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PETROLEUM AGREEMENT
In
THE KINGDOM OF CAMBODIA
__________________________________________________________________________
Table of Contents
1.
DEFINITIONS
2.
SCOPE
3.
EXPLORATION OPERATIONS
4.
EXPLORATION PERIOD
5.
RELINQUISHMENT OF CONTRACT AREA
6.
MINIMUM WORK OBLIGATIONS DURING EXPLORATION PERIOD
7.
DISCOVERY AND APPRAISAL
8.
PRODUCTION PERMIT AND DEVELOPMENT OPERATIONS
9.
PRODUCTION OPERATIONS
10.
ASSOCIATED GAS
11.
ALLOCATIONS OF PRODUCTION
12.
RATE OF RETURN
13.
MARKETING AND SALE OF PRODUCTION
14.
VALUATION OF PRODUCTION
15.
RECOVERY OF PETROLEUM COSTS
16.
PETROLEUM COSTS
17.
INCOME TAX
18.
SURFACE RENTAL, FEES AND CHARGES
19.
WORK PROGRAMS
20.
OBLIGATIONS OF CONTRACTOR IN RESPECT OF PETROLEUM OPERATIONS
21.
OBLIGATIONS OF GOVERNMENT
22.
FACILITIES
23.
MEASUREMENTS
24.
REPORTS AND INFORMATION
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25.
AUDITS
26.
DATA
27.
CONFIDENTIALITY
28.
INSURANCE AND INDEMNITY
29.
ADMINISTRATION FEE
30.
PERSONNEL AND TRAINING
31.
PURCHASE OF GOODS AND SERVICES
32.
FORCE MAJEURE
33.
UNITISATION
34.
JOINT REVIEW COMMITTEE
35.
RELATIONSIP BETWEEN CONTRACTOR PARTIES
36.
TRANSFER OF RIGHTS AND OBLIGATIONS
37.
SUSPENSION AND TERMINATION
38.
SETTLEMENT OF DISPUTES
39.
MISCELLANEOUS
40.
CONDITION PRECEDENT
ANNEXURE I – COORDINATES OF THE CONTRACT AREA
ANNEXURE II – MAP OF THE CONTRACT AREA (BLOCK XXX)
ANNEXURE III – ADDITION DEFINITIONS
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PETROLEUM AGREEMENT
THIS AGREEMENT is made and entered into this
1.
day of
2004, by and between:
The Royal Government of Cambodia, hereinafter called “The Government”, represented by the
Cambodian National Petroleum Authority, hereinafter called “CNPA”, and
2.
( Name of the company ) a company incorporated in ( name of the country ) with registered address
..................(.Official address )“Abbreviation ”.
RECITALS
WHEREAS, title to Petroleum existing within the territory, continental shelf and exclusive economic
zone of the Kingdom of Cambodia is vested in the Kingdom of Cambodia, and all rights related to
Petroleum Operations belong exclusively to the Government;
WHEREAS, CNPA intends to promote the development of Petroleum within Cambodia for the
economic and social benefit of the Cambodian people;
WHEREAS, each Contractor Party has given assurances that it has the capital, technical competence
and professional skills necessary to conduct Petroleum Operations, and intends to conduct Petroleum
Operations in accordance with the terms and conditions of this Petroleum Agreement; and
WHEREAS, Petroleum Regulations, No. 01 on 28th September 1991, provide that Petroleum
Agreements may be entered into between CNPA and qualified Petroleum Contractors.
NOW, THEREFORE in consideration of the covenants and conditions contained herein, the Government and
Contractor mutually agree as follows:
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1.
DEFINITIONS
1.1
Words defined in Petroleum Regulations
The words defined in Petroleum Regulations No. 01 on 28th September 1991, shall, unless
the word is defined below, have the same meanings for the purpose of this Agreement.
1.2
Defined terms
In this Agreement, unless the context indicates otherwise:
Actual Costs has the meaning given to it in Annexure III.
Actual Revenue has the meaning given to it in Annexure III.
Additional Revenue has the meaning given by Article 12.3(c)(iii)(A).
Adjustment Statement means a statement issued by Contractor to CNPA specifying the
adjustment to CNPA’s percentage Net Gas entitlement for the Calendar Year following a
Calculation Date in accordance with Article 12.3.
Affiliated Party or Affiliate means, in relation to a Contractor Party, any entity which
controls, is controlled by, or is under common control with that Contractor Party. An entity
is deemed to control another if it owns directly or indirectly at least fifty percent (50%) of (i)
the shares entitled to vote at a general election of directors of such other entity, or (ii) the
voting interest in such other entity if such entity does not have either shares or directors.
Non-Affiliated Party means a company or entity who is not an Affiliated Party or an
Affiliate.
Associated Gas means Natural Gas produced in association with Crude Oil.
Calculation Date has the meaning given to it in Annexure III.
Calendar Quarter means a period of 3 consecutive months beginning January 1, April 1,
July 1, or October 1 and ending on the following March 31, June 30, September 30 or
December 31, respectively, according to the Gregorian calendar.
Calendar Year means a period of 12 consecutive months beginning January 1 and ending
on the following December 31, according to the Gregorian calendar.
CNPA’s Entitlement means the Government’s share of Production as determined under
Article 11, comprising the aggregate of:
(a)
the Government Royalty; and
(b)
CNPA’s share of Net Petroleum.
Condition Precedent has the meaning given by Article 40.1.
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Contract Area means the area specified from time to time by CNPA and recorded as
Annexure I to this Agreement, as reduced from time to time by relinquishments under
Article 5 and the other provisions of this Agreement.
Contract Operator means the Contractor Party appointed by the Contractor Parties as the
operator or deemed by Article 35.2 to be the operator.
Contract Year means a period of twelve consecutive months beginning on the Effective
Date, or on an anniversary of the Effective Date, according to the Gregorian calendar.
Contractor means the Contractor Parties collectively.
Contractor Parties means ( Company ) and its successors and any entity to which the
whole or any part of its interest under this Agreement has been transferred in accordance
with this Agreement. Contractor Party means any of them.
Contractor’s Entitlement means Contractor’s share of Production as determined under
Article 11, comprising the aggregate of:
(a)
Cost Recovery Petroleum; and
(b)
Contractor’s share of Net Petroleum.
Cost Recovery Petroleum means Production taken by Contractor and applied towards
recovery of Petroleum Costs in accordance with Article 11.1.
Crude Oil means Petroleum produced at the wellhead in the liquid state and asphalt,
ozokerite and liquid Petroleum known as distillate or condensate obtained from Natural Gas
by condensation or extraction.
Data means all data (whether raw, processed or interpreted) in relation to the Contract Area
including but not limited to geological, geophysical, geotechnical, production, engineering,
well and technical data, reports and samples, as Contractor may compile and collect.
Development Operations means all activities undertaken in respect of the development of
one or more Fields in a Production Area and all associated Production Facilities.
Development Operations include but are not limited to:
(a)
drilling and abandoning development wells, whether these wells are dry or
producing;
(b)
drilling and abandoning wells for the injection of water or gas to enhance recovery
of Petroleum;
(c)
completing wells by way of installation of casing or equipment or otherwise after a
well has been drilled, for the of bringing the well into use as a producing well or as
a well for injection of water or gas to enhance recovery of Petroleum;
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(d)
the design, construction, installation, testing and commissioning of Production
Facilities; and
(e)
feasibility, engineering and design studies for Production Facilities.
Development Work Program means a Work Program for Development Operations.
Discovery means the location through Petroleum Operations of a previously undiscovered
accumulation of Petroleum, which can be, recovered at the surface in a flow which is
measurable by conventional petroleum industry testing methods.
Dispute Resolution Procedures means the provisions of Article 38.
Dollar means United States Dollar.
Effective Date means the date notified by CNPA to Contractor under Article 40.5 as the
date on which the Condition Precedent is satisfied or CNPA reasonably estimates that the
Condition Precedent is satisfied.
Exploration Area means those parts of the Contract Area, which from time to time are not
within a Production Area.
Exploration Operations means all work directed towards the exploration for Petroleum,
and the appraisal and evaluation of Petroleum, including:
(a)
geophysical, geochemical, geological and topographical data acquisition including
processing, reprocessing and interpretation of such data;
(b)
drilling and abandoning exploration wells;
(c)
drilling and abandoning appraisal wells;
(d)
sampling and testing; and
(e)
undertaking pre-feasibility and feasibility studies and work.
Exploration Period means the Exploration Period as determined under Article 4 including
any extensions made in accordance with the terms of this Agreement.
Exploration Work Program means a Work Program for Exploration Operations.
Field means a zone within the surface of the Earth consisting of a single Petroleum reservoir
or multiple Petroleum reservoirs all grouped on, or related to, the same individual geological
structural feature, or stratigraphic conditions from which Petroleum may be produced
commercially and the area above that zone on the surface of the Earth.
General and Administrative Costs has the meaning given to it in Article 16.5.
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Good Petroleum Industry Practices means the standards and practices, and exercise of
that degree of skill, prudence and foresight, that would reasonably be expected of persons
carrying out international petroleum operations, and adherence to best industry standards of
the international petroleum industry, including world best environmental practices.
Government Royalty means the royalty held by the Government over Production from the
Contract Area, as described in Article 11.1.
Home Office Overhead Costs has the meaning given to it in Article 16.6.
Inflation has the meaning given to it in Annexure Ill.
Input Tax Credits shall have the meaning given by the Law on Taxation.
Law on Taxation means the Kram on Taxation dated February 24 1997, as amended from
time to time.
Measurement Point means the location or locations in the Production Area or elsewhere in
Cambodia agreed by CNPA and Contractor to be the measurement point for Petroleum
Production, being a location or locations where Petroleum is delivered from the Field for
transportation by truck, barge, marine tanker, pipeline or railway.
Minimum Rate of Return means in respect of a project an internal real rate of return of 16
percent.
Minimum Work Obligation means the work obligations that Contractor is required to
complete during each Stage of the Exploration Period, as described in Article 6.
Natural Gas means Petroleum gas which is primarily methane but may include minor
amounts of other Petroleum gases in order to meet heating value specifications at pipeline
conditions as required by gas customers. Liquids which are extracted from Petroleum gases
and usually known as LPG, condensate or distillate are treated as Crude Oil for the purposes
of this Agreement.
Net Petroleum has the meaning given in Article 11.1.
NPV Project Cash Flow Test has the meaning given to it in Annexure Ill.
Offtake Point means the point or points agreed by CNPA and Contractor to be the offtake
point for Petroleum Production at which custody and title to Production passes to Contractor
and CNPA respectively in accordance with their respective Entitlements.
Parties means CNPA and the Contractor Parties, and Party means any of them.
Percentage Adjustment has the meaning given by Article 12.3(c)(iii)(B).
Petroleum means all hydrocarbon compounds.
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Petroleum Costs means the petroleum costs and expenditures incurred by Contractor in the
conduct of Petroleum Operations eligible for cost recovery, as described in Articles 15 and
16.
Petroleum Operations means all activities undertaken by Contractor under this Agreement
with respect to the Contract Area, comprising Exploration Operations, Development
Operations and Production Operations.
Petroleum Regulations means the Petroleum Regulations No. 01 dated 28 September 1991
published in the Cambodia Gazette, as amended from time to time.
Production means the Petroleum produced from a Field within the Contract Area (less the
amount of Petroleum used for Petroleum Operations) and which is saved and measured by
the measuring device at the Measurement Point.
Production Area means the area the subject of a Production Permit, such area being
determined in accordance with Article 8.2.
Production Facilities means all plant, facilities, equipment and infrastructure required to
develop a Field, to produce Petroleum from a Field and to deliver the Petroleum to each
Offtake Point, including pipelines, flow lines, production and treatment units, wellhead,
equipment, sub-surface equipment, enhanced recovery systems, offshore platforms, offshore
loading systems including tankers, petroleum storage facilities, export terminals and piers,
harbours and any other related facilities, and access roads for production activities.
Production Operations means operations for the recovery, treatment, handling, storage,
transportation and delivery of Petroleum, up to the Valuation Point, and includes
abandonment of facilities.
Production Period means the period specified in Article 9.2.
Production Permit means a permit to be issued under Article 8.
Production Work Program means a Work Program for Production Operations.
Readjustment Statement means a statement issued by Contractor to CNPA specifying the
increase in CNPA's percentage entitlement to Net Gas in accordance with Article 12.4.
Real Costs has the meaning given to it in Annexure III.
Real Revenue has the meaning given to it in Annexure III.
Signature Date means the date on which this Agreement is executed by CNPA and
Kensteel.
Subcontractor means any person hired by Contractor to carry out Petroleum Operations,
other than an employee of a Contractor Party or an Affiliate of a Contractor Party.
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Taxable Supply shall have the meaning given by the Law on Taxation.
Tax on Value Added shall have the meaning given by the Law on Taxation.
Valuation Point means, in the absence of agreement to the contrary between CNPA and
Contractor, the inlet flange of a pipeline or loading facility in the Contract Area at which
Petroleum reaches the metering station of the pipeline or the inlet flange of the lifting
tanker's intake pipe.
Work Program means a work program and budget for Petroleum Operations submitted by
Contractor and approved by CNPA under this Agreement (as amended from time to time)
and includes an Exploration Work Program including the Minimum Work Obligations, a
Development Work Program and a Production Work Program.
2
SCOPE
2.1
Scope
This Agreement sets out:
(a)
the terms on which Contractor shall have the exclusive right and responsibility to
carry out Petroleum Operations, at its sole cost and risk, within the Contract Area
during the term of this Agreement;
(b)
the rights and obligations of Contractor with regard to Petroleum Operations;
(c)
the procedure for approving Work Programs for Petroleum Operations;
(d)
the manner in which Contractor is entitled to recover Petroleum Costs incurred in
carrying out Petroleum Operations;
(e)
the allocation of Production from the Contract Area between CNPA and
Contractor, and the marketing of such Production; and
(f)
the Condition Precedent that must be satisfied before this Agreement has any force
and effect.
2.2
CNPA to administer Agreement on behalf of Government
CNPA shall be responsible for administering this Agreement on behalf of the Government.
Contractor shall be responsible to CNPA for the execution of Petroleum Operations in
accordance with the provisions of this Agreement and the Petroleum Regulations.
3
EXPLORATION OPERATlONS
3.1
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Contractor may carry out Exploration
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During the Exploration Period, Contractor is entitled to enter the Contract Area and to carry
out Exploration Operations in the Contract Area in accordance with this Agreement.
3.2
Exploration Work Programs
(a)
All Exploration Operations conducted by Contractor shall be in accordance with
Exploration Work Programs which have been submitted by Contractor and
approved by CNPA.
(b)
Within 90 days after the Effective Date, Contractor shall submit to CNPA an
Exploration Work Program for Stage 1 of the Exploration Period. At least 30 days
prior to the beginning of each subsequent Contract Year during the Exploration
Period, Contractor shall submit to CNPA for approval an annual Exploration Work
Program for the forthcoming Contract Year.
(c)
Each Exploration Work Program submitted by Contractor under this Article will be
approved by CNPA within thirty (30) days as long as such Exploration Work
Program includes the Minimum Work Obligations and is in accordance with Good
Petroleum Industry Practices.
4
EXPLORATION PERIOD
4.1
Exploration Period
Subject to any extensions provided for under this Agreement, the Exploration Period will be
a period determined as follows:
(a)
Stage I of the Exploration Period will commence on the Effective Date and will
continue for a period of 3 Contract Years.
(b)
At least 90 days prior to the expiry of Stage I, Contractor may apply to CNPA for
an extension of the Exploration Period for a period of 2 Contract Years
commencing upon the expiration of Stage 1 ("Stage 2"). Subject to paragraph (d)
and if applied for by the Contractor, CNPA will grant that extension within thirty
(30) days.
(c)
At least 90 days prior to the expiry of Stage 2, Contractor may apply to CNPA for
a further extension of the Exploration Period for a period of 2 Contract Years
commencing upon the expiration of Stage 2 ("Stage 3"). Subject to paragraph (d)
and if applied for by the Contractor, CNPA will grant that extension within thirty
(30) days.
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(d)
CNPA will be entitled to refuse to grant the extension of the Exploration Period to
Stage 2 or Stage 3 only if:
(i)
Contractor has failed to meet the Minimum Work Obligation for the
preceding Stage of the Exploration Period; or
(ii)
Contractor has failed to provide a new guarantee as required under Article
6.7.
(e)
The Exploration Period will terminate at the expiry of:
(i)
Stage 1, in the event that no extension to Stage 2 is granted under
paragraph (b);
(ii)
Stage 2, in the event that no extension to Stage 3 is granted under
paragraph (c);
(iii)
Stage 3, in the event that no extension is granted under Article 4.2 or 4.3;
or
(iv)
4.2
any extension granted under Article 4.2 or 4.3.
