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PRODUCTION SHARING CONTRACT

BETWEEN



THE GOVERNMENT OF

REPUBLIC OF TAJIKISTAN,

represented by the



STATE AUTHORIZED BODY MINISTRY OF ENERGY AND

INDUSTRY OF THE REPUBLIC OF TAJIKISTAN,

and



KULOB PETROLEUM LIMITED



DATED



«



13



» June 2008



TABLE OF CONTENTS

* [Omitted]

PRODUCTION SHARING CONTRACT AND LICENSES

This Production Sharing Contract (“PSC” or “Contract”) is made and entered into as

of the 13 day of June 2008 by and between:

(1) Ministry of Energy and Industry of the Republic of Tajikistan as the duly

authorised representative of the State (as it is defined in article 1.67), pursuant to

the authority set out in Annex B, (hereinafter referred to as the “State” or the

“Ministry”) as the party of the first part; and

(2) Kulob Petroleum Limited, a company organised and existing under the laws of

the Bailiwick of Jersey, British Isles (registered number 97435), with registered

address at Pirouet House, Union Street, St Helier, Jersey JE4 8ZQ, British Isles ,

and its successors and assignees, if any, will individually be referred to as

“Contractor Party” and collectively referred to as “Contractor” or “Contractor

Parties”) as the party of the second part; and

The State, the Ministry, and the Contractor may sometimes be referred to as “Party”

and collectively as the “Parties”.

WITNESSETH:

WHEREAS, all Petroleum resources within the territory and under the internal waters

of Republic of Tajikistan are owned by the State;

WHEREAS, the State enters into this Contract wishing to promote the development

of the Contract Area and the Ministry and Contractor desire to join and assist in the

exploration, development and production of the potential resources within the

Contract Area;

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NOW, THEREFORE, in consideration of the promises and the mutual covenants and

conditions herein contained, it is hereby agreed as follows:

ARTICLE 1

DEFINITIONS

The following words and terms used in this Contract shall unless otherwise expressly

specified in this Contract have the following respective meanings:

1.1



“Accounting Procedure” means the accounting procedure set out in Annex

“C” hereto.



1.2



An “Affiliated Company” or “Affiliate” means:



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 2 of 27



a) with respect to a Contractor Party: a company, corporation, partnership or

other legal entity:

i)



in which a Contractor Party owns directly or indirectly more than fifty

percent (50%) of the shares, voting rights or otherwise has the right to

establish management policy; or



ii)



in which at least fifty percent (50%) of the shares or voting rights are

owned directly or indirectly by a company or other legal entity, which

owns directly or indirectly more than fifty percent (50%) of the shares,

voting rights or otherwise has the right to establish management policy

of a Contractor Party;



b) with respect to the State: any legal entity directly or indirectly controlled by

the State, respectively, or operating under their collective management. For

the purposes of this part of the definition, the term to “control” (including the

related terms “controlled” or “operates under collective management”) shall

mean with respect to any entity, having the right to carry out direct or indirect

supervision of such entity or to define a general scope of its activity based on

holding the shares entitled to vote, other form of ownership, or on any other

grounds.

1.3



“Annex” or “Annexes” means each or all of the Annexes “A”, “B”, “C”, “D”

attached to this Contract and made a part hereof. In the event of a conflict

between the provisions of an Annex and a term in the main body of this

Contract, the provisions of the latter shall prevail.



1.4



“Appraisal” means all works carried out by Contractor to evaluate and

delineate the commercial character of a Discovery of Petroleum in the

Contract Area.



1.5



“Appraisal Programme” means a work programme submitted by Contractor

under which Contractor plans to evaluate and delineate a Discovery of

Petroleum in the Contract Area.



1.6



“Associated Natural Gas” means all gaseous hydrocarbons produced in

association with Crude Oil, which Crude Oil itself can be commercially

produced and separated therefrom.



1.7



“Available Crude Oil” means Crude Oil produced and saved from the Contract

Area and not used in Petroleum Operations in accordance with Article 11.3.



1.8



“Available Natural Gas” means Natural Gas produced and saved from the

Contract Area and not used in Petroleum Operations in accordance with

Article 11.3.



1.9



“Barrel” means a quantity consisting of forty-two (42) United States gallons

liquid measure, corrected to a temperature of sixty degrees (60º) Fahrenheit

with pressure at sea level.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 3 of 27



1.10



“Budget” means the estimate of the expenditures, listed category by category,

relating to Petroleum Operations and contained in any Work Programme

proposed by Contractor.



1.11



“Calendar Quarter” or “Quarter” is a period of three consecutive months

beginning on January 1st, April 1st, July 1st and October 1st of each Calendar

Year.



1.12



“Calendar Year” means a period of twelve (12) consecutive months beginning

on January 1st and ending on December 31st in the same year, according to the

Gregorian Calendar.



1.13



“Capital Expenditure” means Development Expenditure and Exploration

Expenditure.



1.14



*[definition of commercial terms omitted]



1.15



*[definition of commercial terms omitted]



1.16 “Contract” or “PSC” means this Production Sharing Contract together with all

attached Annexes and any variation, extension or modification hereto which may be

agreed in writing by all the Parties.

1.17



“Contract Area” means the area specified in Article 3 hereof and delineated in

Annex A, as reduced or enlarged from time to time in accordance with the

provisions of this Contract.



1.18



“Contract Year” means a period of twelve (12) consecutive months within the

term of the Contract.



1.19



“Contractor” means the Contractor Parties, their assignees and successors, as

provided herein.



1.20



*[definition of commercial terms omitted]



1.21



*[definition relating to financial terms omitted]



1.22



*[definition relating to financial terms omitted]



1.23



*[definition relating to financial terms omitted]



1.24



*[definition relating to financial terms omitted]



1.25



“Crude Oil” means crude mineral oil, asphalten, ozopherite and all kinds of

hydrocarbons whether in a solid, liquid or mixed state at the wellhead or

separator or which is obtained from Natural Gas through condensation or

extraction, including Condensate (“Condensate” means hydrocarbon liquid

separated from natural gas that condenses due to changes in the temperature,

pressure, or both, and remains liquid at standard conditions).



1.26



“Customs Duties” means all import (or export) tariffs and duties and other

mandatory payments as stipulated by applicable laws, regulations or other

legal measures of Republic of Tajikistan with respect to the import or export



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 4 of 27



of materials, equipment, goods and any other similar items used for the

purposes provided by the Agreement.

1.27



*[definition of financial terms omitted]



1.28



*[definition of financial terms omitted]



1.29



*[definition of financial terms omitted]



1.30



*[definition of financial terms omitted]



1.31



*[definition of financial terms omitted]



1.32



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



1.33



“Double Tax Treaty” means any international treaty or convention for the

avoidance of double taxation of income and/or capital which is applicable in

Republic of Tajikistan.



