTATIONS AND WARRANTIES

34.1



34.2



34.3



NOCAL represents and warrants to the Contractor as follows:

(a)



On the Effective Date, the execution, delivery and performance of this

Contract will have received all necessary governmental approvals and

authorizations and will constitute the legal, valid and binding obligation of

the State.



(b)



The State has not granted Petroleum rights with respect to Block LB-13

other than pursuant to the Original Contract entered into by NOCAL and

Broadway Consolidated Plc.



The Operator, by executing and delivering this Contract, represents and warrants

to the State as follows:

(a)



The Operator is a corporation duly organized, validly existing and in good

standing under the laws of the Bahamas and duly authorized to do

business in Liberia, and has the corporate power and authority to execute,

deliver and perform its obligations under this Contract.



(b)



The Operator has the experience, financial capacity, expertise, technical

know-how and systems required to carry out the obligations of the

Contractor under this Contract, including the exploration of the Delimited

Area and, if warranted, the appraisal and development of, and production

from, any Fields discovered in such exploration.



ExxonMobil, COPL and each other Person that acquires rights under this Contract

and thereby becomes a Person participating in the Contractor (in this Article 34, a

“Member”) represents to NOCAL as of the Effective Date and at the end of each

quarter thereafter as follows:



100



34.4



(a)



It is not a Prohibited Person, no officers or directors of the Member or

other Persons having similar rights and powers with respect to such

Member are Prohibited Persons, no Persons directly or indirectly

Controlling such Member are Prohibited Persons, and no officers or

directors or Persons having similar rights and powers with respect to any

such Controlling Person are Prohibited Persons.



(b)



Neither such Member, any Affiliate of such Member nor any Person

acting on behalf of such Member or any Affiliate of such Member has

made or promised to make any payment or transfer of anything of value,

directly or indirectly, to or for the benefit of an Official or an Official’s

family member or to an intermediary for payment to or for the benefit of

an Official or an Official’s family member in connection with this

Contract or the transactions contemplated hereby, where such payment or

transfer is in violation of anti-corruption Law. (For the purposes of this

paragraph, “Official” means (i) any employee or officer of the State,

including any regional or local department or agency or instrumentality

thereof, (ii) any employee or officer of any enterprise owned or Controlled

by the State, (iii) any official of a political party in Liberia, (iv) any

official or employee of a public international organization, (v) any other

person acting in an official capacity for, or on behalf of, any of the entities

described in clauses (i) through (iv), or (vi) any candidate for political

office in Liberia).



(c)



This Contract has been duly authorized by all necessary corporate action

on the part of such Member, and this Contract constitutes a legal, valid

and binding obligation of such Member enforceable against such Member

in accordance with its terms, except as such enforceability may be limited

by (i) applicable bankruptcy, insolvency, reorganization, moratorium or

other similar laws affecting the enforcement of creditors’ rights generally

and (ii) general principles of equity (regardless of whether such

enforceability is considered in a proceeding in equity or at law).



The State represents and warrants to the Contractor that as of the Effective Date

there are no regulations, rules, orders, directives, decrees, guidelines or other

similar acts in force under or in connection with the Revenue Code that apply to

Contractor for Petroleum Operations under this Contract.



101



ARTICLE 35

ASSIGNMENTS, TRANSFERS AND CHANGES OF CONTROL

35.1



No Transfer may be made to any Person other than a Permitted Transferee. Other

than as provided in Article 35.2, no Transfer is permitted unless the Transfer has

received the prior written consent of NOCAL, which consent may not be

unreasonably withheld if:

(a)



the transferring entity is the Operator and the Transfer would be in

compliance with the applicable requirements of Article 1.3 of this

Contract (compliance shall be deemed if the Transfer is a partial Transfer

of the Operator’s interest and the Operator will remain a participant in the

Contractor and continue as the Operator); and



(b)



at the time of the consummation of such Transfer the transferor is not in

default in payment of any amount over one hundred thousand Dollars

(US$100,000) due to NOCAL or the State under this Contract and is not

otherwise in default in any material respect in the performance of its

material obligations under this Contract (unless (w) the Transfer is a direct

transfer of the right, title and interest in this Contract held by a Person

participating in the Contractor to a Mortgagee or an entity nominated by a

Mortgagee, (x) the Transfer is in the exercise of remedies by the

Mortgagee, (y) the transferee has undertaken to cure any defaults then

existing under the Contract within two hundred and seventy (270) days of

the date of Transfer or such longer period of time as may reasonably be

required to effect such cure and has reasonably demonstrated its capacity

to effect such cure, and (z) the transferee has undertaken to participate in

the Contractor and to provide for the continued use of the Mortgaged

Property in connection with Petroleum Operations); and



(c)



prior to such Transfer, the transferee demonstrates to the reasonable

satisfaction of NOCAL that after giving effect to such transaction, the

Person that remains or has become a participant in the Contractor (or a

parent company thereof) has adequate technical skills, experience, and

financial resources to carry out its obligations under this Contract, and if a

parent company or a third party is relied upon for financial resources,

there is in effect a guarantee from such parent company or third party

complying with the requirements of Article 39 guaranteeing the

obligations of the Person that remains or has become a participant in the

Contractor; and



(d)



in each case involving a transaction in which there is a direct Transfer of

any right, title or interest in this Contract of a Person then participating in



102



the Contractor, the transferee has delivered to NOCAL at or prior to the

consummation of the Transfer an assumption of the rights and obligations

of the Contractor in the form set out at Annex IV.

35.2



No prior consent of NOCAL for a Transfer to a Permitted Person shall be required

if:

(a)



the Transfer is to one or more of the Persons participating in the

Contractor and is the consequence of a default or exercise of a sole risk

provision of the joint operating agreement governing the operations of the

Contractor that transfers all or a prescribed portion of the rights, titles and

interests of the transferor to one or more of the other Persons then

participating in the Contractor; or



(b)



the transferor is a Wholly-Owned Subsidiary of a Person, and the Transfer

is to another Wholly-Owned Subsidiary of such Person; or



(c)



the Transfer arises from a Transfer of the voting stock or rights of Control

over a transferor the voting stock of which are listed on a recognized

securities or stock exchange and that Transfer occurs by an approval of the

Transfer by fifty percent (50%) or more of the holders of such shares or

rights excluding from such approval those holders which at the time of

such approval Controlled (individually or as a group) the issuer of the

voting stock or rights involved;



Provided that for any of (a) to (c) above:

(i)



if the transferor was the Operator there is compliance with the

applicable requirements of Article 1.3 of this Contract (unless the

Transfer is a partial Transfer of the transferring entity’s interest

and the transferring entity will remain a participant in the

Contractor and the Operator); and



(ii)



at the time of the consummation of such Transfer the transferor is

not in default in payment of any amount over one hundred

thousand Dollars (US$100,000) due to NOCAL or the State under

this Contract and is not otherwise in default in any material respect

in the performance of its material obligations under this Contract;

and



(iii)



to the extent required for compliance with Article 39, the amounts

of the guarantees and the identities of the guaranteed parties shall

be adjusted, and if a replacement guarantor is provided, such



103



replacement guarantor shall satisfy the requirements of Article 39;

and

(iv)



there is compliance with Article 35.1(d).



The Contractor shall give NOCAL Notice of any Transfer permitted under this

Article 35.2 other than a Transfer under Article 35.2(b) within thirty (30) days of

the consummation of the Transfer. If any Transfer under Article 35.2 requires

action to comply with clauses (iii) or (iv) above, the Contractor shall give

NOCAL the evidence of such compliance within thirty (30) days of the

consummation of the Transfer.

35.3



A Transfer for a period longer than one (1) year by a Person of its right, title and

interest in Petroleum produced from the Delimited Area and to receive such

Petroleum at the Delivery Point is a Transfer of a right, title and interest under this

Contract subject to this Article 35.

Trades of securities in any parent company including an ultimate parent company

of a Person participating in the Contractor on a recognized securities or stock

exchange (other than pre-arranged trades which in the aggregate result in a

Change of Control) as well as a formal takeover or merger offer subject to rules,

regulations or codes of regulatory bodies in relation to such offers in any relevant

jurisdiction (other than a takeover or merger in which prior arrangements have

ensured that a Change of Control will occur) are not Transfers subject to this

Article 35 and therefore there is no requirement for any approval, preferential

rights or transfer fees under this Article 35.



35.4



If there is (a) a proposed direct Transfer of the right, title and interest of any

Person in this Contract, or (b) a Transfer of any Person whose principal asset

(excluding cash and other liquid assets) is, directly or indirectly, an ownership

interest in a Person participating in the Contractor where such principal asset

represents at least seventy five percent (75 %) of the value of the total assets

(excluding cash and other liquid assets) of such Person, other than a Transfer

exempted from NOCAL approval pursuant to Article 35.2 and other than a

Transfer to a Mortgagee, then the State, acting through NOCAL shall have for a

period not longer than thirty (30) days from the date the transferring Person

requests NOCAL consent to the Transfer, the right to acquire any interest or

Person to be Transferred under the same terms and conditions as those that were

acceptable to the transferring Person. In such case the request for approval shall

be accompanied by the terms and conditions of the proposed Transfer and an

indicative summary including all key terms of the proposed sale. If NOCAL does

not affirmatively notify the transferring Person within thirty (30) days after

receipt of such Notice that it will accept those terms and conditions and does not

acquire such interest on such terms and conditions within thirty (30) days after



104



such Notice of acceptance, the State shall have no further right to pre-empt the

Transfer and acquire the subject interest under this Article 35.4 and the proposed

Transfer may proceed on the proposed terms and conditions. Any Transfer to the

State under this Article 35.4 shall be for its own interest and the right, title and

interest in or of the Contractor so acquired may not be Transferred to any nonState Person within five (5) years from the date of acquisition by NOCAL. This

right may be exercised solely by NOCAL as the representative of the State under

this Contract and not by any Person participating in the Contractor.

This Article 35.4 is in replacement of and supersedes any preference currently

held by the State for the acquisition by the State of any interest Transferred by a

Person participating in the Contractor other than as provided in Articles 19.5 and

19.6 and will have priority over and supersede any Law enacted in the future that

is not of an equal hierarchy of Law.