Extension of Exploration Period to enable completion of work
(a)
Notwithstanding that Stage 2 or Stage 3 of the Exploration Period would otherwise
expire, Contractor may at least 30 days prior to the expiry of Stage 2 or Stage 3 of
the Exploration Period, as the case may be, apply to extend Stage 2 or Stage 3 of
the Exploration Period for a period not exceeding 3 months, in order:
(i)
to complete drilling, logging, testing or plugging of any well which is
actually being drilled, logged or plugged at the end of Stage 2 or Stage 3
of the Exploration Period, as the case may be;
(ii)
to complete any appraisal work;
(iii)
to evaluate any discoveries; or
(iv)
to prepare and submit Development Work Programs or an application for a
Production Permit or both.
(b)
The CNPA shall extend the duration of the Exploration Period for 90 days on
receipt of an application by Contractor under paragraph (a). The CNPA may extend
the Exploration Period for such further period as it considers appropriate on
application from Contractor. CNPA shall designate the area for the extension and
Contractor shall relinquish the balance of the Exploration Area in accordance with
Article 5.
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(c)
Where by thirty (30) days prior to the expiry of the Exploration Period Contractor
has been unable to secure a market for Natural Gas for supply into Cambodia's
domestic market or for export, Contractor may apply to CNPA for a non-renewable
extension of the Exploration Period of I Contract Year. CNPA shall grant such
extension within thirty (30) days provided that Contractor has complied with its
Minimum Work Obligations for each Stage of the Exploration Period.
4.3
Contractor may request further extension beyond Stage 3
(a)
At, or within 30 days prior to, the end of Stage 3 of the Exploration Period,
Contractor may apply for an extension of the Exploration Period in respect of any
part of the Contract Area then remaining for the purpose of carrying out further
Exploration Operations therein.
(b)
Such an application shall specify the proposed period of the extension, the
additional Exploration Work Program and the part of the Contract Area affected.
(c)
CNPA may approve the application for such period and on such terms and
conditions as it considers appropriate and are accepted by Contractor. CNPA shall
endeavor to make its decision within thirty (30) days.
5
RELINQUISHMENT OF CONTRACT AREA
5.1
Mandatory relinquishment
(a)
Subject to paragraph (b), Contractor shall relinquish:
(i)
a portion to be agreed by the Parties of the Contract Area by the end of
Stage 2 of the Exploration Period, subject to mutual discussion;
(ii)
all of the Contract Area at the end of Stage 3 of the Exploration Period;
(iii)
any area required to be relinquished under Article 8.4(g); and
(iv)
any area in respect of which an extension of Exploration Period was
granted under Article 4.3, at the expiry of that extension if not renewed
further.
(b)
Contractor shall not be required to relinquish under paragraph (a) any of the
following:
(i)
any area in the Contract Area that has been declared a Discovery Area;
(ii)
any area in the Contract Area in respect of which Contractor has applied
for a Production Permit, pending consideration of this application;
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(iii)
any area in the Contract Area in respect of which Contractor has been
granted a Production Permit; or
(iv)
any area in the Contract Area in respect of which CNPA has granted an
extension of the Exploration Period under Article 4.3, during the period of
that extension.
5.2
Voluntary relinquishment
Contractor may relinquish part or all of the Contract Area by giving prior written notice to
CNPA if the conditions of this Agreement and the Petroleum Regulations have been met to
the satisfaction of the CNPA (including the Minimum Work Obligations). Any area so
relinquished will then be credited against the part of the Contract Area. if any, which
Contractor is next required to relinquish under Article 5.1.
5.3
Relinquishment requirements
Contractor shall advise CNPA, by notice in writing 60 days in advance of the date of
relinquishment, of the area to be relinquished under Article 5.1 or 5.2 of this Agreement.
Contractor and CNPA will consult with each other regarding which part of a Contract Area
is to be relinquished to ensure that, so far as is reasonable, the area or areas to be
relinquished are sufficient size and convenient shape to enable Petroleum Operations to be
conducted in that area.
5.4
No relief
No relinquishment of an area will operate to relieve Contractor from any obligation arising
on or prior to relinquishment of that area.
6
MINIMUM WORK OBLIGATIONS DURING EXPLORATION PERIOD
6.1
Contractor to meet Minimum Work Obligations
During each stage of the Exploration Period, Contractor shall carry out at least the Minimum
Work Obligations. In no event shall the Minimum Work Obligations be excused except in
accordance with this Agreement.
6.2
Minimum Work Obligations for Stage 1
The Minimum Work Obligations for Stage 1 of the Exploration Period are as follows:
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Work Obligation ( Sample only )
(a)
Estimated Cost (Dollars)
Process, interpret and analyse existing data with
$80,000.00
respect to the Contract Area
(b)
Acquire two hundred (200) sq km of 3D seismic
$1,200,000.00
data over selected parts of the Contract Area,
process and interpret the data
(c)
Drill one - (1) exploratory well to an estimated
$600,000.00
depth of 2,500 m or economic basement,
whichever is reached first.
Total US$
6.3
$1,880,000.00
Minimum Work Obligations for Stage 2
The Minimum Work Obligations for Stage 2 of the Exploration Period are as follows:
Work Obligation
(a)
Estimated Cost (Dollars)
Acquire two hundred (200) sq km of 3D seismic
$1,200,000.00
data over selected parts of the Contract Area
(b)
Drill two (2) exploratory wells to an estimated
$1,200,000.00
depth of 2,500 m or economic basement,
whichever is reached first.
Total US$
$2,400,,000.00
Contractor shall only be liable for the Minimum Work Obligations for Stage 2 if an
extension to Stage 2 is granted by CNPA under Article 4.1 (b).
6.4
Minimum Work Obligations for Stage 3
The Minimum Work Obligations for Stage 3 of the Exploration Period are as follows:
Work Obligation
(a)
Estimated Cost (Dollars)
Acquire two hundred (200) sq km of 3D seismic
$1,200,000
data over selected parts of the Contract Area
(b)
Drill two (2) exploratory wells to an estimated
depth of 2,500 m or economic basement,
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$1,200,000
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whichever is reached first.
Total US$
$2,400,000.00
Contractor shall only be liable for the Minimum Work Obligations for Stage 3 if an
extension to Stage 3 is granted by CNPA under Article 4.1(c).
6.5
Estimated costs
(a)
The cost estimates set out above in relation to the Minimum Work Obligations are
estimates only, based on current assumptions and market conditions, and are
subject to change. If Contractor meets a Minimum Work Obligation, Contractor is
not required to meet the corresponding cost estimate.
(b)
Contractor is not relieved from meeting a Minimum Work Obligations merely by
meeting the corresponding cost estimate.
6.6
Excess work credited to Minimum Work Obligation
(a)
For the avoidance of doubt, Contractor may exceed the Minimum Work Obligation
for any Stage of this Agreement.
(b)
If, during any Stage of the Exploration Period, Contractor exceeds the Minimum
Work Obligation, then such excess will be credited against the Minimum Work
Obligation applicable to the following Stage of the Exploration Period (if any).
(c)
If, as a result of a Discovery, Contractor undertakes an appraisal Work Program,
then that Work Program will be credited against the Minimum Work Obligation
applicable to the Exploration Period.
6.7
Bank Guarantee
(a)
Contractor shall provide to the Government, within 60 days after the Effective Date
and at the beginning of each subsequent Stage of the Exploration Period, a bank
guarantee in an amount which shall correspond to the total dollar amount of the
estimated cost (as set out in this Article 6) of the Minimum Work Obligation to be
completed during the relevant Stage of the Exploration Period. Each identifiable
item of work to be committed by Contractor shall be assigned a portion of the bank
guarantee. The bank guarantee will be in the form of an unconditional undertaking
from a bank licensed and carrying on business in Singapore, Switzerland, Hong
Kong, Australia, the United Kingdom, Japan, or the United States or any other
country approved in advance by CNPA. The Government will give consideration to
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accepting a company guarantee from an Affiliate of a Contractor Party, in lieu of a
bank guarantee, if such can be reasonably justified to CNPA by Contractor.
(b)
The amount of such bank guarantee shall be reduced from time to time, upon
completion of identifiable portions of the Minimum Work Obligation, by the
amount assigned to such portion of the work in the bank guarantee.
(c)
If, at the end of any Stage of the Exploration Period or upon the date of termination
of this Agreement, Contractor has failed to perform all or part of its Minimum
Work Obligation for such Stage, then Contractor shall immediately pay to CNPA
an amount equal to the estimated cost (as set out in this Article 6) of the
unperformed items of Minimum Work Obligation for that Stage. If Contractor fails
to pay such amount, then CNPA shall make a demand on the guarantor to pay such
amount to CNPA under the current bank guarantee.
(d)
CNPA will only make a demand for payment under a guarantee made in its favour
under Article 6.7(a) where Contractor has failed to perform all or part of its
Minimum Work Obligations for the applicable Stage of the Exploration Period.
7
DISCOVERY AND APPRAISAL
7.1
Notice of Discovery
Contractor shall notify CNPA in writing immediately when Exploration Operations indicate
a Discovery of commercial quantities of Petroleum within the Contract Area. This notice
shall include all available details of the Discovery.
7.2
Appraisal work
If Contractor makes a Discovery which in the opinion of Contractor is of possible
commercial significance then the following provisions will apply:
(a)
Within 3 months (or any longer period to which CNPA may agree) after the date on
which Contractor gives notice of the Discovery to CNPA, Contractor shall submit
for approval by CNPA an appraisal Work Program to evaluate the commercial
viability of the Discovery.
(b)
The scope of the appraisal Work Program shall be adequate to assess the
commercial viability of the Discovery, and may include, if appropriate, the drilling
and testing of one or more wells, and studies related to recovery, treatment,
transport, storage and marketing of Petroleum. The Work Program may be
supplemented by further appraisal Work Programs. The duration of such Work
Programs shall be for such periods as are reasonable to accomplish the appraisal
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work, and may be extended with the approval of CNPA if it is satisfied that
justifiable reasons for the extension exist.
(c)
If Contractor considers such appraisal activities unnecessary in order to evaluate
the commercial viability of the Discovery, Contractor shall submit written reasons
to CNPA and shall indicate the basis on which Contractor proposes to assess the
commercial significance of the Discovery.
8
PRODUCTION PERMIT AND DEVELOPMENT OPERATIONS
8.1
Application for Production Permit
(a)
If Contractor makes a Discovery within the Exploration Area, Contractor may at
any time prior to the end of the Exploration Period submit to CNPA an application
for a Production Permit in respect of the Discovery.
(b)
Contractor is entitled to apply for a Production Permit if either:
(i)
Contractor considers that the Field the subject of the Discovery can be
commercially
developed
under
prevailing
conditions
("currently
commercial"); or
(ii)
in the case of a Natural Gas Field, Contractor considers that the Field
cannot be commercially developed under prevailing market conditions, but
may be able to be commercially developed in the future ("potentially
commercial").
(c)
Contractor's application for a Production Permit will specify whether Contractor
considers the Discovery to be currently commercial or, in the case of a Natural Gas
Field, potentially commercial.
8.2
Production Area
(a)
An application for a Production Permit shall describe the Production Area in
respect of which the Production Permit is sought.
(b)
The Production Area shall be a polygon in shape and shall have its geographical coordinates specified in the application.
(c)
The Production Area shall enclose an area which is sufficient to encompass:
(i)
the Field encountered by the Discovery;
(ii)
an additional reserve which is sufficient to capture all proved and probable
reserves based on Contractor's best assessment at that time; and
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(iii)
such additional areas as Contractor may reasonably require for the
development of the Field, including areas required for the location of
Production Facilities.
(d)
If, following the issue of a Production Permit, the extent of the Field is
demonstrated to be different from that which was considered by Contractor to exist
when it applied for the Production Permit, or if Contractor otherwise requires
access to additional areas (within or outside the Contract Area) for the purposes of
its Production Operations within the Production Area, Contractor may apply to
CNPA for an adjustment to the Production Area. CNPA shall adjust the Production
Area accordingly, provided that the Production Area may not be extended to
include areas in respect of which CNPA has granted inconsistent rights to a third
party.
(e)
If the adjusted Production Area extends beyond the Contract Area, and is not
inconsistent with any rights granted by CNPA to a third party, Contractor may
submit an application to CNPA to have the boundaries of the Contract Area and
Production Permit modified to encompass the full extent of the Field.
8.3
Development Work Program
(a)
If Contractor's application for a Production Permit states that the Discovery is
currently commercial, then:
(i)
The application shall include a detailed Development Work Program for
development of the Discovery. The application will be approved by CNPA
within thirty (30) days, provided that the Development Program is
technically sound based upon Good Petroleum Industry Practices.
(ii)
Within 30 days after CNPA approves the Development Work Program,
CNPA shall issue a Production Permit to Contractor in respect of the
Production Area. The term of the Production Permit will be until the end
of the Production Period. The Production Permit shall be issued on such
terms and conditions as are consistent with this Agreement, the Petroleum
Regulations and Good Petroleum Industry Practices.
(b)
A detailed Development Work Program shall address:
(i)
the Development Operations to be undertaken by Contractor for
construction, establishment and operation of all facilities and services
related to the recovery, treatment, transport, and storage of Petroleum from
the Field; and
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(ii)
the design and engineering specifications, necessary infrastructure
investments, training and employment of Cambodian nationals, plans to
maximise the use of Cambodian goods and services, plans to protect the
environment and an explanation of the sources and amount of financing in
respect of the activities contemplated by the Development Work Program.
(c)
If CNPA does not issue a Production Permit to Contractor under Article 8.3(a)(i)
due to Contractor's failure to satisfy the conditions set forth in this Agreement,
Contractor will relinquish the Discovery Area if requested to do so by CNPA.
8.4
Production Permit for potentially commercial Discovery
If Contractor's application for a Production Permit states that the Discovery is potentially
commercial, then CNPA will grant to Contractor a Production Permit over the Production
Area on the conditions set out in this Article.
(a)
The application shall include a conceptual Development Work Program. The
conceptional Development Work Program shall describe, among other things,
Contractor's proposal to secure a market for the Natural Gas Discovery, which shall
be consistent with the priorities for securing a market for Natural Gas described in
this Article and Article 13.5.
(b)
During the term of the Production Permit, Contractor shall:
(i)
make substantive and reasonable efforts in good faith to secure, in an
expeditious manner, a market for the Natural Gas which is sufficient to
justify the commercial development of the Discovery; and
(ii)
make substantive and reasonable efforts in good faith to secure, in an
expeditious manner, an economically viable market for Natural Gas in
Cambodia and shall cooperate and work with CNPA to develop such a
market for Natural Gas in Cambodia.
(c)
Contractor shall consult with CNPA, and keep CNPA informed, with respect to
Contractor's conduct and efforts under paragraph (b). CNPA will likewise consult
with Contractor, and keep Contractor informed, with respect to CNPA's efforts to
develop a market for Natural Gas in Cambodia.
(d)
The initial term of the Production Permit will be 5 years. Prior to the end of the 5
year period (and each subsequent period for which the Production Permit has been
extended), CNPA and Contractor shall review the progress in developing and
securing an economically viable market for the Natural Gas. If an economically
viable market for Natural Gas has not been secured, CNPA shall renew the
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Production Permit for a subsequent period of 5 years. If, 15 Calendar Years after
the issue of the initial Production Permit, Contractor has been unable to secure a
market for Natural Gas, renewal of the Production Permit by CNPA under this
paragraph shall be at the discretion of CNPA.
(e)
As soon as Contractor has secured a market for the Natural Gas which is sufficient
to justify the commercial development of the Discovery, Contractor shall submit a
detailed Development Work Program in respect of the Discovery to CNPA in
accordance with Article 8.3 and shall submit details of the relevant gas sales
contracts. If approved by the CNPA in accordance with Article 8.3, the Production
Permit shall then be extended until the end of the Production Period.
(f)
During the term of the Production Permit, Contractor may continue to carry out
Exploration Operations within the Production Area.
(g)
If CNPA does not issue a further Production Permit to Contractor in accordance
with Article 8.4(d), Contractor will relinquish the Production Area if requested to
do so by CNPA.
8.5
Development Operations
Following the approval of a Development Work Program, Contractor is entitled to carry out
Development Operations within the Production Area in accordance with the terms of the
Production Permit and in accordance with the approved Development Work Program.
8.6
Expanded Projects
Contractor may submit a proposal to CNPA, to develop a Marine Offshore Supply Base with
tax exemption zoning. CNPA will consider any such proposal submitted.