1.34



“Drilling Costs” shall mean all expenditures whether directly or indirectly

incurred during Exploration and Development for well drilling, completing

and reworking operations including, but not limited to, labour, geological

design, engineering and other Subcontractors (including all fees, tariffs and

charges payable to any such Subcontractors), material and equipment

consumed or lost, perforation, formation testing, cementing, well-logging and

transportation.



1.35



“Effective Date” means the date on which this Contract has been duly signed

and executed by all Parties.



1.36 “Excess Associated Natural Gas” is defined as set forth in Article 16.1.b.

1.37 “Excess Crude” is defined as set forth in Article 11.15.

1.38 “Exploration” or “Exploration Operations” means operations conducted under

this Contract in connection with the exploration for previously undiscovered

Petroleum, or the evaluation of discovered reserves which shall include

geological, geophysical, aerial and (other survey) activities and any

interpretation of data relating thereto as may be contained in Exploration

Work Programmes and Budgets, and the drilling of such shot holes, core

holes, stratigraphic tests, Exploratory Wells for the discovery of Petroleum,

Appraisal wells and other related operations.

1.39



*[definition of financial terms omitted]



1.40



“Exploratory Well” means any well drilled with the objective of confirming a

structure or geologic trap in which Petroleum capable of Commercial

Production in significant quantities has not been previously discovered.



1.41



“Field” means a Petroleum reservoir or group of reservoirs within a common

geological structure or feature. “Field” may be an “Oil Field” or a “Natural

Gas Field”.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 5 of 27



1.42



*[definition of financial terms omitted]



1.43



“Force Majeure” is defined as set forth in Article 25.2.



1.44



“Foreign Employee” is defined as set forth in Article 17.11



1.45



“Foreign Subcontractors” means Subcontractors which are organised outside

of Tajikistan.



1.46



“Gas Sales Contract” is any contract to be entered into for the sale of Nonassociated Natural Gas in accordance with the provisions of Article 16.2.



1.47



Operator (Operating company) means the company defined in Article 2.8 or as

subsequently amended in accordance with Article 2.8.



1.48



“Contractor Licence” is the “Licence” issued to the Contractor by the

appropriate authority of the Republic of Tajikistan, giving the exclusive rights

to the exploration for and production of Petroleum in the Contract Area,

according to Republic of Tajikistan Law.



1.49



“LIBOR” means the three (3) months U.S. Dollars London Interbank fixing

offer rate quoted daily in the London Financial Times.



1.50



“Marketing Team” is defined as set forth in Article 16.2.a.ii.



1.51



“Measurement Point” means the location specified in an approved

Development Plan where the Petroleum is metered and delivered to the

Parties.



1.52



“Month” or “Calendar Month” means a calendar month.



1.53



“Natural Gas” means Non-associated Natural Gas and Associated Natural Gas

in their natural state.



1.54



“Natural Gas Field” means a field from which more than fifty (50) percent of

the estimated reserves on an energy equivalency basis are Natural Gas at

surface conditions.



1.55



“Non-associated Natural Gas” means all gaseous hydrocarbons produced from

gas wells, and includes wet gas, dry gas and residue gas remaining after the

extraction of liquid hydrocarbons from wet gas.



1.56



“Oil Field” means a field from which more than fifty (50) percent of the

estimated reserves on an energy equivalency comprise Crude Oil.



1.57



*[definition of financial terms omitted]



1.58



“Party” or “Parties” means the parties whose authorised representatives have

affixed their signatures hereto.



1.59



“Payment Date” has the meaning as defined in 11.10.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 6 of 27



1.60



“Petroleum” means Crude Oil and Natural Gas.



1.61



“Petroleum Operations” means the Exploration Operations, the Development

Operations, Production Operations, and transportation, export and other

activities related thereto carried out pursuant to this Contract, and “Petroleum

Operations Expenditures” means all costs incurred by the Contractor Parties in

connection with the Exploration Operations, the Development Operations,

Production Operations, Finance Costs, transportation, export and other

activities related thereto carried out pursuant to this Contract.



1.62



*[definition of financial terms omitted]



1.63



“Production” or “Production Operations” means operations and all related

activities carried out for Petroleum production after the approval of any

Development Plan, including without limitation extraction, injection,

stimulation, treatment, transportation, storage, lifting, and associated

operations, but does not include any storage or transportation beyond the

Measurement Point.



1.64



*[definition of financial terms omitted]



1.65



*[definition of financial terms omitted]



1.66



*[definition of financial terms omitted]



1.67



“State” or “Government” means the Government of Republic of Tajikistan and

all political or other agencies or instrumentalities or subdivisions thereof

including but not limited to any local government bodies or other

representative, agency or authority, which has the authority to govern,

legislate, regulate, levy and collect taxes or duties, grant licences, permits,

approve or otherwise impact (whether financially or otherwise) directly or

indirectly upon any of the Parties’ rights, obligations or activities under the

Contract; the word “Governmental” shall be construed accordingly.



1.68



*[definition of financial terms omitted]



1.69



*[definition of financial terms omitted]



1.70



“Subcontractor” means any natural person or juridical entity contracted

directly or indirectly by or on behalf of Contractor to supply goods, works or

services related to this Contract.



1.71



“Tax Inspectorate” is defined as set forth in Article 17.10.



1.72



“Third Party” or “Third Parties” means one or more of a natural person or

juridical entity other than a Party hereto and any Affiliate of a Party.



1.73



“Taxes” means all levies, duties, payments, fees, taxes or contributions

payable to or imposed by State agencies, State subdivisions or republican,

local authorities and self-governing authorities of Republic of Tajikistan.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 7 of 27



1.74



“VAT” means Tajikistan value added tax or any sales taxes.



1.75



“Work Programme” and “Work Programme and Budget” shall mean any work

programme and work programme and Budget to be submitted to the

Coordination Committee by the Contractor in accordance with the provisions

of Article 10 and which shall set out the proposed Petroleum Operations to be

carried out in the Contract Area together with the associated Budget as the

case may be.

ARTICLE 2

SCOPE OF CONTRACT AND GENERAL PROVISIONS



2.1



By its approval of this Contract the State authorised body hereby ratifies that

all required to Contractor Licences will be issued according to the current

Laws of Republic of Tajikistan.



2.2



Subject to the terms and conditions of the Contract, the State hereby grants to

the Contractor Parties the exclusive rights to conduct Petroleum Operations in

the Contract Area during the term of this Contract.



2.3



The Contractor shall be responsible to the State for the execution of such

Petroleum Operations with Operator acting as operator all in accordance with

the provisions of the Contract.



