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 COTE D’IVOIRE








1990 Model Petroleum Production Sharing Contract


 TABLE OF CONTENTS











Article


1 Definitions


2 Scope of the Contract


3 Duration of exploration periods and surrenders


4 Exploration work commitments


5 Establishment and approval of Annual Work Programs and Budgets


6 Contractor's obligations in respect of the exploration periods


7 Contractor's rights in respect of the exploration periods


S Activity reports during the exploration periods a.nd


supersivion of Petroleum Operations


9 Occupation of land


10 Use of facilities


11 Appraisal of a Petroleum discovery


12 Grant of an exclusive exploitation authorization


in respect of a commercial discovery


13 Duration of the exploitation period


14 Exploitation obligation


15 Contrator's obligations and rights in respect of


exclusive exploitation authorizations


16 Recovery of Petroleum Costs and production sharing


17 Taxation


18 Valuation of Petroleum


19 Bonuses


20 Ownership and abandonment of assets


21 Natural Gas


22 PETROCI participation


23 Foreign exchange control


24 National Investment Fund


25 Monetary unit used for book-keeping


26 Accounting methods and audits


27 Import and export


28 Disposal of production - Contribution to the


satisfaction of national needs - Transfer of title to


Petroleum and liftings


29 Protection of rights


30 Personnel and training


31 Activity reports in respect of exclusive exploitation


authorizations


32 Arbitration


33 Force Majeure


34 Joint and several obligations and guarantees


35 Rights of assignment


36 Applicable law and stability of conditions


37 Implementation of the Contract


38 Effective Date








Appendix





1 Delimited Area


2 Accounting Procedure











1


 CONTRACT














BETWEEN











The Republic of Cote d’Ivoire, hereinafter referred to as "the


Government”, represented foF the purposes of this Contract by the


President of the Republic, H.E. Felix HOUPHOUET-BOIGNY,








on the one hand,











AND














_,, • '• , a company incorporated under the


laws of ..••••••. V'"1'- ‘_, having its


registered.... office' in _,


hereinafter referred to as _, and represented for


the purposes' of this Contract by_,


(in the case of a consortium, the above should be filled by other


companies)











Societe Nationale d’Operations Petrolieres de la Cote d’Ivoire, a


company incorporated under the laws of Cote d’Ivoire, having its


registered office in Abidjan, Cote d’Ivoire, hereinafter referred to


as ’’PETROCI”, and represented for the purposes of this Contract


by_,








on the other hand,


WHEREAS








the discovery and exploitation of Petroleum are important for the interest


and the economic development of the country and its people ;


in accordance with the provisions of Article 2.1 of Law n® 70-489 of August


3, 1970 establishing the Petroleum Code, and of Article 1 of Ordinance n° 75-


04 of January 3, 1975, ratified by Law n° 76-506 of August 3, 1976, governing


production sharing and service contracts relating to Petroleum, the State


wishes to undertake directly operatibrls'-.for exploration for, exploitation,


transportation, storage, processing.'aptJ-imafketing of Petroleum ;


pursuant to Decree n° 77-848.-;of-October .21', 1977, PETROCI is the holder of


the mining rights in respe.ct\of Petroleum exploration and exploitation over


the entirety of available -areas in Gote. d'J.voire including the Delimited Area


defined hereinafter L \ ’


the Government, directly-, and '-through PETROCI, wishes to promote the


development of the Delimited Area, and the Contractor wishes to cooperate


with the Government: by- assisting it in the exploration for and production of


the potential resources 'within the Delimited Area, and thereby encouraging


the economic growth of the country ;


PETROCI, for the purposes of this Contract, on the one hand, grants to the


Government its mining rights in respect of the Delimited Area and on the


other hand, joins with _ to


constitute the joint venture which will act as Contractor ; and


the Contractor represents that it has the financial resources, the technical


competence and the organization capacity necessary to carry out in the


Delimited Area the Petroleum Operations specified hereinafter ;








NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS :


 ARTICLE I





DEFINITIONS











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


1.1. CALENDAR YEAR means a period of twelve (12) consecutive months


beginning on January first (1st) and ending on the following December


thirty-first (31st), according to the Gregorian Calendar.


1.2. CONTRACT YEAR means a period of twelve (12) consecutive months


beginning on the Effective Date or on the anniversary thereof.


1.3. FISCAL YEAR means a period .of twelve (12) consecutive months


beginning on October first (lstKan

thirtieth (30th). •. j .


1.4. BARREL means U.S.'v^r'rel, i.e.-,..42 U.S. gallons measured at a


temperature of 60®F:.aind-under an ^t.mospheric pressure.


1.5. BUDGET means the itemized‘cost estimates of the Petroleum Operations


described in an Annual W.ork'.’Prcjgram.


1.6. EFFECTIVE DATEmeans the date on which this Contract comes into


force and effect, as defined in Article 38.


1.7. CONTRACTOR means collectively or individually_,


the contracting parties, as well as any entity to which they may assign an


interest pursuant to Articles 22, 35.1 and 35.2.


1.8. CONTRACT means this instrument and its appendices forming an integral


part hereof, together with any extension, renewal, replacement or


modification hereto which may be mutually agreed between the Parties.


1.9. PETROLEUM COSTS means all expenditures actually incurred and paid by


the Contractor for the purposes of the Petroleum Operations under this


Contract, and determined in accordance with the Accounting Procedure


attached hereto as Appendix 2.


1.10. DOLLAR means dollar of the United States of America.


1.11. 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.


1.12. ASSOCIATED NATURAL GAS means Natural Gas which exists in a


reservoir in solution with Crude Oil or, as gas-cap gas in contact with


Crude Oil, and which is or could be produced in association with Crude


Oil.


1.13. NON-ASSOCIATED NATURAL GAS means Natural Gas other than


Associated Natural Gas.


1.14. FIELD means a commercial accumulation of Petroleum in one or several


overlaying horizons, which has been duly appraised in accordance with the


provisions of Article 11, the extent of which is limited by the water-


Petroleum contact isobath.


1.15. PETROLEUM means Crude Oil and Natural Gas.


1.16. PETROLEUM OPERATIONS mea;hs--.all the Petroleum exploration,


appraisal, development, production/ transportation and marketing


operations, and more generally.,''•any other operations directly associated


therewith, carried out und'er-..thfs Contract,


1.17 PARTIES means the Government apd/the Contractor ; and PARTY means


either the Government or the. Contract or.


1.18. APPRAISAL PERIMETER. means any part of the Delimited Area where


one or more Petroleum';, discoveries have been made, and in respect of


which, the Government has granted to the Contractor an exclusive


appraisal authorization in accordance with the provisions of Article 11.3


for the purpose of appraising the extent of said discoveries.


1.19. EXPLOITATION PERIMETER means any part of the Delimited Area in


respect of which the Government has granted to the Contractor an


exclusive exploitation authorization in accordance with the provisions of


Article 12.


1.20. 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.


1.21. DELIVERY POINT means the F.O.B. point connecting the loading


facilities to the vessel then loading Crude Oil in the Republic of Cote


d’Ivoire, or any other transfer point mutually agreed between the Parties.


1.22. TOTAL PRODUCTION means the total production of Crude Oil or the


total production of Natural Gas obtained from the whole Delimited Area,


less the quantities used for the requirements of the Petroleum Operations


and any unavoidable losses.


1.23. ANNUAL WORK PROGRAM means the document describing, item by


item, the Petroleum Operations to be carried out during a Calendar Year


within the Delimited Area and in each Exploitation Perimeter, if any,


established in accordance with the provisions of Articles 4, 5 and 14.1.


1.2£. DELIMITED AREA means the area described in Article 2.7 in respect of


which the Government, under this Contract, grants to the Contractor an


exclusive exploration right.


The areas surrendered by the Contractor in accordance with the


provisions of Articles 3.5 and 3.6 shall be deemed as excluded from the


Delimited Area which shall be reduced accordingly. Conversely, the


Exploitation Perimeter(s) shall make an integral part of the Delimited


Area during the term of the relevant exclusive exploitation authorization.





1.25. AFFILIATED COMPANY means :


a company or any other entity which directly or indirectly controls or


is controlled by any entity constituting the Contractor ; or


a company or any other entity whfich'"directly or indirectly controls or


is controlled by a company o.r 'entity"which itself directly or indirectly


controls any entity constituting the Contractors


Such "control" means direct dr indirect, ownership by a company or any


other entity of mpre -than" fifty per Cent. (50%) of the shares, conferring


voting rights, forming the stock of.another company.


1.26 THIRD PARTY means a\compahy or any other entity, other than the


Contractor, which does. hpt.';C'ome within the foregoing definition.


 ARTICLE 2








SCOPE OF THE CONTRACT














2.1. This Contract is a production sharing contract governed by the provisions


herein contained.


2.2. The Government authorizes the Contractor pursuant to the terms set


forth herein to carry out the useful and necessary. Petroleum Operations


in the Delimited Area, on an exclusive basis, it being understood that said


operations shall only relate to Petroleum.


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


the Petroleum Operations provided fqr- hereunder, to comply with good


international petroleum industry practice and to be subject to the laws


and regulations in force in Cote..d’Ivoire"unless otherwise provided under


this Contract. ...... : } '' V-. \ ..


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 ’a'16he: 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;2.


2.6. During the ter rtr hereof, in the event of production, the Total Production


arising from the Petroleum Operations shall be shared between the


Parties according to the terms set forth in Articles 16.2 and 16.3.


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


Appendix 1.


2.8. The Contractor, within thirty (30) days from the Effective Date, shall


submit for the prior approval of the Government the appointed operator


which shall take charge of the conduct and carrying out of the Petroleum


Operations under the responsability of the Contractor. Any change of


operator shall be submitted for prior approval to the Government.


The operator, in the name and on behalf of the Contractor, shall furnish


the Government with all reports, information and data referred to


hereunder, including without limitation any agreement binding on the


entities constituting the Contractor.


























/


 ARTICLE 3





DURATION OF EXPLORATION PERIODS AND SURRENDERS











3.1. The exclusive exploration authorization is hereby granted to the


Contractor for a first period of _ (_) Contractual Years in


respect of the entire Delimited Area.


3.2. If during the first exploration period set forth above the Contractor has


fulfilled the exploration work commitments defined in Article .4, as


ascertained by the Government, the exclusive exploration authorization


shall, at the Contractor's request, be renewed for a second exploration


period of_(_) Contractual Years.


3.3. If, at the end of such second exploration period and provided that it has


fulfilled its work commitments‘as'-'-set forthv-.above, the Contractor so


requests, a third exploration-..period shall’be' authorized for _


(_) Contractual Years)


3.4. The applications, referred to in.Articles 3.2 and 3.3 shall be made at least


sixty (60) days prior to the expiry of-the current exploration period.


3.3. The Contractor shalLsifirrerider at least the following surfaces :


(a) twenty-five-'per. cent (25%) of the initial surface of the Delimited Area


at the expiry of the first exploration period ;


(b) twenty-five per cent (25%) of the initial surface of the Delimited Area


at the expiry of the second exploration period.


Such surrenders shall be constituted of one block of a simple geometrical


shape delimited by north-south, east-west lines or by natural boundaries


of the area concerned.


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


in respect of any Exploitation Perimeter shall be deducted from the initial


surface of the Delimited Area.


The surfaces previously surrendered pursuant to the provisions of Article


3.6 shall be deducted from the surfaces to be surrendered.


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


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


The Contractor undertakes to furnish the Government with a precise


description and a map showing the details of the surrendered areas and


those retained, together with a report specifying the work carried out in


the surrendered areas from the Effective Date and the results obtained.


The obligations provided by Article 8 of this Contract shall be entirely


fulfilled for any surrendered areas.


3.6. During any exploration period, the Contractor may, at any time, notify


the Government that it surrenders on the whole or any part of the


Delimited Area the rights granted to it by giving sixty (60) days' notice to


that effect.


In the event of partial surrender, the provisions of Article 3.3 concerning


the surrendered surfaces shall be applicable.


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


the work commitments and the investment obligations set forth in Article


4 for the current exploration perLpd.. \


In the event of surrender,.- the. Contractorshall'.‘have the exclusive right to


retain, for their respective''-term, the •surfaces in respect of Appraisal


Perimeters and Exploitation Perimeters which would have been granted


and to carry out'.'th.evPdtroleum Operatiohs therein.


3.7. At the expiry of the third, exploration period set forth in Article 3.3, the


Contractor shall surrender 'the whole remaining surface of the Delimited


Area except as to/any. Appraisal Perimeters and Exploitation Perimeters


which would hg've- then’been granted.


3.8. If at the expiry’ of all the exploration periods the Contractor has not


obtained an exclusive appraisal authorization or an exclusive exploitation


authorization, this Contract shall terminate.


3.9. The expiry or termination of this Contract, whatever the reason thereof,


shall not relieve the Contractor of any obligations under this Contract


incurred prior to, or arising from, said expiry or termination and which


shall be fulfilled.


 ARTICLE 4





EXPLORATION WORK COMMITMENTS











4.1. The Contractor shall commence the geological and seismic work within


three (3) months from the Effective Date.


4.2. The Contractor, during the first exploration period defined in Article 3.1,


shall carry out the following minimum work :


- _kilometers of seismic survey ; and


- exploratory wells.


4.3. The Contractor, during the second .exploration period defined in Article


3.2 shall carry out the following-minimum wor.k :\


- _e xp lo r ato ry-.wejls.


4.4. The Contractor,..during the third explication period defined in Article 3.3


shall carry out the following mihirnum- work :


- _exploratory, well's.