35.5



Processing and Transfer Fees

(a)



For the duration of this Contract, there shall be no fees or charges assessed

in relation to any Transfer other than those provided under this Article

35.5 and other than taxes or withholdings applicable under the Revenue

Code.



(b)



Any request for a consent or approval required under Article 35.1 or for an

agreement or agreements, as appropriate, with the holder of a Mortgage

under the last sentence of Article 35.7(e) must be accompanied by a

processing fee of twenty five thousand Dollars (US$25,000).



(c)



There shall be no fees or charges assessed against any Transfer under

Article 35.2 or the grant of a Mortgage as contemplated by Article 35.7(e).



(d)



Any Transfer (other than a Transfer pursuant to Article 35.2 or a Transfer

in which NOCAL is the transferee under Article 35.4) shall be subject to a

fee, paid upon written approval by NOCAL of the Transfer, of five

hundred thousand Dollars (US$ 500,000).



Nothing in this Article 35 is relevant to the determination of whether taxes or

withholding are due with respect to any Transfer.

35.6



The provisions of this Article 35 shall apply to each Person participating in the

Contractor notwithstanding a lack of knowledge by such Person of any Transfer

affecting any of the Persons Controlling such Person.



35.7



The following provisions are generally applicable to this Article 35:



105



(a)



Any request for approval of a transaction covered by this Article 35 and

all other Notices or documentation required to be delivered under this

Article 35 with respect to any such transaction shall be sent to the

attention of the President of NOCAL, with copies to the attention of the

Minister of Finance and the Minister of Justice.



(b)



Any requirement under this Article 35 that a Person demonstrate that it has

the technical skills, experience, and financial resources necessary to

perform its obligations under this Contract shall take into account whether

or not such Person is or is to become the Operator.



(c)



If NOCAL questions whether a Transfer occurred with respect to a Person

participating in the Contractor without a required consent, such Person

shall have the initial responsibility for providing evidence that consent was

not required.



(d)



If NOCAL does not act either affirmatively or negatively on a request for

a consent or approval under this Article 35 within thirty (30) days of

receipt by NOCAL of the requisite Notice and other documentation

required by the applicable provisions of this Article 35, NOCAL shall be

deemed to have granted the necessary consent or approval.



(e)



The Persons participating in the Contractor may collectively or

individually enter into a Mortgage of all or part of their right, title and

interest or property referred to in the definition of “Mortgage” as security

for an obligation or indebtedness incurred for the purpose of financing

their investment in the Contractor and provided NOCAL is given a copy

of such Mortgage within thirty (30) days of its execution and delivery

NOCAL hereby consents to its probation and registration in accordance

with applicable Law. Subject to satisfaction of the Transfer requirements

in Article 35.1 applicable to a Transfer by a Mortgagee, a Transfer in the

exercise of remedies under a Mortgage to the Mortgagee or a Person

nominated by the Mortgagee of any rights under this Contract including

without limitation any right, title and interest in and to receive Petroleum

thereunder in accordance with a Mortgage previously notified to NOCAL

shall be permitted. If requested, NOCAL acting on behalf of the State

shall enter into an agreement or agreements, as appropriate, with the

holder of such Mortgage embodying the terms of this Article 35 as it

applies to transfers to Mortgagees.



106



ARTICLE 36

STABILITY OF CONDITIONS

36.1



36.2



Change in Law

(a)



This Contract is executed between the Parties in accordance with the Law

in force at the Effective Date, as modified by this Contract as law, and on

the basis of the provisions of said Law and the Contract, as regards the

economic, fiscal and financial provisions of this Contract. This Contract,

except as provided in Article 36.1(b), may only be amended, or modified

or supplemented upon written agreement among the Parties.



(b)



Consequently, except as provided under Article 36.1(c), should any new

Law modify the Law or the Contract in force at the Effective Date or the

Contract immediately following the Trigger Event Satisfaction and should

those modifications, individually or cumulatively, bring about a material

change in the respective economic, fiscal and financial situation of the

State and the Contractor arising from the provisions of this Contract

immediately following the Trigger Event Satisfaction, the State and the

Contractor shall enter into an agreement in order to restore the economic,

fiscal and financial balance of the Contract as existing immediately

following the Trigger Event Satisfaction, provided that the economic,

fiscal and financial benefits to the Parties immediately following the

Trigger Event Satisfaction shall not be reduced. If after discussions, the

Parties cannot agree, then either the State or the Contractor may submit

the matter for Arbitration in accordance with Article 31.



(c)



In respect of changes in Law which pertain to health, safety, security,

labor and environment, and that are consistent with international standards

and best practices and that are applied on a non-discriminatory basis, any

additional costs that result from such changes shall not be considered a

change to the economic, fiscal and financial balance as provided in Article

36.1(b).



Profound Change in Circumstances

(a)



The State and the Contractor shall meet if the State or the Contractor gives

at least forty-five (45) days’ Notice to the other that it reasonably

considers a Profound Change in Circumstances to have occurred. At the

meeting, the State and the Contractor shall review the relevant facts and

circumstances and determine whether or not a Profound Change in

Circumstances has occurred. To the extent that a Profound Change in

Circumstances has occurred, the State and the Contractor shall enter into



107



good faith discussions to consider and shall make such modifications to

this Contract as they may through good faith discussions propose as

necessary or appropriate to restore the economic, fiscal and financial

balance of the Contract.

(b)



For the purposes of this Article 36.2, “Profound Change in

Circumstances” means such changes arising since the later of the

Effective Date and the most recent Notice given pursuant to this Article

36.2 (the “Relevant Date”), in the economic conditions of the petroleum

industry worldwide or in Liberia, or such changes in the economic,

political or social circumstances existing in Liberia specifically or

elsewhere in the world at large as to result in such a material and

fundamental alteration of the conditions, assumptions and bases relied

upon by the Parties at the Relevant Date that the overall economic, fiscal

and financial balance reasonably anticipated by them will no longer as a

practical matter be achievable.



(c)



In addition to the review provided for in Article 36.2(a), the State and the

Contractor shall also meet once every five (5) years after the Effective

Date, on at least forty five (45) days’ prior Notice at the request of either,

to review and discuss in good faith issues deemed material to the rights

and obligations of the State and the Contractor pursuant to this Contract by

the requesting party. The Parties shall effect such modifications to this

Contract that the Parties in good faith discussions agree are necessary.



(d)



In addition to the consultation and review provided by Articles 36.2(a) and

36.2(b), either the State or the Contractor may at any time request a

consultation with the other Party with respect to any matter affecting the

rights and obligations of the State and the Contractor pursuant to this

Contract. The State and the Contractor shall meet reasonably promptly

after such request for the requested consultation. Subsequent to such

consultation, the Parties shall take such action, if any, that is in good faith

discussions mutually agreed to address the matter.



(e)



Any Notice or request under Articles 36.2(a) through 36.2(d), inclusive,

shall include a summary statement of the circumstances giving rise to such

Notice or request.



(f)



For the purposes of Articles 36.2(a) through 36.2(d), “good faith

discussions” and “consultation” shall not require a Party to agree to any

modifications to this Contract and the lack of agreement is not subject to

Article 31.



108



36.3



Nothing in this Article 36 shall require a Party to provide such information as may

cause such Party to violate the competition laws of its or its ultimate parent

corporation’s domicile.



ARTICLE 37

NOTICES

37.1



All orders, approvals, declarations and notices of any kind between the Parties

(each referred to as a “Notice”) shall be in writing and delivered by hand, by fax,

by electronic mail, by postage prepaid registered mail, by prepaid internationally

recognized courier service, or by any other means of communication agreed upon

in writing by the Parties. Notice by fax or electronic mail is valid under this

Contract only to fax numbers or electronic email addresses set forth below or

identified as acceptable to a Party by Notice to the other Party pursuant to this

Article 37. A Notice other than an electronic mail shall bear an original or

facsimile reproduction of the signature of a representative of the sending Party

responsible for such Notice and all Notices shall indicate the identity of such

representative and state how he or she may be reached by telephone and, if

practical, electronic mail. A Notice under this Contract is not effective until

delivery.



37.2



Subject to Article 37.9, delivery of a Notice to a Party shall be deemed to have

occurred in any one of the following circumstances:



37.3



(a)



Fax confirmation of receipt is electronically issued to the sender by the fax

receiving device if the recipient has indicated a fax number for Notices.



(b)



Electronic mail confirmation of receipt originated by the recipient is

received at the electronic mail address of the sender.



(c)



Written confirmation of receipt is received by the postal or courier service

delivering the Notice.



(d)



The recipient has otherwise directly or indirectly acknowledged receipt of

the Notice in writing.



(e)



Verification of receipt of the Notice has been obtained in any other

manner specifically agreed to in writing by the Parties.



All Notices from NOCAL or any other agency of the State, to the Contractor shall

be addressed as follows:



109



ExxonMobil

ExxonMobil Exploration and Production Liberia Limited

Attention: President

233 Benmar

Houston, Texas 77060 USA

Fax: +1(281) 654 5920

COPL

Canadian Overseas Petroleum (Bermuda) Limited

Clarendon House, 2 Church Street,

Hamilton, HM 11, Bermuda

Fax: +1 (441) 295-9528

Attention: CEO

37.4



Any Notice to the Contractor alleging (a) a failure of the Contractor or the

Operator to comply with any requirement of this Contract or (b) that the

Contractor or the Operator is not in compliance with any applicable law or

regulation or proposing to invoke the provisions of Article 1.3(e) of this Contract

shall in addition be given to each Person participating in the Contractor at such

Person’s address for Notices provided to NOCAL from time to time by the

Contractor.

Subject to Article 1.3(d), for the purposes of receiving Notices under this Contract,

each Person participating in the Contractor shall within the time period provided

in Article 1.3(d) (or within ninety (90) days after it becomes a participant in the

Contractor, if later than the Effective Date) establish and thereafter maintain an

address in Monrovia, Liberia, for the receipt of Notices given under this Contract

and shall provide such address to NOCAL.



37.5



All Notices from the State to any guarantor under a guarantee provided in

accordance with the terms of this Contract shall be addressed as provided in such

guarantee, with a copy to the Contractor.