9
PRODUCTION OPERATIONS
9.1
Production Operations
(a)
Following the completion of Development Operations under an approved
Development Work Program, Contractor will be entitled to carry out Production
Operations within the Production Area, and will be entitled to continue Production
Operations during the Production Period.
(b)
Production Operations will be carried out in accordance with production Work
Programs prepared by Contractor and approved by CNPA. Contractor will submit to
CNPA a proposed Production Work Program at least 90 days prior to the
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commencement of commercial production. CNPA shall issue its approval or any
objections within thirty (30) days. The first Production Work Program will cover the
period from the commencement of commercial production until 31 December next
following. Thereafter, Contractor will submit proposed Production Work Programs
for each Calendar Year and will submit each proposed Production Work Program at
least 90 days prior to the commencement of each Calendar Year.
9.2
Duration of Production Period
(a)
The Production Period shall commence on the first commercial production day and
expire thirty (30) years thereafter.
(b)
If commercial production from the Field remains possible at the expiration of the
Production Period, CNPA shall extend the Production Period for the period of projected
commercial production as reasonably determined by the Parties or by an independent
expert, provided Contractor requests an extension at least 90 days prior to the expiration
of the Production Period, and such consent by CNPA shall not be unreasonably
withheld.
10
ASSOCIATED GAS
10.1
CNPA may take uncommercial Associated Gas
If Contractor produces Associated Gas in the course of Crude Oil production and if
Contractor considers
that Associated Gas may not be commercial to develop and is
not necessary for pressure maintenance, CNPA may take and utilise such Associated
Gas that is not required for Petroleum Operations without charge, except that all
handling and
be at the
transportation from the outlet of the first
sole cost and
separation facility shall
risk of CNPA. Contractor will design, construct and operate
all such facilities, at CNPA’s cost, to ensure compatibility with Contractor’s own plant,
operational management and safety systems.
10.2
Conservation of Associated Gas
(a)
Associated Gas which is not used in Petroleum Operations or is not developed,
sold, taken or utilised by CNPA pursuant to this Agreement shall be re-injected into
a subsurface structure, if technically and economically justifiable.
(b)
CNPA will permit the flaring of Associated Gas for short time periods during
production tests, where such flaring accords with Good Petroleum Industry
Practices.
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(c)
CNPA may permit Contractor to flare Associated Gas during the Production Period
where CNPA considers that flaring associated gas is appropriate having regard to
Good Petroleum Industry Practices.
11
ALLOCATION OF PRODUCTION
11.1
Government Royalty and Cost Recovery Petroleum
Production shall be allocated in the following manner and in the following order of priority:
(a)
First, 12.5% of Production shall be retained by the Government as Government
Royalty.
(b)
Second, Contractor shall have the right to take, from 90% of the remaining
Production, an amount of Production equal in Dollar value to its unrecovered
Petroleum Costs from the entire Contract Area for the current and prior Contract
Years (“Cost Recovery Petroleum”).
(c)
Third, the remaining Production (referred to as “Net Oil” or “Net Gas” individually
or “Net Petroleum” collectively) shall be allocated in accordance with Articles 11.2
and 11.3, subject to adjustment, in the case of Natural Gas, in accordance with
Article 12.
11.2
Allocation of Net Oil
(a)
Net Oil shall be allocated between Contractor and CNPA in the following manner:
Net Oil will be allocated between Contractor and CNPA within 60 days after the
end of each Calendar Year, based on the weighted average daily rate of Net Oil
produced during the Calendar Year, as follows:
Net Oil production (annual
Contractor's allocation
CNPA’s allocation
55%
45%
45%
55%
average BOPD)
Up to 30,000 BBL per day
Portion in excess of 30,000
BBL per day
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(b)
The allocation of Net Oil will be implemented in the following manner:
(i)
Prior to the commencement of each Calendar Year, Contractor shall submit to
CNPA Contractor's best estimate of the weighted average daily rate of Net Oil to be
produced during the coming Calendar Year. Contractor may submit revisions of
this estimate from time to time as justified by actual operations, together with
supporting evidence.
(ii)
CNPA will determine, in accordance with the basis of allocation specified in
paragraph (a) and Contractor's estimates provided under paragraph (b)(i), an
interim allocation of Net Oil between Contractor and CNPA for the Calendar Year.
This interim allocation will be applied over the Calendar Year.
(iii)
At the end of the Calendar Year, Contractor and CNPA will determine any
adjustment to Contractor and CNPA allocations of Net Oil necessitated by the
difference, if any, between the actual Net Oil production figures for the Calendar
Year and Contractor's estimates. Any adjustments will be by addition to or
deduction from CNPA's allocation of Net Oil over the next Calendar Year.
11.3
Allocation of Net Gas
Net Gas shall be allocated between Contractor and CNPA in the following percentages,
subject to adjustment in accordance with Article 12.
12
Contractor's share
CNPA's share
60 percent
40 percent
RATE OF RETURN
12.1
Rate of Return
(a)
The parties intend that Contractor’s real internal rate of return for any Natural Gas
development for supply of Natural Gas produced by Contractor into Cambodia’s
domestic market be not less than the Minimum Rate of Return as described in this
Article 12.
(b)
The parties acknowledge that the mechanism specified in this Article 12 is not
intended to operate to subsidise exports of Natural Gas to any market outside
Cambodia.
12.2
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Annual Rate of Return Calculation and adjustment
24
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(a)
Not later than 30 days after each Calculation Date, Contractor will calculate the
result of the NPV Project Cash Flow Test for that Calculation Date.
(b)
Contractor will provide CNPA with historical costs and revenues and future cost
and revenue forecasts and key assumptions on which the result of the NPV Project
Cash Flow Test will be based before the calculation. Contractor will provide details
of its calculations and will consult with CNPA regarding the calculations.
(c)
Subject to paragraph (d), CNPA may have those calculations (including historical
cash flows, estimates, forecasts and key assumptions) reviewed by an independent
expert with appropriate internationally recognised expertise. The independent
expert’s costs shall be met by the Contractor and shall be eligible for cost recovery.
If the independent expert demonstrates that a calculation is materially wrong, or an
estimate, forecast or key assumption unreasonable, then Contractor will correct the
error and modify the result of the affected calculation accordingly.
(d)
Where the results of the NPV Project Cash Flow Test is zero or positive, CNPA
will not request that an independent expert review those results, except as provided
for in Article 12.4.
12.3
Adjustment Statements
(a)
If, for any Calculation Date following the first day of commercial production, the
result of the calculation of NPV Project Cash Flow Test is negative, then
Contractor will submit to CNPA an Adjustment Statement for the Calendar Year
following that Calculation Date.
(b)
Subject to paragraph (c), the Adjustment Statement will set out the adjustment to
CNPA’s percentage entitlement to Net Gas proposed for the Calendar Year
following the Calculation Date required to bring the NPV Project Cash Flow Test
for the following Calculation Date to zero.
(c)
Where Real
Revenue and Real Costs include either revenue and
costs
generated or incurred, or forecast to be generated or incurred, in respect of
Petroleum Production from a project other than a Natural Gas development
for supply of Natural Gas produced by
Contractor
into Cambodia’s
domestic market, and by virtue of Real Revenue and Real Costs attributed to
such Petroleum Production the result of the NPV Project Cash Flow Test in respect
of a Calculation Date is the same as or lower than the NPV Project Cash Flow Test
would be excluding such revenue and costs, the following shall occur:
(i)
the NPV Project Cash Flow Test in respect of a Calculation Date shall be
recalculated excluding Real Revenue and Real Costs in respect of
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Petroleum Production from a project other than a Natural Gas
development for supply of Natural Gas produced by Contractor into
Cambodia’s domestic market;
(ii)
the NPV Project Cash Flow Test in respect of Calculation Date shall be
recalculated using only Real Revenue and Real Costs in respect of
Petroleum Production from project(s) for supply of Natural Gas produced
by Contractor into Cambodia’s domestic market;
(iii)
an Adjustment Statement will be submitted to CNPA setting out:
(A) the amount of additional Real Revenue that would be required to
bring the NPV Project Cash Flow Test to zero at the Calculation
Date when calculated in accordance with Article 12.3(c)(i) and (ii)
(Additional Revenue); and
(B) the adjustment, as set out in paragraph (iv), to CNPA’s percentage
entitlement to Net Gas for the Calendar Year following the
Calculation Date required to deliver Contractor the Additional
Revenue (Percentage Adjustment).
For the purpose of determining the Percentage Adjustment, all additional
Real Revenue that would accrue to Contractor from the adjustment to
CNPA’s percentage entitlement to Net Gas as set out in the Adjustment
Statement shall be deemed to be Real Revenue in respect of Petroleum
Production from a project(s) for supply of Natural Gas produced by
Contractor into Cambodia’s domestic market, whether or not such
additional Real Revenue is actually generated or forecast to be generated
from such a project(s); and
(iv)
the Adjustment Statement submitted under paragraph (iii) will be based on
whichever of the NPV Project Cash Flow Tests recalculated under sub
paragraph (i) and (ii) results in the smaller adjustment to CNPA’s
percentage entitlement to Net Gas proposed for the Calendar Year
following the Calculation Date.
(d)
Contractor will provide CNPA with the calculations, estimates, forecasts and key
assumptions used to calculate the Adjustment Statement before finalising the
Adjustment Statement. Contractor will consult with CNPA regarding those
calculations.
(e)
CNPA may, as part of any independent expert review instituted under Article
12.2(c) request that the calculations, estimates and key assumptions underlying an
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Adjustment Statement be reviewed. If the independent expert demonstrates that a
calculation is materially wrong, an estimate or key assumption unreasonable, then
Contractor will correct the error demonstrated and modify the Adjustment
Statement accordingly.
12.4
Readjustment Statements
(a)
If:
(i)
CNPA’s percentage entitlement to Net Gas has, in a previous Calendar
Year, been subject to adjustment under an Adjustment Statement; and
(ii)
the result of Calculation of the NPV Project Cash Flow Test using Actual
Revenue and Actual Costs only is positive,
then Contractor shall submit to CNPA a Readjustment Statement for the Calendar
Year following that Calculation Date. The Readjustment Statement will set out the
increase to CNPA’s percentage entitlement to Net Gas proposed for the Calendar
Year following the Calculation Date required to return to CNPA the value of
Petroleum transferred from CNPA to Contractor under all Adjustment Statements.
For this purpose, the value of Petroleum transferred from CNPA to Contractor
under an Adjustment Statement equals:
X (l.l6)n
where,
X is the total value of Petroleum transferred from CNPA to Contractor under an
Adjustment Statement in a previous Calendar Year; and
n is the number of Calendar Years between the Calculation Date in respect of
which the Adjustment Statement was submitted and the Calculation Date in respect
of which the Readjustment Statement is submitted.
(b)
Contractor will provide CNPA with the calculations, estimates, forecasts and key
assumptions used to calculate the Readjustment Statement before finalising the
Readjustment Statement. Contractor will consult with CNPA regarding those
calculations.
(c)
CNPA may have the results of the calculation of the NPV Project Cash Flow Test
and calculation of a Readjustment Statement reviewed by an independent expert
expert with appropriate internationally recognised expertise. The independent
expert’s costs shall be met by the Contractor and shall be eligible for cost recovery.
If the independent expert demonstrates that a calculation is materially wrong or
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assumption unreasonable, then Contractor will correct the error demonstrated and
modify the Readjustment Statement accordingly.
12.5
Adjustment of CNPA’s Net Gas Entitlement
(a)
CNPA’s percentage entitlement to Net Gas in a Calendar Year will be adjusted in
accordance with the terms of a valid Adjustment Statement or Readjustment
Statement for that Calendar Year. For the avoidance of doubt, neither CNPA’s nor
Contractor’s percentage entitlement to Net Gas may be less than zero percent for
any year.
(b)
Notwithstanding Article 12.4, a Readjustment Statement shall not bring the
calculation of NPV Project Cash Flow Test, using Real Revenue and Real Costs, to
below zero.
12.6
Additional rights
(a)
In addition to Contractor’s other rights and responsibilities under this Article 12,
where:
(i)
Contractor has discovered additional Natural Gas reserves which
Contractor wishes to supply to Cambodia’s domestic gas market; and
(ii)
Contractor has an approved Development Work Program for a gas
development for export of Natural Gas to a market outside Cambodia;
Contractor may, prior to development of those additional Natural Gas reserves,
apply to CNPA to have Contractor’s proposed Natural Gas development for supply
of Natural Gas into Cambodia’s domestic market designated as a Subsidised
Project.
(b)
CNPA may designate a Natural Gas development for supply of Natural Gas
produced by Contractor into Cambodia’s domestic market as a Subsidised Project
where it considers that such designation is in Cambodia’s national interest.
(c)
Where CNPA designates a Natural Gas development for supply of Natural Gas
produced by Contractor into Cambodia’s domestic market as a Subsidised Project,
for the purpose of determining the results of the NPV Project Cash Flow Test in
respect of that development, Real Costs and Real Revenues attributed to
Contractor’s existing gas development for export of Natural Gas to a market
outside Cambodia shall be excluded from the calculations described in this Article
12 and Annexure III. [to be clarified with CNPA]
12.7
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Expert Determination
28
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Where Contractor or CNPA forms a reasonable and good faith opinion that an independent
expert determination under Article 12.2(c), 12.3(e) or 12.4(c) is materially incorrect or
inaccurate, Contractor or CNPA (as the case may be) shall be entitled to refer the matter for
final determination by an Independent Expert in accordance with Article 38.3.
13
MARKETING AND SALE OF PRODUCTION
13.1
Marketing of Crude Oil
The following provisions apply to the marketing of Production of Crude Oil:
(a)
Subject to Article 13.2, Contractor shall have the right to sell, dispose of, and
export Contractor’s Entitlement to Crude Oil (free of export duties) and freely remit
or retain the proceeds abroad.
(b)
Contractor and CNPA will each be responsible for separately marketing and lifting
their respective Entitlements. However, the Parties agree that they will consider
having Contractor coordinate joint liftings and marketing to avoid interruption in
production or to address safety and environmental concerns or if market conditions
warrant.
(c)
CNPA may from time to time request Contractor to market and lift CNPA’s
Entitlement in conjunction with, and on the same terms as, Contractor’s own
Entitlement. CNPA may, at its option, and upon at least 90 days prior written notice
to Contractor, require Contractor to give CNPA all information available to it
concerning possible purchasers of CNPA’s Entitlement and possible terms and
conditions of sale. CNPA shall give instructions regarding the sale and marketing
of its Entitlement in a timely manner so as not to interfere with Contractor’s sale
and lifting arrangements.
(d)
If Contractor and CNPA separately market their respective Entitlements, then:
(i)
each Party will take its respective entitlement at the Measurement Point, or
other point as mutually agreed;
(ii)
CNPA shall from time to time notify Contractor of the delivery schedules
and amount of Petroleum that CNPA will take in kind;
(iii)
CNPA and Contractor shall agree on appropriate lifting arrangements for
their respective Entitlements but in any event, as far as practicable, each
party shall take alternate lifting; and
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(iv)
each Party will ensure that liftings are programmed to avoid any
interruption in Crude Oil production resulting from lack of Crude Oil
storage.
13.2
Obligation to supply Crude Oil Production for internal demand
CNPA has the right to order Contractor to sell to the Government, for domestic
consumption, a portion of Contractor’s share of Net Oil to meet the internal demand of
Cambodia, subject to Contractor’s existing sales commitments and the following provisions:
(a)
Before exercising this right, CNPA shall give prior written notice of at least one (1)
Calendar Quarter to Contractor.
(b)
The maximum quantity of Contractor’s share of Net Oil that it shall be required to
sell to the Government to meet such internal demand shall not exceed the amount
which is equal to the total of such demand which cannot be met by all crude oil
produced in the Kingdom of Cambodia to which the Government is entitled,
multiplied by the amount of Contractor’s share of Net Oil, and divided by the total
amount of allocations of all contractors producing crude oil in the Kingdom of
Cambodia.
(c)
If Contractor sells to the Government a portion of Contractor’s share of Net Oil to
meet domestic consumption needs, that Crude Oil will be valued in accordance
with Article 14. The Government will pay for that Crude Oil in Dollars, to an
external bank account outside Cambodia nominated by Contractor, no later than 30
days after that Crude Oil is lifted. To the extent that Contractor elects to have such
payment made within Cambodia, the said Dollars shall be freely exportable from
Cambodia without payment of transfer taxes or other charges.
13.3
Export of Contractor’s Entitlement
Contractor shall have the right to sell, dispose of and export Contractor’s Entitlement to
Natural Gas (free of export duties) and freely remit or retain the proceeds abroad.