2.4



In performing Petroleum Operations, Contractor shall provide all financial and

technical requirements, unless otherwise provided in this Contract, or agreed

with the State, and conduct all operations in accordance with the standards

generally accepted in the international Petroleum industry.



2.5



Contractor shall be compensated for its services, not by way of reimbursement

in cash of its expenditures under the Contract, but by receipt of its share of

Petroleum from the Contract Area to which it may become entitled by way of

recovery of Costs and Expenses from Cost Recovery Petroleum under Article

11.

If share due to the Contractor in accordance with this Agreement

Petroleum produced from Development Areas within the Contract Area

developed by Contractor is insufficient to reimburse Contractor for Costs and

Expenses incurred by Contractor, Contractor shall bear its own losses in

respect of any shortfall.



2.6



This Contract defines the Parties’ rights and obligations, governs their mutual

relations and establishes the rules and methods for the Exploration,

Development, Production, and sharing of Petroleum between them. The entire

interests, rights and obligations of each of the Parties under this Contract shall

be solely governed by the provisions of this Contract. The Contractor and the

Ministry may as between themselves, agree in writing to amend any provision

of this Contract where to do so would, in the opinion of both the Contractor

and the Ministry improve the day to day operations contemplated hereunder,

but not so as to vary any fundamental provision of this Contract.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 8 of 27



2.7



During the period in which this Contract is in force, all Available Crude Oil

and Available Natural Gas resulting from Petroleum Operations, will be

shared between the Ministry (or its designated representative) and the

Contractor in accordance with the provisions of Article 11 of this Contract.



2.8



The Operator (Operating company) for Petroleum Operations shall be a

Petroleum Operating Company established by the Contractor in accordance

with the legislation of Republic of Tajikistan and may be changed by the

Contractor with the consent of the Ministry. Such consent can not be

unreasonably withheld. In case if no decision (consent) of the Ministry is

given in the course of forty-five (45) days after the Ministry is informed by the

Contractor the appointment of operator shall be deemed as effected. It is

hereby agreed that the first Operator shall be Tethys Services Tajikistan

Limited, a company organised and existing under the laws of the Republic of

Tajikistan (registration number 001- 4472) and with current offices at 37/1,

Bokhtar Street, Dushanbe, Tajikistan.

ARTICLE 3

CONTRACT AREA



3.1



The Contract Area is as set out by the geographic location and coordinates

described in Annex “A” attached hereto and delineated in the map which

forms part thereof. The total area of the Contract Area may hereafter be

reduced only in accordance with the provisions of this Contract upon consent

of the Parties.



3.2



Except as for all rights and authorisations necessary for the implementation of

the provisions of this Contract, no right is granted in favour of the Contractor

or the Ministry to the use or disposal of any other natural or man-made

resources or aquatic resources with the exception of aquatic resources used

directly in Petroleum Operations”.



3.3



*[description of commercial terms omitted]



ARTICLE 4

CONTRACT TERM

4.1



The term of this Contract shall commence on the date of signing and on that

date the Contract becomes fully effective (the “Effective Date”) and exclusive

Petroleum Operations by the Contractor on the Contract Area may commence

and shall continue for a total of twenty-five (25) consecutive Contract Years,

unless the Contract is sooner terminated in accordance with Article 29 of this

Contract. If not already issued the State undertakes to ensure that any further

governmental consents, licences, approvals and permissions required by the

Contractor or the Operator are issued within thirty (30) days of the Contract

Effective Date.



4.2



If in respect of any Development Area, Commercial Production remains

possible beyond the initial period of 25 consecutive Contract Years specified



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 9 of 27



in Article 4.1 or any extension provided under this Article, the Contractor,

after giving notice to the State at least one (1) year prior to the end of any such

term shall automatically be entitled to have an extension of the term of this

Contract with respect to such Development Area for an additional term of not

less then 5 years or the producing life of the Development Area.



ARTICLE 5

*[description of commercial terms omitted]

ARTICLE 6

*[description of commercial terms omitted]

ARTICLE 7

OPERATOR RESPONSIBILITY

7.1



The Parties agree that the Operator shall act as the Operator for Petroleum

Operations within the Contract Area in accordance with approved Work

Programmes and Budgets unless otherwise stipulated in this Article 7.



7.2



The Operator shall have the following obligations:



7.3



a)



to perform the Petroleum Operations reasonably, economically and

efficiently



b)



to conduct (implement) the Work Programmes and Budgets approved ;



c)



to be responsible for purchasing facilities, equipment and

miscellaneous material and enter into subcontracts and service

contracts on behalf of Contractor with domestic service providers and

vendors related to the Petroleum Operations, in accordance with

approved Work Programmes and Budgets and instructions from

Contractor;



d)



describes commercial obligations ;



e)



to establish and maintain complete and accurate accounting records

regarding its costs and expenditures for the Petroleum Operations in

accordance with the Accounting Procedure and this Contract;



f)



describes commercial obligations;



g)



as above .



Operator and Contractor, and their direct and indirect shareholders, shall not

be responsible for any activities (including Petroleum activities) affecting the

Contract Area prior to the date of the Operator’s Licence and the results of

such activities.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 10 of 27



7.4



The Operator shall provide all Parties with copies of all relevant data and

reports pertaining to Petroleum Operations (including but not be limited to

geophysical, geological, technological, operational, accounting or other

material) required by such Parties.

ARTICLE 8

OPERATOR OBLIGATIONS AND REQUIREMENTS



8.1



The Contractor will ensure that the Operator acts in accordance with

International oil and gas field standards and good oilfield practices.



8.2



*[description of commercial obligations omitted]

ARTICLE 9



9.1



*[description of commercial activities omitted]

ARTICLE 10

ANNUAL WORK PROGRAMMES AND BUDGETS



10.1



Contractor shall be responsible for the procurement of installations, equipment

and supplies and entering into contracts for the purchase of goods and services

with Foreign Subcontractors and others arising out of Petroleum Operations,

all in accordance with approved Work Programmes and Budgets. Operator

shall assist the Contractor when requested in respect of the matters set out in

the previous sentence, and shall implement domestic procurement operations

as provided in Clause 7.2(c) in accordance with approved Work Programmes

and Budgets.



10.2



*[description of commercial obligations omitted]



10.3



*[description of commercial obligations omitted]



10.4



*[description of commercial obligations omitted]



10.5



*[description of commercial obligations omitted]



10.6



*[description of commercial obligations omitted]



10.7



*[description of commercial obligations omitted]

ARTICLE 11

11.1



In accordance with requirements of part 1 Article 10 of the Law of



Republic of Tajikistan “On Production Sharing contracts” Contractor shall

Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 11 of 27



provide or procure the provision of all funds required to conduct Petroleum

Operations under this Contract, and Contractor shall be entitled to recover its

Costs and Expenses (Petroleum Operations Expenditures) from Petroleum

produced from the Contract Area as provided below.