37.6



All Notices from the Contractor or any Person participating in the Contractor to

NOCAL shall be addressed by courier and by email as follows:

President and CEO

National Oil Company of Liberia

Episcopal Church Plaza, 3rd Floor

1000 Monrovia

10 Liberia

E-Mail: ceo@nocal.com.lr



110



And in the case of any such Notice concerned in any way with any financial

obligation of the Contractor or any guarantee provided in accordance with the

terms of this Contract, with a copy by courier to:

The Minister of Finance

Ministry of Finance

Broad Street

Monrovia, Liberia

37.7



A copy of any Notice alleging or relating to any failure of a Party to this Contract

to comply with the terms of this Contract shall be given by courier to:

The Minister of Justice

Ministry of Justice

Ashmun & Center Street

Monrovia, Liberia



37.8



Any Person designated by name in this Article 37 or any Person that has

subsequently become a participant in the Contractor and that has provided an

address for Notices as contemplated by Article 37.4 may at any time, upon prior

Notice to each Person then entitled to receive Notice under this Article 37, change

the designation of any individual or official title named to receive Notices under

this Contract, or the street, postal or electronic address or fax number of the office

in Liberia or elsewhere authorized to receive such Notices.



37.9



All Notices, reports, applications, feasibility reports and related plans and

documents, financial statements and similar materials furnished by the Contractor

under this Contract shall be delivered to the required recipients in duplicate paper

copies, and, if more than six (6) pages long, shall be accompanied by a

reproducible electronic copy in Microsoft Word or Adobe PDF format that is

compatible with versions of such program that have been readily available in

Monrovia for at least thirty-six (36) months. NOCAL may change the required

electronic data format for any such document to any other readily available format

on at least sixty (60) days prior Notice to the Contractor.



ARTICLE 38

MISCELLANEOUS

38.1



The Parties shall cooperate in good faith to achieve the objectives of this Contract.

On request by the Contractor, NOCAL shall provide assistance to the Contractor

in identifying permits, licenses and approvals required to be obtained from other



111



ministries or agencies of the State for the performance of the Contractor’s

obligations under this Contract, and the manner in which and the place at which

applications should be filed. The Contractor shall observe the applicable

procedures and formalities, and shall itself apply to the relevant ministries and/or

agencies.

The Parties agree to respect the terms of this Contract and not to unilaterally

abrogate any of the terms and conditions herein contained.

38.2



Unless this Contract expressly provides otherwise, all amounts payable by the

Contractor to the State under this Contract save for payments under Article 40.5

must be paid to the Ministry of Finance by deposit in the Consolidated Fund. The

Ministry of Finance shall deliver as soon as reasonably practical a receipt or other

official document evidencing payment of the amount and the purpose for which

paid.



38.3



Except as expressly provided in this Contract, any modification or amendment of

or supplement to this Contract shall be by the mutual written agreement of the

Contractor, on the one hand, and by NOCAL, the Minister of Finance, the

Minister of Lands Mines and Energy, the Chairperson of the National Investment

Commission, acting together, on the other hand, and shall not become effective

until (i) attested by the Minister of Justice, (ii) approved by the President of the

Republic of Liberia, (iii) ratified by the Legislature and (iv) signed into Law by

the President of the Republic of Liberia.

Either NOCAL or the Contractor may (i) extend the time for the performance of

any of the obligations of the other, (ii) waive any inaccuracies in the

representations and warranties contained herein or in any document delivered

pursuant hereto, or (iii) waive any non-compliance by the other with, or default by

the other under, any provision of this Contract, provided that such extension or

waiver must be in writing. No waiver given by NOCAL under this Contract that

affects the determination of amounts due from the Contractor under this Contract

for amounts payable in to the Consolidated Fund or purports to delay the due date

of any payment due from the Contractor under this Contract for amounts payable

in to the Consolidated Fund by more than thirty (30) days is valid unless the

Minister of Finance has agreed thereto in writing. Actions under this paragraph

are not modifications or amendments of, or supplements to, this Contract.



38.4



The State and NOCAL hereby expressly exclude Articles 3.3, 3.4 and 3.7 of the

Petroleum Law and Sections 17, 742(a) and (b), 753, and 754 of the Revenue

Code from being applied to or having any effect under this Contract and waive

any and all rights in relation thereto.



112



38.5



The non-exercise or partial exercise by a Party of any of its rights under the terms

of this Contract shall not in any case constitute a waiver of that right. Without

prejudice to the generality of the foregoing sentence, the failure of NOCAL to

make any inspection described in this Contract or provided for under applicable

Law or to ascertain in any such inspection the existence of any breach by the

Contractor of any of its obligations under this Contract or applicable Law shall

not affect the ability of the State to require full compliance by the Contractor with

such obligations.



38.6



This Contract, including the Annexes and Exhibits attached to it, represents the

entire agreement between the Parties and shall from the Effective Date supersede

all previous oral and written negotiations and agreements between the Parties.



38.7



Headings in this Contract are inserted for purposes of convenience and reference

and in no event shall define, restrict or describe the scope of object of the Contract

or of any of its clauses.



38.8



The terms and conditions of this Contract shall inure to the benefit of and be

binding upon the successors by operation of Law and permitted assignees of the

Parties including without limitation in the case of the State, all future

manifestations or forms of public power exercising sovereign authority over all or

part of the present territory of Liberia.



38.9



Notwithstanding termination of this Contract by any Party or for any reason,

including a termination due to a finding that this Contract or a portion thereof is

void, invalid, or unenforceable, Articles 1.1 (Definitions), 1.2 (Joint and Several

the Contractor Member Liability), 2.1 (Scope of Contract), 6 (Environmental

Obligations), 8 (Confidentiality), 9.3 (Use of Facilities), 17 (Taxation), 18

(Valuation of Petroleum), 20 (Abandonment), 23 (Applicable Law), 25

(Accounting Methods and Audits), 26 (Import and Export), 31 (Arbitration), 36

(Stability of Conditions), 37 (Notices), 38 (Miscellaneous) and 40.1 (Effective

Date) of this Contract, all liabilities of any Party accruing prior to such

termination and all abandonment and environmental remediation and restoration

obligations of the Contractor under this Contract and any ESMP shall survive

such termination. Moreover, any such termination shall be without prejudice to

rights, duties and obligations of any Party that have accrued prior to termination

and, notwithstanding such termination, such provisions of this Contract as are

reasonably necessary for the full enjoyment and enforcement of such accrued

rights, duties and obligations shall survive such termination for the period

necessary.



38.10 Should any Article of this Contract, or any provision or term of any Article, be

found pursuant to Article 31 to be void, invalid or unenforceable, in whole or in

part, then the remaining Articles, and those unaffected provisions or terms of any



113



other Articles which contain any void, invalid or unenforceable provision or term,

shall nevertheless remain valid and subsisting and shall be construed as if this

Contract had been executed without such void, invalid or unenforceable Articles,

provisions or terms. Any otherwise void, invalid or unenforceable Article, term

or provision of this Contract shall be so construed, or reformed, as to alter, amend

or change any such term, provision or condition to the extent necessary to render

it valid, lawful and enforceable, while also giving maximum effect to the Parties’

originally intended purpose or result, short of creating any void, invalid or

unenforceable provision, term or condition.

38.11 Apart from the State, NOCAL and the Contractor (and the Persons participating

in the Contractor that have become Parties to this Contract), no Person shall have

any rights under this Contract unless specifically stated in this Contract.

38.12 Specific performance or similar equitable remedies may not be awarded against

any Party. Each of the Parties hereto expressly waives and forgoes any right to

punitive, exemplary or similar damages. No Party shall have any liability under

this Contract for any form of consequential loss; provided that, so long as

appropriate adjustments are made for the time value of money and for future

uncertainties, this exclusion of consequential loss does not apply to loss of profits

or similar consequential loss in regard to a determination of the loss in value due

to expropriation or a material breach of this Contract.

38.13 Nothing in this Contract is intended to exclude any Party’s liability under any

applicable anti-corruption law. The Parties hereby acknowledge that a violation of

anti-corruption law will be subject to the appropriate remedies under the law,

including Liberian penal law.



ARTICLE 39

GUARANTEE

39.1



Each Person participating in the Contractor shall provide adequate security,

having regard to Good International Petroleum Industry Practice, to guarantee

performance of the Contractor’s obligations under this Contract in the exploration,

appraisal and development phases under this Contract. The initial guarantee with

respect to each such Person shall be delivered to NOCAL at the Trigger Event

Satisfaction. The amount available under each guarantee prior to the grant of the

initial exclusive exploitation authorization under this Contract shall be fifty

million Dollars (US$50,000,000) multiplied by such Person’s percentage interest

in the Contractor, and following the grant of such initial exclusive exploitation

authorization until first Commercial Production of any Field, the amount available



114



under each guarantee shall be one hundred million Dollars (US$100,000,000)

multiplied by such Person’s percentage interest in the Contractor, subject to

reduction of the amount available under any guarantee pursuant to Article 39.4.

39.2



The adequate security shall be in the form of any of the following:

(a)



irrevocable standby letters of credit or commercial bank guarantees

obtained by such Person from financial institutions meeting acceptable

financial standards and having a net worth of at least five (5) times the

secured amount, in each case in customary form reasonably acceptable to

NOCAL;



(b)



irrevocable corporate or government guarantees from entities meeting

acceptable financial standards and having a net worth of at least five (5)

times the secured amount;



(c)



irrevocable guarantees from a Wholly Owned Subsidiary of the ultimate

parent of such Person meeting acceptable financial standards provided that

such subsidiary has a net worth of at least five (5) times the amount being

secured and is an Affiliate of such Person; or



(d)



irrevocable guarantees from the ultimate parent of COPL, or from any

other Person then participating in the Contractor if the credit of such other

Person is otherwise acceptable to NOCAL under all the facts and

circumstances.



Any guarantee provided under clause (b), (c) or (d) of this Article 39.2 shall be in

substantially the form set forth in Annex III.

39.3



Entities meeting acceptable financial standards under Articles 39.2(a) to (c) shall

have a sound financial reputation and a history of providing quality service and

meeting the minimum financial criterion that would qualify it to receive a

long-term debt rating of at least “AA” from Standard & Poor’s or at least “Aa2”

from Moody’s Investors Service.