4.5. Each of ■ the exploratory" wells referred to above shall be drilled to a


minimum deptftof • meters, after deduction of the water depth, or to


a lesser depth if'tfte 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 ;


(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 to the contrary, the


Government and the Contractor may, at any time, agree to abandon the


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


4.6. In order to carry out the exploration work defined in Articles 4.2 to 4.4 in


the best technical conditions in accordance with good international


petroleum industry practice, the Contractor undertakes to spend the


following minimum amounts determined with minimum expenditure of


_million Dollars per well :


(a) _million Dollars during the first exploration period defined


in Article 3.1 ;


(b) _ million Dollars during-. the second exploration period


defined in Article 3.2 ; v-..\


(c) _million Dollars..during the third" exploration period defined


in Article 3.3. ;• 'O'


If during an exploration period-..the Contractor has performed its work


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


shall be deemed to have\fulf-iifed its investment obligations relating to


that period. Conver.selyy-.jEfte Contractor shall perform the entirety of its


work commitments set forth in respect of an exploration period even if it


results in exce'edlng-th'e amount specified above for that period.


4.7. Upon the Effective Date, the Contractor shall provide a security


acceptable to the Government, guaranteeing the Contractor's work


obligations for the first exploration period.


As the case may be, upon commencement of each additional exploration


period, the Contractor shall also provide a similar security guaranteeing,


for that additional period, the Contractor’s work obligations.


At the end of each Contractual Year, the security shall be reduced in


order to cover the outstanding balance of work obligations for the current


exploration period.


4.8. If at the expiry of any of the three (3) exploration periods defined in


Articles 3.1, 3.2 and 3.3, or upon the date of surrender of the whole


Delimited Area, or upon the date of termination of this Contract, the


Contractor has not fulfilled its work commitments set forth in this


Article, it shall pay as compensation to the Government, within thirty (30)


days after that date of expiry, surrender or termination, the unspent


balance of exploration work commitments above-defined for the current


exploration period.
























































































































































12


 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 Effective Date, the


Contractor shall prepare and submit for approval to the Government an


Annual Work Program together with the related Budget for the entire


Delimited Area, specifying the Petroleum Operations that the Contractor


proposes to perform during that Calendar Year and their cost.


5.2. If the Government wishes to propos.e-ariy revisions or moc 'ications to the


Petroleum Operations specif ied..i'n..:said Annual Work Pr 'ram, it shall,


within thirty (30) days after Vdbeipt of that. Program so notify the


Contractor, presenting all ^justifications.-deemed useful. In :hat event, the


Government and the •‘.Contractor shall-.me.et as soon as pos ble to consider


the proposed revisions or modifications' and to mutual: establish the


Annual Work .Program and..•the.;' related Budget in its final form, in


accordance with good international' petroleum industry pra tice. However,


during the exploration -period,'the Annual exploration Work Program and


the related Budget.'Established by the Contractor after the above-


mentioned meeting ^hall be deemed to be approved provided that they


comply with the'obligations set forth in Article 4.


Each part of the Annual Work Program and Budget in respect of which


the Government has not proposed any revision or modification within the


period of thirty (30) days above-mentioned, shall be carried out by the


Contractor within the stated time.


Should Government fail to notify the Contractor of its wish for revision or


modification within the period of thirty (30) days above-mentioned, such


Annual Work Program and the related Budget submitted by the Contractor


shall be deemed to be approved by the Government.


5.3. It is agreed by the Government and the Contractor that knowledge


acquired as and when the work proceeds or certain events may justify


changes to the details of the Annual Work Program. In that event, after


notification to the Government, the Contractor may make such changes


provided that the basic objectives of said Annual Work Program are not


modified.


 ARTICLE 6








CONTRACTORS OBLIGATIONS IN RESPECT OF THE EXPLORATION PERIODS











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.- shali be carried out in the most


appropriate manner in observance\ of) good international petroleum


industry practice. y-;.


6.4. The Contractor undertakes tp take all the reasonable and practical steps


to : ... \.... \ \


(a) ensure the protection of water-.bearing strata encountered during its


work ; \ \


(b) carry out the tests, necessary for determining the value of any show


encountered ..during- drilling and the exploitability of any possible


Petroleum discoveries ;


(c) avoid losses and discharges of Petroleum produced as well as losses


and discharges of mud or any other product used in the Petroleum


Operations.


6.5. All works and facilities erected by the Contractor hereunder shall,


according to their nature and to the circumstances, be built, placed,


signalled, marked, fitted and preserved so as to allow at any time and in


safety free passage to navigation within the Delimited Area, 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 maintain them in a manner satisfactory to


said authorities.


6.6. 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, nor


cause a nuisance to any government or public building, except with the


prior consent of the Government, and shall make good the damage caused


by it in that event.


6.7. In pursuance of the International Convention for the Prevention of


Pollution of the Sea by Oil signed in London on May 12, 1954 and the


amendments and implementing instruments thereof, the Contractor


undertakes, inter alia, to take ail necessary precautions to prevent


marine pollution.


In order to prevent pollution, the Government may adopt, in consultation


with the Contractor, any additional measure which it may consider


necessary to preserve the environment.


6.8. The Contractor and its subcontractors shall be obligated to give


preference to enterprises and goods from Cote d’Ivoire, if conditions of


price, quality, delivery time and terms of payment are similar.


The Contractor undertakes to issue call for bids to Ivorian and foreign


candidates for any supply, construction or service contracts the estimated


value of which exceeds two hundred- thousand (200,000) Dollars during the


exploration period and five hundred thiousand (500,000) Dollars during the


exploitation period, it beipg-.und'erstbod that the Contractor will not


improperly split said con.tr.acts. : r.


Copies of all the ..contracts related to the Petroleum Operations shall be


submitted to the Government upon signature thereof.


6.9. The Contractor undertake^, t-p.'give preference, under similar economic


conditions, to the purchase- of assets necessary Petroleum Operations


rather than to' thereittai:-thereof or any other kind of lease.


For that purpose,""all the lease contracts having an estimated value


greater than _ Dollars shall be specified by the Contractor in


any submitted Annual Work Programs.






























































$ K


-Ji. K)


 ARTICLE 7








CONTRACTOR'S RIGHTS IN RESPECT OF THE EXPLORATION PERIODS











7.1. Without prejudice to the provisions hereof, the Contractor shall have the


right to carried out the Petroleum Operations within the Delimited Area.


Such right includes, inter alia :


(a) full responsability for, management of and control over all the


Petroleum Operations ;


(b) authority to exercise any of the rights conferred hereby through


agents and independent contractorsrand to pay accordingly all of their


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


Contractor, in accordance w-ith -tfeprovisions -of Article 23.


7.2. The Contractor shall havd-. the’-right to clear-, the ground, dig, perforate,


drill, build, erect, piade,-'supply, oper.ate, manage and maintain ditches,


pools, wells, trenches-'j -excavations', dams* canals, water conduits, plants,


tanks, basins, maritime and other-.storage facilities, primary distillation


units, first-extraction gasoline-separator units, sulfur plants, 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,


harbours, dikesj'-jetties, dredges, sea walls, under-water piers and other


facilities, ships, vehicles, railways, roads, bridges, ferries, airlines,


airports and other transportation facilities, garages, 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.


The location of such facilities may be selected by the Contractor at the


place or position chosen by it, subject to the Government’s approval,


which shall not be unreasonably withheld, and to the conditions of Articles


2.3 and 6.3 to 6.7.


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.





























O


7.4. The Contractor shall have the right, subject to the payment of fees


applicable in Cote d’Ivoire, to remove and use 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.


With the consent of the competent administrative services, the


Contractor may make reasonable use of such materials for the


performance of the Petroleum Operations, free of charge, when they are


located on land owned by the Government and placed in the vicinity of the


land where said Operations are taking place.


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


Operations at no charge, 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.


 ARTICLE 8





ACTIVITY REPORTS DURING THE EXPLORATION PERIODS


AND SUPERVISION OF PETROLEUM OPERATIONS











8.1. The Government shall own and may freely use all the original data and


documents relating to the Petroleum Operations such as, but without


limitation, records, samples, geological, geophysical, petrophysical,


drilling and operating reports.


8.2. The Contractor undertakes to furnish the Government with the following


periodic reports :


(a) daily reports on drilling operations?;


(b) weekly reports on seisrhio operations


(c) within thirty (30)'-days' after ea'cm'Oalendar quarter, a report on the


Petroleum Operations carrled-odt..together with a detailed statement


on Petroleum Costs in respect of the preceding quarter ;


(d) prior to the end of., ftd&r.iiary of each Calendar Year, an annual report


on the Petroleutn Operations carried out together with a detailed


statement on Petroleum Costs in respect of the preceding Calendar


Year.


8.3. In addition, the following reports or documents shall be furnished to the


Government 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, maps, profiles, sections or other documents related thereto,


as well as, at the Government's request, the originals of all recorded


seismic magnetic tapes ;


(c) a copy of the drilling location and completion reports 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.


All maps, sections, profiles, logs and all other geological or geophysical


documents shall be supplied on an appropriate transparent support in view


of subsequent reproduction.


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 the Government within a reasonable period.


Upon expiry or in the event of surrender or termination of this Contract,


the original documents and samples relating to the Petroleum Operations,


including on request the magnetic tapes, shall be provided to the


Government.


The Government through its duly' designated representatives shall be


entitled to have access at any time to the Contractor’s files relating to


the Petroleum Operations, of which...at least one copy shall be kept in


Cote d’Ivoire. \'.....


8.4. The Parties undertake to treat as’confidential, and.not to disclose to Third


Parties all or part of \‘ahy-.documents' and’ samples relating to the


Petroleum Operation's in V.espect of all the 'exploration periods as defined


in Article 3, and in' -.the event of - surrender of an area until the date of


such surrender-.with regard to ■the.'dpcuments and samples relating to that


surrendered area. \ ?


However, each Party'•rnaiy-cause Third Parties selected by it to prepare


studies-in connection; with the Petroleum Operations. Those may have


access to documents' and samples relating to the Petroleum Operations


and shall undertake to treat them confidentially.


If it so desires, the Government may decide to increase the period of


confidentiality specified in this Article 8.4.


8.5. The Contractor shall keep the Government informed of its activities


through the duly designated representative of the latter. In particular,


the Contractor shall notify to the Government as soon as possible and in


any event at least fifteen (15) days in advance all projected Petroleum


Operations, such as any geological surveys, seismic surveys,


commencement of drilling, installation of a platform, etc.


In the event the Contractor decides to abandon a drilling, it shall notify


the Government thereof within at least seventy-two (72) hours prior to


such abandonment.


8.6. One or several duly authorized representatives of the Government shall


have the right to supervise the Petroleum Operations and, at reasonable


intervals, to inspect work, facilities, equipment, materials, records and


books relating to the Petroleum Operations, provided that such inspection


shall not unduly delay the proper conduct of said Petroleum Operations.


That representative shall have, inter alia, the right to be present during


the testing and the abandonment of any well.


In order to permit the exercise of the above-mentioned rights, the





Contractor shall provide the Government’s representatives with


reasonable assistance, as regards, inter alia, transportation and


accommodation. Transportation and accommodation expenses directly


related to the supervision and inspection shall be charged to the


Contractor and included in the Petroleum Costs.





8.7. The Contractor shall, as promptly as possible, inform the Government of


any discovery of mineral substances. \.....


8.8. For the purposes of this Article, the \Government’s designated


representative shall be .tft.e..;”bir6cteur de's Hydrocarbures” or any other


person appointed by him-..'; \




























































































9 {)


 ARTICLE 9








OCCUPATION OF LAND











9.1. The Government shall make available to the Contractor, at no cost and


only for the purposes of the Petroleum Operations, any land which it owns


and which is necessary for said Operations. The Contractor shall have the


right to build and maintain, above and below the ground, the facilities


necessary for the Petroleum Operations. The Contractor shall not request


the use of said lands unless there.is a genuine need thereof and shall


refrain from claiming any land occupied by buildings or property used by


the Government.


The Contractor shall indemnify the Government for any damage caused to


the land by the construction, use-..and\ maintenance of its facilities on such


land. ‘ v-.. \ ..


The Government shall'authorize the Contradtor to build, use and maintain


telephone, telegrapH:.aind'‘piping systems above and below the ground and


along the land'.rvo.tV belonging-to\the'Government, without claiming any


compensation, provided that, the? Contractor causes as little damage as


possible and pays to the\land-oWners, a reasonable compensation mutually


agreed upon.


9.2. The rights on .land owned by private persons, which would be necessary for


the carrying out .df the Petroleum Operations, shall be acquired by direct


agreement between the Contractor and the private person concerned.


In the event of disagreement, the Contractor shall notify the Government


thereof, and the latter shall proceed to expropriation for a public purpose,


at Contractor’s expenses. When determining the value of those property


rights, no consideration shall be given to the Contractor's purpose for


acquiring them and the Government agrees that no law or procedure for


said acquisition shall have the effect of giving them an excessive value or


a confiscation value. Those rights acquired by the Government shall be


registered in its name, but the Contractor shall be entitled to benefit


therefrom for the purposes of the Petroleum Operations, at no cost,


during the entire term of this Contract. The Government guarantees that


the Contractor shall be protected in the use and occupation of such land


just as if it owns the property rights thereto.


 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 the applicable laws, any railroad,


tramway, road, airport, landing strip, canal, river, bridge, waterway and


any telephone or telegraph network in Cote d’Ivoire whether owned by the


Government or by any private enterprise, subject to the payment of fees


then in effect or mutually agreed upon which will not be in excess of the


prices and tariffs charged to Third Parties for similar services.


The Contractor shall also have the rigjht to use for the purposes of the


Petroleum Operations any land, sea Kir--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. .. - \ V ’


10.2. The Government shall have the right.'to:-,use for exceptional matters any


transportation ahd-...communication-, facility installed by the Contractor,


subject to a fair compensation-.mutUcilly agreed upon which will not be in


excess of the prices and'tariffs charged to Third Parties for similar


services, provided thatf-.ip the Contractor's opinion, such use by the


Government does hothinder or cause prejudice to the Petroleum


Operations.