11.2



*[description of commercial terms omitted]



11.3



Contractor and Operator shall have the right to use free of charge Petroleum

produced from the Contract Area to the extent required for Petroleum

Operations under the Contract. The amount of Petroleum which Contractor

and Operator shall be entitled to use for Petroleum Operations shall not exceed

the amount which would be expected to be used in accordance with

international Petroleum industry practice. For the avoidance of doubt, the use

of such Petroleum shall only be for the benefit of Petroleum Operations and

not the personal gain of any Party. An appropriate paper shall also be executed

for the use of such Petroleum.



11.4



Available Crude Oil and Available Natural Gas shall be measured at the

applicable Measurement Point and allocated as set forth hereinafter.

*[description of financial terms omitted]



11.6



*[description of financial terms omitted]



11.7



*[description of financial terms omitted]



11.8



*[description of financial terms omitted]



11.9



*[description of financial terms omitted]



11.10 *[description of financial terms omitted]

11.11 *[description of financial terms omitted]

11.12 *[description of financial terms omitted]

11.13 For the avoidance of any doubt, title to their relevant shares of Petroleum shall

pass from the State to the Ministry and each Contractor Party as appropriate at

the Measurement Point. The Operator has no title to any Petroleum.

11.14 The Ministry and Contractor shall agree on procedures for taking volumes of

Crude Oil corresponding to their respective entitlements on a regular basis and

in a manner that is appropriate having regard to the respective destinations and

uses of the Crude Oil, all in accordance with the provisions of this Contract. If

necessary the Ministry and Contractor will enter into a lifting agreement

consistent with this Contract setting out the agreed procedures for taking

volumes of Crude Oil, and such agreement shall comply with the principles of

accepted international Petroleum Industry practice.



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 12 of 27



11.15 The Contractor Parties shall have the free right to export, without hindrance,

its share of Crude Oil and Natural Gas from Republic of Tajikistan without the

imposition of any export duties, taxes, rents, customs fees or similar, and shall

be able to freely sell its share of Petroleum to any organisation, corporation or

individual whether resident in Republic of Tajikistan or not, and to receive

payment for this Petroleum wheresoever and in what form and currency it

wishes. No VAT or sales taxes shall be chargeable on sales of the Contractor

Parties share of Petroleum whether such sales are to the domestic market or

for export.

ARTICLE 12

12.1



*[description of financial terms omitted]



12.2



*[description of financial terms omitted]



12.3



*[description of financial terms omitted]

ARTICLE 13

ANCILLARY RIGHTS OF THE CONTRACTOR AND OPERATOR



13.1



In addition to the rights to carry out Petroleum Operations within the Contract

Area the State and the Ministry shall provide or otherwise procure in

accordance with existing legislation of Republic of Tajikistan access to

Contractor and Operator to all existing facilities and infrastructure in the

Contract Area and within Republic of Tajikistan owned by the State or the

Ministry for the purpose of carrying out its Petroleum Operations during the

term of the Contract. Such facilities and infrastructure would include, but not

be limited to, oil, gas and product pipelines, oil and gas processing facilities,

oil and gas storage facilities, rail loading facilities, and similar. Such access

shall be on terms as regards access and tariffs no less favourable than those

offered to other persons or entities, either State or otherwise, both within

Republic of Tajikistan and with regard to interstate contracts.



13.2



The Contractor and Operator shall have the right to use, produce, reprocess

and export all existing geoscience, engineering, environmental and geodetic

data (including magnetic tapes and films) maps, surveys, reports, and studies it

deems necessary to carry out Petroleum Operations in accordance with

existing legislation of Republic of Tajikistan hereunder including, but not

limited to: magnetic surveys, seismic surveys, well logs and analysis, core

analysis, well files, geologic and geophysical maps and reports, reservoir

studies, reserve calculations, accurate geodetic coordinates for the location of

all wells and seismic lines and all other pertinent data relative to the Contract

Area. The State will give all assistance to the Contractor to retrieve and gain

access to such data.

In accordance with existing legislation of Republic of Tajikistan The

Contractor shall have the right to conduct all geoscience, engineering,



13.3



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 13 of 27



environmental and geodetic studies it deems necessary to carry out Petroleum

Operations under the Work Programme. Said studies may include, but are not

limited to: seismic surveys, magnetic surveys, global positioning surveys,

aerial photography (obtaining relevant permits), collection of

soil/water/oil/rock samples for scientific and environmental studies and

geological field studies. Contractor shall be granted access to and/or

permission to fly subject to obtaining appropriate consents (which will not be

unreasonably withheld or delayed) over the Contract Area to conduct said

studies. Contractor shall have the right to import equipment and supplies

necessary to conduct said studies as well as the right to export data, film and

all samples to laboratories outside Republic of Tajikistan to conduct such

studies.

13.4



describes commercial obligations

the Contractor and/or Operator shall have the right to clear the land, to dig,

pierce, drill, construct, erect, locate, supply, operate, manage and maintain

pits, tanks, wells, trenches, excavations, dams, canals, water pipes, factories,

reservoirs, basins, maritime storage facilities and such, primary distillation

units, separating units for first oil extraction, sulphur factories and other

Petroleum producing installations, as well as pipelines, pumping stations,

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

and other means of communication (including satellite communication

systems), plants, warehouses, offices, shelters, personnel housing, hospitals,

schools, premises, underwater piers and other installations, means of

transportation, roads, bridges, and other means of transportation, garages,

hangers, workshops, maintenance and repair shops and all the auxiliary

services which are necessary or useful to Petroleum Operations or related to

them and, more generally, everything that is or could become necessary or

accessory to carry out the Petroleum Operations but for the avoidance of any

doubt in accordance with the relevant law of Republic of Tajikistan.



13.5



The agents, employees and personnel of both Contractor and Operator, or

Subcontractors, may enter or leave the Contract Area and have free access,

within the scope of their functions, to all installations put in place by the

Contractor or Operator or otherwise utilised in Petroleum Operations.



13.6



Subject to prior consent of any appropriate local State bodies and the relevant

landowners the Contractor shall have the right to utilise the upper soil, mature

timber, clay, sand, lime, salt, gypsum and stones with exclusion of precious

and semiprecious stones, gems, ore materials and other mineral deposits for

the production and exploration of which a separate licence (permission) is

required, and any other similar substances, necessary for the performance of

Petroleum Operations in accordance with the current legislation of the

Republic of Tajikistan. The Contractor may utilise the water necessary for

Petroleum Operations, on condition that reasonable efforts are taken to

minimise potentially adverse effects on irrigation and navigation, and that

land, houses and the watering places are not adversely affected.