13.4
Marketing of Natural Gas
CNPA and Contractor shall cooperate when marketing Natural Gas and Contractor will
coordinate, lead and direct the marketing effort and negotiation of sales price, quantity and
other necessary terms and conditions of any contract of sale or amendment of such contracts.
13.5
Securing a Market for Natural Gas in Cambodia
(a)
CNPA will endeavour, prior to the discovery by Contractor of Natural Gas
reserves, to:
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(i)
take preliminary steps to study the economics of a potential development
of Natural Gas for supply into Cambodia’s domestic market;
(ii)
develop and enhance Cambodia’s legal and regulatory framework to
facilitate investment in infrastructure and other projects associated with
Natural Gas development; and
(iii)
liaise with potential investors in infrastructure, industrial, manufacturing
and other projects associated with Natural Gas development, with a view
to anticipating investors’ needs and devising a strategy to encourage
development and investment in Cambodia.
(b)
CNPA will endeavour, following discovery by Contractor of Natural Gas reserves,
to:
(i)
review the appropriateness of its strategy to encourage development and
investment in Cambodia; and
(ii)
implement its revised strategy with the aim of developing a market for
Natural Gas in Cambodia that is sufficient to take Natural Gas to be
produced by Contractor.
(c)
Contractor shall:
(i)
cooperate and collaborate with CNPA in its endeavours under paragraphs
(a) and (b); and
(ii)
in seeking to secure a market for Natural Gas to be produced by
Contractor, simultaneously investigate the market for Natural Gas in
Cambodia (including to the Government or for any project within
Cambodia that the Government promotes) and any export market for sale
or disposal of Natural Gas outside Cambodia.
(iii)
in conjunction with CNPA, and at Contractor’s sole cost, to evaluate and
study the options for development of a gas-fuelled power plant, under a
Build Own Operate, Build Operate Transfer or other basis, and associated
projects.
(d)
CNPA acknowledges that it may be unsuccessful in its attempts to develop a
market for Natural Gas in Cambodia that is as attractive to Contractor as any export
for sale or disposal of Natural Gas outside Cambodia. Accordingly, nothing in this
Article 13.5 limits Contractor’s rights under Article 13.3.
(e)
Where, at any time during the period from the date of issue of a Production Permit
in respect of a Discovery under Article 8.4 to the date on which Contractor submits
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a detailed Development Work Program in respect of that Discovery for approval
under Article 8.4(e), a commercially comparable market for Natural Gas exists
within Cambodia, sufficient to take Natural Gas to be produced by Contractor from
that Discovery, Contractor shall give priority to the supply of that Natural Gas to
Cambodia’s domestic gas market over export of that Natural Gas. Assessment of
whether markets are commercially comparable shall include assessment by
reference to projected revenues, projected costs (including infrastructure costs) and
risk profile taken as a whole.
14
VALUATION OF PRODUCTION
14.1
Scope
The value of Petroleum will be determined in accordance with this Article 14.1 for all
purposes under this Agreement including:
(a)
determining the allocation of Petroleum between CNPA and Contractor pursuant to
Article 11;
(b)
CNPA's payment entitlements for the Petroleum allocated to it pursuant to this
Agreement and sold on its behalf by Contractor;
(c)
Contractor's payment entitlements for Net Oil it is required to sell to the
Government under Article 13.2.
14.2
Value
The value of Petroleum for the purposes of this Agreement will be the value at the Valuation
Point. Any dispute relating to the value of Petroleum shall be referred to an independent
expert in accordance with Article 38.3.
14.3
Arm's length sales
In the case of an arm's length sale of Petroleum, the Petroleum sold will be valued at the
realised price for the sale netted back to the Valuation Point.
14.4
Non-arm's length sale
In the case of a non-arm' s length sale or other disposal of Petroleum, the value of Petroleum
sold or otherwise disposed of will be whichever is the higher of:
(a)
the revenue received from sale of the Petroleum at the first point of sale netted back
to the Valuation Point; or
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(b)
the prevailing market price in South East Asia for arm's-length sales of comparable
Petroleum in comparable circumstances, adjusted as necessary to take account:
(i)
in the case of Natural Gas, of specifications and calorific value, netted
back to the Valuation Point; and
(ii)
and in the case of Crude Oil, of quality, quantity, grade and specific
gravity of the Crude Oil production, netted back to the Valuation Point.
In determining the prevailing market price the CNPA shall have regard to
internationally recognised industry publications that regularly report upon
petroleum prices referable to South East Asia.
14.5
Definitions
For the purposes of this Article:
(a)
an arm’s length sale means a sale or other disposal to an independent bona fide
purchaser who is not an Affiliate of any Contractor Party and who has no
relationship with Contractor or any Contractor Party, whether contractual or
otherwise, that would or might cause Contractor to accept a lower price for the sale
of Petroleum than it would otherwise accept.
(b)
A non-arm’s length sale means a sale or other disposal that is not an arm’s length
sale, and includes any sale or disposal to CNPA.
(c)
The reference to netted back means:
(i)
the value realised referred to in Article 14.3; or
(ii)
the value calculated in accordance with Article 14.4,
minus, in accordance with internationally recognised practise in the off-shore
petroleum industry, Contractor’s costs (if any) directly related to activities
downstream from the Valuation Point to, and including, the first point of sale, being
all or any of:
(A)
transportation, storage, processing and marketing of Petroleum
(including any commissions and brokerage paid not exceeding
the customary and prevailing rates);
(B)
depreciation of relevant petroleum assets (on an agreed basis);
(C)
certain interest costs associated with the acquisition and
construction of the relevant petroleum facilities (on an agreed
basis); and
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(D)
the Contractor’s overhead expenses directly related to such costs.
In the case of sea transport of Crude Oil on a c.i.f. basis, freight (including tankers),
insurance, demurrage at the port of destination, wharfage at the port of destination
and loading, heating costs in the case of Crude Oil (where required of the Crude
Oil), cargo surveys and a volumatic loss of up to 0.05% of the quantity of Crude
Oil loaded in the Contract Area, may also be subtracted from the amounts specified
in paragraphs (c)(i) and (c)(ii), as applicable, in order to ascertain the value of
Petroleum in accordance with this Article 14.
14.6
Sales and disposals
Contractor shall notify CNPA, as required by CNPA, of quantities and sales prices of all
Petroleum from the Contract Area sold or disposed of.
15
RECOVERY OF PETROLEUM COSTS
15.1
Recovery of Petroleum Costs
(a)
Contractor shall have the right to recover Petroleum Costs out of Production in the
manner set out in this Agreement.
(b)
Contractor’s books and accounts shall be prepared and maintained in accordance
with a generally accepted and recognised accounting system consistent with Good
Petroleum Industry Practices.
(c)
All calculations required to determine Petroleum Costs shall be done in Dollars.
Where costs are denoted in any other currency, they shall be translated into Dollars
at the exchange rate set, on the day the payment was made, by a reputable
international bank designated by CNPA.
15.2
General description of Petroleum Costs
(a)
Petroleum Costs are described generally as all costs and expenditures incurred by
Contractor in the course of or relating to Petroleum Operations and which are part
of a Work Program (and associated budgets) that has been approved by CNPA,
minus the receipts described in Article 16.9 and which costs are not specifically
excluded from being treated as Petroleum Costs under the terms of this Agreement.
Petroleum Costs are further classified and described in Article 16.
(b)
The costs qualifying as Petroleum Costs will include all costs and expenditures
which are:
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(i)
incurred, measured and recorded by Contractor in accordance with the
generally accepted accounting procedures (as specified under Article
15.1(c) and, where consistent with the foregoing, Contractor’s normal
accounting methods and procedures (a copy of which will be supplied to
CNPA); or
(ii)
as otherwise permitted under the Petroleum Regulations or this
Agreement.
15.3
Contractor to keep financial records of Petroleum Costs
Contractor shall keep complete financial accounts and records in the English language on a
cash accounting basis recording all Petroleum Costs and all amounts recovered as Cost
Recovery Petroleum. Such accounts and records shall be kept in Dollars or such other
currency as may be mutually agreed, and shall be kept at the office of Contract Operator in
Cambodia.
15.4
Quarterly statements of Petroleum Costs
(a)
Contractor shall submit to CNPA within 30 days after the end of each Calendar
Quarter a statement of Petroleum Costs showing:
(i)
the total amount of unrecovered Petroleum Costs carried forward from the
preceding Calendar Quarter;
(ii)
the amount the Petroleum Costs incurred during the Calendar Quarter,
itemised in such classifications of expenditure as CNPA may prescribe;
(iii)
the amount of Petroleum Costs recovered during the Calendar Quarter
through Cost Recovery Petroleum, showing the calculation of the amount;
and
(iv)
the total amount of unrecovered Petroleum Costs as at the end of the
Calendar Quarter, to be carried forward to the next Calendar Quarter.
(b)
All books, records and accounts required to support a Quarterly statement of
unrecovered Petroleum Costs shall be available, upon giving of reasonable notice
by CNPA, for inspection by CNPA, at the office of Contract Operator in Cambodia
at any time during office working hours.
(c)
CNPA may, within 120 days following the end of a Calendar Quarter covered by a
statement under par (a), notify Contractor that it considers such statement to be
inaccurate. Such notice shall be in writing and shall specify which items CNPA
considers may be inaccurate and shall also state CNPA’s reasons for such opinion.
Upon receipt of the notice, Contractor shall confer with CNPA to resolve the issue
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in a satisfactory manner. If CNPA does not give such notice within the time period
stated above, then such statement shall be considered as approved.
(d)
CNPA is entitled to disallow Contractor’s claim for particular costs where:
(i)
those costs were not reported either in a Quarterly statement of Petroleum
Costs for the Quarter in which they were incurred or in the following
Quarterly statement, or in the annual statement of Petroleum Costs for the
Contract Year to which it pertains, except where such non-reporting
results from a bona fide error on the part of Contractor’s staff; or
(ii)
the claim for costs is not consistent with this Agreement or the Petroleum
Regulations.
15.5
Ability of CNPA to disallow costs claimed by Contractor
CNPA may require. Contractor to provide further details of the cost of obtaining the goods
or services obtained on a non-arm’s length basis (including from any Affiliate of a
Contractor Party) described in the quarterly or annual statement of petroleum costs if, in its
opinion, the cost of such goods or services varies significantly from the expected market
cost.
16
PETROLEUM COSTS
16.1
Classifications
Petroleum Costs will be classified and subdivided as follows:
16.2
(a)
Exploration Costs;
(b)
Development Costs;
(c)
Production Costs;
(d)
General and Administrative Costs; and
(e)
Home Office Overhead Costs.
Exploration Costs
Eligible exploration costs will be those direct and allocated indirect expenditures incurred in
respect of Exploration Operations (Exploration Costs), including:
(a)
geophysical, geochemical, geological and topographical data acquired or created,
including processing, reprocessing and interpretation of such data; -
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(b)
labour, materials, equipment and services used in drilling exploration and appraisal
wells; and
(c)
any other expenditures incurred in the search for Petroleum within the Contract
Area after the Effective Date but prior to the declaration of the relevant Discovery
Area by the CNPA.
16.3
Development Costs
Eligible development costs will include those direct and allocated indirect expenditures
incurred in respect of Development Operations (Development Costs), including:
(a)
drilling of wells, other than appraisal wells, which are completed as producing
wells, and drilling of wells f the purpose of producing from a Petroleum reservoir,
whether these wells are dry or producing, and drilling of wells used for the
injection of water or gas to enhance recovery of Petroleum;
(b)
completing wells by way of the installation of casing or equipment or otherwise
after a well has been drilled for the purpose of bringing the well into use as a
producing well or as a well for the injection of water or gas to enhance recovery of
Petroleum; and
(c)
16.4
construction of facilities for the extraction, lifting and production of Petroleum.
Production Costs
Production Costs are all direct and allocated indirect expenditures incurred in respect of
Production Operations (Production Costs).
16.5
General and Administrative Costs
(a)
General and Administrative Costs comprise:
(i)
reasonable management, administrative and general costs in respect of
Petroleum
Operations
incurred
by
Contractor
in
Contractor’s
representative office and field offices in Cambodia including, but not
limited to, supervisory, accounting, legal, technical and employee relations
services;
(ii)
reasonable management, administrative and general costs in respect of
Petroleum Operations incurred outside Cambodia by Contractor and its
Affiliates including, but not limited to, supervisory, accounting, legal,
technical and employee relations services;
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(iii)
reasonable general costs in respect of Petroleum Operations incurred
outside Cambodia by Contractor and its Affiliates including costs in
respect of financial, office and personnel services.
(b)
All General and Administrative Costs will be based on actual costs without any
profit element to Contractor.
(c)
Contractor may at its election maintain General and Administrative Costs as a
separate cost category, or allocate General and Administrative Costs between
Exploration Costs, Development Costs and Production Costs respectively, provided
that such allocation occurs in accordance with internationally recognised petroleum
industry accounting practices. For the avoidance of doubt, no cost described in
Article 16.6 shall be eligible for recovery as a General and Administrative Cost.
16.6
Home Office Overhead Costs
(a)
Home Office Overhead Costs are intended to reflect the following costs incurred by
Contractor in its home office, to the extent that such costs assist Contractor to
conduct Petroleum Operations in respect of the Contract Area:
(i)
executive costs, reflecting the time of executive officers above the rank of
regional exploration manager;
(ii)
treasury costs, reflecting the provision of financial advice and other advice
in respect of foreign exchange and payment of invoices;
(iii)
purchasing and forwarding costs, reflecting costs relating to procuring
materials, equipment and supplies;
(iv)
Exploration and Production costs, reflecting costs in connection with
directing, advising and controlling Petroleum Operations and other matters
in connection with this Agreement; and
(v)
indirect Affiliate costs, reflecting all indirect services provided to
Contractor by the Affiliates of any Contractor Party which services are not
direct and allocated indirect expenditures covered by Article 16.2, 16.3,
16.4 and 16.5, such as legal, tax, engineering, employee relations and
personnel, recruiting, administrative, accounting and audit assistance.
(b)
Home Office Overhead shall, prior to the date of approval of the first Development
Work Program in respect of the Contract Area, be recoverable in the amount
resulting from application of the following percentage rates to the total of all
Petroleum Costs for the Contract Year other than General and Administrative
Costs:
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Total Petroleum Costs, less General and Administrative Costs,
Home Office
paid during the Contract Year
Overhead Costs
(%)
(c)
For each dollar up to $2,000,000.00
5
For each dollar of the next $3,000,000
3
For each further dollar
1
Home Office Overhead Costs shall, from the date of approval of the first
Development Work Program in respect of the Contract Area, be recoverable in the
amount of one half of one percent (0.50%) of all Petroleum Costs for the Contract
Year other than General and Administrative Costs.
(d)
Contractor shall make provisional quarterly charges to the accounts based on the
above rates.
(e)
The percentage rates specified in paragraphs (b) and (c) will be reviewed annually
by Contractor and CNPA and shall be adjusted if it is necessary so that such
charges reflect a reasonable estimate of actual cost to Contractor for the matters set
out in paragraph (a).
16.7
Allocation of common costs
Development Costs and Production Costs which are incurred in respect of facilities used in
more than one Production Area shall be allocated between the relevant Production Areas,
taking into account the estimated usage by each Production Area, in accordance with a basic
standard to be agreed between Contractor and CNPA.