Under the same conditions, in the event of national necessity, inter alia,


national catastrophes, cataclysms, internal or external threats, the


Contractor shall make its facilities available to the Government at the


latter's request.


10.3. Nothing in this Contract shall limit the Government's right to build,


operate and maintain on, under and along the land made available to the


Contractor for the purposes of the Petroleum Operations, roads, railroads,


airports, landing strips, canals, bridges, flood protection works, police


stations, military facilities, pipelines, useful telephone and telegraph


lines, provided that such right is not exercised in a manner which restricts


or hinders the Contractor's rights hereunder, or the Petroleum Operations,


or causes prejudice thereto, except in the event of national necessity.


Under the same conditions, the Government may authorize persons to


build, operate and maintain any facilities within the Delimited Area.


 ARTICLE 11








APPRAISAL OF A PETROLEUM DISCOVERY











11.1. In the event the Contractor discovers Petroleum, it shall, as promptly as


possible, notify the Government 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 information relating to said


discovery.


11.2. If the Contractor wishes to undertake appraisal work relating to the


above-mentioned Petroleum discovery, it shall submit for approval to the


Government, 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 Articles 5.2 and 5.3 shall- be applicable, mutatis


mutandis, to said program-.as' regards- 'its -approval and performance, it


being understood . that '-the submitted, program may not be rejected or


modified by .the Government . provided that it complies with good


international petroleum industry, practice.


11.3. If the Contractor meets, the conditions referred to in Article 11.2 and on


request to the Gov'ernnfi'eht, the latter shall grant to it an exclusive


appraisal authorization for a duration of two (2) years from the date of


approval of the appraisal work program and the related budget, in respect


of the Appraisal Perimeter specified in said program. Except otherwise


provided by this Article, the Contractor shall, during the term of said


exclusive appraisal authorization, be subject to the same regime as that


applicable to the exclusive exploration authorization.


11.3.1. The Contractor shall then diligently carry out the appraisal work


program for the discovery in question ; in particular it shall drill the


appraisal wells and carry out the production tests specified in said


program.


At the Contractor's request, notified at least thirty (30) days prior to


the expiry of the appraisal period above-defined, the duration of said


period may be extended by a maximum of six (6) months, provided that


such extension is justified by the continuation of the drilling and


production tests specified in the appraisal program.


11.3.2. Within three (3) months after the completion of appraisal work, and no


later than thirty (30) days prior to the expiry of the appraisal period,


the Contractor shall provide the Government with a detailed report


giving all the information relating to the discovery and the appraisal


thereof.

















O


11.3.3. 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 the Government, 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 :


(a) the planned delimitation of the Exploitation Perimeter applied for


by the Contractor, so that it covers the area defined by the seismic


closure of the Field concerned, together with all the technical


justifications with respect to the extent of said Field ;


(b) 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 and the possible


valorization of the products associated with Crude Oil, such as any


Associated Natural Gas ; ;


(c) item by item, the descripTioiVbf equipment, and work necessary for


production, such as..the:-.number of deveip-pmeht wells, the number


of platforms, pipelines*-.production,-processing, storage and loading


facilities together - with their specifications ;


(d) the estimated schedule '-for'-, its implementation and the projected


date of production s£art\uj>-;


(e) the estimates of. Investments and exploitation costs together with


an economic'-.ey.aluation demonstrating the commercial nature of


the discovery in question.


11.3.4. 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 the Government the economic study referred


to in Article 11.3.3 (e) 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.


11.3.5. For the purposes of evaluating the commercial nature of said Field or


Fields, the Government and the Contractor shall meet within thirty


(30) days after the submission of the development and production plan


accompanied by the economic evaluation.


11.3.6. The development and production plan submitted by the Contractor


shall be subject to the approval of the Government. Within ninety (90)


days after the submission of said plan, the Government may propose


revisions or modifications hereto by notifying the Contractor thereof


with all the useful justifications. In that event, the Parties 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 ; the plan shall be deemed to be approved by the Government


upon the date of such agreement.


Should the Government fail to notify the Contractor of its wish for


revision or modification within the above-mentioned ninety (90) days’


period, the plan submitted by the Contractor shall be deemed to be


approved by the Government at the expiry of said period.





11.4. When the Contractor does not wish to undertake the appraisal work in


respect of the Petroleum discovery...referred to in Article 11.1, the


provisions of Article 3.8 shall be applicable.


11.5. If for reasons not technically justified the (Contractor, within twelve (12)


months after notification-to the Government of a Petroleum discovery,


has not applied for an--exclusive appraisal authorization or if, after its


granting, it has. riot commenced ..the "appraisal work in respect of said


discovery, or -If. the Contractor.,- within eighteen (18) months after


completion of the appraisal'-work, does not declare the discovery as


commercial, the Government may require that the Contractor surrenders


ail its rights in respect of the area deemed to encompass said discovery


without any compensation for the Contractor. If, within sixty (60) days


after Government’s request, the Contractor has not notified its decision,


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.


11.6. Any quantity of Petroleum produced from a discovery before it is


declared commercial, not used for the requirements of the Petroleum


Operations or lost, shall be measured according to the provisions of


Article 15.9 and included in the Total Production for the purposes of


Articles 16 and 17.





















































5


 ARTICLE 12





GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION





IN RESPECT OF A COMMERCIAL DISCOVERY











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 11.3.3., to obtain, in respect of the Field concerned, an exclusive


exploitation authorization covering the related Exploitation Perimeter.


Said authorization shall be granted by the Government as soon as possible.


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-Timited.


12.3. If in the course'of \ Work carrie.d\.out. after the grant of an exclusive


exploitation authorization, it appears that the area defined by the seismic


closure of the Field concerned'-jSTarger than originally estimated pursuant


to Article 11.3.3, the Government 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 the


Government, 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, the


Government may require the Contractor to exploit said Field in


association with the rightholder of the adjacent area under the provisions


of a so-called unitization agreement.


Within six (6) months after the Government 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


rightholder 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 expiry of the exploitation period of twenty-five (25) years above-


defined, a commercial exploitation of a Field remains possible the


Government shall authorize the Contractor, at the latter’s justified


request submitted at least twelve (12) months prior to said expiry, 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 expiry of -tftatyadditional -exploitation period, a commercial


exploitation of said-Ffeicf- remains possible, the Contractor may require to


the Governments at least twelve. (12) months prior to said expiry, to be


authorized to continue the- exploitation of said Field under this Contract,


during an additional period-to\b'e agreed upon.


13.2. The Contractor fnayy\at any time, fully or partially surrender any


exclusive exploitation authorization by giving at least twelve (12) months’


prior notice, ‘which may be reduced with the Government’s consent. That


notice shall be accompanied by the list of steps which the surrendering


Contractor undertakes to take, in accordance with good international


petroleum industry practice, arising out of its surrender, and such


surrender shall only be effective upon completion of the required


abandonment work.


13.3. Interruption of development work or production of a Field declared


commercial, for a consecutive period of at least six (6) months, decided


by the Contractor without the Government's consent, or abandonment of


the exploitation of a Field, may give rise to the withdrawal of the


exclusive exploitation authorization concerned together with the


termination of this Contract as provided by Article 37.4.


13A. Upon expiry, surrender or withdrawal of the last exclusive exploitation


authorization granted to the Contractor, this Contract shall terminate.


13.5. The expiry or termination of this Contract, whatever the reason thereof,


shall not relieve the Contractor of any obligations incurred prior to, or


arising from, said expiry or termination and which shall be fullfiiled, with


respect to, inter alia, the provisions of Article 20.


13.6. In the event of any surrender, withdrawal or upon expiry of an exclusive


exploitation authorization, if the Government considers that the


exploitation can be continued by another exploiter, the Government shall


have the right to have it exploited, without any compensation for the


Contractor. The Parties shall meet together with a view to ensuring the


continuity of exploitation.


 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 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 provistons'pf Article 12.1, the Government


agrees not to force the Contractor. :;to continue-.the exploitation of such


Field. . K -


In that event, theGoyetiiment, in., its discretion, may withdraw the


exclusive exploitation authorization ., concerned from the Contractor


without any compensation for the-.latter, by giving a sixty (60) days’ prior


notice, and the provisions-.'of •• Articles 13.6 and 20 shall, inter alia, be


applicable. . .. \ ’•


 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 11.3.6. and shall continue it with the maximum diligence.


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 biitld, use, operate and maintain all


the Petroleum storage and tran.spqr'tatioh facilities which are necessary


for the production, transportation" and sale-..of .Petroleum produced,


pursuant to the conditions ’specified in thi.s.Cbn tract.


The Contractor may -ddtermine the ‘route and location of any pipeline


inside Cote d'Ivoire \which is .necessary for the Petroleum Operations,


provided that it shall submit‘-true? plans to the Government for approval


prior to the commencement'of. work ; 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.


The conditions of transportation as well as the safety regulations relating


to those structures, shall be the purpose of an agreement between the


Parties.


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 that 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 in respect of the


pipeline or facility concerned shall be paid by the user.


15.5. Following the grant of an exclusive exploitation authorization, the


Contractor undertakes to proceed diligently with the carrying out of


development wells, spacing them 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 shall provide the Government with all the reports, studies,


measurement results, tests and documents enabling the monitoring of the


proper exploitation of each Field.


The Contractor shall, in particular, carry out the following measures on


each producing well :


(a) monthly testing of production arki-gas/oil ratio ;


(b) half-yearly measurement'of the- Field reser.vb.ir5 pressure.


15.8. The Contractor undertakes to produce every year from each Field


quantities of Petroieurh In accordance- with the provisions of Article 15.6.


The annual production rates-, of "each Field shall be submitted by the


Contractor together with- the Annual Work Programs referred to in


Article 5 to the ap.prqvai. of the Government which shall not be withheld


provided that the Contractor gives proper technical and economic


grounds.


15.9. The Contractor shall measure, in a point mutually agreed between the


Parties, all Petroleum produced not used for the requirements of the


Petroleum Operations and excluding unavoidable losses, after extraction


of water and sediments, by using, after approval by the Government, the


measurement appliances and procedures customarily used in the


international petroleum industry.


The authorized Government's representatives shall have the right to


examine those measurements and inspect or cause to be inspected the


appliances or procedures used.


If the Contractor wishes to change said measurement appliances or


procedures, it shall obtain prior approval from the Government.


Where the appliances and procedures used therefore 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, and the proper adjustment


shall be made for the period of existence of such error.

















3 1


 ARTICLE 16








RECOVERY OF PETROLEUM COSTS


AND PRODUCTION SHARING





























16.1. From the commencement of regular’ production of Crude Oil, the


Contractor shall market all the.production of Crude Oil obtained from the


Delimited Area, in accordance-with the provisions hereinafter defined.


16.2. For the purposes of recovery, of the Petroleum Costs, the Contractor may


freely take each..Calendar Year apportion of the production in no event


greater than '-■•per- cent ( :‘%~X of., the Total Production of Crude Oil


from the Delimited’Area, of only, any lesser percentage which would be


necessary and sufficient,. \ V’ *•


The value of such..pdrtign' of Total Production allocated to the recovery of


the Petroleum {‘CostS'by the Contractor, as defined in the preceding


paragraph, shall -be-‘‘calculated in accordance with the provisions of Article


18.


If during a Calendar Year the Petroleum Costs not yet recovered by the


Contractor under the provisions of this Article 16.2 exceed the equivalent


in value of _per cent (_%) of the Total Production of Crude Oil


from the Delimited Area, as calculated above, the balance of the


Petroleum Costs which cannot be recovered in that Calendar Year shall


be carried forward in the following Calendar Year or Years until full


recovery of the Petroleum Costs or until the expiry of this Contract.


16.3. The quantity of Crude Oil from the Delimited Area remaining during each


Calendar Year after the Contractor has taken from the Total Production


the portion necessary for the recovery of the Petroleum Costs under the


provisions of Article 16.2, hereinafter referred to as "Remaining


Production", shall be shared between the Government and the Contractor


as follows :


Option I or II to be selected by the Contractor at the time of its application :


OPTION I





The Remaining Production shall be shared according to the daily Total


Production from the Delimited Area :





Increments of Governments share Contractors share


daily Total Production


(in Barrels per day)





from 0 to 15,000 % %


from 15,000 to 30,000 % %


from 30,000 to 50,000 % %


over 50,000 % %





For the purpose of this Article, the daily Total Production shall be the average


rate of Total Production during the calendar-quarter in question.


When the Delimited Area includes water depths both lesser and greater


than 200 meters, different production, sharing increments according to


these water depths may; be provided for. .


OPTION II


The Remaining Production shali.be shared according to the value of the "R" ratio


hereinafter defined : ...





Value of "R" . . .. Government's share Contractor's





less than 1 % %


from 1 to 2 % %


from 2 to 3 % %


greater than 3 % %





For the purpose of this Article, "R" represents the ratio between "Cumulative


Net Revenues" and "Cumulative Investments" calculated at the end of the


preceding Calendar Year, where :


"Cumulative Net Revenues" means the sum, from the Effective Date until


the end of the preceding Calendar Year, of the Contractor' revenues


obtained under the provisions of Articles 16.2 and 16.3, less the sum of


the Petroleum Costs only in respect of the exploitation expenses, (and the


sum of income tax related to the Delimited Area and paid in Cote d'Ivoire


for all the tax periods preceding that of the current Fiscal Year. To be


added if the production sharing is determined before the payment of


income tax as provided by Article 17.1 hereafter).


"Cumulative Investments" means the sum, from the Effective Date until


the end of the preceding Calendar Year, of the Petroleum Costs only in


respect of the exploration expenditures, appraisal expenditures and


development expenditures. Neither recovery nor depreciation of said


expenditures shall be taken into account for the calculation of the sum of


expenditures specified above.