13.7



The Contractor shall have the right to use existing pipeline and terminal

facilities belonging to or under the control of the State or the Ministry. The



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 14 of 27



State and the Ministry shall assist in making these facilities available to the

Contractor on terms with regard to access and tariffs that are no less

favourable than those available to others including the Ministry and any other

State enterprise. Priority shall be given in the use of such pipelines and

facilities to Petroleum produced within Republic of Tajikistan.

ARTICLE 14

*[description of the State’s obligations omitted]

ARTICLE 15

15.1



*[description of commercial terms omitted]

ARTICLE 16

*[description of commercial terms omitted]

ARTICLE 17

TAX/FISCAL REGIME



17.1



This Article shall apply to each Contractor Party individually.



17.2



Each Contractor Party, Foreign Subcontractor, Foreign Employee and

Operator shall be entitled to full and complete exemption from Taxes

according to the Tax Code of the Republic of Tajikistan prior to or after the

Effective Date of this Agreement except as otherwise provided for in this

Contract.



17.3



It is acknowledged that Double Tax Treaties will have effect to give relief

from Taxes to, but not limited to, Contractor, Contractor Parties, Foreign

Subcontractors and Foreign Employees if such Treaties exist.



17.4



It is acknowledged that, if this Contract was not in force, each Contractor

Party may be normally subject to taxes related to the mineral extraction

industry in accordance with the taxation code of Republic of Tajikistan.



17.5



Given that this Contract is in force, then taxes, levies, duties, rents and other

similar payments and liabilities to the State and local authorities to which the

Contractor Parties may be liable will be paid, assumed and discharged by the

Ministry, its assignees, divisions or other entities receiving the State share of

Petroleum in accordance with Article 17.6 herein. For the avoidance of doubt,

the Contractor Parties shall be entitled to full and complete exemption from

taxes, levies, duties, rents, fees and other similar payments to the State and

local authorities according to the Tax Code of Republic of Tajikistan valid on

the effective date of this Agreement, and that the State’s share of Petroleum is

full compensation for this exemption.



17.6



The Ministry, its successors or assignees, will assume, pay and discharge, in

the name and on behalf of each Contractor Party (and if necessary the



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 15 of 27



Operator), any road tax liability, mineral usage tax liability, production tax

liability or any other Tajik tax liability, according to the Tax Code of Republic

of Tajikistan, out of the Ministry’s share of Profit Oil and Profit Natural Gas.

The Ministry Profit Oil and Profit Natural Gas share as determined by Article

11 of this Contract is therefore implied to include an amount equal in value to

all of the Contractor Parties’ (and Operator’s) potential tax liabilities.

17.7



The Ministry, on behalf of the State, will cause to be issued to the Contractor

Parties (and Operator) by the appropriate State tax bodies, before 1st April of

each year, an annual statement of all taxes imputed to have been paid by the

Ministry on behalf of the Contractor Parties, in such a form that the statement

would reasonably be accepted by foreign authorities operating a Double Tax

Treaty with the Republic of Tajikistan.



17.8



The Ministry shall not credit, directly or indirectly, Contractor Parties’ tax

payments against the Ministry’s tax or any other payments to the Government

or the treasury of the Republic of Tajikistan required from the Ministry.



17.9



The Ministry shall assume, pay and discharge any penalties, interest, fines or

similar levies for late payment of a Contractor Party’s (and Operator’s) Road

Tax and/or Mineral Usage or other tax liabilities in respect of any Calendar

Year.



17.10 The State will notify each Contractor Party within one (1) month of the

Effective Date of this Contract on the tax inspectorate office (“ for the Major

Tax payers”) which is to be located in Dushanbe, where the Contractor Party

and Operator should be registered as a tax payer in accordance with the Tax

Code of Republic of Tajikistan and be responsible for and administer the

implementation of the provisions of this Contract as they relate to taxation and

issuance of statements and of appropriate documentation to allow the tax and

related exemptions contained in this Contract to be implemented by the

Contractor Parties and/or the Operator.

17.11 Employees of the Contractor, Contractor Parties, their Affiliates and

Subcontractors, and those employees assigned by Contractor to Operator who

are not citizens of the Republic of Tajikistan (“Foreign Employees”) shall not

be liable to personal income tax in accordance with Article 141 paragraph 2)

of Tax Code of Republic of Tajikistan.

17.12 Foreign Employees who perform work in the Republic of Tajikistan and their

employers that would otherwise be covered by and subject to social insurance,

pension fund contributions and similar payments under the social security

system of the Republic of Tajikistan will be exempt from those payments.

17.13 VAT or sales tax shall be treated as follows:

a)



Goods, works and services supplied directly or indirectly to or by a

Contractor Party or its Affiliates, Operator or a Foreign Subcontractor

for the purpose of Petroleum Operations shall be exempt from VAT in

accordance with the Tax Code of Republic of Tajikistan.



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b)



All imports including but not limited to goods, equipment, works,

loans and other forms of financing acquired by a Contractor Party or its

Affiliates, Operator, their Subcontractors or their agents for the

purpose of Petroleum Operations shall be exempt from VAT in

accordance with the Tax Code of Republic of Tajikistan.



c)



Exports of Petroleum by each Contractor Party or its agents shall be

imposed with VAT with credit zero per cent rate in accordance with

the Tax Code of Republic of Tajikistan.



d)



All re-exports by a Contractor Party or its Affiliates, Subcontractors or

their agents of goods and works supplied for the purposes of Petroleum

Operations including but not limited to re-export of goods temporarily

imported into Tajikistan for the purposes of Petroleum Operations shall

be exempt from VAT or the amounts paid in respect with VAT earlier

shall be reimbursed in accordance with the legislation of Republic of

Tajikistan.

ARTICLE 18

ACCOUNTING, FINANCIAL REPORTING AND AUDIT



18.1



Contractor shall maintain books and accounts of Petroleum Operations in

accordance with the Accounting Procedure attached hereto as Annex C. These

shall be maintained in local currency of the Republic of Tajikistan and in US$

in accordance with the legislation of Republic of Tajikistan and generally

accepted international Petroleum industry accounting principles. All books

and accounts which are made available to the Ministry in accordance with the

provisions of the Accounting Procedure shall be prepared both in the Tajik and

English languages.



18.2



The Accounting Procedure specifies the procedure to be used to verify and

establish promptly and finally Contractor’s Costs and Expenses under Article

11 of this Contract.