39.4



The security available under any such guarantee shall be reduced as amounts are

paid under such guarantee. Such security shall not otherwise be reduced except to

reflect changes in interests resulting from Transfers in accordance with the

provisions of Article 35 of this Contract. Any reduction in the amount of a

guarantee occurring as a result of a payment under such guarantee prior to the

grant of the initial exclusive exploitation authorization under this Contract shall

reduce the amount of such guarantee otherwise available both prior to and after

such grant.



115



39.5



In the event any guarantee of the obligations of a Person having a participation in

the Contractor provided under this Article 39 is no longer in full force and effect,

or an event of the kind referred to in Articles 33.2(c)(i), (c)(ii) or (c)(iii) has

occurred with respect to the obligor under such guarantee, or material

indebtedness for money borrowed of such obligor has become immediately due

and payable and has not been paid within thirty (30) days, such guarantee shall

within sixty (60) days thereafter be replaced with a substantially similar guarantee

from a guarantor satisfactory to NOCAL or qualified under Article 39.2(a) or (b).

No guarantee is required or may be enforced after first Commercial Production

from any Field within the Delimited Area or, if this Contract is terminated prior to

such time, more than one hundred and twenty (120) days after the date of

termination.



ARTICLE 40

EFFECTIVE DATE

40.1



The “Effective Date” is the date upon which this Contract has been executed by

the Parties, attested by the Minister of Justice of the Republic of Liberia, signed

by the President of the Republic of Liberia, ratified by the national legislature of

the Republic of Liberia, approved into Law by the President of the Republic of

Liberia, and published into handbills as part of the Laws. The Parties are bound

by this Contract from and after the Effective Date, provided however that until the

occurrence of the Trigger Event Satisfaction and save for the provisions of this

Article 40, the Parties are not entitled to exercise their respective rights under, and

shall not be required to perform any of their respective obligations under, this

Contract and no Party shall have any cause of action under this Contract arising

out of the failure of the Trigger Event Satisfaction to occur.



40.2



On the occurrence of all of the Trigger Events (the “Trigger Event Satisfaction”),

the Original Contract shall terminate and be of no further force and effect and this

restated and amended Contract shall be the sole instrument setting forth the rights

and obligations of all of the Parties with respect to Block LB-13.



40.3



If the Trigger Event Satisfaction has not occurred by 5:00 p.m. New York time,

on the thirtieth day following the Effective Date, or such later date as NOCAL,

the Minister of Justice, ExxonMobil and COPL shall agree in writing (the

“Longstop Date”), this Contract shall terminate and be of no further force and

effect. It is further acknowledged and agreed that if this Contract terminates in

accordance with the preceding sentence the Original Contract remains in full

force and effect and the Original Contract shall remain with Peppercoast



116



Petroleum Plc and shall not transfer or shall be deemed never to have transferred

to COPL or ExxonMobil.

40.4



Because ExxonMobil and COPL were unable to make arrangements for the 100%

transfer from Peppercoast Petroleum Plc to COPL and the 80% transfer from

COPL to ExxonMobil in a manner that would satisfy the requirements of each of

ExxonMobil, COPL and NOCAL, ExxonMobil informed NOCAL that it would

welcome any assistance NOCAL can provide to the realization of the

contemplated transfers on the understanding that the completed transaction will

have the same economic effect as the originally proposed transfers. NOCAL has

agreed to assist in the transfers because there was no other workable alternative

that was acceptable to all parties. This assistance involves the structuring of the

transaction so that the transfer from Peppercoast Petroleum Plc to COPL and the

transfer from COPL to ExxonMobil would occur without necessity of a COPL

cash payment to Peppercoast or an ExxonMobil cash payment to COPL.

NOCAL proposed to all parties that (1) NOCAL would take on the responsibility

for the cash payment to Peppercoast Petroleum Plc required to complete the

transfer of the Original Contract to COPL, if (2) ExxonMobil would pay directly

to NOCAL the entire amount that it would have paid in part to COPL (eighty-five

million Dollars (US$85,000,000) and in part to NOCAL (thirty-five million

Dollars (US$35,000,000)) under the transaction as originally contemplated. This

change in the flow of payments will have the effect of leaving all of the parties,

including NOCAL, in the same economic position as they would have been if the

overall transaction had closed in the manner originally contemplated by

ExxonMobil, COPL and NOCAL.

This proposal was acceptable to ExxonMobil, COPL and Peppercoast Petroleum

Plc, and, aware that the proposal would entail NOCAL incurring considerable

costs in obtaining financing for this payment, Peppercoast Petroleum Plc agreed

to accept a reduced after-tax payment of sixty eight million five hundred thousand

Dollars (US$68,500,000), instead of the after-tax payment of seventy million

Dollars (US$70,000,000) that COPL had originally agreed to make to Peppercoast

Petroleum Plc for the transfer to it of the Original Contract.

By agreement of all the parties and Peppercoast Petroleum Plc, the release from

escrow of (i) the novation agreements making effective the 100% transfer of the

Original Contract from Peppercoast Petroleum Plc to COPL and the 80% transfer

of the Original Contract from COPL to ExxonMobil and (ii) the related

guarantees, all as referred to in clauses (1) through (3) of Article 40.5, and the

replacement of the Original Contract by this Contract, will occur upon Trigger

Event Satisfaction.



117



As set forth in clause (6) of Article 40.5, the final component of Trigger Event

Satisfaction is the confirmation by Citibank NA that it has transferred one

hundred twenty million Dollars (US$120,000,000), to the account of Ecobank

Liberia Limited ("Ecobank") maintained at the New York office of Citibank NA

with instructions for credit to the account of NOCAL maintained with Ecobank.

ExxonMobil shall cause such transfer to be made following the occurrence of the

Trigger Event set forth in clause (5) of Article 40.5. The making of such transfer

to Ecobank with instructions for credit to the account of NOCAL, when

confirmed by Citibank NA as contemplated by clause (6) of Article 40.5 of this

Contract, shall be deemed to fully pay and discharge



40.5



(1)



the bonus payment obligation of the Contractor under Article 19.1(a) of

this Contract,



(2)



any obligation of the Contractor, ExxonMobil or COPL to pay any transfer

or similar fees or charges to NOCAL or the State in connection with the

transfer of a 100% interest in the Original Contract to COPL, the transfer

of an 80% interest in the Original Contract to ExxonMobil, or the

restatement of the Original Contract,



(3)



any obligation of the Contractor, ExxonMobil or COPL to pay

withholding tax or income tax to the State rising in connection with the

transfer of a 100% interest in the Original Contract to COPL or the

transfer of an 80% interest in the Original Contract to ExxonMobil, and



(4)



any obligation of COPL to pay income taxes to the State in respect of the

transfer of an 80% interest in the Original Contract to ExxonMobil.



The Trigger Events are the following:

(1)



The execution and delivery into escrow of the novation agreement

transferring one hundred percent (100%) of the Original Contract from

Peppercoast Petroleum Plc to COPL.



(2)



The execution and delivery into escrow of the novation agreement

transferring eighty percent (80%) of the Original Contract from COPL to

ExxonMobil.



(3)



The execution and delivery into escrow of guarantees as required by

Article 39 of this Contract.



(4)



Delivery by Speechly Bircham LLP (counsel for Peppercoast Petroleum

Plc) ("Speechlys") to ExxonMobil, COPL and NOCAL of its undertaking,

satisfactory in form and substance to ExxonMobil, COPL and NOCAL,



118-A



that upon receipt by Speechlys of the funds referred to in clause (5) below,

it will immediately deliver the confirmation referred to in clause (5) below

and release the documentation held by it providing for the release of liens

upon the interest of Peppercoast Petroleum plc in the Original Contract.



40.6



(5)



Confirmation by Speechlys to ExxonMobil, COPL and NOCAL that it has

received in its client account maintained with the Royal Bank of Scotland

from or on behalf of NOCAL sixty eight million five hundred thousand

Dollars (US$68,500,000) and delivery by Speechlys to COPL of the

documentation held by it providing for the release of liens upon the

interest of Peppercoast Petroleum plc in the Original Contract.



(6)



Confirmation by Citibank NA that it has transferred on instruction from

ExxonMobil one hundred twenty million Dollars (US$120,000,000) to

NOCAL to the account of Ecobank maintained with Citibank NA in New

York City with instructions for credit to the account of NOCAL

maintained with Ecobank.



NOCAL shall cause forty-five million Dollars (US$45,000,000) of the one

hundred twenty million Dollars (US$120,000,000) payment referred to in Article

40.5(6) of this Contract to be transferred onward to the Central Bank of Liberia

for credit to the Consolidated Fund immediately following NOCAL’s receipt

thereof. Such transfer represents:

(a)



fifteen million Dollars (US$15,000,000) on account of withholding tax

and/or any income tax on the COPL-Peppercoast Petroleum Plc

transaction transferring one hundred percent (100%) of the Original

Contract from Peppercoast Petroleum plc to COPL;



(b)



twelve million seven hundred and fifty thousand Dollars (US$12,750,000)

on account of withholding tax and/or any income tax on the ExxonMobilCOPL transaction transferring eighty percent (80%) of the Original

Contract from COPL to ExxonMobil; and



(c)



seventeen million two hundred and fifty thousand Dollars

(US$17,250,000) in discharge of a portion of the obligation of the

Contractor to make the bonus payment set out in Article 19.1(a) of this

Contract.



The balance of the payment to NOCAL referred to in Article 40.5(6) of this

Contract, being seventy-five million Dollars (US$75,000,000), represents the

following amounts:

(i)



sixty eight million five hundred thousand Dollars (US$68,500,000) to be

applied to repayment of the loan taken by NOCAL to fund the payment by

NOCAL referred to in Article 40.4



118-B



(ii)



one million Dollars (US$1,000,000), representing the transfer fees agreed

to be paid to NOCAL in connection with the COPL-Peppercoast

Petroleum Plc transaction transferring one hundred percent (100%) of the

Original Contract from Peppercoast Petroleum Plc to COPL and the

ExxonMobil-COPL transaction transferring eighty percent (80%) of the

Original Contract from COPL to ExxonMobil.