End of Options I and II


For the purposes of the tax legislation of the Republic of Cote d'Ivoire,


the quantity of Crude Oil that the Government will receive during each


Calendar Year pursuant to this Article 16.3 shall include the portion


necessary to pay any tax(es) of the Contractor in Cote d'Ivoire which will


be assessed on its incomes. The Government agrees to pay from this


portion any income tax(es) on behalf and in the name of the Contractor


and to deliver to the latter official receipts of such payments as provided


for in Article 17.6. For the determination of the value of said portion


necessary for the payment of income tax, the Government shall use the


sale price defined in Article 18. The portion of Crude Oil to which the


Government is entitled and which corresponds to the income tax shall be


determined separately and specified pursuant to the provisions of this


Article. (The preceding paragraph, is to be deleted if the production


sharing is determined before the payment of income tax as provided by


Article 17.1 hereafter).


16.4. The Government may receive its share" of production defined in Article


16.3 either in kind or in cash, if.being tihderstoo.d that the Government's


share of production includes, Uiter: alia, a contribution to the State "Fonds


d'Actions Petrolieres" which is equal to fifteen per cent (15%) thereof.


16.5. If the Government wishes" to receive-, mv.kihd all or part of its share of


production defined, in Article.. T6';3, it shall so notify in writing the


Contractor at least ninety (90). "day's prior to the beginning of the calendar


quarter concerned specifying -the precise quantity that it wishes to


receive in kind during-said-quarter.


For that purpose,,''-the Contractor shall not enter into any sale


commitment in-respect of the Government's share of production for a


term of more than one (1) year without the written consent of the


Government.


16.6. If the Government wishes to receive in cash all or part of its share of


production defined in Article 16.3, or if the Government has not. notified


the Contractor of its decision to receive its share of production in kind


pursuant to Article 16.5, the Contractor shall market the Government's


share of production to be taken in cash for the quarter concerned, lift said


share during such quarter and pay to the Government, within thirty (30)


days following the date of each lifting, an amount equal to the quantity


corresponding to the Government's share of production multiplied by the


sale price defined in Article 18.


The Government 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 laws generally


applicable and the regulations in force in Cote d'Ivoire concerning taxes


which are or may be levied on incornes, or determined thereto, which


taxes are acknowledged as includircg-t-hat set forth in Law n° 70-489 of


August 3, 1970, and the Contractor shall file the tax returns which could


be required in such respect. / \ y.. \


It is specifically acknowledged that -.the., provisions of this Article shall


apply individually Yto 'any entity..-comprising the Contractor under this


Contract. \ -


The Contractor shall keep separate accounts for each Fiscal Year in


respect of the Petroleurn.'Operations, in accordance with the regulations


in force in Cote :

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. For the purposes of Article 17.1, the Contractor shall, in respect of its


net profit arising from Petroleum Operations, be liable to an industrial


and commercial income tax ("impots sur les benefices industriels et


commerciaux") of fifty per cent (50%), as provided by the second


paragraph of Article 1 of the General Tax Code ("Code General des


Imp6ts").


In accordance with the provisions of the last paragraph of Article 16.3,


the Contractor shall not be liable to any payment to the Government with


respect to said tax. As regards the tax authorities of Cote d'Ivoire, the


share of Crude Oil, which the Contractor is entitled to receive under the


provisions of Articles 16.2 and 16.3, is considered as representing the


recovery of the Petroleum Costs and the net profit obtained by the


Contractor after payment of such industrial and commercial income tax.


Where an after tax production sharing is agreed, the


following paragraph will replace the preceding one.


Such tax shall, at Government's option, be payable part or all in kind or in


cash. If the Government wishes the payment in cash, in whole or in part,


it shall so notify in writing the Contractor ninety (90) days prior to the


beginning of each Fiscal Year for which said tax is payable. The Crude Oil


price shall be valued in accordance with the principles set forth in Article


18. Tax payable in kind shall be paid as uniformly as possible during each


Fiscal Year with settlement of the balance upon filing of the annual tax


return concerned, in accordance with the procedure provided for in the


General Tax Code and pursuant to a detailed procedure to be mutually


agreed between the Parties in due time. Tax payable in cash shall be paid


in accordance with a system of quarterly payment on account with


settlement of the balance upon filing of the annual tax return concerned.


17.3. For the purposes of determining the Contractor's taxable net income in


respect of a Fiscal Year, the profit and loss account shall, inter alia, be


credited by the following :


(a) the Contractor’s annual gross income recorded in its accounting books,


arising from the marketing of the quantity of Crude Oil to which it is


entitled under Articles 16.2 and 16.3-.


The Contractor guarantees .th.at.thfe prices obtained from the export of


Crude Oil will reflect, - as faithfully. ais. possible the prevailing


international market..prices at the time'they are established.


(b) all other inco.mes>or. proceeds- related to the Petroleum Operations,


including inter alia those arising.f rom :


- the sale of related‘sObstarices ;


processing, transportation or storage of products for Third Parties


in the facilities-dedicated to the Petroleum Operations ;


- capital gains realized in connection with the assignment or transfer


of any items of Contractor's assets or the assignment, in whole or


in part, of rights and obligations arising from this Contract;


exchange gains realized in connection with the Petroleum


Operations.


(c) the value of the share of Petroleum taken by the Government in


accordance with the last paragraph of Article 16.3 for payment of the


income tax set forth in Article 17.1 for the Fiscal Year concerned.


(This paragraph (c) is to be deleted if the production sharing is


determined before the payment of income tax).



































fl


17.4. Such profit and loss account shall be debited with all charges necessary


for the purposes of the Petroleum Operations in respect of the Fiscal


Year concerned, which may lawfully be deducted under the applicable


laws of Cote d'Ivoire and the provisions of this Contract.


In particular may be debited from the income of the Fiscal Year


concerned the following items :


(a) In addition to the charges specifically set forth below in this Article


17.4, all other Petroleum Costs, including the costs of supplies,


personnel and manpower expenses, costs of services provided to the


Contractor in respect of the Petroleum Operations.


However :


- Costs of supplies, personnel and services rendered by Affiliated


Companies shall be deductible..provided that they do not exceed


those which would be normally-charged in arm's length transactions


between independent buyer-..and' seller . for identical or similar


supplies or services. •** * v-..


Capital expendltiireS'Shall be depreciated from commencement of


a commercial explbitation .in the';.pelimited Area. The depreciation


deductible iniV respect of-the-Fiscal Year concerned shall be equal,


to the extent of capital..expenditures remaining to be depreciated,


to the difference,. - if. -positive, between the amount of the


Petroleum Costs;recovered for the Fiscal Year in question pursuant


t.o Article 16.2'and the total of the other charges debited from the


profit arid loss account in accordance with this Article 17.4.


(b) Overhead costs relating to the Petroleum Operations performed under


this Contract, including without limitation :


Rentals for movable and immovable properties as well as insurance


premiums ;


A reasonable portion, in light of the services rendered to the


Petroleum Operations performed in Cote d'Ivoire, of wages and


salaries paid to managers and employees residing abroad, and the


general and administrative overhead costs of the central services


of the Contractor and its Affiliated Companies working for its


account, located abroad, and indirect costs incurred by said central


services abroad for their account. Overhead costs paid abroad shall


in no event be greater that the limits specified in the Accounting


Procedure.


(c) Interests and agios paid to creditors of the Contractor, for their actual


amount, subject to the limits specified in the Accounting Procedure.


Shareholders and Affiliated Companies shall not be considered as


"third parties" for the purposes of Article 58.8 (e) of the Petroleum


Code and therefore the advances and loans made by them outside Cote


d'Ivoire shall not be submitted to the approval of the Administration as


provided for in said Article, but shall be declared hereto and, pursuant


to the preceding paragraph, shall also be subject to the limitations


specified in the Accounting Procedure.


(d) Losses of materials or assets resulting from destruction or damage,


assets which are renounced or abandoned during the year, bad debts,


indemnities paid to Third Parties as compensation for damage.


(e) Reasonable and justified reserves made for clearly identified future


losses or liabilities which current ev.ents render probable.


(f) Any other losses or charfgesCdirectly related to the Petroleum


Operations, including exchange losses realized in connection with the


Petroleum Operations-, as'weil as bonuses a^d amounts paid during the


Fiscal Year pursuah-t'-to Article-.--19-. and Article 30.2 respectively,


excluding the- amount of direct indonhie tax determined in accordance


with the provision's of this-.Article-.'


(g) The amount of non-;offset losses relating to previous Fiscal Years in


accordance with- the. regulations of Cote d'Ivoire.


17.5. The Contractor's taxable net profit shall be equal to the difference, if


positive, betweerf all the amounts credited and all the amounts debited in


the profit and loss account. If this amount is negative, it shall constitute a


loss.


17.6. Within three (3) months after the end of a Fiscal Year, each entity


constituting the Contractor shall submit to the competent tax authorities


its annual tax return together with financial statements, as required by


the applicable regulations.


The Government shall, after submission of said annual tax return and


acknowledgment of tax payment, furnish to the Contractor within a


reasonable period the tax receipts and all other documents certifying that


the Contractor has, for the Fiscal Year in question, complied with all its


tax obligations with respect to the industrial and commercial income tax


as defined in this Article.


17.7. Apart from the industrial and commercial income tax defined in this


Article and the bonuses provided for in Article 19, the Contractor shall be


exempt from all other levies, duties, taxes or contributions of any nature


whatsoever arising from the Petroleum Operations and any revenues


related thereto or, more generally, on Contractor's property, activities or


actions, including its establishment and its operation hereunder.


In particular, the Contractor, its suppliers, subcontractors and Affiliated


Companies shall be exempt from the taxes on turnover (value added taxes


and taxes on services) which would be payable in connection with sales


made by, work performed for and services rendered to the Contractor


under this Contract.


The shareholders of the entities constituting the Contractor, their


Affiliated Companies shall also be exempt from all levies, duties, taxes


and contributions in respect of any dividends received, debts, loans and


related interest, purchases, transportation of Petroleum for export,


services rendered and, more generally?-any revenues or activities in Cote


d'Ivoire directly related to the "Petroleum Operations.


Assignments of any k-irid. between the -companies signing this Contract and


their Affiliated Com parties as well a.s any assignment made in accordance


with the provisions-.Of Article.3.5'-shaii be exempt from any duties or taxes


payable in such respect. .. -. \


17.8. Notwithstanding the_'’•foregoing provisions, land taxes shall be payable


pursuant to the applic-aBle laws on dwelling buildings and the above-


mentioned exemptions shall not apply to any duties, taxes and royalties


payable as compensation for services rendered by administrations, public


collectivities arid bodies of Cote d'Ivoire. However, the tariffs charged in


such cases in respect of the Contractor and its subcontractors, carriers


and clients and its agents, shall be reasonable in relation to the services


rendered and shall correspond to tariffs generally charged for the same


services by said administrations, public collectivities and bodies.


 ARTICLE 18





VALUATION OF PETROLEUM











18.1. For the purposes of this Contract, and in particular for the purposes of


Articles 16.2, 16.6, 17., 22. and 28., the Crude Oil price shall be the


F.O.B. "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 for each quarter.


A Market Price shall be determined for each type of Crude Oil or Crude


Oil mix.


18.2. The Market Price applicable to liftings, of Crude Oil made during a


calendar quarter shall be calculated at.Vthe end of said quarter and shall be


equal to the weighted average/'of the prices obtained for Crude Oil from


the delimited Area during;^ said...quarter .by ••the’ Contractor and by the


Government from independent purchasers, as adjusted to take into


account the differences iii quality and gravity as well as in F.O.B. delivery


terms and paymfep-t. cohditions>-prbVided that the quantities so sold to


independent purchasers during-., the; quarter concerned represent at least


thirty per cent (30%) of-, the‘‘-.total quantities of Crude Oil from the


Delimited Area sold durihg-$aid quarter.


18.3. In the event such sales-'are not made, or do not represent thirty per cent


(30%) of the total ..quantities of Crude Oil from the Delimited Area sold


during the quarter concerned, the Market Price shall be determined on the


basis of the prices obtained on the international market during said


quarter between independent buyers and sellers for sales of crude oils of


quality similar to the Crude Oil from the Delimited Area in the same


markets as those in which the Ivorian Crude Oil would normally be sold, as


adjusted to take into account the differences in quality, gravity,


transportation as well as in sales and payment conditions.


The Parties shall select those reference crude oils at the beginning of


each Calendar Year.


18.4. The following transactions shall, inter alia, be excluded from the


calculation of the Market Price of Crude Oil :


(a) sales in which the buyer is an Affiliated Company of the seller as well


as sales between entities constituting the Contractor ;


(b) sales in the Ivorian domestic market under Article 28.1 ;























4


(c) sales in exchange for other than payment in freely convertible


currencies and 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 ten (10) days following the end of each quarter, the Parties shall


advise each other of the prices obtained for their share of production of


Crude Oil from the Delimited Area sold to independent purchasers during


the quarter in question, indicating for each sale the identity of the


purchaser, the quantities sold, the delivery and payment terms.


Within twenty (20) days following the end of each quarter, the Contractor


shall determine in accordance with the provisions of Article 1.8.2 or


Article 18.3, as the case may be, the Market Price applicable for the


quarter concerned, and shall notify the Government of that Market Price,


indicating the method of calculation and all data used in the calculation


of that Market Price. \


Within thirty (30) days following-receipt of the '-notice referred to in the


preceding paragraph, the \GdVernment shaH\yefify that the calculation of


Market Price complies ..wi.jth"' the provisions" hereof and shall notify the


Contractor of its. acceptance or objections. Failing notification from the


Government within that thirty.\;(3p) days' period, the Market Price


provided for in -the Contractor's " notice referred to in the preceding


paragraph shall be deemed\to have been accepted by the Government.