16.8
Exclusions from Petroleum Costs
Despite any other provision of this Agreement, the following costs and expenses shall not be
included in Petroleum Costs:
(a)
costs and expenses incurred prior to the Effective Date, except for Contractor’s
costs of meeting CNPA’s legal services costs in respect of negotiation and award of
this Agreement;
(b)
costs and expenses not related to Petroleum Operations in the Contract Area;
(c)
costs and expenses specifically excluded as Petroleum Costs under this Agreement;
(d)
any taxes imposed by Cambodia or any income or withholding taxes imposed by
any other country;
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(e)
penalties, fines or similar charges paid in Cambodia or any other countries;
(f)
bonuses, fees and other charges paid to CNPA under Articles 18.1 and 18.2 of this
Contract;
(g)
royalties paid to the CNPA under this Contract;
(h)
costs of marketing Petroleum and the costs of transporting, storing, handling and
exporting Petroleum downstream from the Valuation Point;
(i)
losses which are recovered through insurance or any contract of indemnity;
(j)
payments of principal, interest or other costs on a loan or other financial
accommodation obtained in connection with Petroleum Operations (including
interest components of credit-purchase agreements and finance leases);
(k)
realised foreign exchange losses;
(1)
expenses incurred on education and training of Cambodian nationals (other than
employees of Contractor or its Subcontractors) which are not approved in writing in
advance by CNPA;
(m)
replacement and repair costs of any asset or other property which Contractor had
agreed to insure, but which Contractor has failed to insure at all or for the amount
agreed with the CNPA;
(n)
for the avoidance of doubt, any costs and charges related to the formation of a
related company or any partnership or joint venture arrangement, payments of
dividend or the cost of issuing shares, repayment of equity capital or payments
associated with farm-in agreements or excess costs associated with assigning an
interest in this Agreement by a Contractor Party;
(o)
all costs, expenses and charges relating to the settlement of disputes, including all
costs and expenses of arbitration or litigation proceedings, unless approved in
advance by CNPA;
(p)
costs incurred as a result of a material non-compliance by Contractor with a
provision of this Agreement or the Petroleum Regulations;
(q)
costs incurred as a result of the demonstrably willful, reckless or negligent noncompliance by Contractor with a provision of this Agreement. For the avoidance of
doubt, nothing in this Article 16.8 affects any other rights or claims by the CNPA
in respect of any breach of this Agreement by Contractor; and
(r)
expenditures of a personal nature, gifts and donations, other than those approved in
writing in advance by the CNPA.
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16.9
Receipts
All monies received by Contractor, other than for the disposal of Petroleum produced from
the Contract Area, which are directly related to the conduct of Petroleum Operations in the
Contract Area shall be notified to CNPA and deducted from Petroleum Costs for the
purposes of recovery of those costs. Such receipts include the following:
(a)
any amounts received from the sale or disposal of Petroleum produced from
production testing operations undertaken in Exploration or Development Periods;
(b)
any amounts received for the disposal, loss, or destruction of property the cost of
which is recoverable under this Agreement;
(c)
any amounts received by Contractor under an insurance policy, the premiums of
which are Petroleum Costs, in respect of damage to or loss of property, the
replacement costs of which are recoverable;
(d)
any amounts received as insurance, compensation or indemnity in respect of
Petroleum production lost or destroyed prior to the Offtake Point;
(e)
any amounts received from the hiring or leasing of property, the cost of which
property is recoverable under this Agreement, and also any amounts received from
entering into a tolling agreement or any other agreement relating to such property;
(f)
any amounts received from supplying information obtained from surveys,
appraisals or studies the cost of which is recoverable under this Agreement;
(g)
any amounts received as charges for the use of employee amenities, the cost of
which is recoverable under this Agreement;
(h)
any amounts received in respect of expenditures which - are recoverable under this
Agreement, by way of indemnity or compensation for the incurring of the
expenditure, refund of the expenditure, or rebate, discount or commission in respect
of the expenditure; and
(i)
16.10
realised foreign exchange gains.
Apportioning of costs and Petroleum receipts
Where property, or any other thing, for which a Petroleum Cost is allowable or a receipt
deducted from Petroleum Costs in accordance with Article 16.8 or Article 16.9, is only used
partially in conducting Petroleum Operations, only that proportion of the cost or the receipt
which relates to the conduct of Petroleum Operations will be allowed as an Petroleum Cost
or deducted from Petroleum Costs in accordance with Article 16.8 or Article 16.9.
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17
INCOME TAX
17.1
Contractor to pay income tax
(a)
Contractor shall pay to the Government, on a Calendar Year basis, income tax at
the rate of 25% on Contractor’s allocation of Net Petroleum less fees under Article
18.1 and 18.2 and adjusted for any realised foreign exchange gains and losses.
Income tax shall be paid in Dollars to the Ministry of Finance Tax Department.
(b)
CNPA shall ensure that proper official receipts are issued to Contractor evidencing
the payment of Contractor’s Cambodian income tax for each tax year within 90
days following receipt by CNPA of Contractor’s tax declaration for that year. Such
receipts shall be issued by the proper tax authorities and shall state the amount paid
and other particulars customary for such receipts.
18
SURFACE RENTAL, FEES AND CHARGES
18.1
Surface rental
Contractor shall, on a Calendar Year basis, pay to the Government annual surface rental for
areas within the Contract Area. The first payment of surface rental shall be due and payable
on 1 January 2005. The payment for each subsequent Calendar Year will be made within 30
days after the commencement of that Calendar Year. Annual surface rental will be payable
in Dollars, at the following rates:
Annual Surface Rental
1.
2.
3.
4.
Rate (Dollars)
For Exploration Area during Stage 1 of the
$10 per square kilometre of
Exploration Period
unrelinquished Exploration Area.
For Exploration Area during Stage 2 and 3
$20 per square kilometre of
of the Exploration Period
unrelinquished Exploration Area.
For Exploration Area during any additional
$40 per square kilometre of
extension of Exploration Period
unrelinquished Exploration Area.
For a Production Area
$500 per square kilometre of
unrelinquished Production Area.
18.2
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42
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Contractor shall also pay to CNPA in Dollars the following fees:
1.
For each extension of the Exploration Period
$ 1,000
2.
For each Production Permit
$ 10,000
3.
For any adjustment to Production Permit
$ 1,000
4.
For each extension of Production Permit
$ 10,000
5.
For transfer of any rights for Petroleum Operations
$ 15,000
6.
CNPA assistance for survey work
at cost
7.
CNPA assistance with boundary location for Contract Area
at cost
CNPA will be under no obligation to implement the relevant action until such time as the
applicable fee has been paid.
18.3
Charges for services actually rendered by CNPA
Contractor shall pay to CNPA all generally applicable charges for services actually rendered
by CNPA, where such services are rendered at the request of Contractor.
18.4
Exemption from other tax, duties, tariffs and charges
(a)
Except as provided in Article 17, Contractor and its Affiliates shall be exempt from
income tax, withholding taxes on interest payments, and other taxes and tariffs and
charges due to The Government or local authorities which would otherwise be
imposed in connection with or arising out of Petroleum Operations (including
financing of Petroleum Operations).
(b)
Contractor and Subcontractors shall be exempt from all customs duties and tariffs,
exit duty and other similar taxes and duties due to the Government or local
authorities which would otherwise be imposed on them in connection with
Petroleum Operations.
(c)
Contractor may, from time to time, by notice in writing to CNPA, nominate up to
10 specified non-Cambodian citizens employed by Contractor in connection with
Contractor’s Petroleum Operations in Cambodia (Nominated Employees) whom
Contractor desires to be entitled to an exemption from Cambodian income tax. At
no time may more than ten persons be Nominated Employees. Contractor may,
from time to time, by notice in writing to CNPA, change its Nominated Employees.
Nominated Employees shall be exempt from income tax in Cambodia for the period
for which they are Nominated Employees.
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(d)
Taxable Supplies made by Contractor or its Affiliates in connection with or arising
out of Petroleum Operations (including financing of Petroleum Operations) or the
sale, disposal or export of Petroleum produced from a Field within the Contract
Area, shall be exempt from the Tax on Value Added. The Tax on Value Added
shall apply to all other Taxable Supplies in accordance with the Law on Taxation.
Contractor and its Affiliates may claim Input Tax Credits in accordance with the
Law on Taxation or procedures to be prescribed by CNPA. Contractor and its
Affiliates shall comply with any procedures prescribed by CNPA in connection
with payment, collection, levy or application of the Tax on Value Added, including
any prescribed requirements to notify and inform the Government of Taxable
Supplies in respect of which the Tax on Value Added has not been levied, applied
or paid or has been levied or applied at the tax rate of 0 percent.
19
WORK PROGRAMS
19.1
Petroleum Operations to be conducted in accordance with approved Work
Programs
(a)
Contractor shall conduct all Petroleum Operations in accordance with Work
Programs submitted by Contractor and approved by CNPA.
(b)
Contractor will submit separate Work Programs for Exploration Operations,
appraisal work, Development Operations and Production Operations.
19.2
Content of Work Programs
Each Work Program submitted by Contractor will:
(a)
contain a description of the Petroleum Operations that Contractor proposes to carry
out under the Work Program;
(b)
contain a budget of the corresponding Petroleum Costs that Contractor estimates
will be incurred in carrying out those Petroleum Operations; and
(c)
in relation to Work Programs relating to the Exploration Period, incorporate the
applicable Minimum Work Obligations.
19.3
Procedure for review and approval of Work Programs
The Parties will adopt the following procedure for the review and approval of Work
Programs submitted by Contractor:
(a)
Within 21 days after the submission by Contractor of a Work Program, CNPA may
require Contractor to provide within a reasonable time such further information as
it may require to evaluate the Work Program.
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(b)
Within 60 days after the later of submission by Contractor of a Work Program or
submission by Contractor of the further information requested from Contractor,
CNPA may advise Contractor of revisions to the proposed Work Program required
by CNPA. CNPA may require revisions to a proposed Work Program if the
revisions are reasonably appropriate in the circumstances, based on Good
Petroleum Industry Practices. Upon Contractor making such revisions as may be
mutually agreed, CNPA shall approve the Work Program.
(c)
If the CNPA does not, within 60 days of the later of submission by Contractor of a
Work Program or submission by Contractor of the further information requested
from Contractor, request revisions to the proposed Work Program under paragraph
(b) or reject a proposed Work Program, the Work Program shall be deemed
approved at the end of the 60 days.
(d)
If CNPA requires revisions that Contractor does not agree with, then CNPA and
Contractor will meet within 7 days to discuss their differences. If the Parties cannot
reach agreement within 14 days thereafter, either Party may refer the matter for
resolution in accordance with the Dispute Resolution Procedures. The Work
Program which is determined as a result of the Dispute Resolution Procedures will
be deemed an approved Work Program for the purposes of this Agreement.
19.4
Scheduling of work under approved Work Programs
(a)
An approved Work Program shall contain a schedule for commencement and
completion of the work covered by the Work Program.
(b)
Contractor shall commence and complete the work under an approved Work
Program in accordance with the time schedule therein.
19.5
Suspension of approved Work Programs
Contractor shall not suspend any Petroleum Operations under approved Work Programs,
except for justifiable technical or economical reasons approved in writing by CNPA prior to
suspension of Petroleum Operations, or for Force Majeure. Such prior approval by CNPA
shall not be unreasonably withheld and is not required for temporary suspensions arising due
to emergencies or other causes threatening personal injury or serious damage to property.
19.6
Amendment of approved Work Programs
(a)
Contractor may from time to time submit to CNPA variations to existing approved
Work Programs.
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(b)
Any proposed variation to an approved Work Program will be reviewed and dealt
with in accordance with the same procedures as are applicable to the approval of
Work Programs.
(c)
If Contractor considers that the detailed implementation of an approved Work
Program requires change due to new geological information or more modern
exploration technology, or for other reasons, Contractor may apply to CNPA to
approve such changes as it deems necessary. Contractor shall specify in its
application the reasons for the proposed change. The CNPA may approve the
change if CNPA considers that the change is appropriate.
19.7
Emergency work and expenditure
In the event of an emergency, Contractor shall take all actions it deems necessary or
appropriate to protect life, property, the environment and the interests of CNPA and
Contractor. All such actions will be deemed to have occurred in accordance with an
approved Work Programs.
19.8
Import and Export at Project Site
Contractor and its Subcontractors may import and export directly to and from the site of
Petroleum Operations such goods, materials, vessels and other equipment as are necessary
for Petroleum Operations, in accordance with any procedures prescribed by CNPA.
20
OBLIGATIONS
OF
CONTRACTOR
IN
RESPECT
OF
PETROLEUM
OPERATIONS
20.1
Contractor to provide all capital, technology, etc.
Except as otherwise provided in this Agreement, Contractor shall provide all capital,
technology and personnel necessary to conduct Petroleum Operations. Contractor shall
endeavour to transfer non proprietary technology from Contractor or its Subcontractors to
Cambodian firms and companies, with the objective of developing Cambodian local
technical and managerial capabilities.
20.2
Contractor to bear all risk
Except as otherwise provided in this Agreement, Contractor shall carry out Petroleum
Operations at its sole cost and risk. Petroleum Costs may be recovered by Contractor out of
Production in accordance with this Agreement. If no commercial field is discovered in the
Contract Area, or if the Production achieved is insufficient to recover Petroleum Costs,
Contractor shall bear its own losses.
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20.3
Standards of operations
(a)
Contractor shall conduct Petroleum Operations diligently and in accordance with
the Petroleum Regulations and Good Petroleum Industry Practices designed to
achieve the efficient and safe exploration and production of Petroleum and to
maximise the ultimate economic recovery of Petroleum from the Contract Area.
(b)
Contractor shall observe sound technical and engineering practices in conduct of all
Petroleum Operations.
20.4
Materials, equipment and facilities
All materials, equipment and facilities used in Petroleum Operations shall comply with
Good Petroleum Industry Practices, and shall be kept in good working order.
20.5
Protection of Petroleum
While conducting Petroleum Operations, Contractor shall endeavour to:
(a)
ensure that Petroleum discovered and produced within the Contract Area does not
escape and is not wasted, either physically or economically or in any other way;
(b)
prevent damage to any adjacent Petroleum, water-bearing formations, and other
natural resources;
(c)
manage the reservoir in accordance with Good Petroleum Industry Practices,
including preventing external entrance and non-interventional entrance of water
into Petroleum formations;
(d)
maximise production from the fields where petroleum is discovered, consistent with
Good Petroleum Industry Practices; and
(e)
maximise its rate of recovery of Petroleum consistent with Good Petroleum
Industry Practices and Contractor arrangements for sale of Petroleum.
20.6
Safety
(a)
While conducting Petroleum Operations, Contractor shall take all reasonable
measures, consistent with Good Petroleum Industry Practices, to maintain safety
and to avoid any personal injury or loss of life.
(b)
Upon commencement of Petroleum Operations, Contractor shall provide CNPA
with copies of its safety plans, procedures and policies with respect to Petroleum
Operations under this Agreement. The Parties shall adopt and comply with the
same procedure for the review and approval of such safety plans, procedures and
policies as provided for Work Programs by Article 19.3, as if the reference to Work
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Programs in that Article was read as a reference to safety plans, procedures and
policies.
(c)
Contractor represents, undertakes and warrants that it will comply with the terms
and conditions of its approved safety plans, procedures and policies with respect to
the conduct of Petroleum Operations under this Agreement.
20.7
Environmental protection
(a)
While conducting Petroleum Operations, Contractor will take all reasonable
measures, consistent with Good Petroleum Industry Practices, to protect and
minimise damage to the natural environment, and to avoid causing any loss or
damage to animals, natural property, forest, fishery and archaeological objects.
(b)
Upon commencement of Petroleum Operations, Contractor will provide CNPA
with copies of its environmental management plans and specify the measures to be
undertaken by Contractor to comply with its obligations under paragraph (a). The
Parties shall adopt and comply with the same procedure for the review and
approval of such environmental management plans as provided for Work Programs
by Article 19.3, as if the reference to Work Programs in that Article was read as a
reference to environmental management plans.
(c)
Contractor represents, warrants and undertakes that it will comply with the terms
and conditions of its approved environmental management plans with respect to the
conduct of Petroleum Operations under this Agreement.
(d)
Contractor shall be liable to and indemnify the Government for any damage or
harm to the environment arising out of or in connection with Petroleum Operations
under
this Agreement
(Environmental
Damage),
whether
or
not
that
Environmental Damage causes loss to Government, and without limiting the
generality of the foregoing Contractor shall:
(i)
indemnify and hold harmless the Government for any loss, liability, cost
or expense suffered or incurred by the Government or any other person
arising out of or in connection with any Environmental Damage; and
(ii)
be liable to CNPA for all clean-up or remediation costs and expenses
incurred by CNPA or any other person to restore the environment or
mitigate any damage or harm to the environment caused by or arising out
of or in connection with Petroleum Operations under this Agreement.
(e)
Where Petroleum Operations cause pollution of the environment, Contractor shall
be responsible for cleaning up, at Contractor’s expense, such pollution and shall be
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liable for all damage and expense in connection with such pollution to the extent
that it results from the negligence, or breach of this Agreement or any laws or
regulations of Cambodia by Contractor or its Subcontractors.
20.8
Safety of Navigation
(a)
Contractor will take the appropriate steps to avoid interference with, and conduct
all Petroleum Operations in a manner that will have a minimal effect on, navigation
and fishing in the waters of the Contract Area.
(b)
Contractor will make secure and safe all structures in the Contract Area, including
the installation of appropriate safety equipment, such as warning lights.
20.9
Zone of Operations
Contractor shall not without the prior written approval of CNPA conduct Petroleum
Operations within 500 metres of boundary of the Contract Area.