(iii)



four million dollars (US$4,000,000) representing the remaining portion of

the total agreed bonus of twenty one million two hundred and fifty

thousand Dollars (US$21,250,000) after giving effect to the allocation

referred to in clause (c) of this Article 40.6; and



(iv)



one million five hundred thousand Dollars (US$1,500,000), representing

the difference between the cash payment originally to have been received

by Peppercoast Petroleum Plc in consideration of the 100% transfer of the

Original PSC to COPL (i.e., seventy million Dollars (US$70,000,000))

and the reduced cash payment Peppercoast Petroleum Plc agreed to accept

such transfer (i.e., sixty-eight million five hundred thousand Dollars

(US$68,500,000)), which is payable to NOCAL's lender for interest, fees

and expenses associated with the loan.



IN WITNESS WHEREOF, the Parties have signed this Contract on the date first set

forth above:

ON BEHALF OF NOCAL AND THE GOVERNMENT OF LIBERIA:

(s) Randolph A.K.W. McClain

Randolph A. K. W. McClain

President/CEO

National Oil Company of Liberia

(s) Robert A Sirleaf

Robert A Sirleaf

Chairman, Board Of Directors

National Oil Company of Liberia

(s) Patrick Sendolo

Patrick Sendolo

Minister of Lands, Mines & Energy

Republic of Liberia



118-C



(s) Amara Konneh

Amara Konneh

Minister of Finance

Republic of Liberia



(s) O. Natty B. Davis

O. Natty B. Davis

Chairman, National Investment Commission

Republic of Liberia



ON BEHALF OF EXXONMOBIL EXPLORATION AND PRODUCTION

LIBERIA LIMITED



(s) Elijah White, Jr.

Name:Elijah White, Jr.

Title:

ExxonMobil Exploration and Production Liberia Limited



ON BEHALF OF CANADIAN OVERSEAS PETROLEUM (BERMUDA)

LIMITED



(s) Arthur S. Millholland

Name: Arthur S. Millholland

Title:

Canadian Overseas Petroleum (Bermuda) Limited



119



ATTESTED:



(s) Hon. Christiana Tah

Hon. Christiana Tah

Minister of Justice

Republic of Liberia

APPROVED:



(s) Ellen Johnson Sirleaf

Her Excellency

Ellen Johnson Sirleaf

President of the Republic Of Liberia



120



ANNEX I

DESCRIPTION OF THE DELIMITED AREA

On the Effective Date, the Delimited Area, designated as Block LB-13, is formed by the

area included inside the perimeter constituted by the points indicated on the map on the

following page labeled “Block LB-13 Delimited Area”.

The geographic coordinates that define the Delimited Area are the following, based upon

the WGS84 datum.

Point

1

2

3

4

5



Latitude (degrees)

5.2087757

5.3972022

5.9636231

5.7873024

5.2087757



Longitude (degrees)

-10.8082884

-11.0204243

-10.5714519

-10.3485833

-10.8082884



Those coordinates are only given for purposes of defining the Delimited Area and shall

not be considered as the boundaries of the national jurisdiction of Liberia.

The surface of the Delimited Area above-defined is deemed to be approximately 2,540

square kilometers.



121



122



ANNEX II

ACCOUNTING PROCEDURE

Article I – General Provisions

I.1



Object

This Accounting Procedure shall be followed and observed in the performance of

the obligations under the Contract to which this Annex is attached.

The purpose of this Accounting Procedure is to establish the principles of

accounting which shall reflect the Operator’s actual costs relating to Petroleum

Operations undertaken on behalf of the Contractor to the end that the Operator

shall subject to the processes of the Contract neither gain nor lose by reason of the

fact that it acts as Operator.



I.2



Accounts and statements

The registers and accounting books of the Contractor shall be in conformity with

accounting rules and regulations generally applicable to the petroleum industry in

Liberia. However, the Contractor may apply Good International Petroleum

Industry Practice accounting rules and procedures, insofar as none of these are

contrary to the rules and regulations referred to above.

In accordance with the provisions of Article 25 of the Contract, accounts, books

and registers shall be maintained and recorded in Dollars. These accounts shall be

used, inter alia, to determine the amount of Petroleum Costs, the recovery of

Petroleum Costs, the production sharing, as well as for the purposes of the

Contractor’s tax return.

The Contractor shall at all times maintain and keep true and correct records of the

production and disposition of all Petroleum, and of all costs and expenditures, as

well as other data necessary or proper for the settlement of accounts between the

members of the Contractor to enable the Persons participating in the Contractor to

comply with their respective applicable income tax and other laws.

The Contractor shall record all operations connected with the Petroleum

Operations in accounts separate from those relating to any other activities which it

may carry out in the Republic of Liberia.

All accounts, books, records and statements, together with documents supporting

expenses incurred, such as invoices and service contracts, shall be kept in the



123



Republic of Liberia or as otherwise determined by this Contract in order to be

provided at the request of the competent authorities of Liberia.

I.3



Interpretation

The definitions of the terms used in this Annex II shall be the same as those of the

same terms set forth in the Contract. In the event of a direct conflict between the

provisions of this Accounting Procedure and the Contract, the provisions of the

Contract shall prevail. In addition certain terms used herein are defined as

follows:

“Material” shall mean the property, including but not limited to equipment and

supplies, acquired and held for use in the Petroleum Operations.



I.4



Modifications

The provisions of this Accounting Procedure may be modified by mutual

agreement between the Parties.

The Parties agree that if any provision of the Accounting Procedure proves

inequitable to either Party, such provision shall be modified in good faith by the

Parties.



Article II – Petroleum Costs

II.1



Petroleum Costs Account

The Contractor shall maintain a “Petroleum Costs Account” which will record in

detail the expenses incurred by the Contractor directly relating to the Petroleum

Operations carried out under this Contract. Properly recorded costs will be

recoverable in accordance with the provisions of Article 16 of the Contract.



II.1.1

This Petroleum Costs Account shall, inter alia, record separately, by Appraisal

Perimeter or Exploitation Perimeter if any, and also consolidate for the Delimited

Area the following expenses:

(a)



exploration expenditures;



(b)



appraisal expenditures;



(c)



development expenditures;



(d)



exploitation expenses;



124



(e)



financial costs;



(f)



overhead costs in Liberia;



(g)



overhead costs abroad.



II.1.2

The Petroleum Costs Account shall enable, inter alia, to identify:

(a)



the total amount of Petroleum Costs prior to the Effective Date;



(b)



the total amount of Petroleum Costs since the Effective Date;



(c)



the total amount of Petroleum Costs recovered;



(d)



the total amount credited to the Petroleum Costs Account pursuant to

Article II.4(a) and II.4(b) below;



(e)



the total amount of Petroleum Costs which remain to be recovered.



II.1.3

For the purposes of Article 16 of the Contract, Petroleum Costs shall be recovered

in the following sequence:

(a)



exploitation expenses in respect of a Field incurred and paid from the date

of commencement of regular production;



(b)



subject to II.2.9 and II.3, financing costs;



(c)



other Petroleum Costs.



In addition, within each of the foregoing categories, the costs shall be recovered

in the sequence in which they are incurred.

Unless otherwise expressly provided for in this Accounting Procedure the intent

of the Parties is not to duplicate any item of the credit or debit of the accounts

maintained under the Contract.

II.2



Items debited to the Petroleum Costs Account

The following non-exhaustive list of expenses and costs shall be debited to the

Petroleum Costs Account and shall be considered ordinary expenses for

producing income for income tax return purposes unless specifically excluded



125



from the Revenue Code, but is not to be considered an exhaustive or complete list

of deductible costs under Article 17.

II.2.1 Personnel expenses

Salaries, wages and related costs include everything constituting the employees’'

total compensation, as well as the cost to Operator of holiday, vacation, sickness,

disability benefits, living and housing allowances, travel costs, travel time,

bonuses, and other customary allowances applicable to the salaries and wages

chargeable hereunder, as well as the costs of recruitment and relocation of local

employees (including spouse and dependent children), as well as expatriate

employee relocation (including spouse and dependent children), as well as the

costs to Operator for employee benefits, including but not limited to employee

group life insurance, group medical insurance, hospitalization, retirement,

severance and other payments or other benefits required by Law. This list of

personnel expenses is not exhaustive. The expenses incurred will be in

accordance with Good International Petroleum Industry Practice.

II.2.2 Costs in Liberia

Costs in Liberia include personnel expenses under II.2.1 incurred by the

Contractor for the Contractor’s personnel directly engaged in the Petroleum

Operations in the Republic of Liberia as well as costs of maintaining and

operating in Liberia a main and administrative office and sub-offices necessary

for the Petroleum Operations.

II.2.3 Overhead costs abroad

Indirect costs chargeable under this article represent the cost of general assistance

and support services provided by Operator and its Affiliates. No cost or

expenditure included under this article shall be included or duplicated in other

charges. The charges under this article are not subject to audit other than to verify

that the overhead percentages are applied correctly to the expenditure basis.

The expenditures used to calculate the monthly indirect charge shall not include

the indirect charge (calculated either as a percentage of expenditures or as a

minimum monthly charge), rentals on surface rights acquired and maintained for

the Joint Account, guarantee deposits, pipeline tariffs, concession acquisition

costs, bonuses paid in accordance with the Contract, royalties and taxes on

production or revenue to the Joint Account paid by Operator, expenditures

associated with major construction projects for which a separate indirect charge is

established hereunder, payments to third parties in settlement of claims, and other

similar items.



126



Credits arising from any government subsidy payments, disposition of Material,

and receipts from third parties for settlement of claims shall not be deducted from

total expenditures in determining such indirect charge.

The aggregate year-to-date indirect charges shall be a percentage of the year-todate expenses charged to the Petroleum Costs Account, calculated on the

following scale:

(a)



during the exploration period,

$0 to $5,000,000 of expenditures = 4%

next $10,000,000 of expenditures = 2.5%

excess above $15,000,000 of expenditures = 1.5%



(b)



during the exploitation (development and production) period:

Development expenses = 1.5%

The development phase for each Field will be deemed to cease at the

completion of the scope of the initial development operations in the

development and production plan approved by NOCAL.

The

development overhead rate shall also apply to satellite or deeper horizon

developments in the approved development and production plan, but not

the subject of the initial development.

Production expenses = 1%

For the avoidance of doubt, development and production operations may

be ongoing at the same time at different places within the Delimited Area.

In such cases, different areas within the Delimited Area will attract

different overhead rates based on the type of operations ongoing.