18.3



Sales revenues, expenditures, financial results, tax liabilities, and loss carryforwards of each Contractor Party shall be determined in accordance with the

rules, rights, and obligations set forth in this Contract in so far as such sales

revenues, expenditures, financial results, tax liabilities, and loss carryforwards are related to Petroleum Operations under this Contract.



18.4



To the extent that the Ministry incurs Costs and Expenses which are

recoverable from Cost Recovery Petroleum in accordance with Article 11, the

Ministry shall maintain separate books and accounts. These books and

accounts shall be maintained in local currency of the Republic of Tajikistan

and in US$, in the Tajik language and the English language and shall be in

accordance with generally accepted international Petroleum industry

accounting principles. Prior to the Ministry commencing to incur Costs and

Expenses an accounting procedure which establishes the method for



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 17 of 27



accounting for the Ministry’s participation in the funding of Petroleum

Operations shall be agreed and approved by Co-ordination Committee. The

Contractor shall have the right to audit the books and accounts maintained by

the Ministry.



ARTICLE 19

CURRENCY, PAYMENTS AND EXCHANGE CONTROL

19.1



Contractor and each Contractor Party, and their Affiliates, Subcontractors and

Operator shall have the right to open, maintain, and operate Foreign Exchange

bank accounts both in and outside of Tajikistan and local currency bank

accounts inside the Republic of Tajikistan. Such operations performed in the

Republic of Tajikistan will comply with the Republic of Tajikistan Law.



19.2



Contractor and each Contractor Party, and their Affiliates and Foreign

Subcontractors shall have the right to transfer all funds received in and

converted to Foreign Exchange in the Republic of Tajikistan to bank accounts

outside the Republic of Tajikistan in accordance with the Republic of

Tajikistan Law.



19.3



Contractor and each Contractor Party, and their Affiliates and Foreign

Subcontractors shall have the right to hold, receive and retain outside the

Republic of Tajikistan and freely use all funds received and derived from

Petroleum Operations by them outside the Republic of Tajikistan without any

obligation to repatriate or return the funds to the Republic of Tajikistan,

including but not limited to all payments received from export sales of

Contractor Parties’ share of Petroleum and any sales proceeds from an

assignment of their interest in this Contract.



19.4



Contractor and each Contractor Party, and their Affiliates, Foreign

Subcontractors and Operator have the right to import into the Republic of

Tajikistan funds required for Petroleum Operations under this Contract in

Foreign Exchange in accordance with the legislation of Republic of Tajikistan.



19.5



Contractor and each Contractor Party, and their Affiliates and Foreign

Subcontractors shall have the right to pay outside of the Republic of Tajikistan

for goods, works and services of whatever nature in connection with the

conduct of Petroleum Operations under this Contract without having first to

transfer to the Republic of Tajikistan the funds for such payments.



19.6



Whenever such a need arises Contractor and each Contractor Party and their

Affiliates, Foreign Subcontractors and Operator shall be entitled to purchase

local currency with Foreign Exchange and covert local currency into Foreign

Exchange in accordance with provisions stipulated in legislation.



19.7



Contractor and each Contractor Party, and their Affiliates and Foreign

Subcontractors shall have the right to pay outside the Republic of Tajikistan

principal and interest on loans used for funding Petroleum Operations without



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 18 of 27



having to first transfer to the Republic of Tajikistan the funds for such

payment.

19.8



Contractor and each Contractor Party and their Affiliates, Foreign

Subcontractors and Operator shall have the right to pay, wages, salaries,

allowances and benefits of their foreign personnel working in the Republic of

Tajikistan in Foreign Exchange partly or wholly outside the Republic of

Tajikistan.



19.9



Conversions of currency shall be recorded at the rate actually experienced in

that conversion. Expenditures and sales revenues in currency other than the

US$ shall be translated to US$ at the rates officially published by National

Bank of the Republic of Tajikistan at the close of business on the first business

day of the current month.

ARTICLE 20

IMPORT AND EXPORT



20.1



Contractor, each Contractor Party and Affiliates and their agents and

Subcontractors and Operator shall have the right to import into, export and reexport from the Republic of Tajikistan in Accordance with the Republic of

Tajikistan Law all equipment with no customs fees, levys, duties, import taxes

or similar being payable.



20.2



Contractor, each Contractor Party and Affiliates, their agents and

Subcontractors shall have the right to sell any materials or equipment or goods

which were used in Petroleum Operations provided that such items are no

longer needed for Petroleum Operations and the costs of such items have not

been and are not intended to be included as Costs and Expenses recoverable

from Cost Recovery Petroleum including payments of the relevant taxes from

those such operations (sales) in accordance with the Tax Code of Republic of

Tajikistan.



20.3



Contractor, each Contractor Party, their customers and their carriers shall have

the right to export the share of Petroleum on behalf of Contractor or each

Contractor Party in accordance with the Republic of Tajikistan Law.



20.4



Foreign Employees and family members of Contractor and its Affiliates, its

agents and Foreign Subcontractors, shall have the right to import into and reexport of personal and household purpose items from the Republic of

Tajikistan at any time in accordance with the Republic of Tajikistan Customs

Code.

ARTICLE 21

EXPORT OF HYDROCARBONS, TRANSFER OF

OWNERSHIP, AND REGULATIONS FOR DISPOSAL



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21.1



The Contractor, Contractor Parties, any purchaser from such parties and their

respective carriers shall, for the duration of this Contract, have the right to

export without any export duties, levys, rents, taxes or similar, from any

export point selected by the Contractor for such purpose, the share of

Petroleum to which the Contractor is entitled under this Contract. Access to

export points shall be given to the above parties on a non discriminatory basis

and at rates no less favourable than those available to the Ministry, or granted

to others by the State or the Ministry.



21.2



*[description of commercial terms omitted]



21.3



The Contractor and the Ministry shall each be entitled to designate (at their

own cost) an employee, independent company or consultant who shall check

the liftings of Petroleum from the Measurement Point or at such other point as

may be designated in accordance with Article 21.



21.4



If one of the Parties is unable to lift its share of Petroleum in due time, with

the result that Petroleum Operations may be interfered with or in any way

disrupted, then after giving such notice as is practical in the circumstances any

other Party may dispose of it, and subsequently give back to such Party an

equivalent amount of Petroleum (taking into account any costs incurred).