21
OBLIGATIONS OF GOVERNMENT
21.1
Contractor to have exclusive right to carry out Petroleum Operations
CNPA agrees that, subject to this Agreement, Contractor shall have the exclusive right to
carry out Petroleum Operations within the Contract Area during the term of this Agreement.
21.2
Sanctity of fundamental provisions
The Government shall ensure that during the term of this Agreement Contractor’s rights and
obligations hereunder shall not be changed unilaterally.
21.3
Change in laws
The terms of this Agreement have been negotiated and agreed having due regard to the
terms of the Petroleum Regulations in force on the Effective Date. If, at any time or from
time to time, there should be changes in the Petroleum Regulations, or if there should be the
introduction of any other legislation, regulations or orders, which materially increases the
financial burden of Contractor, then CNPA shall agree to amend the terms of this Agreement
in favour of Contractor so as to take account of such changes or introduction.
21.4
Access to Contract Area
(a)
Contractor shall have the right to ingress to and egress from the Contract Area, all
adjacent areas and Contractor’s facilities, wherever located, at all times.
(b)
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Nothing herein shall limit the right of the Government, its servants, employees and
agents and other contractors of the Government to move freely and lay pipelines
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and construct other facilities, within the Contract Area or to authorise others to do
so, provided such conduct does not cause undue interference with Petroleum
Operations. The parties will agree reasonable procedures for notification and coordination of activities.
21.5
Access to land for Petroleum Operations and Security
(a)
Except for areas in which Petroleum Operations are prohibited, CNPA shall place
at the disposal of Contractor public areas reasonably required by Contractor for
Petroleum Operations at a reasonable surface rent to be fixed by CNPA. Possession
of such areas shall be returned to the Government when no longer required for
Petroleum Operations.
(b)
If land required for Petroleum Operations is private land, Contractor may utilise it
by paying appropriate compensation, or by directly concluding a lease agreement
with the landowner, or by purchasing such land in the name of CNPA, subject to
the conditions prescribed by CNPA. If it is not practical or possible to utilise the
area in that manner, CNPA shall acquire such area on a permanent or temporary
basis and will lease it to Contractor, on terms reflecting prevailing market
conditions, for utilisation for Petroleum Operations under this Agreement.
21.6
CNPA assistance in obtaining Government approvals
(a)
CNPA shall, at Contractor’s request and cost, assist Contractor and its
Subcontractors in obtaining all Government permissions, registrations, licences,
visas and other approvals and rights which are necessary to carry out Petroleum
Operations under this Agreement, including all necessary permits for importing the
equipment, machineries, materials, goods, and other ancillaries as are necessary
for Petroleum Operations.
(b)
CNPA shall assign two representatives (or more than two upon Contractor request)
on a permanent basis to assist Contractors. CNPA’s representatives shall provide
the following Services:
(i)
advise and assist Contractor as described in paragraph (a); and
(ii)
advise and assist Contractor in relation to appropriate and reasonable
security arrangements for Contractor’s personnel and property, in
particular, liaison with Cambodia’s Defence Forces where requested by
Contractor.
In consideration for the provision of the Services, Contractor shall pay CNPA
$2,000 per month (Service Fee) plus all expenses reasonably incurred in
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connection with provision of the Services, including all generally applicable fees
and charges levied by any Ministry, authority or other Government body other than
CNPA for the approvals and rights necessary to carry out Petroleum Operations.
The monthly Service Fee payable by Contractor shall be increased by 5 percent (%)
each Calendar Year, with effect from 1 January of that year. CNPA shall from time
to time in its discretion issue invoices to Contractor for amounts due to CNPA
under this Article 21.6(b). Contractor shall, within 30 days of receipt of the invoice,
transfer in immediately available funds the full amount due under the invoice, net
of all bank charges levied on the transfer or receipt of the funds, into the CNPA
bank account nominated in writing by CNPA to Contractor. All such amounts paid
by Contractor shall be included in Petroleum Costs.
21.7
Consents and approvals not to be unreasonably delayed or withheld
The Petroleum Regulations and this Agreement require consents, approvals and information
to be given, and certain measures- to be prescribed, for the proper execution and supervision
of Petroleum Operations. Delays in giving such consents, approvals and information and the
taking such measure may hinder the expeditious execution supervision of Petroleum
Operations. Therefore, CNPA and Contractor agree that any requested consents, approvals
and information shall, where possible, be given expeditiously.
21.8
22
Radio Communication by Contractor’s between Onshore and Offshore Facilities
FACILITIES
22.1
Facilities within Production Area
Contractor shall construct, operate, repair and maintain in accordance with Good Petroleum
Industry Practices all facilities required in a Production Area in connection with Petroleum
Operations.
22.2
Facilities outside Production Area
(a)
Contractor shall have the right to construct, operate, repair and maintain roads,
pipelines, and other transportation, communications and storage facilities in
Cambodia outside a Production Area that are necessary to carry out Petroleum
Operations, subject to prior approval of a Development Work Program by CNPA
and acquisition of surface area in accordance with Article 21.5. Contractor’s
facilities may include terrestrial (radio, microwave and cable) and satellite
communications systems (international and domestic) to the extent necessary for
Petroleum Operations.
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(b)
If the Government undertakes the construction, operation, repair and maintenance
outside a Production Area of any such facilities which are required by
Contractor in order to carry out Petroleum Operations, Contractor shall have
the right to use such facilities on terms that are calculated by reference to the
Costs of construction, operation, repair and maintenance of such facilities,
plus a mutually agreed amount to cover amortisation, interest and a reasonable
profit.
22.3
Contractor’s infrastructure facilities available for use by other persons
The Government may require that infrastructure facilities (including, but not limited to,
roads, pipelines and other transportation, communication and storage facilities) constructed
by Contractor in Cambodia in or outside a Production Area be made available to the
Government and other persons in an emergency, or in other circumstances provided that the
use of such facilities does not materially impair the efficient and economic conduct of
Petroleum Operations by Contractor. Contractor shall have a priority right to use said
infrastructure facilities. The Government or such other persons shall have a right to use such
facilities on terms that are calculated by reference to the reasonable costs of operation, repair
and maintenance of such infrastructure facilities, plus a mutually agreed amount to cover
amortisation, interest and a reasonable profit which amount shall be credited to Petroleum
Costs.
22.4
CNPA may acquire ownership of Contractor’s permanent facilities
(a)
In this clause, “Contractor’s permanent facilities” means all permanent facilities
constructed and owned by Contractor or a Contractor Party and used exclusively in
connection with Petroleum Operations, but excluding facilities belonging to and
leased from third parties (including third parties who perform services as
Subcontractors).
(b)
With regard to each item of Contractor’s permanent facilities:
(i)
Contractor will give notice to CNPA when Contractor no longer requires
the facility for the purposes of Petroleum Operations.
(ii)
Within 60 days after such notice, CNPA may elect by notice to Contractor
to acquire the facility at no cost.
(iii)
Upon CNPA so electing, title to and risk in respect of the facility shall
pass to CNPA.
(iv)
Thereafter, if Contractor has a need to use or access the facility to conduct
Petroleum Operations, Contractor shall be entitled to do so without being
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obliged to make any payment to CNPA, other than to compensate CNPA
for the reasonable costs of operating, repairing and maintaining such
facility.
22.5
Removal of Contractor’s permanent facilities not acquired by CNPA
At the end of this Agreement:
(a)
CNPA may require Contractor at Contractor’s cost to remove all or part of:
(i)
Contractor’s permanent facilities;
(ii)
any facilities leased from a third party; and
(iii)
any facilities owned by its Subcontractors,
which remain in the Contract Area at the end of this Agreement.
(b)
Following such removal, Contractor shall restore the Contract Area, including the
sea-bed area if the Contract Area is located off-shore, consistent with Good
Petroleum Industry Practices to the reasonable satisfaction of CNPA.
22.6
Removal of facilities other than Contractor’s permanent facilities
Except for Contractor’s permanent facilities, all of Contractor’s other facilities, equipment
and assets used in Petroleum Operations may be freely removed and exported from
Cambodia.
23
MEASUREMENTS
23.1
Measuring equipment
(a)
At the Measurement Point, Contractor shall provide and install the necessary
equipment and perform all measurements of Petroleum produced from Contract
Area and sold or disposed of. If it is necessary or desirable to replace or repair such
equipment, Contractor shall inform CNPA in advance.
(b)
The Government may inspect, or cause to be inspected by a selected qualified
specialist, the measurements and equipment described in Article 23.1(a) at any time
at its own cost and risk and may reject the use of any equipment it considers
inaccurate or defective.
(c)
Where measurement equipment is demonstrated to be inaccurate or defective,
Contractor and CNPA shall agree an adjustment to offset the effect of such
inaccuracy or defect as required.
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24
REPORTS AND INFORMATION
24.1
Information
Contractor shall keep CNPA regularly and fully informed of all Petroleum Operations.
Without limiting the generality of the foregoing obligation Contractor shall notify CNPA in
advance of all significant Petroleum Operations.
24.2
Inspection of operations
(a)
CNPA has the right, at its own cost and risk, to be present at and to observe all
Petroleum Operations, provided that the exercise of this right does not cause
unreasonable delay or interference to Contractor.
(b)
Contractor shall provide local transportation and accommodation for a reasonable
number of representatives of CNPA on terms and conditions to be mutually agreed.
24.3
Quarterly and annual reports
(a)
Contractor shall submit to CNPA within 30 days after the end of each Calendar
Quarter, a report on all Petroleum Operations and a statement of Petroleum Costs
incurred in that Calendar Quarter.
(b)
Contractor shall submit to CNPA within 90 days after the end of each Contract
Year, a report on all Petroleum Operations and a statement of Petroleum Costs
incurred in that Contract Year.
(c)
All such quarterly and annual reports shall include such information as CNPA may
reasonably prescribe.
24.4
Information required under the Petroleum Regulations
Contractor shall deliver to CNPA within the times prescribed all reports, data and
information, and analyses and interpretations thereof, pertaining to the Contract Area and
Petroleum Operations which are required under this Agreement and the Petroleum
Regulations.
24.5
Records of operations
(a)
Contractor shall maintain full and accurate records of all technical operations and
maintenance work performed under this Agreement.
(b)
Contractor shall, to the extent that it will not breach any obligation of
confidentiality owed to a third party, provide CNPA with all details relating to field
production facilities, pipeline transportation systems and terminal storage and
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export facilities used in connection with Petroleum Operations. CNPA may at any
time require Contractor to report the quantities of Petroleum stored in any such
facilities.
25
AUDITS
25.1
Access
(a)
Contractor and Contractor Party Affiliates shall ensure that CNPA shall, on giving
reasonable notice in accordance with Article 25.2, have free access at reasonable
times during normal business hours to all books, records, accounts and inventories
maintained by Contractor and Contractor Party Affiliates so far as the same relates
to Petroleum Operations.
(b)
Contractor and Contractor Party Affiliates shall ensure that CNPA shall, on giving
reasonable notice in accordance with Article 25.2, have free access at reasonable
times during normal business hours to all books, records, accounts and inventories
maintained by any auditor of Contractor or any Contractor Party Affiliate so far as
the same relates to Petroleum Operations.
25.2
Notice
CNPA shall give at least fourteen (14) days’ written notice pursuant to this Agreement of its
intention to conduct an audit of Contractor’s books, records, accounts and inventories, and
shall make reasonable efforts to conduct any audits pursuant to this Article jointly or
simultaneously in a manner which will result in a minimum of inconvenience to Contractor.
Contractor shall make all reasonable efforts to co-operate with any audit and will provide
reasonable assistance in relation thereto.
25.3
Costs
CNPA may require Contractor to pay the reasonable cost of any audit by CNPA, and such
costs shall constitute recoverable Petroleum Costs.
25.4
Report
(a)
CNPA shall provide a copy of the audit report to Contractor within thirty (30) days
of the completion of the audit. The audit report shall state, to the extent possible, an
opinion as to the completeness and accuracy of Contractor’s books, records,
accounts and inventories and shall comment on any matter or concern arising out of
the audit, including Contractor’s books, records and accounts in relation to
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Petroleum Costs and the amounts recorded and claimed by Contractor as Petroleum
Costs.
(b)
The audit report shall include any claims made by CNPA against Contractor,
arising out of the audit, in connection with any statement of Petroleum Costs
submitted by Contractor to CNPA. Failure to include a claim in an audit report
shall not prevent CNPA from making such claim at any other time.
25.5
Adjustments
Contractor shall reply to the report in writing within thirty (30) days and shall promptly
record all adjustments or other matters which have been agreed upon between Contractor
and CNPA. All Parties shall use commercially reasonable best efforts to resolve any
outstanding issues in connection with the audit and audit report in a timely manner.
25.6
Disagreements
Outstanding claims or other matters in connection with the audit or audit report which
cannot be settled by agreement shall be referred to the Joint Review Committee for
settlement before going to arbitration.
25.7
Time Limits
CNPA shall have the right to conduct further investigations of the relevant books, records,
accounts and inventories in relation to any outstanding claim or other matter in connection
with the audit or audit report until such claim or matter has been settled.
25.8
External auditors
CNPA may engage auditors of international standing to conduct on its behalf audits under
this Article. The reasonable cost of such assistance shall be chargeable to Contractor and
shall constitute a recoverable Petroleum Cost.
25.9
Third party Contracts
Contractor shall use its best efforts to secure access by the auditor to all relevant contracts
and such other material as is necessary for the proper conduct of the audit.
25.10
Audit Results
Where an audit under this Article demonstrates that there has been an error in calculating
Petroleum Costs or Income Tax under this Agreement, an adjustment payment shall be made
by Contractor to CNPA to offset the effect of the error, including adjustment to rate of return
calculations under Article 12, as appropriate. Any amount due to CNPA as a consequence of
an erroneous claim for a Petroleum Cost or any Income Tax unpaid shall bear interest at
LIBOR plus 3 percent.
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26
DATA
26.1
Data generated by Contractor
The following provisions apply to Data generated or acquired by Contractor in the course of
Petroleum Operations under this Agreement:
(a)
Contractor shall provide to CNPA two legible copies of the Data within 30 days of
the final processed Data being available. Such data shall be provided in digital
format
(b)
CNPA shall have title to the Data and Contractor will be obliged to treat the Data as
Confidential Information. However, Contractor shall be entitled to freely use the
Data for the purposes of Petroleum Operations, including to export all Data and
samples from the Kingdom of Cambodia for the purposes of processing, testing,
analysis and interpretation.
(c)
CNPA will also be obliged to treat the Data as Confidential Information, except for
Data over parts of the Contract Area which have already been relinquished by
Contractor, which Data CNPA shall be free to use or disclose.
26.2
Access by Contractor to Data held by Government
(a)
Contractor shall have the right to have access to and to use any non-confidential
Data held by the Government or by any other government agency or entity, relating
to:
(i)
the Contract Area; and
(ii)
Areas adjoining the Contract Area,
on such terms and conditions as are agreed by Contractor and CNPA.
(b)
Contractor will be obliged to treat all Data provided by, or received or acquired
from, the Government under this Article as Confidential Information.
27
CONFIDENTIALITY
27.1
Confidential Information
For the purposes of this Agreement, “Confidential Information” includes:
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(a)
all Data and other information relating to Petroleum Operations or the Contract
Area acquired or received by either Party from the other, and which information is
not in the public domain;
(b)
the text of this Agreement, any amendment thereto, or any correspondence between
the Parties relating thereto; and
(c)
all Data required by either Party to be treated as Confidential Information under
Article 26. .
27.2
Confidential Information to be kept confidential
(a)
Where a Party is required to treat Data, information or other documents or material
as Confidential Information, or receives Confidential Information from the other,
that Party shall keep confidential the Confidential Information and shall not
disclose the Confidential Information except as permitted under this Agreement or
with the prior written approval of the other Party, which approval shall not be
unreasonably withheld if the intended recipient of the information gives an
undertaking in form and substance satisfactory to the other Party to keep such
information confidential.
(b)
The obligations described in Article 27.2(a) will continue for a period of 2 years
after termination of this Agreement.
27.3
Permitted disclosures
A Party is entitled to disclose Confidential Information to the following personnel and in the
following circumstances:
(a)
to a Government Ministry, Authority or official where considered appropriate by
CNPA;
(b)
to a Subcontractor involved in Petroleum Operations;
(c)
to any Affiliated Party of a Contractor Party;
(d)
to any entity to whom a Contractor Party intends to transfer any part of its interest
under this Agreement, provided that a confidentiality agreement has been executed
with the said entity;
(e)
to an external consultant whose services are required by CNPA or Contractor,
provided that a confidentiality agreement has been executed with the said
consultant;
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(f)
to a bank or financial institution from which Contractor is seeking finance,
provided that a confidentiality agreement has been executed with the said bank or
financial institution;
(g)
to the extent that this Agreement obliges Contractor, by application of the laws or
regulation applicable to Contractor, or in conformity with the rules of an official
Stock Exchange on which shares of Contractor or its Affiliates are listed;
(h)
to the extent that the Confidential Information is already in the public
domain; and
(i)
28
to directors, officers or employees of Contractor or its Affiliated Party.