In the event the; Government should have notified objections to the


Market Price,:the: Parties shall meet within fifteen (15) days following the


Government's "notification to mutually agree on the Market Price. If the


Parties fail to agree on the Market Price applicable to a given quarter


within seventy five (75) days after the end of that quarter, the


Government or the Contractor may immediatly submit to an expert,


appointed in accordance with the following paragraph, the determination


of the Market Price (including the determination of reference crude oils if


the Parties have not determined them). The expert shall determine the


price within thirty (30) days after his appointment and his conclusions


shall be final and binding on the Parties. The expert shall decide in


accordance with the provisions of this Article.


The expert shall be selected by agreement between the Parties or, if no


agreement is reached, by the International Center of technical expertise


of the International Chamber of Commerce in accordance with its rules


on technical expertise, at the request of the most diligent Party. The


expertise costs shall be charged to the Contractor and included in the


Petroleum Costs.
































■ i


18.6. In the event it would be necessary to calculate on a provisional basis


during a quarter the Crude Oil price applicable to the liftings made during


said quarter, that price shall be established as follows :


(a) For any sale to independent buyers, the price applicable to that sale


shall be the price obtained for the Crude Oil for said sale, as adjusted


to take into account the F.O.B. delivery terms and thirty (30) days


payment terms.


(b) For any lifting other than those which are the subject of a sale to


independent buyers, the price applicable to that lifting shall be the


Market Price determined for the preceding quarter or, if that Market


Price has not been determined, a price set up by agreement between


the Parties or, failing agreement, the last known Market Price.


Once the Market Price for a quarter has been determined on a final basis,


adjustments, if required, shall be made within thirty (30) days.


 ARTICLE 19








BONUSES











19.1. The Contractor shall pay to the competent department of the "Direction


Generale des Impots” of Cote d’Ivoire, pursuant to Articles 981 and 982 of


the Finance Act (1981 budget), a signature bonus of an amount of_


million Dollars within thirty (30) days following the Effective Date.


As an exceptional measure, the signature bonus is repealed for the


purpose of the 1990 Promotion of Petroleum Exploration in Cote d'Ivoire


for all the contracts signed prior to duly first (1st), 1991.


19.2. In addition, the Contractor shall pay to'-.the competent department of the


"Direction Generale des Imp6js’.r'ofVCote' d’Ivoire the following bonuses :


(a) _million Dpifar.? 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.


(b) _million Dollars\wheh 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.


(c) _; fhiliicjn-Dollars 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 (a), (b) and (c) above shall be paid


within thirty (30) days following the expiry of the reference, period of


thirty (30) consecutive days.


19.3. The payments referred to in Articles 19.1 and 19.2 shall not be


recoverable and, therefore, shall in no event be considered as Petroleum


Costs.






































3


 ARTICLE 20





OWNERSHIP AND ABANDONMENT OF ASSETS














20.1. Upon expiry, 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 transfer at no cost to


the Government the ownership of 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, buildings, warehouses, docks, lands,


offices, plants, machinery and equipment, bases, harbours, wharfs, dykes,


jetties, buoys, platforms, pipelines, roads, bridges, railroads and other


facilities. t


Such transfer of ownership shaiT-caOse the automatic cancellation of any


security or surety concerning /those a.ssetsr: or which those assets


constitute. y :--.


However, the Contractor may continue to use those assets beyond the


date referred to-, in the first, paragraph, for the requirements of its


petroleum operations in Cotq d-Tvoire governed by other contracts, subject


to the billing by the Government of a reasonable rental tariff.


In addition, theprovisions set forth in the first paragraph of Article 20.1


shall not apply ;.to assets owned by Third Parties and which are rented by


the Contractor. "


20.2. If the Government decides not to accept, for all or part of the assets, the


transfer of ownership provided for in Article 20.1, it may, not later than


ninety (90) days following the date specified in said Article, require the


Contractor, in accordance with good international petroleum industry


practice, to perform abandonment operations and to remove, at the cost


of the Contractor, the facilities relating to the surrendered area which


would be no longer necessary.


















































4


 ARTICLE 21








NATURAL GAS











21.1. Non-Associated Natural Gas


21.1.1. In the event of a Non-Associated Natural Gas discovery, the Contractor


shall engage discussions with the Government with a view to determining


whether the appraisal and exploitation of said discovery have a potentially


commercial nature.


21.1.2. If the Contractor, after the above-mentioned discussions, considers that


the appraisal of such Non-Associated Natural Gas discovery is justified, it


shall undertake the appraisal work.-program for said discovery, in


accordance with the provisions of Article 16.


The Contractor shall hayd'--.the .right, for.- the.-purposes of evaluating the


commerciality of the;'Nod-Associated 'Natural Gas discovery, if it so


requests at least ; thirty- (30) days; -pV.ior to the expiry of the third


exploration period, set forth in..Article 3.3, to be granted an exclusive


appraisal authorisation conceiving'-the Appraisal Perimeter of the above-


mentioned discovery, for a.-term' of four (4) years instead of the two (2)


years provided for in.Article 11.1.


In addition, the"'Parties shall jointly evaluate the possible outlets for the


Natural Gas ff.onrythe discovery in question, 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. For that purpose, a Consultative Committee


for Natural Gas shall be established by the Parties to ensure the


coordination of the upstream and downstream components of the Natural


Gas project and facilitate its evaluation and implementation.


21.1.3. 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 expiry of the appraisal period an application for an


exclusive exploitation authorization which the Government will grant


under the terms provided by Article 12.1.


The Contractor shall then have the right and the obligation to proceed


with the development and production of that Natural Gas in accordance


with the approved development plan referred to in Article 11.3, and the


provisions of this Contract applicable to Crude Oil shall apply, mutatis


mutandis, to Natural Gas, unless otherwise specifically provided under


Article 21.3.


21.1.4. If the Contractor considers that the appraisal of the Non-Associated


Natural Gas discovery concerned is not justified, the Government may, by


giving twelve (12) months' prior notice which may be reduced either with


the Contractor's consent or automatically in the event the exclusive


exploration authorization expires earlier, require the Contractor to


surrender its rights in respect of the area encompassing said discovery.


In the same manner, if the Contractor, after completion of appraisal


works, considers that the Non-Associated Natural Gas discovery is not


commercial, the Government may, by giving three (3) months* prior notice


unless the exclusive exploration authorization expires earlier, require the


Contractor to surrender its rights on the area encompassing said


discovery.


In both cases, the Contractor shall forfeit its rights on all Petroleum


which could be produced from said discovery, and the Government may


then carry out, or cause to be carried out, all the appraisal, development,


production, processing, transportation ar\b marketing work relating to that


discovery, without any compensation....for the Contractor, provided,


however, that said work shall..not‘‘c.adse prejudice to the performance of


the Petroleum Operations by-.the Contractor-.


21.2. Associated Natural Gas\. •


21.2.1. In the event of a-.'dqitimercial. discovery of Crude Oil, the Contractor shall


state in the report referred to. in Article 11.3.3. if it considers that the


production of Associated. •Natural Gas is likely to exceed the quantities


necessary for the requiKe brents of the Petroleum Operations related to


the production .of -Crude Oil (including reinjection operations), and if it


considers that ;.such excess is capable of being produced in commercial


quantities. In the event the Contractor shall have informed the


Government of such an excess, the Parties shall jointly evaluate the


possible outlets for that excess of Natural Gas, both on the local market


and for export (including the possibility of joint marketing of their shares


of production of that excess of. Natural Gas in the event such excess


would not otherwise be commercially exploitable), together with the


means necessary for its marketing.


In the event the Parties should decide that the development of the excess


of Natural Gas is justified, or in the event the Contractor would wish to


develop and produce that excess for export, the Contractor shall indicate


in the development and production program referred to in Article 11.3.3.


the additional facilities necessary for the development and exploitation of


that excess and its estimate of the costs related thereto.


The Contractor shall then have the right to proceed with the development


and exploitation of that excess in accordance with the development and


production program approved by the Government under the terms


provided by Article 11.3.6, and the provisions of the Contract applicable


to Crude Oil shall apply, mutatis mutandis, to the excess of Natural Gas,


unless otherwise specifically provided by Article 21.3.


A similar procedure shall be applicable if the sale or marketing of


Associated Natural Gas is decided during the exploitation of a Field.


21.2.2. In the event the Contractor should not consider the exploitation of the


excess of Natural Gas as justified and if the Government, at any time,


would wish to utilize it, the Government shall notify the Contractor


thereof, in which event :


(a) the Contractor shall make available to the Government free of


charge at the Crude Oil and Natural Gas separation facilities all or


part of the excess that the Government wishes to lift ;


(b) the Government shall:be Responsible for t-hp. gathering, processing,


compressing and 'transporting of--' that ' excess from the above-


mentioned separation"'facilities;-..and shall bear any additional costs


related thereto


(c) the construction of 'the 'facilities necessary for the operations


referred to in paragraph '(b) above, together with the lifting of that


excess by the- Gbvernment, shall be carried out in accordance with


good international petroleum industry pratice and in such a manner


as not to hinder the production, lifting and transportation of Crude


Oil by th.e. Contractor.


21.2.3. Any excess of Associated Natural Gas which would not be utilized under


Articles 21.2.1 and 21.2.2, 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 the Government with a report


demonstrating that said gas cannot be economically utilized to improve


the rate of recovery of Crude Oil by means of reinjection pursuant to the


provisions of Article 15.6, and provided, further, that the Government


approves said flaring, which approval shall not be unreasonably withheld.


21.3. Provisions common to Associated and Non-Associated gas


21.3.1. In order to encourage the exploitation of Natural Gas, the Government


may grant to the Contractor specific benefits when they are duly justified


concerning, inter alia, the recovery of the Petroleum Costs relating to


Natural Gas, production sharing, bonuses and PETROCI participation.


Those provisions shall be the purpose of a specific agreement, in


accordance with the provisions of Article 37.5.


21.3.2. 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


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 the


Parties under Article 16.


21.3.3. For the purposes of this Contract, the. Natural Gas price, expressed in


Dollars per million BTU, shall be equal to-s


(a) with respect to Natural/'Gas export sales-to'-Xhird Parties, the price


obtained from purchasers.;---' \


(b) with respect th.sales on the iocal-’market of Natural Gas as a fuel,


the equivajentVof -.per cent (_%) of the price of high


sulfur heavy fuel oii\(expressed in Dollars per million BTU)


exported from or imported into Cote d'Ivoire, or such other price


as the Governm6nt;;.(br the national entity that the Government


would set up for‘--the distribution of Natural Gas on the local


market) and’ fhe-Contractor would mutually agree upon.


The above-mentioned equivalent price for the utilization of Natural Gas


as a fuel shall be determined on the basis of the same calorific value with


respect to commercial gas delivered at the entry point of the main gas


transportation network, if any, or otherwise where delivered to large


consumers. In the event of transfer of the gas at a delivery point located


upstream, the selling price shall be adjusted accordingly.


21.3.4. For the purposes of Articles 16.3 and 19.2, the quantities of available


Natural Gas, after deduction of the quantities used for the requirements


of the Petroleum Operations, reinjected or flared, shall be expressed in a


number of Barrels of Crude Oil such as one hundred and sixty five (165)


cubic meters of Natural Gas as measured at the temperature of 15°C and


at the atmospheric pressure of 1.01325 bar are deemed to be equal to one


Barrel of Crude Oil, unless otherwise agreed between the Parties.


 ARTICLE 22





PETROCI PARTICIPATION











22.1. In consideration of the work previously undertaken in the Delimited Area,


PETROCI shall, from the Effective Date, be associated with the entities


constituting the Contractor in order to participate in the Petroleum


Operations, with an interest of ten per cent (10%) (hereinafter referred to


as "Initial Participation").


PETROCI shall, in respect of and in proportion to its participation, have


the same rights and obligations as those of the Contractor defined in this


Contract, subject to the provisions of.-this Article.


22.2. Pursuant to the policy for .proomptihg" the petroleum industry in Cote


d'Ivoire defined by the Government, PETROCI -shall have the option to


increase, in respect of \apy''-Exploitation •Perimeter, the amount of its


Initial Participation in accordance with the following provisions :


(a) The Tb-tal \ Participation-.;" of- PETROCI with respect to an


Exploitation Perimeter., : including the above-mentioned Initial


Participation, may reach' a maximum of twenty per cent (20%).


(b) Not lat.e.r ithah' six (6) months following the issue date of an


exclusive exploitation authorization, PETROCI shall notify in


writing--th£ other entities constituting the Contractor of its wish to


exercise its option to increase its participation with respect to the


Exploitation Perimeter concerned, specifying the percentage of its


additional participation (hereinafter referred to as "Additional


Participation") for said Exploitation Perimeter. Failing notification


within that six (6) months' period, PETROCI participation for that


Perimeter shall remain equal to its Initial Participation.


(c) The Additional Participation shall be effective in respect of the


Exploitation Perimeter concerned from the date of the notice


referred to in Article 22.2 (b) above.


(d) Upon receipt of the written notice from PETROCI, all the entities


constituting the Contractor other than PETROCI shall assign to


PETROCI, immediately and together, each in proportion to its


participation at that time, a percentage of their participation in


the Exploitation Perimeter concerned, the total of which shall be


equal to the percentage of the Additional Participation of


PETROCI.


(e) As from the effective date of its Additional Participation, or


failing notification referred to in Article 22.2 (b) six (6) months


after the issue of an exclusive exploitation authorization,


PETROCI shall :











4 9


in respect of the exclusive exploitation authorization


concerned, participate in the Petroleum Costs related to the


corresponding Exploitation Perimeter in proportion to its Total


Participation and subject to the provisions of Article 22.2 (f) ;


if such authorization is the first exclusive exploitation


authorization, reimburse, pursuant to Article 22.2 (g) and


subject to the provisions of Article 22.2 (f), the other entities


constituting the Contractor its percentage of Total


Participation in the Petroleum Costs not yet recovered,


incurred from the Effective Date of this Contract until the


date of notification of its Additional Participation ;


for each subsequent exclusive exploitation authorization,


reimburse, pursuant to Article 21.2 (g) and subject to the


provisions of Article 22.2 (f), the other entities constituting the


Contractor its percentageC.'.qf Total Participation in the


Petroleum Costs with ..respect to the new Exploitation


Perimeter not yet recovered, incurr.ed\from the date on which


its Additional Participation relating to -the previous exclusive


exploitation .authorisation has- 'been. notified until the date on


which the.. Additional Participation in respect of the new


exclusive authorization ^xplbitcition has been notified.