(c)



As to major projects which include the engineering, construction and

installation of fixed assets, the expansion of fixed assets and any other

project clearly discernible as a fixed asset required for Petroleum

Operations (such as, but not limited to, pipelines, gas reprocessing and

processing plants, final loading and terminalling facilities, and dismantling

for decommissioning of platforms and related facilities, but excluding

drilling and workovers) when the estimated cost of each project amounts

to more than twenty million Dollars (US$20,000,000), a separate and

lower indirect charge for such project shall be approved by NOCAL at the

time of approval of the project in lieu of the amount of II 2.3 (a) – (b).



127



(d)



A minimum amount of one hundred and twenty thousand Dollars

(US$120,000) shall be assessed each Calendar Year calculated from the

Effective Date and shall be reduced pro rata for periods of less than a year.



II.2.4 Buildings

Construction, maintenance expenses, as well as rents paid for all offices, houses,

warehouses and buildings of other types directly required for the performance of

the Petroleum Operations, including housing for employees, and cost of

equipment, furniture, and fittings necessary for the operation of those buildings.

II.2.5 Materials, equipment and rentals

Costs of equipment, Material, machinery, and facilities purchased or provided for

use in the Petroleum Operations, as well as rentals or compensations paid or

incurred for the use of any equipment or facilities required directly for the

performance of the Petroleum Operations.

Materials and equipment purchased from third parties and directly necessary for

the performance of the Petroleum Operations carried out under the Contract shall

be charged to the Petroleum Costs Account at Net Cost incurred by the Contractor.

“Net Cost” shall include the cost of Materials equipment and rentals and items

such as taxes, shipping agent fees, export broker fees, transportation costs,

loading and unloading costs, export and import duties and fees and license fees

related to the supply and procurement of Materials and equipment, as well as

transit losses not recovered through insurance.

II.2.6 Services

Costs of services directly related to Petroleum Operations rendered by

subcontractors and consultants, as well as any costs directly related to services

rendered by the Government or NOCAL or any other authorities of the Republic

of Liberia.

II.2.7 Insurance Premiums

Premiums paid including those paid to Affiliates, for insurances customarily taken

out for the Petroleum Operations to be carried out by the Contractor. Losses not

covered by the applicable insurance provisions including the relevant deductible

amounts will also be debited to this Account.



128



II.2.8 Legal Expenses

All expenses of handling, investigation defending, protecting or recovering joint

property and settlement of litigation or claims directly arising from or by reason

of the Petroleum Operations.

II.2.9 Financial Costs

All interests paid by the Contractor in respect of the loans from third parties and

advances obtained from Affiliates, provided that those loans and advances shall

be for the purpose of the financing of Petroleum Costs related to development

operations in accordance with an approved development and production plan. For

the avoidance of doubt, financing costs related to satellite or deeper horizon

developments in the approved development and production plan, but not the

subject of the initial development, shall also be Petroleum Costs. In the event

such financing is provided by an Affiliate, the allowable interest rates shall not

exceed the rates customarily used in the international financial markets for loans

of a similar nature.

With respect to costs related to development operations which are funded by

members of the Contractor on behalf of NOCAL under Article 19.5 and 19.6, the

interest payments will be determined and recovered as specified under Article

19.5 and 19.6. No other interest charges associated with the funding of these costs

by members of the Contractor shall be chargeable to the Petroleum Costs Account.

II.2.10 Other Expenses

Any other expenses incurred and paid by the Contractor for the purposes of the

necessary and proper conduct of the Petroleum Operations under the approved

Annual Work Programs and Budgets or otherwise approved by NOCAL, other

than the expenses covered and dealt with by the foregoing provisions of this

Article and other than the expenses excluded from the Petroleum Costs.

II.2.11 Ecological and Environmental Charges

All costs incurred for the benefit of Petroleum Operations and other property

under the Contract as a result of governmental or regulatory requirements and/or

Operator’s policies to comply with environmental rules applicable to Operations.

These costs may include periodic environmental audits, ecological or

archaeological surveys and pollution control procedures required by the

applicable Laws and regulations.



129



II.2.12 Abandonment Operations

Costs incurred, cash balances or amounts paid into the Abandonment Fund for

abandonment operations as contemplated in Article 20. Cash balances or reserves

set aside in excess of actual abandonment costs and not recovered by the

Contractor in accordance with Article 16.3 shall be shared between NOCAL and

the Contractor in proportion with each Party’s contribution to the Abandonment

Fund. Cash balances or reserves set aside in excess of the actual abandonment

costs and which have been recovered by the Contractor in accordance with Article

16.3 shall be distributed to NOCAL. Actual abandonment costs in excess of cash

balances or amounts paid into the Abandonment Fund for abandonment

operations shall be shared between NOCAL and the Contractor according to each

Party’s share of Remaining Oil Production during the final year of the Contract.

II.2.13 Interest on NOCAL Carried Costs

Interest incurred at the Liberian Interest Rate or the Liberia Default Interest Rate

on all payments made on NOCAL’s behalf under Article 19.5 and 19.6.

II.2.14 Past Costs

All amounts accrued as Petroleum Costs during the First Exploration Period. The

Petroleum Costs account balance as of the Effective Date shall be deemed twenty

five million three hundred and twenty thousand seven hundred and eighty Dollars

(US$25,320,780), and shall not be increased by any costs or expenses occurring

after the Effective Date and attributable to the First Exploration Period or

otherwise incurred under the Original Contract. Recovery for one hundred

percent (100%) of all such costs shall be allocated to COPL or their assignee.

II.3



Expenses not chargeable to the Petroleum Costs Account

The expenses which are not directly necessary for the performance of the

Petroleum Operations, and the expenses excluded by the provisions of the

Contract or this Accounting Procedure as well as by the regulations in force in

Liberia, are not chargeable to the Petroleum Costs Account and shall therefore not

be recoverable.

Such expenses shall include:

(a)



except as provided in II.2.14, expenses relating to the exploration period

before the Effective Date;



130



(b)



any expenses relating to the operations carried out beyond the Delivery

Point, such as transportation and marketing costs except as provided in

Article 27.3;



(c)



costs relating to the financing of Petroleum Operations prior to the

approval of a development and production plan within the Delimited Area,

except as recovered under II.2.13 above;



(d)



bonuses defined in Article 19 of the Contract;



(e)



expenditure incurred in obtaining, furnishing and maintaining the

guarantees required under the Contract;



(f)



fines and penalties imposed by any Government agency;



(g)



except with the consent of NOCAL, costs incurred in respect of Petroleum

after it has passed the Delivery Point; and



(h)



costs established to have been incurred as a result of Gross Negligence /

Willful Misconduct by the Contractor’s Senior Supervisory Personnel.

For the purposes of this Annex II II.3(h), the following terms shall have

the following meanings:

“Gross Negligence / Willful Misconduct” means any act or failure to act

(whether sole, joint or concurrent) by any Person which was intended to

cause, or which was in reckless disregard of or wanton indifference to,

harmful consequences such Person knew, or should have known, such act

or failure would have on the safety or property of another Person.

“Senior Supervisory Personnel” means, with respect to the Persons

participating in the Contractor, any individual who functions as its senior

resident manager who directs all operations and activities of the Persons

participating in the Contractor in the country or region in which he is

resident, and any manager who directly reports to such senior resident

manager in such country or region and responsible for exploration,

appraisal, development or production operations; and any individual who

functions for the Persons participating in the Contractor or one of their

Affiliates at a management level equivalent to or superior to the above

specified senior resident manager or direct report positions and is

responsible for exploration, appraisal, development or production

operations, or any officer or director of the Persons participating in the

Contractor or one of their Affiliates.



131



II.4



Items credited to the Petroleum Costs Account

The following incomes and proceeds shall, inter alia, be credited to the Petroleum

Costs Account:

(a)



income arising from the marketing of the quantity of Petroleum to which

the Contractor is entitled under Article 16 of the Contract for the purpose

of recovery of the Petroleum Costs;



(b)



any other incomes or proceeds related to the Petroleum Operations,

specifically those arising from:



Article III

III.1







sales of related substances;







any services rendered to third parties using the facilities dedicated

to the Petroleum Operations, including, but not limited to,

processing, transportation and storage of products for third parties

in those facilities.



Cost Evaluation Basis For Services, Materials and Equipment Used in

the Petroleum Operations



Technical services

A reasonable rate shall be charged for the technical services rendered by the

Contractor or its Affiliated Companies for the direct benefit of the Petroleum

Operations carried out under the Contract, such as gas, water, core analyses and

any other analyses and tests. Where comparable, the charges for such services

shall not exceed those currently prevailing if performed by non-affiliated third

parties, considering the quality and availability of such services.



III.2



Purchase of Materials and equipment

Materials and equipment purchased from third parties and directly necessary for

the performance of the Petroleum Operations carried out under the Contract shall

be charged to the Petroleum Costs Account at Net Cost incurred by the Contractor.



III.3



Use of equipment and facilities owned exclusively by the Contractor

Charges for exclusively owned equipment, facilities, and utilities of Operator or

any of its Affiliates shall be at Net Cost paid by the Contractor. Exclusively

owned drilling tools and other equipment lost in the hole or damaged beyond

repair may be charged at replacement cost less depreciation plus transportation

costs to deliver like equipment to the location where used.



132



III.4



Inventories

The Contractor shall keep an inventory both in quantity and value of all normally

controllable materials used for the Petroleum Operations and shall proceed at

reasonable intervals with the physical inventories as required. A Notice of

intention to take an inventory shall be sent to NOCAL at least ninety (90) days

prior to the commencement of said inventory so that NOCAL may be represented

at its own expense during the inventory operations. In the event that NOCAL is

not represented at an inventory, NOCAL shall be bound to accept the inventory

taken by the Contractor. A copy of such inventory shall be provided to NOCAL

by the Contractor.



Article IV – Financial and Accounting Statements

The Contractor shall furnish the STATE and NOCAL with all the reports, records

and statements provided by the provisions of the Contract and the applicable

regulations and, inter alia, the following financial and accounting statements:

IV.1



Statement of exploration work obligations

Such annual statement shall be submitted prior to the end of February of each

Calendar Year in respect of the exploration periods.