ARTICLE 22

OWNERSHIP OF ASSETS



22.1



Ownership of any asset, whether fixed or moveable, acquired by or on behalf

of Contractor in connection with Petroleum Operations hereunder shall vest in

the State without consideration if (1) both the costs of such asset have been

recovered by Contractor under this Contract, and (2) either the Contract has

come to an end or, if earlier, when the asset is no longer required for

Petroleum Operations by the Contractor. The Contractor shall enjoy

continued free, exclusive and unrestricted use of all assets at no cost or loss of

benefit to the Contractor until the termination of this Contract or if earlier until

they are no longer required for Petroleum Operations. The Contractor shall

bear the custody and maintenance of such assets and all risks of accidental loss

or damage thereto while they are required for Petroleum Operations, provided

however that all costs necessary to operate, maintain and repair such assets

and to replace or repair any damage or loss shall be recoverable as Operation

Expenses from Cost Recovery Petroleum in accordance with the provisions of

Article 11.



22.2



Whenever Contractor relinquishes any part of the Contract Area, all moveable

property located within the portion of the Contract Area so relinquished may

be removed to any part of the Contract Area that has been retained for use in

Petroleum Operations.



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22.3



The provisions of Article 22.1 and 22.2 shall not apply to materials or other

property that are rented or leased to Contractor, its Affiliates or Operator or

which belongs to employees of Contractor, its Affiliates or Operator.

ARTICLE 23

INSURANCE



23.1



Contractor shall obtain and maintain such types and amounts of insurance for

the Petroleum Operations as are reasonable and such that they comply with

Republic of Tajikistan Law and accepted international Petroleum industry

practice and standards.



23.2



*[description of commercial terms omitted]

ARTICLE 24

PERSONNEL



24.1



Contractor shall be entitled to bring foreign personnel into the Republic of

Tajikistan in connection with the performance of Petroleum Operations. The

entry into the Republic of Tajikistan of such personnel is hereby authorised,

and the State authorised body shall issue at the Contractor’s request the

required documents, such as entry and exit visas, work permits and residence

cards. At Contractor’s request, the State shall facilitate all immigration

formalities at the points of exit and entry into the Republic of Tajikistan for

the employees and family members of the Contractor, its Affiliates,

Subcontractors, Operator, agents and brokers. The Contractor (or Operator on

its behalf) shall contact the appropriate offices of the State to secure the

necessary documents, and to satisfy the required formalities.



24.2



The employees working within the scope of Petroleum Operations shall be

placed under the authority of the Contractor, its Affiliates, its Subcontractors,

agents or brokers or the Operator each of which shall act individually in their

capacity as employers. The works, hours, wages, and all other conditions

relating to their employment shall be determined by the relevant employer of

such employees. In relation to employees who are citizens of the Republic of

Tajikistan their employment shall be in accordance with the Republic of

Tajikistan law. To the extent that any expatriate personnel are engaged under

a contract subject to the Republic of Tajikistan law, that contract shall comply

with the provisions of the Republic of Tajikistan law. The Contractor, its

Affiliates, its Subcontractors, agents or brokers however, shall enjoy full

freedom in the selection and assignment of their employees.



24.3



Contractor takes into account the Law of Republic of Tajikistan “On Product

Sharing Contracts” and agrees to:

a)

Where employees have the appropriate experience and skills, to engage

employees who are citizens of the Republic of Tajikistan with the aim of these



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 21 of 27



employees ultimately making up at least seventy per cent (70%) of the total

employees engaged in the implementation of the works under this Contract;

b)

Employ foreign employees and specialists where necessary for the

effective operation of works under this Contract or due to the unavailability of

suitably trained and qualified local staff.

c)

To implement appropriate training programmes for Tajik staff with the

intention of replacing foreign staff with suitably trained and experienced local

specialists.



ARTICLE 25

FORCE MAJEURE

25.1



If as a result of Force Majeure, Contractor is rendered unable, wholly or in

part, to carry out its obligations under this Contract, other than the obligation

to pay any amounts due, then the obligations of Contractor, so far as and to the

extent that the obligations are affected by such Force Majeure, shall be

suspended during the continuance of any inability so caused, but for no longer

period. Contractor shall notify the Parties of the Force Majeure situation

within seven (7) days of becoming aware of the circumstances relied upon and

shall keep the Ministry informed of all significant developments. Such notice

shall give reasonably full particulars of the said Force Majeure, and also

estimate the period of time which Contractor will probably require to remedy

the Force Majeure. Contractor shall use all reasonable diligence to remove or

overcome the Force Majeure situation as quickly as possible in an economic

manner. The period of any such non performance or delay, together with such

period as may be necessary for the restoration of any damage done during

such delay, shall be added to the time given in this Contract for the

performance of any obligation dependent thereon (and the continuation of any

right granted) and to the term of this Contract.



25.2



For the purposes of this Contract, “Force Majeure” shall mean a circumstance

which is irresistible or beyond the reasonable control of Contractor, any act of

the State, or the Ministry or any other hindrance of Contractor’s performance

not due to its fault or negligence.

ARTICLE 26



*[description of commercial terms omitted]

ARTICLE 27

CONTRACT ENFORCEMENT AND STABILISATION, AND

REPRESENTATIONS AND WARRANTIES



Production Sharing Contract between The Republic of Tajikistan and Kulob Petroleum Limited - Page 22 of 27



27.1



In the course of performing the Petroleum Operations, the Operator and the

Parties shall be subject to all applicable laws, decrees, rules and regulations.



27.2



The State agrees and commits to Contractor, for the duration of this Contract,

to maintain the stability conditions of this Contract.



27.3



The Parties agree to cooperate in every possible way in order to achieve the

objectives of this Contract. The State and its subdivisions shall facilitate the

exercise of Contractor’s activities by granting it all decrees, permits,

resolutions, licenses and access rights and making available to it all

appropriate existing facilities and services under the control of the State or the

Ministry so that the Parties may derive the greatest benefit from Petroleum

Operations for their own benefit and for the benefit of the Republic of

Tajikistan.



27.4



If at any time after this Contract has been signed there is a change in the

applicable laws, regulations or other provisions effective within the Republic

of Tajikistan which to a material degree adversely affect the economic

position of the Contractor or any Contractor Party hereunder, the terms and

conditions of this Contract shall be altered so as to restore the Contractor to no

worse an overall economic position as that which the Contractor would have

been in had this Contract been given full force and effect without amendment

as it is stipulated in Article 27.5.



27.5



To the extent that the Contractor’s overall economic position is not restored

through mutually agreed changes to the terms and conditions of this Contract

the State shall fully indemnify the Contractor against such economic effects.

In case if the Contract is terminated under Articles 29.2 and 30 hereunder,

then Contractor shall indemnify the State against losses such as lost profit and

lost capital.



27.6



If the Contractor believes that its economic position has been adversely

affected, due to the circumstances provided in Articles 27.4, 27.5 under which

articles it may give notice to the State and to the Ministry describing how its

position has been so affected and the Parties shall thereafter promptly meet

with a view to reaching agreement on the remedial action to be taken. If

matters have not been resolved within 90 days the matter may be referred to

arbitration by any Party in accordance with the provisions of Article 30.