INSURANCE AND INDEMNITY
28.1
Contractor’s insurance obligations
Contractor shall obtain and maintain throughout the period of this Agreement insurance of
such kinds covering such risks and for such amounts as shall be in accordance with Good
Petroleum Industry Practices, and such additional insurance on such terms as CNPA and
Contractor may mutually agree. The parties shall review the insurance program annually and
make such adjustments thereto as the parties may agree. Upon reasonable notice Contractor
shall provide evidence of such insurance to CNPA on demand. Contractor will select the
insurance companies to provide such insurance.
28.2
Indemnity
(a)
Contractor shall indemnify and hold harmless the Government and CNPA against
all third party claims for losses and damages caused by or resulting from Petroleum
Operations conducted by or behalf of Contractor, provided that Contractor shall not
be liable to the Government hereunder for any loss, claim, damage, injury or
liability caused by any act or omission of the Government, CNPA, or the
Government’s or CNPA’s servants, representatives, agents or contractors in breach
of this Agreement.
(b)
Subject to any other provision of this Agreement, except where Contractor has been
negligent or has acted in breach of this Agreement or any law or regulation of
Cambodia in the conduct of Petroleum Operations, Contractor will not be liable to
CNPA or the Government for any special, punitive or other indirect loss or damage,
including but not limited to loss of profits or loss of production, resulting from
Petroleum Operations.
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29
ADMINISTRATION FEE
Contractor shall be obligated to CNPA for an annual Administration Fee of $272,000. This
fee shall be an eligible Petroleum Cost. Contractor shall pay the Administration Fee to
CNPA as follows:
(a)
the first $72,000 will be paid in equal quarterly installments directly to CNPA. The
first installment shall be due and payable by Contractor on {.................– to be
discussed in next meeting} and subsequent payments shall be made by not later
than the last day of each subsequent quarter, with the final payment being made on
the earlier of the date of first commercial production or termination of this
Agreement, whether or not that date is less than 3 months from the end of the
preceding quarter; and
(b)
the balance of the Administration Fee $200,000 or part thereof shall be allocated in
accordance with this paragraph to meeting the cost of external consultants engaged
by CNPA. Such consultants shall be engaged by CNPA to provide assistance to
CNPA in relation to its endeavours to develop the petroleum industry in Cambodia
and such other related activities as directed by CNPA. Such consultants will be
internationally recognized in the field of expertise for which they are engaged by
CNPA. Prior to engaging such consultants, CNPA shall consult with Contractor
and Contractor shall within 14 days approve engagement of consultants, unless the
arrangements are not in full compliance with the laws of the Kingdom of Cambodia
and Singapore. CNPA shall also keep Contractor informed of the names of the
external consultants and the nature and extent of the work to be undertaken by the
external consultants. Contractor must make payment under this paragraph for all
work undertaken by the external consultants up to and including the earlier of the
first commercial production day or the date of termination of this Agreement, even
if the invoice in respect of that work is received by Contractor after the first
commercial production day or the date of termination of this Agreement.
(c)
In meeting its obligations under paragraph (b), Contractor shall, within 30 days of
receipt of an invoice issued by an approved consultant, pay to CNPA the total
amount of the invoice, to enable CNPA to meet the cost of that invoice.
(d)
If the total amount paid by Contractor to CNPA in a Contract Year to satisfy
invoices rendered by the external consultants is less than the Administration Fee
owed by it for that period, Contractor shall pay the outstanding amount into a
Dollar interest-bearing account (the Surplus Account) established by CNPA for this
purpose, such payment to be made, within 30 days of the last day of the relevant
Contract Year. The funds in the Surplus Account (including all interest thereon)
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shall be applied to meet the total value of invoices rendered by the external
consultants in- any Contract Year to the extent that such invoices exceed in excess
of the Administration Fees owed by Contractor for that Contract Year. Any funds
remaining in the Surplus Account on the earlier of the first commercial production
day or termination of this Agreement shall belong to CNPA. This Article 29(d)
shall survive termination of this Agreement.
(e)
Unless Contractor is notified to the contrary, for the purpose of this Article 29 the
Director General of CNPA shall represent CNPA and be responsible for CNPA’s
arrangements with respect to the Administration Fee, and Contractor shall be
entitled to rely upon directions from the Director General of CNPA with respect to
these arrangements.
30
PERSONNEL AND TRAINING
30.1
Obligations to employ and train Cambodian nationals
Contractor shall employ, to the maximum extent possible, appropriately qualified
Cambodian nationals in Petroleum Operations, and Contractor shall undertake education and
training programs for Cambodian employees of Contractor to ensure the maximum
participation of Cambodian personnel in Petroleum Operations at all levels. Each Work
Program shall contain provisions on the methods Contractor intends to use to satisfy the
requirements of this Article 30.
30.2
Training of Cambodian nationals
(a)
During each Contract Year, Contractor shall spend a minimum of $150,000 on
education and training of Cambodian nationals (who are not employees of
Contractor) in fields related to petroleum resources development in accordance
with a program mutually agreed by Contractor and CNPA. These funds are to be
utilised for purposes such as staff training, scholarships, conferences, purchases of
equipment, on-the-job training, or other similar matters that would provide or assist
with education and training in fields related to petroleum resources development.
Any portion of the training commitment that is unexpended at the end of the
Contract Year shall be carried forward. Any amount of minimum training
commitment outstanding on the date of termination of this Agreement or
relinquishment by Contractor of all of the Contract Area, whichever occurs first,
shall be immediately due and payable in full to CNPA. This Article 30.2(a) shall
survive termination of this Agreement.
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(b)
In the event that Contractor and CNPA are unable to mutually agree an education
and training program under Article 30.2(a) during any Contract Year after making
reasonable endeavours to do so, CNPA may from time to time submit proposed
programs to Contractor setting out proposed items of education and training for that
Contract Year and the anticipated cost of each such item and Contractor shall
approve each such program within 30 days of receiving the proposal provided that
each proposed item of education and training, and the purpose for which the funds
are requested, is in accordance with Article 30.2(a) and the program would not
require Contractor to exceed its minimum training commitment for the Contract
Year in which the funds would be required by this Article 30.2(b) to be paid.
Contractor shall provide CNPA with the funds requested in an approved program
within 30 days of approving the program.
(c)
Contractor agrees to provide on-the-job training for personnel of CNPA who will
be seconded to Contractor, subject to suitable Contractor projects being available,
in order to gain experience in the field of oil industry practice relevant to Petroleum
Operations in Cambodia. Contractor will endeavour to second 4 CNPA personnel
to Contractor each Contract Year on such terms as are mutually agreed, it being
understood that such personnel shall be seconded for mutually agreed specified
projects, and that the qualifications and performance of such personnel shall meet
Contractor’s standards for Cambodian employees. The remuneration of seconded
personnel shall be mutually agreed and shall be deemed Petroleum Costs. In the
event that Contractor does not second 4 CNPA personnel to Contractor in a
Calendar Year, CNPA may elect in its absolute discretion to:
(i)
carry forward the non-secondment and require Contractor to second an
additional CNPA employee to Contractor during a following Calendar
Year; or
(ii)
require Contractor's minimum training obligation under Article 30.2(a) for
the following Contract Year increased by $15,000 for each nonsecondment.
CNPA shall notify Contractor in writing within 60 days of the end of each Contract
Year if CNPA has elected to have the non-secondment(s) carried forward or the
minimum training obligation increased. For the avoidance of doubt, Contractor's
obligations under this Article 30.2(c) are separate from and in addition to
Contractor's obligations under Articles 30.2(a) and (b), and without limitation to the
foregoing any remuneration of seconded personnel shall not count toward
satisfaction of Contractor's minimum training obligation under Article 30.2(a).
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30.3
Right to employ aliens
(a)
Contractor and its Subcontractors may employ qualified foreign nationals to the
extent that qualified Cambodian nationals cannot be found to fill the positions
required. On the recommendation of CNPA, the Government shall issue permits
required for the employment of foreign nationals and visas required for said foreign
nationals and their family members to stay in the Kingdom of Cambodia.
(b)
If any foreign national or family member engages in any activity which is against
the interests of the country, CNPA may by written notice to Contractor require
Contractor to cause such person to leave the country.
30.4
Reports on employment
Contractor shall within 15 days after the end of each Calendar Quarter submit a report to
CNPA on the nationality, employer, job position, remuneration and other benefits and all
personnel employed by Contractor and each of its Subcontractors working in Cambodia
under this Agreement for a period of more than 3 months.
31
PURCHASE OF GOODS AND SERVICES
31.1
Purchase of goods and services
(a)
Contractor shall purchase Cambodian goods and services where such goods and
services are competitive in quality, quantity, price and availability with imported
goods and services. For the avoidance of doubt, in relation to price the term
competitive shall mean a price for Cambodian goods and services of not more than
10% above the price of otherwise equivalent imported goods and services.
(b)
If Cambodian goods and services are not competitive with imported goods and
services, Contractor, with notification to CNPA, shall be entitled to import all
goods and services which may be needed for conducting Petroleum Operations.
(c)
Without limiting Contractor's entitlement under paragraph (b) above, Contractor
and CNPA shall mutually agree upon a program to develop and maximise
opportunities for Cambodian companies and persons to supply goods and services
in connection with Petroleum Operations.
31.2
Subcontractors
(a)
When hiring a Subcontractor, Contractor shall ensure that the Subcontractor has the
necessary professional expertise and experience to perform the work to be assigned
to it. Contractor shall consult with CNPA and give CNPA all relevant information
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regarding any proposed Subcontractor and shall provide CNPA an opportunity to
comment on the selection of the proposed Subcontractor a reasonable period in
advance of engagement of such Contractor.
(b)
In the case of each contract with a value in excess of $100,000, Contractor shall
notify CNPA of the name and address of each Subcontractor and the identity of its
authorised representative, and deliver a copy of the contract to CNPA within 30
days after such Subcontractor has been hired by Contractor. Contractor shall
include reports on the work of all Subcontractors in its quarterly and annual reports.
32
FORCE MAJEURE
32.1
Force Majeure defined
For the purposes of this Agreement an event of “Force Majeure” means a circumstance or
circumstances outside the control of party, without fault or negligence on the part of such
party, which causes a delay in performance or the non-performance of its obligations
hereunder including, but not limited to, unforeseen circumstances or acts of the public
enemy, danger of navigation, fire, hostilities, war (whether or not declared), civil war,
blockade, civil unrest, strikes, notes, insurrection, acts of terrorism, quarantine restrictions,
epidemics, storms, earthquakes, accidents, and circumstances preventing Contractor from
carrying out Petroleum Operations or from entering upon any part of the Contract Area,
circumstances relating to the protection of personnel (Contractor’s or Subcontractor’s) or
property, provided always that lack of finance shall not constitute a case of Force Majeure.
32.2
Effect of Force Majeure
(a)
The obligation of each of the parties shall be suspended during the period and to the
extent that a party is prevented from carrying out its obligations by an event of
Force Majeure. In the event of Force Majeure, the affected party shall notify the
other party of the reason, date of commencement and extent of the suspension of
obligations. The party whose obligations have been suspended as stated above shall
resume the execution of those obligations in the shortest reasonable period after the
removal of the cause of Force Majeure, and it shall notify the other party of such
resumption.
(b)
The term of any permit or period under this Agreement, and of this Agreement
itself, shall be extended by the period of the delay caused by the occurrence of
Force Majeure.
32.3
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Reasonable measures to minimise
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Both parties shall take all reasonable measures to minimise the consequences of any event of
Force Majeure.
33
UNITISATION
33.1
Compulsory unitization
(a)
CNPA may order that the development and production of a field be carried out
jointly with a party to another petroleum agreement if:
(i)
a field within the Contract Area extends into another area which is subject
to another petroleum agreement; or
(ii)
a field within the Contract Area is not commercial unless its development
and production is combined with another field which extends into or is
within another area which is subject to another petroleum agreement.
(b)
If CNPA makes such an order, then Contractor shall collaborate with the other
person subject to another petroleum agreement in preparing a joint operating
program for the development of the Field involved, which program shall be
submitted promptly for approval to CNPA.
(c)
Within 180 days after CNPA notice to Contractor that a joint operating program
has been approved or adopted, Contractor shall proceed with such joint operating
program.
(d)
Contractor shall at all times be entitled to relinquish the area, including the Field,
and the minimum area restriction in Article 6 shall not apply to such
relinquishment.
33.2
Voluntary unitisation
In the absence of an order by CNPA requiring joint development and production, Contractor
may enter into an agreement with other contractors to jointly develop and produce an
adjacent Field or Fields.
34
JOINT REVIEW COMMITTEE
34.1
Establishment of Joint Review Committee
Within 60 days after the Effective Date a Joint Review Committee composed of 6 members,
3 of whom shall be appointed by Contract Operator and 3 by CNPA, shall be established.
The Chairman of the Joint Review Committee shall be appointed by the Chairman of CNPA.
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Additional representatives of each party may attend meetings of the Joint Review
Committee as observers or alternate members.
34.2
Meetings of Joint Review Committee
Commencing within one month after its establishment, ordinary meetings of the Joint
Review Committee shall be held regularly every 6 months on dates and in places to be
mutually agreed, or failing such agreement on a date specified by the Committee. The Joint
Review Committee shall review the following:
(a)
All Work Programs (including budgets), Quarterly Reports, Annual Reports and
other reports and proposals required to be submitted to the Government or CNPA;
(b)
Progress of Contractor’s work;
(c)
Contractor’s statements of Petroleum Costs;
(d)
Terms of contracts executed between Contractor and Subcontractors and the
performance of Subcontractor’s work under those contracts;
(e)
Any problems arising in Petroleum Operations;
(f)
Employment of Cambodian nationals and use of Cambodian goods and services in
connection with Petroleum Operations, and development and implementation of the
program under Article 31.1(c); and
(g)
Such additional subjects as may be requested by either party.
Special meetings of the Joint Review Committee may be called, on reasonable notice by
either party, for the purpose of reviewing any major development or problems in Petroleum
Operations, and proposing appropriate actions to be taken.
34.3
Quorum voting
(a)
A quorum for the transaction of business before the Joint Review Committee shall
consist of at least 4 members. Decisions of the Joint Review Committee shall be
made by unanimous votes of members attending the meeting. Any disagreement
between the parties will be first referred to the Chairman before invoking the
Dispute Resolution Procedures.
(b)
Recommendation or opinions of the Joint Review Committee shall be delivered to
the Chairman of CNPA for information and appropriate action.
34.4
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Confidentiality obligations of members
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Members of the Joint Review Committee shall be required to treat all information
acquired by them through the Joint Review Committee as Confidential Information
for the purposes of this Agreement.
35
RELATIONSHIP BETWEEN CONTRACTOR PARTIES
35.1
Joint and several liability
If at any time there is more than one Contractor Party, each Contractor Party shall be jointly
and severally bound by the provisions of this Agreement, including for the avoidance of
doubt jointly and severally bound to satisfy and fulfill all obligations, duties and
responsibilities imposed on Contractor by this Agreement.
35.2
CNPA to receive summary of agreement between Contractor Parties
An executive summary of any agreement which governs the relationship between the
Contractor Parties, or an executive summary of any agreement under which any person is
designated the Contract Operator, shall be delivered to CNPA within 60 days of the
Effective Date and within 10 days following any revisions to such agreements. If at any
time there is only one Contractor Party, that Contractor Party shall be deemed to be the
Contract Operator. Contract Operator shall be responsible for representing Contractor in
discussions with CNPA and shall be responsible for carrying out all Petroleum Operations in
accordance with this Agreement.
36
TRANSFER OF RIGHTS AND OBLIGATIONS
36.1
Transfers from a Contractor Party to an Affiliate
A Contractor Party is entitled to transfer the whole or any part of its interest under this
Agreement to an Affiliate of that Contractor Party. The Contractor Party shall, at least 30
days prior to the proposed transfer give CNPA written notice of the proposed transfer
attaching a copy of the proposed instrument of transfer and any other relevant
documentation that CNPA reasonably requires.