It shall present with details the exploration work and expenditures carried out by

the Contractor to fulfill its obligations set forth in Article 4 of the Contract,

excluding specifically appraisal wells and related appraisal expenditures as well

as development expenditures, exploitation expenses, overhead costs and bonuses.



IV.2



Statement of recovery of Petroleum Costs

A quarterly statement shall be submitted not later than thirty (30) days after the

end of each Calendar Quarter. It shall present the following items of the

Petroleum Costs Account:

(a)



the amount of Petroleum Costs which remain to be recovered at the

beginning of the quarter;



(b)



the amount of Petroleum Costs in respect of that quarter and recoverable

under the provisions of the Contract;



(c)



the quantity and the value of the production of Petroleum taken by the

Contractor during the quarter for the purpose of recovery of the Petroleum

Costs;



133



(d)



the amount of incomes or proceeds credited for the purpose of Article

II.4(b) above during the quarter;



(e)



the amount of Petroleum Costs which remain to be recovered at the end of

the quarter.



In addition, an annual statement of the recovery of Petroleum Costs shall be

submitted prior to the end of February of each Calendar Year.

IV.3



Statement of production

After commencement of production, such monthly statement shall be submitted

not later than ten (10) days after the end of each month.

It shall present for each month the detailed production of each Exploitation

Perimeter and, inter alia, the quantities of Petroleum:

(a)



stored at the beginning of the month;



(b)



lifted during the month;



(c)



lost and used for the requirements of the Petroleum Operations;



(d)



stored at the end of the month.



134



ANNEX III

FORM OF GUARANTEE

This Annex is an integral part of this Contract

between the Republic of Liberia and the Contractor.

THIS GUARANTEE is made on this [insert day] of [insert month and year] BETWEEN:

(1)



[NAME OF GUARANTOR], a company organized and existing under the

laws of [insert jurisdiction], and having its registered office at [insert

address] (the “Guarantor”); and



(2)



THE REPUBLIC OF LIBERIA (the “State”), represented for the purposes

of this Guarantee by the National Oil Company of Liberia (“NOCAL”)

and the Ministry of Justice.

RECITALS



WHEREAS, the Guarantor is the parent or an Affiliate of [insert name of Company]

organized and existing under the laws of [insert jurisdiction], and having its registered

office at [insert address] (the “Company”);

WHEREAS, the Company has entered into a production sharing contract (the

“Contract”) with, among others, the State, represented by NOCAL, in respect of the

Contract Area;

WHEREAS, the Company has a Participation Interest under the Contract;

WHEREAS, the State desires that the execution and performance of the Contract by the

Company be guaranteed by the Guarantor and the Guarantor desires to furnish this

Guarantee as an inducement to the State to enter into the Contract and in consideration of

the rights and benefits inuring to the Company under the Contract; and

WHEREAS, the Guarantor is fully familiar with and understands the contractual

obligations of the Company under the Contract.

NOW THEREFORE, it is hereby agreed as follows:

1.



Definitions and Interpretation



All capitalized words and expressions in this Guarantee have the same meaning as in the

Contract, unless otherwise specified to herein.



135



2.



Scope of this Guarantee



The Guarantor hereby guarantees to the State the timely payment and performance of any

and all indebtedness and obligations whatsoever of the Company to the State arising

under or in relation to the Contract as amended, modified or supplemented from time to

time, including the payment of any amounts required to be paid by the Company to the

State when the same become due and payable under the Contract (the “Guaranteed

Obligations”); provided, however, that the aggregate liability of the Guarantor to the

State hereunder shall not exceed the lesser of:

(a)



the liabilities of the Company to the State under the Contract;



(b)



_______ million Dollars (US$__,000,000) prior to the grant of the initial

exclusive exploitation authorization under this Contract; and



(c)



___________million Dollars (US$__,000,000) following the grant of the initial

exclusive exploitation authorization until first Commercial Production of any

Field.



3.



Waiver of Notice, Agreement to All Modifications



The Guarantor hereby waives notice of the acceptance of this Guarantee and of the state

of indebtedness of the Company at any time, and expressly agrees to any extensions,

renewals, modifications or acceleration of sums due to the State under the Contract or

any of the terms of the Contract, whether occurring with or without notice thereof to the

Guarantor, all without relieving the Guarantor of any liability under this Guarantee,

provided any such extensions, renewals, modifications or acceleration are undertaken in

accordance with the terms of the Contract. The State has no obligation to notify the

Guarantor of any amendments or modifications of or supplements to the Contract, but

NOCAL and the Ministry of Justice shall keep the Guarantor informed of any change in

their respective addresses for Notice under the Contract.

4.



Absolute and Unconditional Guarantee



The obligations of the Guarantor under this Guarantee shall be an absolute, unconditional

and (except as provided in Article 2 above) unlimited guarantee of payment and

performance to be performed strictly in accordance with the terms hereof, and shall

remain in full force and effect until the entire Guaranteed Obligations shall have been

performed or paid,. Such obligations of the Guarantor shall not be affected, modified or

impaired upon the happening from time to time of any event, including without limitation

any of the following, whether or not with notice to, or the consent of the Guarantor:

(a)



the waiver, surrender, compromise, settlement, release or termination of any or all

of the obligations, covenants or agreements of the Company under the Contract;



136



(b)



the failure to give notice to the Guarantor of the occurrence of a default under the

Contract;



(c)



an extension of the time for any payment of the Guaranteed Obligations or of the

time for performance of any other obligations, covenants or agreements under or

arising out of the Contract;



(d)



the modification, amendment or alteration (whether material or otherwise) of any

obligation, covenant or agreement set forth in the Contract;



(e)



the taking or the omission of any of the actions referred to in the Contract;



(f)



any failure, omission, delay or lack on the part of the State to enforce, assert or

exercise any right, power or remedy conferred on it in the Contract;



(g)



the voluntary or involuntary liquidation, dissolution, sale or other disposition of

all or substantially all the assets, marshaling of assets and liabilities, receivership,

insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,

arrangement, composition with creditors or readjustment of, or other similar

proceedings affecting the Guarantor or the Company or any of the respective

assets of either of them, or any allegation or contest of the validity of this

Guarantee in any such proceeding;



(h)



any defense based upon any legal disability of the Company or, to the extent

permitted by law, any release, discharge, reduction or limitation of or with respect

to any sums owing by the Company or any other liability of the Company to the

State;



(i)



to the extent permitted by law, the release or discharge by operation of law of the

Guarantor from the performance or observance of any obligation, covenant or

agreement contained in this Guarantee; or



(j)



the default or failure of the Guarantor fully to perform any of its obligations set

forth in this Guarantee.



If any payment by the Company to the State is rescinded or must be returned by the State

as a consequence of any matter referred to in clause (g) above, the obligations of the

Guarantor shall be reinstated with respect to such payment.

No set off, counterclaim, reduction, or diminution of any obligation, or any defense of

any kind or nature which the Guarantor has or may have against the State shall be

available hereunder to the Guarantor against the State to reduce the payments due to the

State under this Guarantee save that the Guarantor shall have the ability to assert any

claims or defenses available to the Company other than those available to the Company



137



as a consequence of any matter applicable to the Company referred to in clause (g) of this

Article 4 or as a consequence of any legal disability of the Company.

In the event of a default in the performance or payment of the Guaranteed Obligations

when and as the same shall become due, the State shall have the right to proceed first and

directly against the Guarantor under this Guarantee without proceeding against the

Company or exhausting any other remedies which it may have.

The Guarantor assumes responsibility for being and remaining informed of the financial

condition of the Company and of all other circumstances bearing upon the risk of

nonperformance of obligations or nonpayment of amounts owing under the Contract that

diligent inquiry would reveal and agrees that the State has no duty to advise the

Guarantor of any information regarding such condition or any such circumstances.

5.



No Discharge of Guarantor



The obligations of the Guarantor hereunder shall not in any way be released or otherwise

affected by: a release or surrender by the State or NOCAL of any collateral or other

security it may hold or hereafter acquire for payment of any obligation hereby

guaranteed; by any change, exchange or alteration of such collateral or other security; by

the taking of or the failure to take any action with respect thereto either against the

Company or against the Guarantor; or by any other circumstance which might otherwise

constitute a legal or equitable discharge or defense of a guarantor.

6.



No Prior Action Required



The State shall not be required to make demand for payment or performance first against

the Company or any other Person or to proceed against any collateral or other security

which might be held by the State or otherwise to take any action before resorting to the

Guarantor hereunder or exhausting any other remedies which it may have.

7.



Cumulative Rights



All rights, powers and remedies of the State hereunder shall be cumulative and not

alternative, and shall be in addition to all rights, powers and remedies given to the State

by law or otherwise.

8.



Continuing Guarantee



This Guarantee is intended to be and shall be considered as a continuing guarantee of

payment and performance and shall remain in full force and effect until first Commercial

Production of any Field.

Guarantor covenants that so long as it has any outstanding obligations under this

Guarantee, it will maintain its and its subsidiaries’ corporate existence, will not dissolve,



138



sell or otherwise dispose of all or substantially all of its assets (including its subsidiaries)

and will not consolidate with or merge into another corporation or permit one or more

other corporations to consolidate with or merge into it; provided that Guarantor may,

without violating the covenants contained in this Section 8, consolidate with or merge

into another corporation or permit one or more other corporations to consolidate with or

merge into it, or sell or otherwise transfer to another corporation all or substantially all of

its assets as an entirety and thereafter dissolve, if the surviving, resulting or transferee

corporation, as the case may be, (i) assumes, if such corporation is not Guarantor, all of

the obligations of Guarantor hereunder, (ii) is not, after such transaction, otherwise in

default under any provisions hereof, and (iii) is immediately after giving effect to such

transfer satisfies the requirements for a guarantor under Article 39.2 of the Contract.

9.



Notice of Demand



Upon default in the performance of any of the obligations of the Company guaranteed

hereunder, the State or its duly authorized attorney, in order to make a claim hereunder,

must give written notice to the Guarantor at its principal office in [insert jurisdiction] of

the amount due, and the Guarantor, within a period of ten (10) Business Days of receipt

of such notice, will make, or cause to be made, payment of such amount as notified, in

Dollars, at such bank or other place in [insert jurisdiction] as the State shall designate and

without set-off or reduction whatsoever of such payment in respect of any claim the

Company or any of its Affiliates may then have or thereafter might have against the State

or NOCAL.