(f) Taking into account 'tb'e’previous work already undertaken in the


Delimited Area,vPE.TfioCI, in respect of its Initial Participation,


shall not be obligated, during the entire term of this Contract, to


finance nor- 'reimburse its share of the Petroleum Costs relating


exclusively fo exploration expenditures and appraisal expenditures,


those expenditures being borne and recoverable by the other


entities constituting the Contractor in accordance with Article


16.2, each in proportion to its participation.


(g) As provided for in Article 22.2. (e), PETROCI shall reimburse the


amounts of the Petroleum Costs resulting from its participation to


the other entities constituting the Contractor as follows, at


PETROCI's option :


within six (6) months from the date of notice of the increase of


its participation, by payment in Dollars or by payments in


Crude Oil valued in accordance with the provisions of Article


18 ; or


in kind by means of liftings by the Contractor of a portion of


the share of Petroleum to which PETROCI is entitled under


Article 16.3, not exceeding fifty per cent (50%) of said portion,


the value of that share being calculated in accordance with the


- provisions of Article 18, until the value of those liftings is equal


to the outstanding balance increased by interest as provided


below. The outstanding balance due on the date of expiry of


the above-mentioned period of six (6) months shall bear interest


from that date until the date of reimbursement, at the


 annual LIBOR six (6) months rate (London Interbank Offering


Rate) as quoted by the National Westminster Bank in London


plus one (1) percentage point, with annual compounding.


22.3 (a) PETROCI shall not be subject to contribute, in respect of its Initial


Participation and/or Additional Participation, to the payment of


the bonuses defined in Article 19, those being entirely payable by


the other entities constituting the Contractor.


(b) The joint venture between PETROCI and the Contractor must not





in any event either cancel or cause prejudice to the rights of the


other entities constituting the Contractor to refer to the


arbitration clause provided by Article 32, which is not applicable to


disputes between the Government and PETROCI -but only to


disputes between the Government and the other entities


constituting the Contractor.


The Government shall notify .the International Center for the


Settlement of Investment^ Disputes,-, immediately after the


Effective Date, ..that ityagrees to-, include" a clause providing for


arbitration by-•s.ai.d'-.C’enter in- ' the '-.agreements to be concluded


between PETR-Q.CI and the\ other entities constituting the


Contractor^..and it shall oo.ti’fy"the other entities constituting the


Contractor1, that it has-'.'futfilled such formality ;


(c) PETROCI, on-.the one hand, and the other entities constituting the


Contractor^“ooXthe other hand, shall not be jointly and severally


liable Tor The/obligations resulting from this Contract as provided


for in. Article 35. PETROCI shall be individually responsible to the


Goveriimdnt for its obligations under this Contract ;


(d) Any failure by PETROCI to perform any of its obligations shall not


be considered as a default of the other entities constituting the


Contractor and shall not in any event be invoked by the


Government in order to terminate this Contract in accordance with


Article 37.4 or to refer to the procedure set forth in Article 37.3.;


(e) PETROCI may, at any time, assign to a company of its election


controlled by the State all or part of the rights and obligations


resulting from the participation set forth in this Article.


22.4 The terms of PETROCI participation together with the relations between


the entities constituting the Contractor shall be determined in a Joint


Operating Agreement which will enter into force as from the Effective


Date of this Contract.





A Model Joint Operating Agreement is available and may be


obtained on request.


 ARTICLE 23





FOREIGN EXCHANGE CONTROL











23.1. The Contractor shall comply with the foreign exchange control


regulations, subject to the provisions of this Article.


23.2. The Contractor shall have the right to retain. abroad all the foreign


currencies arising from export sales of all Petroleum to which it is


entitled under this Contract, or from assignments, as well as equity,


incomes from loan 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 Cote d'Ivoire.


23.3. No restriction shall be exercised importation by the Contractor of


funds intended for the performance-bT the Petroleum Operations.


23.4. The Contractor shall..- hav.e'-the right 'to purchase currencies of Cote


d'Ivoire with foreign‘-.-currencies,., and. freely exchange into foreign


currencies of its election any fund.s.heid by it in Cote d'Ivoire in excess of


its local requirements at exchange rates which shall not be less favourable


than those generally applicable\-to any other buyer or seller of foreign


currencies. \ \













































































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 ARTICLE 24








NATIONAL INVESTMENT FUND














Subject to arrangements introduced by this Article, the Contractor shall, in


accordance with the legal provisions in force arising from Law n° 62-34 of


February 12, 1962, be liable to the contribution in favour of the National


Investment Fund.


However, the Government, in view of the very large amount of investments


necessary for the carrying out of the Petroleum Operations, considers that said


investments will represent the fulfilment of ail the obligations of the Contractor


which may arise from the contribution in-favour of the National Investment


Fund. V.....


 ARTICLE 25





MONETARY UNIT USED FOR BOOK-KEEPING














25A, The registers and accounting books relating to this Contract shall be


maintained in the French language and recorded in Dollars. Said registers


and accounting books shall be used to determine the Petroleum Costs,


gross income, exploitation costs, net profits and for the purpose of the


preparation of the Contractor’s tax return ; they shall contain, inter alia,


Contractor’s accounts showing the sales of Petroleum under this Contract.


For information’s purposes, accounts and balance sheets shall also be


maintained in CFA Francs. .


25.2. Whenever it is necessary to convert: into Dollars expenses and incomes


expressed in another curreocy, t:he' exchange.'rates to be used shall be


equal to the arithmetic-aV-eP^g'e of the daily'closing rates for the purchase


and sale of said currency., during thevjT»'onth when the expenses were paid


and the income received-. A . \


In the event of 'an officiaT'-.d'eyaluation or revaluation during a given


month, two arithmetic.aver'ages shall be applied, the first one calculated


on the basis of the.dail'y'closing rates for purchase and sale in respect of


the period from-., the ;fi'rst day of the month until the day of said


devaluation or (‘revaluation, inclusive, and the second, on the basis of the


daily closing rates'for purchase and sale in respect of the period from the


day of said devaluation or revaluation, exclusive, until the last day of the


month concerned.


The exchange rates to be applied in order to carry out the evaluations


provided for in this Article shall be those quoted on the Paris exchange


market or, if said rates are not available, those quoted by the Citibank


N.A., New York.


25.3. The originals of the registers and accounting books referred to in Article


25.1 shall be kept in Cote d’Ivoire.


The registers and accounting books shall be supported by detailed


documents with respect to receipts and Petroleum Costs.



































A


 ARTICLE 26








ACCOUNTING METHOD AND AUDITS











26.1. The Contractor shall maintain its accounts in accordance with the


regulations in force and with the provisions of the Accounting Procedure


set out in Appendix 2 attached hereto forming an integral part of this


Contract.


26.2. After giving the Contractor notice thereof in writing, the Government


shall have the right to cause the registers and accounting books relating


to the Petroleum Operations to be controlled, inspected and audited by its


own agents or by experts of its election, and shall have a period of four (4)


years following the end of each Calendar Year to carry out those controls,


inspections or audits relating to said-Year and may submit its objections


to the Contractor for any' contradictions v pr\ errors found during such


controls, inspections or audits..V"


Should the Government fail to v:make' any claim within the above-


mentioned period, of four (4) years, no further objection or claim shall be


made by the Ivorian administration'for the Calendar Year concerned.


 ARTICLE 27








IMPORT AND EXPORT











27.1. (a) The Contractor shall have the right to import into Cote d'Ivoire, in


its own name or on behalf of its contractors and subcontractors, all


the technical equipment, materials, machinery and tools, goods and


supplies necessary in the Contractor's opinion for the proper


conduct and achievements of the Petroleum Operations ; that


includes but is 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 .afid telecommunication equipment,


power plants and all related equipment, aircraft, automotive


equipment and other .vehrcfes, 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 .;df. all types,-, ludi'b.er, office furniture and equipment,


automobiles, explosives*.- chemicals, fuels, ship supplies,


pharmaceutical products^ medicines.


(b) The Contractor shall have the right to import into Cote d'Ivoire, 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


Cote d'Ivoire for the Contractor or its contractors or


subcontractors.


(c) However, the Contractor, its agents, contractors and


subcontractors undertake not to proceed with the imports


mentioned in Article 27.1 (a) insofar as such items are not


available in Cote d'Ivoire under equivalent conditions of quantity,


quality, price, delivery and terms of payment, unless specific


requirements or technical emergencies are presented by the


Contractor.


(d) The Contractor, its agents, contractors and subcontractors shall


have the right to re-export from Cote d’Ivoire, free of all duties


and taxes and at any time, all the items imported under Article


27.1 (a) and (b) which are no longer necessary for the Petroleum


Operations except the items which have become the property of


the State under the provisions of Article 20.


27.2. Ail the technical material, materials, machinery and tools, goods and


supplies specified in Article 27.1 which the Contractor, its agents,


contractors and subcontractors, their foreign employees and their families


will have the right to import in one or more shipments to Cote d’Ivoire,


shall be fully exempt of all duties and taxes payable as a result of the


importation (’’entry duties and taxes").


As the case may be, the applicable administrative formalities will be


those of the following regimes :


(a) Exceptional temporary admission regime ("regime de l'admission


temporaire exceptionnelle"). in full suspension of entry duties and


taxes for equipment/.nciaterials,..•m-adhinefy and tools, goods and


supplies necessary; 'for the proper', progress of the Petroleum


Operations^'for;' the entire duration of their use in Cote d’Ivoire


including.'the continental'shelf, it being understood that for the


equipment/ materials, machinery and tools, and goods and supplies


consumed during.'the’operations or left in place, the exceptional


temporary .adbnis.si'on discharge will be automatic by simple


.quarterly declaration and without payment of duties and taxes.


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 Cote d’Ivoire and


the administrative regularization relating to their admission will be


made later and as soon as possible.


(b) Supply regime ("regime de l’avitaillement") for consumable goods


and foodstuffs, fuels and lubricants used at sea, in particular on all


ships, aircraft and machineries used for petroleum exploration and


exploitation.


(c) Exempt admission regime ("regime de l’admission en franchise")


according to the regulations in force, for furniture, clothing,


household appliances and personal effects.


27.3. Items other than those mentioned in Article 27.2 shall be subject to the


generally applicable regime.


























r*-' KH


5 /


27A. The Contractor, its agents, contractors and subcontractors shall, provided


that they inform the Government in advance of their intent to sell and


subject to the provisions of Article 20, have the right to sell in Cote


d’Ivoire, 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. In that event, the seller


shall be responsible for paying all duties and taxes applicable on the date


of the transaction and for filing all the formalities prescribed by the


regulations in force.


The Government shall have a preferential right to purchase such


equipment, materials, machinery and tools, goods and supplies at prices


and conditions equivalent to those agreed by Third Parties. That right


shall be exercised within a period not to exceed the period agreed by said


Third Parties for the conclusion of the sale.


27.5. 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 Con-tractor is entitled in accordance with the


provisions of this Contract,..after; deduction of all .deliveries made to the


Government.


27.6. All imports and exports'carried out udder- this Contract shall be subject to


the formalities and documentation, required by Customs, but shall not give


rise to any payment of entry 'duties and taxes, subject to the provisions of


Article 27.3, owing to the\regirine applicable to the Contractor pursuant to


the provisions of this Contract.


 ARTICLE 28








DISPOSAL OF PRODUCTION -


CONTRIBUTION TO THE SATISFACTION OF NATIONAL NEEDS -


TRANSFER OF TITLE TO PETROLEUM AND LIFTINGS











28.1. Each Calendar Year, up to a total of ten per cent (10%) of the share of


Crude Oil Production to which the Contractor is entitled pursuant to


Articles 16.2 and 16.3, shall be sold to PETROCI by the Contractor for


the purpose of satisfying the needs of the domestic market of Cote


d'Ivoire. Such contribution of the Cqatractor shall be in proportion to its


share of production, as defined in -Articles 16.2 and 16.3, in the total


Crude Oil production in Cote d'lv.pir.O.


The quantity of Crude Oil ‘the Contractor shall be obligated to sell to


PETROCI shall be notified "to it by PETROCI at least three (3) months


prior to the beginning of"'each calendar:quarter.


28.2. The price of the- Crude Oil-, sold to PETROCI under Article 28.1 for the


needs of the domestic-.market' shall be equal to seventy-five per cent


(73%) of the Market.pri-cV'defined in Article 18.


That Crude Oil pried shall be payable to the Contractor in CFA Francs


two (2) months.-" after receipt of the invoice unless otherwise agreed


between the Parties.


28.3. The transfer of title to, and risks of, the share of Petroleum production to


which each Party is entitled shall be made at the Delivery Point, or at any


other transfer point agreed between the Parties.


The Contractor shall not be the owner of Petroleum before such point ; it


shall, however, take out all necessary insurance policies in order to cover


ail damage, losses or liabilities which may occur.


28.4. Each of the Parties shall have the right and obligation, subject to the


provisions of Articles 16.6, 21 and 28.1, 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 each of the Parties, 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 production rate and the storage capacity. In


the establishment of the sequence of liftings, priority will be given to the


Party with the largest share of produced and unlifted quantity of


Petroleum at a given time. The Parties shall periodically meet to


establish a provisional lifting program on the basis of the principles


above-described and taking into account the wishes of the Parties as


regards the dates and quantities of their liftings, provided that those


wishes are compatible with said principles.


Prior to commencement of production in the Delimited Area, the Parties


shall execute a lifting agreement specifying the practical procedures of


implementation of this Article.