27.7



The State and the Ministry warrants to the Contractor as follows:

a)



The State has taken the appropriate steps necessary to authorise the

Ministry to execute this Contract on behalf of the State;



b)



The signatories to this Contract on behalf of the State (in each of their

capacities hereunder) is duly authorised to bind the Ministry;



c)



The Ministry has been legally vested by the State with the necessary

power to authorise Petroleum Operations in the Contract Area and to



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compensate the Contractor by allocating to it a share of the Petroleum

produced in accordance with the terms of this Contract.

d)



The conduct of Petroleum Operations in accordance with the laws of

the Republic of Tajikistan.



e)



Upon completion of the matters and procedures set out in Article 32

there is no other entity or authority whose approval or authorisation is

required to permit the Contractor to enjoy and enforce its rights

hereunder.

ARTICLE 28

NOTICES AND CONFIDENTIALITY



28.1



Notices shall be considered duly drafted if written in Tajik and English and

delivered in person or by registered mail or by courier service or by any

electronic means of transmitting written communications which provides

confirmation of complete transmission, and addressed to such Parties as

designated below. The originating notice given under any provision of this

Contract shall be deemed delivered only when received by the Party to whom

such notice is directed. Time for such Party to deliver any notice in response

to such originating notice shall run from the date the originating notice is

received. The second or any responsive notice shall be deemed delivered

when received. “Received” for purposes of this Article with respect to written

notice delivered pursuant to this Contract shall be actual delivery of the notice

to the address of the Party to be notified specified in accordance with this

Article. Each Party shall have the right to change its address at any time

and/or designate that copies of all such notices be directed to another person at

another address, by giving written notice thereof to all other Parties. The

addresses for service of notices on each of the Parties is as follows:-



Kulob Petroleum Limited

P.O. Box 524

St. Peter Port

Guernsey, GY1 5EL

Channel Islands

Attention:

Fax :

e-mail:



CEO

+44 1481 725 922

info@tethys.gg



The State and the Ministry

Ministry of Energy and Industry

Rudaki Avenue 22

Dushanbe

Tajikistan, 734012

Attention:

Fax:



Minister

+ 992 48 221 8889



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e-mail:

28.2



28.3



____________________



Subject to the provisions of the Contract, the Parties agree that all information

and data acquired or obtained by any Party in respect of Petroleum Operations

shall be considered confidential and shall be kept confidential and not be

disclosed during the term of the Contract to any person or entity not a Party to

this Contract, except:

a)



To an Affiliate, provided such Affiliate maintains confidentiality as

provided herein;



b)



To a governmental agency or other entity when required by the

Contract;



c)



To the extent such data and information is required to be furnished in

compliance with any applicable laws or regulations, or pursuant to any

legal proceedings or because of any order of any court binding upon a

Party;



d)



To prospective or actual contractors, consultants and attorneys

employed by any Party where disclosure of such data or information is

essential to such contractor’s, consultant’s or attorney’s work;



e)



To a bona fide prospective transferee of a Party’s participating interest

(including an entity with whom a Party or its Affiliates are conducting

bona fide negotiations directed toward a merger, consolidation or the

sale of a majority of its or an Affiliate’s shares);



f)



To a bank or other financial institution to the extent appropriate to a

Party arranging for funding;



g)



To the extent that any data or information which, through no fault of a

Party, becomes a part of the public domain;



h)



To the extent required by any recognised stock exchange, regulatory

body or auditor.



Disclosure as pursuant to Article 28.2 (d), (e), and (f) shall not be made unless

prior to such disclosure the disclosing Party has obtained a written undertaking

from the recipient party to keep the data and information strictly confidential

for at least three (3) years and not to use or disclose the data and information

except for the express purpose for which disclosure is to be made.



ARTICLE 29

TERMINATION AND BREACH



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29.1



At any time, if in the opinion of Contractor, circumstances do not warrant

continuation of the Petroleum Operations, Contractor may, by giving written

notice to that effect to the Ministry, relinquish its rights and be relieved of its

obligations pursuant to this Contract, except such rights and obligations as

related to the period prior to such relinquishment. Neither this Contract nor

any of the rights granted hereunder nor the Operator Licence may be

terminated as a result of any act or omission of Operator save in the case

where Operator has carried out an act or omitted to do something at the

specific request of the Contractor and Operator has previously advised the

Contractor prior to carrying out the act or omitting to do something that to

carry out that act or to omit to do the relevant thing may result in this Contract

being terminated.



29.2



Without prejudice to the provisions stipulated in Article 29.1 above, this

Contract may only be terminated by the State in its entirety by giving one

hundred and eighty (180) days advance written notice thereof to all Parties,

when and only if a material breach of Contract is alleged to have been

committed by Contractor and, provided that conclusive evidence thereof has

been found by prior arbitration as stipulated in Article 30. For the purposes of

this Article, a material breach means a fundamental breach which, if not cured,

is tantamount to the frustration of the entire Contract either as a result of the

unequivocal refusal to perform contractual obligations or as a result of conduct

which has destroyed the commercial purpose of this Contract.

ARTICLE 30

DISPUTE RESOLUTION



30.1



All disputes arising out of or in connection with this Agreement shall be

finally settled under the Rules of Arbitration of the International Chamber of

Commerce by three arbitrators appointed in accordance with the said Rules.



30.2



A Party need not exhaust administrative or judicial remedies prior to

commencement of arbitrage proceedings.



30.3



Any arbitrage tribunal constituted pursuant to this Agreement shall be held in

Stockholm, Sweden, in the English language and apply the provisions of this

Agreement as supplemented and interpreted by general principles of the laws

of Sweden as are in force on the Effective Date.



ARTICLE 31

TEXT



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31.1



This Contract shall be executed in three (3) originals in the Tajik language,

three (3) originals in the English language and in three (3) originals in the

Russian language each of which shall have equal legal force and effect;

provided however that in the case of dispute, conflict or arbitration the English

version shall be used as the authentic version to determine the rights and

obligations of the Parties which shall be determined by reference solely to the

English version of this Contract.

ARTICLE 32



*[description of State’s obligations omitted]



This Contract is executed this 13 day of June 2008 _____ in three (3) versions in

Tajik, Russian and English.



STATE AUTHORIZED

REPRESENTATIVE

For the Ministry

Minister of Energy and Industry



CONTRACTOR



Signature: “signed”



Signature: “signed”



Name: Gul Sherali



Name: Dr David Robson



For Kulob Petroleum Limited

Director and President



ANNEXES

*[description of commercial and fiscal terms omitted]



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