36.2
Transfers from a Contractor Party to a Non-Affiliate
If a Contractor Party wishes to transfer the whole or any part of its interest under this
Agreement to another Contractor Party or to a Non-Affiliate it shall submit a request to
CNPA for its approval, together with a copy of the proposed instrument of transfer, evidence
of the qualifications, financial standing and appropriateness of the proposed transferee and
any other relevant documentation that CNPA reasonably requires. CNPA shall within 60
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days from the date of receipt of such application review the qualification, financial standing
and appropriateness of the proposed transferee, and give its approval or state the basis for its
disapproval. However, such approval shall not be unreasonably withheld and if CNPA fails
to approve or disapprove within the specified period the transfer shall be deemed to be
approved.
36.3
Impact of Transfers
(a)
A transferee will be entitled to cost recover the transferor’s unrecovered Petroleum
Costs. Transfers will not affect the total amount of Petroleum Costs.
(b)
A transferee’s annual
income tax will be assessed on the basis of the
transferor’s fees paid during that year under Article 18.2 and realised
foreign
exchange
gains and
losses. Transfers
income
tax, withholding taxes, value added
will
not
be
subject
to
taxes, and other taxes and
tariffs and charges due to the Government or local authorities other than those
imposed under this Agreement.
(c)
For the avoidance of doubt, notwithstanding assignment of all or part of an interest
under this Agreement, a Contractor Party shall remain fully responsible to CNPA
for all liabilities and obligations existing or arising in connection with this
Agreement prior to the date of assignment, including as a result of any action or
omission of Contractor or a Contractor Party prior to the date of assignment
(whether or not that liability or obligation is known or quantifiable at the date of the
assignment).
(d)
Subject to paragraph (c), where a Contractor Party assigns all or part of an interest
in accordance with this Agreement, the Contractor Party shall cease to be a
Contractor Party in respect of that interest from the date of the assignment and shall
be released from performance of obligations arising in connection with that interest
after the date of assignment.
36.4
Deed of covenant
Without limiting any other restrictions on transfer under this Agreement, no transfer will be
binding on CNPA unless and until notice of the transfer has been given to CNPA by the
transferor, and the transferee, if it is not a Contractor Party prior to the transfer, has entered
into a written contract with CNPA acknowledging that it has become a party to this
Agreement and will comply with this Agreement as a Contractor Party.
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37
SUSPENSION AND TERMINATION
37.1
Right to order suspension
In the event of:
(a)
a material breach of this Agreement by Contractor which is not corrected within 30
days after notice is given to Contractor by CNPA to do so; or
(b)
a situation which poses a serious and imminent threat to persons, property or
environment,
CNPA may order Contractor to temporarily suspend all or part of its Petroleum Operations
or to take such other measures as may be reasonably necessary until such breach has been
cured or the threatening situation abated.
37.2
Termination for default
(a)
CNPA may give to Contractor notice of its intention to terminate this Agreement if:
(i)
Contractor has failed to substantially comply with any material provision
of this Agreement; and
(ii)
Contractor has failed to take reasonable steps to rectify its default within
30 days after being ordered in writing by CNPA to do so (or within such
longer period as CNPA may prescribe), or such default is not capable of
being rectified.
(b)
If CNPA gives a notice to Contractor under paragraph (a) and if within 30 days
after the giving of such notice Contractor:
(i)
again fails to take reasonable steps to rectify its default or such default is
not capable of being rectified, and
(ii)
fails to demonstrate to CNPA’s reasonable satisfaction why this
Agreement should not be terminated, then CNPA may terminate this
Agreement by notice to Contractor.
37.3
Termination does not relieve Contractor
Termination of this Agreement shall not relieve Contractor from the performance of any
obligation outstanding prior to termination, or from the consequences of non-compliance
with such obligation.
37.4
Consequences of termination
In the event of termination of this Agreement after issue of a Production Permit, CNPA may
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Operations on behalf of and at the cost of CNPA for a reasonable time until CNPA assigns
the right to conduct Petroleum Operations to another person or has assumed control of
Petroleum Operations.
37.5
Failure to perform
Notwithstanding any other provision of this Agreement, and without in any way limiting or
affecting any other right held by CNPA to terminate this Agreement:
(a)
if Contractor fails to perform any obligation under this Agreement to the
satisfaction of CNPA (in its absolute discretion) then CNPA may, at any time after
6 months from the date of execution of this Agreement, terminate this Agreement
by notice in writing to Contractor; or
(b)
if Contractor fails at any time to fully and absolutely perform its obligations under
any of Articles 3.2(b), 6.7(a), 18.1, 18.2 or 29 by the date for performance required
by each such Article, then CNPA may terminate this Agreement by notice in
writing to Contractor within 60 days of any such failure to perform.
Any such termination shall take effect immediately on issue of the notice to Contractor and
thereafter Contractor shall have no rights in respect of the Contract Area and shall have no
rights or interest under or in respect of this Agreement including in respect of termination of
this Agreement.
38
SETTLEMENT OF DISPUTES
38.1
Consultation
CNPA and Contractor agree to make every effort to settle amicably any problem arising
under this Agreement.
38.2
Manner in which disputes to be resolved
(a)
In this Article, “dispute” means any disagreement, dispute, controversy or claim
between CNPA and Contractor arising out of or relating to this Agreement or the
interpretation, breach or termination thereof, which cannot be settled amicably.
(b)
Any dispute which relates to:
(i)
Good Petroleum Industry Practices, including any dispute as to whether
Contractor’s Work Programs or Petroleum Operations comply with Good
Petroleum Industry Practices; or
(ii)
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the valuation of Petroleum,
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will be referred to an independent expert (“Expert”) for resolution.
(c)
All other disputes between CNPA and Contractor other than any disagreement,
dispute, controversy or claim arising out of or relating to termination of this
Agreement under Clause 37.5 will be referred to arbitration for resolution unless
otherwise agreed between the Parties.
38.3
Referral to an Expert
Other than as contemplated under Article 12.2, 12.3 or 12.4, where a dispute is to be referred
to an Expert for resolution, the following provisions will apply:
(a)
The Expert will be jointly agreed by CNPA and Contractor.
(b)
The Expert will be a person agreed between the Parties. If the Parties cannot agree
upon the person to be appointed as the Expert, the Parties will request that the
International Centre for Expertise in Paris, France nominate the Expert. No person
shall be appointed to act as an Expert unless that person is qualified by education,
experience and training to determine the matter in dispute. A person may not be
appointed as Expert if that person has any conflict of interest.
(c)
An Expert shall fix a reasonable time and place for receiving submissions or
information from the Parties. Each Party will have the opportunity to make written
submissions to the Expert.-
(d)
The Expert will be required to determine the matter with all due diligence.
(e)
The Expert shall not be an arbitrator and shall not be subject to laws or rules of
arbitration.
(f)
38.4
The Expert’s determination shall be final and binding upon the Parties.
Referral to arbitration
Where a dispute is to be referred to arbitration for resolution, the following provisions will
apply:
(a)
The Parties shall establish an ad hoc panel of 3 arbitrators. CNPA and Contractors
shall each appoint one arbitrator and so advise the other party, and these two
arbitrators will appoint a third. If either party fails to appoint an arbitrator within 30
days after receipt of request of the other party, and if the parties do not otherwise
agree, the arbitrator not appointed by that party shall be appointed by the President
of the International Court of Justice in the Hague. If the first two arbitrators
appointed as aforesaid fail to agree on a third within 30 days following the
appointment of the second arbitrator, the third arbitrator shall be agreed by the
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parties and, if the parties are unable to agree, be appointed, at the request of either
party, by the International Court of Justice in The Hague.
(b)
The place of arbitration shall be Singapore, unless otherwise mutually agreed.
(c)
The language to be used in the arbitration proceedings shall be English.
(d)
The award of the arbitral panel shall be final and binding on both parties.
(e)
Except as provided in this Article, arbitration shall be conducted in accordance with
the arbitration rules of the United Nations Commission on International Trade Law
(IJNCITRAL), in force at the date of appointment of the third arbitrator.
(f)
Contractor shall continue its work under this Agreement during the arbitration
proceeding and no allocation of Petroleum or payment due to or from either party
shall be withheld pending the award of the arbitral panel.
39
MISCELLANEOUS
39.1
Applicable law
This Agreement shall be interpreted according to the law of the Kingdom of Cambodia with
consideration of customary principles and practices of the international petroleum industry.
39.2
Notices
All notices required to be given by either party to the other under this Agreement shall be in
writing in the English language, and may be made by prepaid and registered airmail, or by
facsimile or by hand to the respective address of each party indicated below, or to such other
address as either party may subsequently notify the other. All notices shall be deemed to be
duly made when received.
CAMBODIAN GOVERNMENT:
Cambodian National Petroleum Authority
Room D4, Office of the Council of Ministers, Russian Federation Blvd.
Kingdom of Cambodia
Attention: Director General
Fax: +855 212278; Tel: 855 16880071, E-Mail: durong.tara2005@online.com.kh
CONTRACTOR:
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( Local company name........................ Ltd
Address: to be advise
Attention: Mr. ............................
Position: Senior Vice President / Director
Tel: 65-65464122
Fax: 65-65464022
Email: .....................com
39.3
Office
Within 90 days after the Effective Date, Contract Operator shall establish an office in
Phnom Penh and maintain such an office for the duration of this Agreement.
39.4
Interpretation
The captions and headings in this Agreement are solely for reference purposes and shall not
affect the interpretation hereof.
The following rules apply unless the context requires
otherwise.
(a)
The singular includes the plural and conversely.
(b)
Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(c)
A reference to a person, corporation, trust, partnership, unincorporated body or
other entity includes any of them.
(d)
A reference to an Article or an Annexure is a reference to an article of, or annexure
to, this Agreement.
(e)
A reference to a party to this Agreement or another agreement or document
includes the party's successors, permitted substitutes and permitted assigns (and,
where applicable, the party's legal personal representatives).
(f)
A reference to an agreement or document is to the agreement or document as
amended, novated, supplemented or replaced, except to the extent prohibited by
this Agreement.
(g)
A reference to legislation or to a provision of legislation includes a modification or
re-enactment of it, a legislative provision substituted for or added to it and a
regulation or statutory instrument issued under it.
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(h)
A reference to writing includes a facsimile transmission and any means of
reproducing words in a tangible and permanently visible form.
(i)
A reference to conduct includes, without limitation, an omission, statement or
undertaking, whether or not in writing.
(j)
39.5
A limited partnership will be regarded as a corporation.
Inflation indices
If:
(a)
Inflation cannot be determined for a time period; or
(b)
any change occurs to the method of calculation of any of the indices used to
calculate Inflation for the purpose of this Agreement, the parties shall endeavour to
agree an appropriate substitute. If the parties are unable to agree within 30 days, the
matter shall be referred to independent expert determination.
39.6
Waiver of Sovereign Immunity
In respect of the Contractor, CNPA irrevocably and unconditionally:
(a)
agrees that in any arbitration or legal action in respect of this Agreement it will not
raise, rely on or claim any immunity (including, without limitation, from suit,
judgment, attachment before judgment or otherwise, execution or other
enforcement);
(b)
waives any right of immunity that it or its assets may have at any time; and
(c)
consents generally to the giving of any relief or the issue of any process in
connection with any arbitration or legal action in respect of this Agreement
including, without limitation, the making, enforcement or execution of any order or
judgment against any property (irrespective of its use or intended use).
39.7
Completeness of the agreement
This Agreement constitutes the entire understanding between the parties and shall not be
amended or changed without the prior written consent of each Party.
39.8
Language of the agreement
This Agreement has been made and executed in the Khmer and English languages Each
original shall have equal force and validity, except that in the case of inconsistency or
discrepancies between them, the English language original shall prevail.
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40
CONDITION PRECEDENT
40.1
Condition Precedent
Contractor shall pay CNPA $300,000 within 30 days after the Signature Date as a gesture of
good faith in connection with entry into this Agreement (Goodwill Payment). Contractor
must transfer within 30 days after the Signature Date the full amount of the Goodwill
Payment, net of all bank charges levied on the transfer or receipt of the funds, in
immediately available funds into the bank account nominated in writing by CNPA to
Contractor (Condition Precedent).
40.2
Effect of Condition Precedent
Subject to Article 40.3, this Agreement shall have no force and effect and neither party shall
have any rights or obligations under this Agreement unless and until the Condition
Precedent is satisfied.
40.3
Articles Binding from Effective Date
Articles 1 (Definitions), 2.2 (CNPA to Administer Agreement), 18.3 (Charges for Services
Rendered by CNPA), 27 (Confidentiality), 35.1 (Joint and Several Liability), 37 (Suspension
and Termination, 38 (Dispute Resolution), 39.1 (Applicable Law), 39.2 (Notices), 39.4
(Interpretation), 39.6 (Waiver of Sovereign Immunity) 39.7 (Completeness of Agreement),
39.8 (Language of Agreement) and this Article 40 (Condition Precedent) shall be effective
on and from the Signature Date whether or not the Condition Precedent has been satisfied.
40.4
Failure to Perform Condition Precedent
In the event that the Condition Precedent is not satisfied within 30 days after the Signature
Date, this Agreement shall automatically and immediately terminate and thereafter:
(a)
Each Party shall be freed and discharged from all further obligations and liabilities
under this Agreement;
(b)
Contractor shall have no rights, title or interest in respect of the Contract Area; and
(c)
CNPA shall have no obligations or liabilities in respect of the termination of this
Agreement,
in each case without prejudice to any rights, remedies, powers, obligations and liabilities that
have accrued under this Agreement prior to the termination of this Agreement.
40.5
Notice of Satisfaction of Condition Precedent
Contractor must promptly notify the CNPA in writing if Contractor considers that the
Condition Precedent has been satisfied. If CNPA is satisfied that the Condition Precedent
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has been satisfied, CNPA shall promptly notify Contractor in writing of the date on which
the Condition Precedent is satisfied or CNPA reasonably estimates that the Condition
Precedent is satisfied.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement in the English language in
Phnom Penh, Cambodia on the date first written above in
original copies.
FOR AND ON BEHALF OF
THE ROYAL GOVERNMENT
OF
THE KINGDOM OF CAMBODIA
......................................
Chairman of the Cambodian National Petroleum Authority
SIGNED by the Contractor Party
Executed for and on behalf of
....................................... Ltd
Signature
Witness Signature
Print Name
Print Name
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ANNEXURE I
COORDINATES OF THE CONTRACT AREA
ANNEXURE II
MAP OF THE CONTRACT AREA (.................)
[To be inserted]
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ANNEXURE III
NPV Project Cash Flows Test means in respect of a Calculation Date, the results of the following
calculation: the sum of Real Revenue minus Real Costs for each previous time period and each future time
n
period over the projected life of the project divided for each time period by [1.16] .
Where:
n
is the number of Calendar Years (which may include a fraction) from the Effective
Date to the relevant previous time period or future time period.
Calculation Date
means:
(a) 1 January of every year after the Effective Date; and
(b) the date of expiry of this Agreement.
Real Revenue
means, in respect of a Calculation Date, Actual Revenue for previous time periods
as adjusted by reference to actual Inflation and Forecast Revenue for future time
periods as adjusted by reference to forecast Inflation.
Real Costs
means, in respect of a Calculation Date, Actual Costs for previous time periods
adjusted for actual Inflation and Forecast Costs for each future time period adjusted
for forecast Inflation.
Actual Revenue
means, in respect of a Calculation Date, the amounts received by Contractor in
connection with this Agreement from the sale or disposal of Contractor’s
Entitlement in that time period minus Income Tax paid under this Agreement in
respect of that time period.
Forecast Revenue
means, in respect of a Calculation Date, the amounts forecast to be received by
Contractor in connection with this Agreement from sale or disposal of Contractor’s
Entitlement in a future time period minus income tax forecast to be payable under
this Agreement in respect of that time period.
Actual Costs
means, in respect of a Calculation Date, the amounts spent by Contractor in
connection with this Agreement during a previous time period and approved by
CNPA as Petroleum Costs for that time period (and shall include fees paid under
Article 18.1 and 18.2.
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Forecast Costs
means, in respect of a Calculation Date, the costs forecast to be incurred by
Contractor in connection with this Agreement as Petroleum Costs in a future time
period (and shall include fees forecast to be paid under Article 18.1 and 18.2.
Inflation
means in respect of a time period, the annual rate of change in the United States
Producer Price Index for Finished Goods, as published by the United States
Department of Labor.
time period
means a period of one Calendar Year (or fraction of a year) between the Effective
Date and the first Calculation Date and thereafter each Calendar Year to 1 January
over the projected life of the project.
previous time period
means, in respect of a Calculation Date, a time period prior to that Calculation Date
and after the Effective Date.
future time period
means, in respect of a Calculation Date, a time period following that Calculation
Date.
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