 ARTICLE 29





PROTECTION OF RIGHTS











29.1. The Contractor shall take all necessary steps to achieve the objectives of


this Contract and shall indemnify and compensate any person for any loss


or damage, arising from or in relation to the Petroleum Operations, which


it, its employees, contractors, subcontractors or agents and their


employees may cause to the person, property or right of other persons.


29.2. The Government shall take all necessary and possible steps to facilitate


the implementation by the Contractor of the objectives of this Contract,


and to protect the property and:'operations of the Contractor, its


employees and agents in the . territory of Cote d'Ivoire and its


dependencies.


29.3. At the duly justified-regdest” of the-Contractor, the Government shall


prohibit the construction, of dwelling or business buildings in the vicinity


of installations whleh-the Contractor may declare dangerous as a result of


its operations. It itiall take all necessary precautions to prohibit anchoring


in the vicinity of submerged pipelines at river passages, and to prohibit


any hindrance to the.. u.s'e of any other installation necessary for the


Petroleum Operations'whether on land or offshore.


29.4. 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 used in the international


petroleum industry, 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 Ivorian legislation.


The Contractor shall provide the Government with the certificates


supporting the subscription of the insurances referred to above.


29.3. The Contractor shall indemnify, defend and hold harmless the Government


against all claims, losses or damage whatsoever caused by, or resulting


from, the Petroleum Operations.






































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 ARTICLE 30








PERSONNEL AND TRAINING











30.1. The Contractor shall, for the purposes of the Petroleum Operations,


employ in priority Ivorian personnel in a minimum proportion of seventy-


five per cent (75%) of its total personnel.


Managers, technicians, engineers, accountants, geologists, geophysicists,


scientists, chemists, drillers, foremen, mechanics, skilled workers,


secretaries and executive employees may be hired outside Cote d'Ivoire if


similarly qualified specialists cannot be hired in the country or seconded


from PETROCI.


Upon granting an exclusive exploitation authorization, a plan for


"Ivorization" shall be submitted for'the approval of the Government.


30.2. Upon commencement ■o'f‘:the”Petroleum' Operations, the Contractor shall


organize a trainings-program for ..Ivorian nationals. Said program shall


concern, in association'with the-Contractor, all the Petroleum Operations


from exploration\up to exploitation', including, but not limited to, the


preliminary studies for the..-lay-out and carrying out of works (such as


seismic survey, drillin'gy-production tests, development of a field) and


negotiation of contracts with possible subcontractors.


For that pur pose,/the Contractor, excluding PETROCI, shall devote a


minimum annual training budget of :


(a) _Dollars during the exploration periods ;


(b) _Dollars during the exploitation periods.


The corresponding annual training program shall be established by mutual


agreement.


The training expenses borne by the Contractor shall be included in the


recoverable Petroleum Costs.


30.3. The entry into Cote d'Ivoire of all the above-mentioned foreign personnel


shall be authorized and the Government shall issue the documents


necessary for that entry to all members of the foreign personnel, such as


entry visas, working permits and exit visas, in compliance with the


immigration regulations in force in Cote d'Ivoire.


























O 9


At the request of the Contractor, the Government shall facilitate any


immigration formalities with the Immigration Bureau, at the points of


entry into and exit from Cote d’Ivoire, in respect of the Contractor's


employees, contractors, subcontractors and agents, and their families, all


without undue delays.


30.4. 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. 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, in accordance with social


legislation applicable in Cote d’Ivoire. However, the Contractor shall


freely select and assign its personnel, subject to the provisions of Article


30.1.




















































































































O 3





 ARTICLE 31





ACTIVITY REPORTS IN RESPECT OF


EXCLUSIVE EXPLOITATION AUTHORIZATIONS














31.1. The provisions of Article 11 shall apply, mutatis mutandis, to any


exclusive exploitation authorizations. In addition* the following periodic


activity reports shall, inter alia, be furnished in respect of each Field :


(a) daily production reports ;


(b) monthly reports stating the quantities of Petroleum produced and


those sold during the previous •rn.dnth together with information on


such sales. .. \


Unless the Contractor giv.es--.its written consent*■ the information relating


to a Field under exploitatiani-except statistical data about activity, shall


be considered as confidential by .the..Parties during the term of this


Contract. ‘' ..... V - \


31.2. The Contractor shall for.ttiwith\notify the Government of any material


damage whatsoever caused, ip the petroleum fields or facilities, and shall


take all necessary .- step's to terminate it and carry out the necessary


repairs. ‘ ..•• ••• /


31.3. From the year "of granting an exclusive exploitation authorization, the


annual reports 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 ;


(b) information on all transportation and sales operations together


with the location of the main facilities built by the Contractor, if


any ;


(c) a statement specifying the number of employees and workers, their


qualification, their nationality and the total amount of their


salaries, together with a report on the medical care and training


provided to them.





























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 ARTICLE 32





ARBITRATION








32.1. In the event of any dispute between the Government and the Contractor


relating to, or arising out of, the interpretation or execution of the


provisions of this Contract, the Parties shall make their best efforts to


settle such dispute amicably.


If within three (3) months from the date of notice of such dispute by


either Party to the other, the Parties have not reached settlement, the


dispute shall, at the request of the most diligent Party, be referred for


arbitration to the International Center for Settlement of Investment


Disputes in accordance with the rules then in force set forth by the


Convention on the Settlement of Investment Disputes between States and


Nationals of Other States, a convention signed and ratified by the


Government of the Republic of Cote\d'Ivoire.


The arbitrators shall not-.■Haye. the same nationality as the Parties.


32.2. The arbitration shall be held in Paris.[(France). The language used during


the procedure shall be the Fr.endh • language, and the applicable law shall


be the Ivorian la\y» ' .. \ \ :


The arbitral tribunalVaward shall be final ; it shall be binding on the


Parties and shall be imrnecliatly enforceable.


32.3. The expenses-.of any arbitration shall be borne equally by the Parties, that


is to say each Party shall pay the expenses of its own arbitrator and the


expenses of the third arbitrator in equal shares, and any expenses imposed


by the President or the Secretary of the Center shall be shared equally by


the Parties.


The performance by the Parties of their obligations under this Contract


shall not be suspended during the course of the arbitration.


















































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 ARTICLE 33








FORCE MAJEURE











33.1. No delay or default of a Party in performing any of the obligations


resulting from 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, that delay extended by the period of. time


required to repair the damage caused during such delay and resume the


Petroleum Operations shall be added to the period provided by this


Contract for the performance of sai.d obligation, and the exclusive


exploration or exploitation authorizations, shall be extended by thait period


as regards the area concerned by Force Majeure. ..


33.2. Force Majeure means any vent..unforeseeable and beyond the control of a


Party, such as : earthqqakey."flood, accident, strike, lockout, riot, delay in


obtaining rights-qf-Way,-'/ insurrectionj-' clyil disturbances, sabotages, acts


of war or conditiQhsVat’tributab.le..tq war, or any other cause beyond its


control, similar tdor different from’those already mentioned.


33.3. Where a Party consid£rs.;:.it is prevented from performing any of its


obligations by the odcurehce of a case of Force Majeure, it shall forthwith


notify the other Party-thereof by specifying the grounds for establishing


Force Majeure and/take, in agreement with the other Party, all necessary


and useful steps to ensure the normal resumption of the performance of


the concerned obligations upon termination of the event constituting the


case of Force Majeure.


Obligations other than those concerned by Force Majeure shall continue to


be performed in accordance with the provisions of this Contract.


 ARTICLE 34








JOINT AND SEVERAL OBLIGATIONS AND GUARANTEES











34.1. All the clauses, conditions and provisions of this Contract shall be binding


on the Parties and their respective successors and assignees. This


Contract constitutes the only agreement between the Parties and no


previous communication, promise or agreement, whether oral or written,


between the Parties, related to the purpose of this Contract may be


asserted to amend the clauses hereof.


The Government certifies and guarantees that there is no other applicable


agreement with respect to the petroleum rights within the Delimited


Area, that it will perform its obligations in fairness and good faith and


that this Contract will not be cancelled, amended or modified except by


agreement between the Parties.*-; v-..


34.2. Where the Contractor js\cdnstituted-.by\several entities, the obligations


and liabilities of those entities..udder-.,this Contract shall be joint and


several. V


34.3. If one of the entities-.constituting the Contractor is a subsidiary, its


parent company shall submit to the Government’s approval an undertaking


guaranteeing the proper performance of the obligations arising from this


Contract.










































































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 ARTICLE 35





RIGHTS OF ASSIGNMENT











35.1. All or part of the rights and obligations arising from this Contract may be


assigned by any of the entities constituting the Contractor to Third


Parties whose technical and financial reputation is well established ; the


assignees with the other entities constituting the Contractor shall


thereafter be jointly and severally liable for the obligations arising from


this Contract.


The terms of any joint and several assignment and ownership shall be


subject to the prior approval of the Government.


If within sixty (60) days following notification to the Government of a


projected assignment accompanied-.byiall the related information and the


draft assignment deed, the...Government has not: "given its decision, that


assignment shall be deemed tb be'approved by.tfie Government.


From the date of. approval of an,-asSi.gn'ment, the assignee shall comply


with the terms ahd eonditions o.f this Contract.


35.2. All or part of the joint..and'several rights and obligations arising from this


Contract may be freefy''*d:s’Signed at any time by any of the entities


constituting the.Contractor to one or more Affiliated Companies or other


entities constituting the Contractor.


Said assignments shall be notified to the Government by the Contractor


prior to the effective date thereof and, as the case may be, the provisions


of Article 34.2 shall be applicable.


35.3. The assignments carried out in breach of the provisions of this Article


shall be null and void.


 ARTICLE 36





APPLICABLE LAW AND STABILITY OF CONDITIONS














36.1. The laws and regulations in force in the Republic of Cote d'Ivoire shall


apply at any time to the Contractor, to this Contract and to the


operations which are the purpose thereof, unless otherwise provided by


the Contract.


36.2. This Contract is executed between the Parties in accordance with the


laws and regulations in force at the date of its signing and on the basis of


the provisions of said laws and regulations, as regards, inter alia, the


economic, fiscal and financial provisions of this Contract.


Consequently, should new laws o.r regulations modify the provisions of the


laws and regulations in force'at-. the”- date of •..signing of this Contract and:


should those modifications"bf4ng.:about a .material -change in the respective


economic situation of;the‘.JParties resulting from the original provisions of


said Contract, the 'Parties shall in.gopd-faith enter into an agreement with


a view to modifying 'those pro.visioris in order to restore the economic


balance of the Contract as .intended'at the signing thereof.


In the event the Parties,.'•ih. spite of their efforts, are unable to reach an


agreement, the provisions of Article 32 above shall apply.













































































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 ARTICLE 37





IMPLEMENTATION OF THE CONTRACT











37.1. The Parties agree to cooperate in every possible manner to achieve the


objectives of this Contract.


The Government shall facilitate the Contractor’s performance of its


activities by granting it any permits, licenses, access rights necessary for


the performance of the Petroleum Operations and by making available to


it any appropriate services and facilities, so that the Parties can obtain


the best benefit from a sincere cooperation. However, the Contractor


shall observe the applicable procedures and formalities, and shall apply to


the competent departments of the administration.


37.2. Any notices or other comm unicatioiy under this Contract shall be deemed


to have been made when .they are delivered \by'hand to an authorized


representative of the Par-ty... Concerned.-at the location of said Party's


principal office in Cpte-.d-U voire, or sent\by-telegram, cable or telex with


all expenses paid, or-.deposited ,as registered letters with the Postal


administration of-.CSte d'Ivoire with‘postage prepaid.


Notifications shall be deeirr^d to have been made on the date when the


adressee shall receive therni '


37.3. If the Government cdri’siders that the Contractor has committed a breach


in the performance of any of its obligations, it shall so notify the


Contractor in writing and the Contractor shall have sixty (60) days to


remedy the breach or refer the matter to arbitration in accordance with


the provisions of Article 32 of this Contract.


37.4. The breach by the Contractor of the provisions of this Contract may give


rise to the termination thereof by the Government, after notification to


the Contractor in accordance with the provisions of Article 37.3. Said


termination shall not relieve the Contractor from its obligations incurred


prior to, or arising from, that termination.


37.5. The terms and conditions of this Contract may be modified only in writing


and by mutual agreement between the Parties.



































7 0


37.6. Unless otherwise specified in writing, the "Directeur des Hydrocarbures"


shall represent the Government under this Contract and is empowered to


grant, in the name and on behalf of the Government, any consent


necessary or useful for the implementation of this Contract.


37.7. Headings in this Contract are inserted for purposes of convenience and


reference and in no event shall define, restrict or describe the scope or


object of the Contract or of any of its clauses.


37.8. Appendices 1 and 2 attached hereto shall form an integral part of this


Contract.


37.9. Any waiver of the Government concerning the performance of any


obligation of the Contractor shall be in writing and signed by the


Government’s representative, and no waiver shall be implied if the


Government does not exercise any of its rights to which it is entitled


under this Contract. .





































































































1


x


 ARTICLE 38





EFFECTIVE DATE











Upon execution by the Parties, this Contract shall become effective, the date of


execution being referred to as the Effective Date, and said Contract shall


become binding on the Parties.


IN WITNESS WHEREOF, the Parties have signed this Contract in_(_)


copies.














ABJD3AN, this

















FOR. .THE REPUBLIC OF COTE D'IVOIRE























The President of the Republic


H.E. Felix HOUPHOUET - BOIGNY
































FOR FOR





























r~j O


4 .<


 APPENDIX I











Attached to and made part of this Contract between the Republic of Cote


d'Ivoire and the Contractor.








DELIMITED AREA











On the Effective Date, the Delimited Area, designated as _ Block, is


formed by the area included inside the perimeter constituted by the points


_indicated on the map attached hereto.