10.



Assignment



Save as set out in Clause 8 above, the Guarantor shall not in any way effect, or cause or

permit to be effected, the assignment or transfer of any of its obligations hereunder

without the express prior written consent of NOCAL and the Ministry of Justice on

behalf of the State.

It is understood that NOCAL and the Ministry of Justice will adjust the amount

guaranteed hereunder to reflect changes in interests resulting from Transfers approved in

accordance with the provisions of Article 35 of the Contract, and the parties will use best

efforts to execute any appropriate amendments requested by one of the parties to reflect

such adjustments, and such amendments shall be consistent with Article 39 of the

Contract.

11.



Subrogation



Until all obligations of the Company under the Contract have been performed and

discharged in full, the Guarantor shall have no right of subrogation to any security,

collateral or other rights which may be held by the State.



139



12.



Payment of Expenses



The Guarantor shall pay to the State all reasonable costs and expenses, including

attorney’s fees, incurred by it in collecting or compromising any indebtedness of the

Company hereby guaranteed or in enforcing this Guarantee.

13.



Governing Law



This Guarantee shall be construed and enforced in accordance with, and the rights of the

parties shall be governed by, the law of the State of New York excluding choice of law

principles of the law of the State of New York that would permit the application of the

laws of a jurisdiction other than the State of New York.

All disputes or claims arising out of or relating to this Guarantee shall be finally settled

by arbitration, in accordance with Article 31 of the Contract.

If in connection with a claim under this Guarantee there is a question as to whether a

liability or obligation of the Company has in fact been performed or discharged, any prior

determination of such question in an arbitration proceeding under the Contract shall be

binding upon any arbitration panel convened with respect to such claim.

If an arbitration with respect to a claim against the Guarantor under this Guarantee is

commenced while an arbitration is pending under the Contract with respect to a liability

or obligation of the Company that is the subject of such claim, the arbitration commenced

hereunder shall be consolidated with the arbitration commenced under the Contract and

the arbitration panel appointed hereunder shall be the same arbitration panel appointed

pursuant to the Contract.

If an arbitration is commenced under the Contract with respect to a liability or obligation

thereunder the discharge or performance of which is the subject of a pending arbitration

with respect to a claim under this Guarantee, the arbitration commenced under this

Guarantee shall be stayed pending the outcome of the arbitration under the Contract, and

the determination of the arbitration panel under the Contract shall thereafter be binding

upon the arbitration panel hearing the arbitration commenced under this Guarantee as to

any matters decided therein with respect to the discharge or performance of such liability

or obligation.

If other parties to the Contract have also provided substantially similar guarantees of the

discharge or performance of any liability or obligation of the Contractor under the

Contract, the Guarantor and such other Persons may be joined as defendants by the State

in a single arbitration proceeding to enforce this Guarantee and such other guarantees,

and in any such case the Guarantor and such other Persons shall agree upon themselves

as to the arbitrator to be chosen by them. Failing such an agreement, the State may

request the London Court of International Arbitration to designate the arbitrators.



140



14.



Notices



All notices and other communications of any kind between the Guarantor, on the one

hand, and the Ministry of Justice or NOCAL, on behalf of the State, on the other hand

(each referred to as a “Notice”) shall be in writing and delivered in the manner described

in this Article 14.

Any Notice to the Guarantor from NOCAL or the Ministry of Justice, on behalf of the

State, shall be addressed as follows:

[Insert Guarantor information]

Any Notice from the Guarantor to the State hereunder shall be made to NOCAL or the

Ministry of Justice and shall be addressed in the manner provided in the Contract.

Any such Notice shall be in writing and delivered by hand, by postage prepaid registered

mail, by prepaid internationally recognized courier service, by facsimile, by electronic

mail, or by any other means of communication agreed upon in writing by the State and

the Company. Notice by facsimile or electronic mail is valid under this Guarantee only

to fax numbers or electronic email addresses set forth above (or in the case of the

Ministry of Justice and NOCAL in the Contract), and is not valid in connection with an

initial demand on the Guarantor for payment hereunder. A Notice other than an electronic

mail shall bear an original or facsimile reproduction of the signature of a representative of

the sending Party responsible for such Notice and all Notices shall indicate the identity of

such representative and state how he or she may be reached by telephone and, if practical,

electronic mail.

Delivery of a Notice under this Guarantee shall be deemed to have occurred in any one of

the following circumstances:

(a)



Electronic mail confirmation of receipt originated by the recipient is received at

the electronic mail address of the sender.



(b)



Facsimile confirmation of receipt is electronically issued to the sender by the

facsimile receiving device if the recipient has indicated a facsimile number for

notices.



(c)



Written confirmation of receipt is received by the Person, postal service or courier

service delivering the Notice.



15.



Severability of Provisions, etc.



If for any reason any provision hereof may prove illegal, unenforceable or invalid, the

validity or enforceability of the remaining provisions hereof shall not be affected.



141



This Guarantee may be amended only in writing executed and delivered by the Guarantor

and by the State, represented by the Ministry of Justice and NOCAL.

A person who is not a party to this Guarantee shall have no rights to enforce or enjoy the

benefit of any provision of this Guarantee.

For the purposes of this Guarantee, references to “NOCAL” shall mean and include any

ministry or agency of the State that may from time to time succeed to the regulatory

functions of NOCAL under the Contract.



[GUARANTOR]

By:

Title:

FOR THE REPUBLIC OF LIBERIA

THE NATIONAL OIL COMPANY OF LIBERIA

By:

Title:

MINISTRY OF JUSTICE

By:

Title:



142



ANNEX IV

FORM OF ASSUMPTION OF RIGHTS AND OBLIGATIONS



THIS Assumption of Rights and Obligations (the “Agreement”) is dated [date]

PARTIES

(1)

[full company name] incorporated and registered in [place of incorporation] with

company number [number] whose registered office is at [registered office address] and

which is authorized to do business in Liberia (the “Transferor”).

(2)

[full company name] incorporated and registered in [place of incorporation] with

company number [number] whose registered office is at [registered office address] and

which is authorized to do business in Liberia (the “Transferee”).

(3)

The Republic of Liberia, represented for the purposes of this Contract by the

National Oil Company of Liberia (“NOCAL”), a statutory entity established under the

laws of the Republic of Liberia.

Each a “Party” and together the “Parties”.

THE PARTIES AGREE AS FOLLOWS:

1.



Words and expressions used in this Agreement shall, unless otherwise stated and

unless the context expressly requires otherwise, have the meaning given to them

in the Contract, and the following terms shall have the following meanings:

(a)



“Contract” means the Restated and Amended Production Sharing

Contract and its annexes dated [date 2012] among the Republic of Liberia

and [other parties] relating to Liberia Block LB-13, together with any

extension, renewal, replacement, amendment, supplement or modification

thereto.



(b)



“Member” has the meaning given to it in Article 34.3 of the Contract.



(c)



“Participating Interest” means an interest in the rights and obligations of

the Contractor under the Contract.



143



2.



(d)



“Participation Date” means the later of the date of this Agreement or the

date upon which the assignment of rights and obligations under the

Contract from Transferor to Transferee becomes effective under the terms

of the Transfer Agreement.



(e)



“Transfer Agreement” means the agreement whereby the Transferor has

agreed to assign rights and obligations under the Contract to the

Transferee.



[If the Transferor does not retain a Participating Interest: The Transferor and

Transferee attach to this Agreement as Appendix 1 a copy of the Transfer

Agreement whereby Transferor assigns to Transferee all of Transferor’s [list

percentage to be assigned] Participating Interest. NOCAL confirms receipt of the

Transfer Agreement.

[If the Transferor retains a Participating Interest: The Transferor and Transferee

attach to this Agreement as Appendix 1 a copy of the Transfer Agreement

whereby Transferor assigns to Transferee a [percentage to be assigned]

Participating Interest and the Transferor retains a [percentage to be assigned]

Participating Interest. NOCAL confirms receipt of the Transfer Agreement.]

[If the Transfer is other than a Participating Interest across the entire Contract:

The Transferor and Transferee attach to this Agreement as Appendix 1 a copy of

the Transfer Agreement whereby Transferor assigns to Transferee [describe the

transaction]. NOCAL confirms receipt of the Transfer Agreement.]



3.



The Transferee hereby becomes a Person participating in the Contractor as at the

Participation Date and undertakes and covenants and as a separate covenant with

and for the benefit of each of the other Persons participating in the Contract and

NOCAL to assume, observe, perform, discharge and be bound by all liabilities

and obligations arising under the Contract (whether actual, accrued, contingent or

otherwise and whether arising on, before or after the Participation Date) and to be

bound by the Contract as a Person participating in the Contractor as if the

Transferee had at all times been a Person participating in the Contractor under the

Contract.



4.



The Transferee, hereby agrees to perform and to discharge all of the Transferor’s

various covenants, undertakings and other obligations in the Contract and from all

claims and demands whatsoever in respect of the Contract arising subsequent to

the Participation Date.



5.



As of the Participation Date and thereafter as required by Article 34.3 of the

Contract, the Transferee makes to NOCAL and each of the other Persons



144



participating in the Contract each of the representations and warranties to be made

by a Member under Article 34.3 of the Contract.

6.



[If the Transfer is a Transfer under Article 35.1: NOCAL has consented to the

assignment of the rights and obligations of the Participating Interest assigned

under the Transfer Agreement.]

[If the Transfer is a Transfer under Article 35.2: The Transferor warrants to

NOCAL that the transfer to the Transferee is permitted without the prior consent

of NOCAL under Article 35.2 of the Contract.]



7.



This Agreement (including non-contractual disputes or claims) shall be governed

by, and construed in accordance with, the law of the Republic of Liberia.



8.



The provisions of article 31 (Arbitration) and 37 (Notice) of the Contract shall

apply mutatis mutandis to this Agreement. In regard to Article 37, any Notice to

Transferee as a Person participating in the Contractor under the Contract sent by

NOCAL may be sent to:

[provide address even if same as address above]



145



IN WITNESS whereof the parties have caused this Agreement to be executed and

delivered the day and year first written above.



Transferor



Transferee



NOCAL



146