The geographical coordinates of those points-are the following, with reference to


the Greenwich meridian : \








Point Latitude . Longitude












































Those coordinates are only given for purposes of illustration and shall not be


considered as the boundaries of the national jurisdiction of Cote d'Ivoire.


The surface of the Delimited Area above-defined is deemed to be equal to about


_sq.km.


MAP OF THE DELIMITED AREA


 APPENDIX 2











Attached to and made part of this Contract between the Republic of Cote


d’Ivoire and the Contractor.








ACCOUNTING PROCEDURE








Article 1 - GENERAL PROVISIONS


1.1. Object


This Accounting Procedure ...sjia.ll'v.be' followed and observed in the


performance of the obligations under the CoriXr.aCt.to which this Appendix


is attached. \ .. . \ V


1.2. Accounts and staterneriits


The registers and accounting 'books of the Contractor shall be in


conformity with regulations,- and maintained in accordance with the


general chart of accounts' for business ("Plan Comptable General des


Entrepr-ises") applicable' in Cote d’Ivoire. However, the Contractor may


apply the accounting rules and procedures customarily used in the


petroleum industry, insofar as none of these are contrary to the


regulations and the chart referred to above.


In accordance with the provisions of Article 25 of the Contract, accounts,


books and registers shall be maintained in the French language and


recorded in Dollars. These accounts shall be used, inter alia, to .determine


the amount of Petroleum Costs, the recovery of said Costs, the


production sharing, as well as for the purposes of Contractor’s tax return.


For information's purposes, accounts and balance sheets shall also be


maintained in CFA Francs.


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 Cote d’Ivoire.


All accounts, books, records and statements, together with documents


supporting expenses incurred, such as invoices and service contracts, shall


be kept in the Republic of Cote d'Ivoire in order to be provided at the


request of the competent authorities of Cote d'Ivoire.























ry £


1.3. Interpretation


The definitions of the terms used in this Appendix 2 shall be the same as


those of the same terms set forth in the Contract.


In the event of any conflict between the provisions of this Accounting


Procedure and the Contract, the provisions of the Contract shall prevail.


I A. 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.






















































































rj O


Article 2 - PETROLEUM COSTS





2.1. Petroleum Costs Account


The Contractor shall maintain a "Petroleum Costs Account" which will


record in detail the expenses incurred by the Contractor relating to the


Petroleum Operations carried out under this Contract, and which will be


recoverable in accordance with the provisions of Article 16.2 of the


Contract.


This Petroleum Costs Account shall, inter alia, record separately, by


Appraisal Perimeter or Exploitation Perimeter if any, the following


expenses :


(a) exploration expenditures ;


(b) appraisal expenditures ; . \


(c) development expenditures ; . \


(d) exploitation-expehses ;


(e) financial-.'cpsts ; . %


(f) overhead costs-.-in Cote d'Ivoire ;


(g) overhead-cbsts.-'abroad.


The Petroleum" Costs Account shall enable, inter alia, to identify at any


time :


(a) the total amount of Petroleum Costs since the Effective Date ;


(b) the total amount of Petroleum Costs recovered ;


(c) the total amount credited to the Petroleum Costs Account


pursuant to Article 2.4. (b) below ;


(d) the total amount of Petroleum Costs which remain to be


recovered.


For the purposes of Article 16.2 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) financial 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 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.


Items debited to the Petroleum Costs Account


The following expenses and costs shall be debited to the Petroleum Costs


Account :


2.2.1. Personnel expenses


All payments in respect of the salaries and wages of the Contractor’s


employees directly assigned to the Petroleum Operations carried out


under this Contract, in the Republic of Cote d’Ivoire, whether temporarily


or permanently, including amounts imposed by the applicable laws and


costs of employees' benefits and all additional charges or expenses in


accordance with the individual or collective employment contracts or


pursuant to the Contractor's personne.l\policies.


2.2.2. Overhead costs in Cpt'e 'd’Ivoire





Wages and salaries;-.. df;"'th‘e Contractor’s- personnel engaged in the


Petroleum Operations-in- the Republic of Cote d'Ivoire, whose work time is


not directly allocated to the.programs, as well as costs of maintaining and


operating in Cote d'lvoir.e-.. a 'main and administrative office and sub-


offices necessary for the-Pefroleum Operations.


2.2.3. Over head--costs abroad





The Contractor shall add a reasonable amount as overhead paid abroad,


connected to the carrying out of the Petroleum Operations by the


Contractor or its Affiliated Companies, such amounts representing the


estimated cost of services rendered for the benefit of the said Petroleum


Operations.


The amounts charged shall be provisional amounts established on the basis


of the experience of the Contractor, and shall be annually adjusted


according to the actual costs borne by the Contractor.


However, overhead costs paid abroad shall be charged only within the


following limits :


(a) prior to the grant of an exclusive exploitation authorization :_per


cent (_%) of expenses charged to the Petroleum Costs Account


excluding overhead costs for the year in question ;


(b) from the grant of the first exclusive exploitation authorization :


_per cent (_%) of expenses charged to the Petroleum Costs


Account excluding bonuses and overhead costs for the year in question.


2.2A. Buildings





Construction, maintenance expenses and related costs, as well as rents


paid for all offices, houses, warehouses and buildings of other types,


including housing and recreational facilities for employees, and cost of


equipment, furniture, fittings and supplies necessary for the operation of


those buildings required for the performance of the Petroleum Operations-


2.2.5. Materials, equipment and rentals


Costs of equipment, materials, machinery, articles, supplies 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 for the performance of the Petroleum Operations,


including the facilities exclusively owned by the Contractor.


2.2.6. Transportation .


Transportation of employees, 6quiphnent, materials and supplies, inside


the Republic of Cote d’Tvo;ire..a's well as between the Republic of Cote


d’Ivoire and other countries, necessary.for the' Petroleum Operations.


The transportation-costs of employees shall include the moving costs in


respect of the 'employees- ^rid fhfcir families paid by the Contractor in


accordance with its policies. \ v


2.2.7. Services • '•





Costs for services rendered by subcontractors, consultants, experts and


public utilities as well as any costs related to services rendered by the


Government or any other authorities of the Republic of Cote d’Ivoire.


Costs for services rendered by Affiliated Companies, provided that such


costs shall not exceed those normally charged by independent companies


for an identical or similar service.


2.2.8. Insurance and claims


Premiums paid for insurances customarily taken out for the Petroleum


Operations to be carried out by the Contractor as well as all expenses


incurred and paid in settlement of any losses, claims, damages and any


other expenses, including those concerning legal services not recovered by


the insurer and all expenses arising from judgments.


If, after Government's approval, no insurance is taken out, any expenses


paid by the Contractor in settlement of any losses, claims, damages,


judgments and other expenses.


2.2.9. Legal expenses





All expenses of handling, investigation and settlement of litigation or


claims arising from the Petroleum Operations, or the expenses required to


protect or recover assets acquired during the carrying out of the


Petroleum Operations, including, but not limited to, costs of investigation


or inquiry, court costs, and amounts paid for the settlement or


satisfaction of any such litigation or claims.


If such services are effected by the legal personnel of the Contractor, a


reasonable compensation shall be included in the Petroleum Costs, which


shall not exceed the cost for rendering an identical or similar service


normally charged by an independent company.


2.2.10. Financial costs


All interests and agios paid by the 'Contractor in respect of the loans


contracted from Third Parties-an

Companies, provided that...those-loans and advances shall be for the


purpose of the financing'-...of’ 'Petroleum Costs related only to the


development Petroleum-. .Operations ip respect of a Field, and shall not


exceed seventy ..five..--per cent (?5%). "of the total amount of those


development Petroleum Costs.-''-.Those loans and advances shall be


submitted to the 'approval-of-.the Administration under the conditions


provided by Article 58.,8\($) of the Petroleum Code, unless otherwise


specifically set f or thin-. Article 17A (c) of the Contract.


In the event such;. financing is provided by Affiliated Companies, the


allowable interest-rates shall not exceed the rates customarily used in the


international financial markets for loans of a similar nature.


2.2.11 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, 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.


Such other expenses include, inter alia, exchange losses actually realized


by the Contractor in connection with the Petroleum Operations.


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 Cote d’Ivoire, are not chargeable to the Petroleum Costs Account


and shall therefore not be recoverable.


Such expenses shall include, without limitation :


(a) expenses relating to the period before the Effective Date ;


(b) any expenses relating to the operations carried out beyond the


Delivery Point, such as transportation and marketing costs ;


(c) financial costs relating to the financing of exploration Petroleum


Operations, and those relating to the share of financing of


development Petroleum Operations in excess of seventy five per cent


(75%) of the total amount of development Petroleum Costs ;


(d) bonuses defined in Article 19 of the Contract ;


(e) exchange losses other then those specified in Article 2.2.11.


Besides, charges set forth in Article -17A (d), (e) and (g) of the Contract,


although deductible from the ne.t -profit for th.e purpose of the industrial


and commercial income tax/* are not chargeable to the Petroleum Costs


Account, in consequence-;of: the.-def ini tipp-thereof.


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 Crude Oil to


which the-Contractor is entitled under Article 16.2 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 :


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 ;


assignment or transfer of any items of Contractor's assets, and


assignment, in whole or in part, of rights and obligations of the


Contractor pursuant to Article 35 of the Contract ;


exchange gains actually realized by the Contractor in connection


with the Petroleum Operations.


2.5. Determination of the ”R” ratio (OPTION II of Article 16)


For the purposes of Article 16.3 of the Contract, exploration


expenditures, appraisal expenditures, development expenditures and


exploitation expenses (which exclude, inter alia, any financial costs)


correspond to the expenses charged to the Petroleum Costs Account in


respect of each of those items.


Article 3 - COST EVALUATION BASIS FOR SERVICES, MATERIALS AND


EQUIPMENT USED IN THE PETROLEUM OPERATIONS











3.1. Technical services


A reasonable rate shall be charged for the technical services rendered by


the Contractor or its Affiliated Companies for the benefit of the


Petroleum Operations carried out under the Contract, such as gas, water,


core analyses and any other analyses and tests, provided that such charges


shall not exceed those normally charged by independent technical service


companies and laboratories for similar services.


3.2. Purchase of materials and equipment


Materials and equipment purchased -.fr.orn Third Parties and necessary for


the performance of the Petroleum. Operations carried out under the


Contract shall be charged tq*-f he' Petroleum Cos.ts Account at "Net Cost"


incurred by the Contractor;*. \ /


"Net Cost" shall vincl-tide’' such itenci's as taxes, shipping agent fees,


transportation,•.Tpadirig and unloading., costs, licence fees, related to the


supply of materials and equipment-,. -as well as transit losses not recovered


through insurance.


3.3. Use of equipment and facilities owned exclusively


by the Contractor


Equipment and "facilities owned by the Contractor and used for the


Petroleum Operations shall be charged to the Petroleum Costs Account at


a rental rate which shall be sufficient to cover maintenance, repairs,


depreciation and services required for the performance of the Petroleum


Operations, provided such costs shall not exceed those normally charged


by Third Parties in the Republic of Cote d'Ivoire for similar services.


3.4. Valuation of material


All material transferred to Cote d'Ivoire from the Contractor's


warehouses, or from those of any entity constituting the Contractor or


their Affiliated Companies, shall be valued as follows :


(a) New material


New material (condition "A”) means new material which has never


been used : one hundred per cent (100%) of the current market price,


which corresponds to the price normally charged for similar supplies in


arm's length transactions between independent buyer and seller.


(b) Material in good condition


Material in good condition (condition "B") means material in good


condition which is still usable for its original purpose without repair :


at a maximum of seventy five per cent (75%) of the price of new


material.


(c) Other used material


Other used material (condition "CVhrtreans material still usable for its


original purpose, but only .afte£--.Vepairs and reconditioning : at a


maximum of fifty per cent/( 50%) of the price.of new material.


(d) Material in poor condition '


Material in poor ^condition ..(condition "D") means material no longer


usable for its original purpose but' still usable for other purposes : at a


maximum of twenty five-.-peb-cent (25%) of the price of new material.


(e) Scrap, material i : " •


Scrap material-" (condition "E") means material beyond usage and


repair : prevailing price of scrap material.


3.5. Materials and equipment disposed by the Contractor


Materials and equipment purchased by all the entities constituting the


Contractor shall be valued in accordance with the principles defined in


Article 3.4 above.


Materials and equipment purchased by any entity constituting the


Contractor or by Third Parties shall be valued at the received sale price,


which shall in no event be less than the price determined in accordance


with the principles defined in Article 3.4 above.


The corresponding amounts shall be credited to the Petroleum Costs


Account.


























8 4


Article 4 - INVENTORIES








4.1. Periodicity


The Contractor shall keep a permanent 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 by the Parties.


4.2. Notice


A written notice of intention to take an inventory shall be sent, by the


Contractor at least ninety (90) days prior to the commencement of said


inventory so that the Government and the entities constituting the


Contractor may be represented at the.ir own expenses during the inventory


operations. .


4.3. Information ;-


In the event the Goyemrhent or any.'ehtity constituting the Contractor


shall not be represented-at an inventory,’ such Party or Parties shall be


bound to accept .-the inventory- taken by the Contractor which shall furnish


to such Party or- Parties a.copy of said inventory.


Article 5 - FINANCIAL AND ACCOUNTING STATEMENTS








The Contractor shall furnish the Government 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 :


5.1. Statement of exploration work obligations


Such annual statement shall be submitted not later than one (1) month


after the end of each Contractual Year in respect of the exploration


periods.


It shall present with details the exploration work and expenditures carried


out by the Contractor to fulfil 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. .


5.2. Statement of recovery of Petroleum Costs





A quarterly statement, shall be submitted hot later than one (1) month


after the end oi.eadh 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-..o.f-‘ 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 ;


(d) the amount of incomes or proceeds credited for the purpose of Article


2.4 (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.


5.3. Statement of production


After commencement of production, such monthly statement shall be


submitted not later than fifteen (15) 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.