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 Execution Copy





























PRODUCTION SHARING





CONTRACT

















Between











THE KURDISTAN REGIONAL GOVERNMENT OF IRAQ











and








Repsol YPF Oriente Medio S.A.























(Quia Die Block)


 Production Sharing Contract Qata Die











Table of Contents








Clause 1- Definitions; Construction 2


Definitions 2





Construction 16





Clause 2 - Scope 19





Exclusive Right J9


Compliance J9





Permits 20


Best Practices 20





Sole Risk 20


Auxiliary Rights 20





Liability Attribution 21





Clause 3- Contractor; Participating Interests


21


Contractor 21


Participating Interests 21





Clause 4 - Government Interest


21


General 21





Assignment 22





Clause 5 - Operator ; Joint Operating Agreement 24





Operator 24


Joint Operating Agreement 25





Clause 6 - Term


26


General 26





Exploration Rental 26


Exploration Period 26





Sub Periods 27


Extensions of Sub-Periods 27





Expiration of Exploration Period 28


Guaranteed Amount 29





Development Period 29


Termination of Production Operations 29





Clause 7 - Relinquishment 30





Mandatory and Considered Relinquishment 30





Voluntary Relinquishment 31


General Qualifications 31





Cleanup 31





Effect of Relinquishment 32

















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Clause 8 - Management Committee 32


Establishment 32


functions 33


Regular Meetings; Venue 33


Extraordinary Meetings 33


Action by Members without Meeting 33


Agenda; Minutes 33


Chairman 34


Quorum 34


Voting 34


Subcommittees 35


Clause 9 - Guarantees 35


First Sub Period Obligations 3S


Second Sub-Period 3S


Gas Plan Guarantees 36


Accession 36


Clause 10 - Minimum Exploration Work Obligations 36


Commencement 36


Minimum Work Obligations 36


First Sub-Period 36


Second Sub-Period 37


Qualifications 37


Clause 11 - Exploration Work Programs 39


General 39


Details 39


Approval by Management Committee 39





Clause 12 - Discovery; Appraisal; Development 40


Discovery Report; Relinquishment 40


Appraisal Work Program and Budget 40


Appraisal Report and Declarations 41


Development Plan - Crude Oil 42


Clause 13 - Development Work Program 43


General 43


Development Work Program and Budget 43


Production Work Program and Budget 44


Production Rental 44


Clause 14 - Natural Gas 45


Definitions 45


General 46


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Flaring 47


Gas field Holding Period Application 47


Gas field Holding Period 48


Gas field Holding Period Rental 49


Early Termination and Relinquishment 49


Governm ent Priority Rights SO


Domestic Gas Morketing Operations SI


Consideration of Gas Disposition Plans - Export and Domestic S2


Gas Export Plan S3


Domestic Gas Plan S3


Development Plan S4


Gas Development Period S4


Surplus Associated Gas S4


Gas Pipelines 55


Clause 15 - Accounts; Operations 55





Accounts 55


Audit 56


Clause 16-Other Contractor Rights and Obligations 57


Permanent Representative S7


Conduct of Petroleum Operations S7


Information and Reports S7


Requirement for Petroleum Operations S7


Supervision S7


Access to facilities S8


Use of facilities S8


Loss or Damage S8


Intellectual Property Rights S8


Litigation S8


Production Rates 59


Lifting 59


Regional Consumption Requirements 59


Clause 17 - Use of Land and Existing Infrastructure 60


General 60


Third Party Lands 60


Infrastructure 61


Petroleum Operations 61


Adjoining Properties 62


Access 62


Clause 18-Government Assistance 62











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 Production Sharing Contract Qata Die








Clause 19 - Assets and Materials 63


Genera) 63


Procurement Procedures 63


Clause 20 - Title to Assets 63





Title Transfer 63


Leased Assets; Subcontractor Assets 64


Clause 21 - Use of Assets 64


Right 64


No Transfer by Government 64


Contractor Redeployments 64


Clause 22 - Subcontractors; Expatriates 64


Genera) 64


Loco) Preference 64


Procurement Procedures 65


Clause 23 - Personnel; Training; Assistance 65


Expatriate Work Permits 65


Loco) Preference 65


Ministry Capacity BuiJding Payments and in Kind Assistance 66


Training 66


Training Expense Allocation and Payment 66


Environment fund Payments 67


Clause 24 - Royalty 67


Definitions 67


Obligation 67


Royalty Rate 68


Delivery 68


Payment in Cosh 68


Clause 25 - Recovery of Petroleum Costs 69


Definitions 69


Cost Recovery 69


Valuation of Available Petroleum 69


Contractor Entitlement to Cost Oi) 69


Contractor Entitlement to Cost Gas 70


Recovery Waterfall; Limitations 70


Delivery 70


Ring Fence 71


Clause 26 - Profit Petroleum 71


Definitions 71








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Calculation of R factor 71


entitlements 72


Delivery Entitlements 73


Production Estimates 74


Annual Production Report 74


Cost Recovery for Government Costs 74


Clause 27 - Valuation and Metering 74


Valuation of Crude Oil 74


Valuation of Natural Gas 75


Production Statement 75


Measurement 7S


Clause 28 - Sales Assistance 76


Clause 29 - Currency; Financial Provisions 77





Reference Currency 77


Currency Conversion 77


Payments; No Offset against Government 77


Payments to fund for Revenue Sharing 78


Currency Assurances 78


Clause 30 - Customs 79





Clause 31 - Taxes 80


General 80


Income Tax 80


Exemptions 81


Withholding for Iraq Nationals 81


Double Tax Treaties 81


VAT Cost Recovery 81


Independent Obligations 81





Clause 32 - Bonuses; Capacity Building Payments 81


Capacity Building Bonus 81


Pro

Capacity Building Payments 82


Capacity Building Account 86


No Cost Recovery 86





Clause 33 - Pipelines 86


Crude Oil Pipelines 86


Gas Pipelines 88


Clause 34 - Unitisation 88








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Clause 35 - Indemnification; Insurance 88





Liabitily 88


indemnification 89





Notice of injuries and Emergencies 89


Consequentiai Damages Limitation 90





insurance 90


Clause 36 - Records; Confidentiality 91





information 91





Confidential information 91





No Trading 93


Clause 37 - Environmental; Worker Safety and Health 93





GeneraI 93





EIR 94


EiA 95





EMMP 95


Self Monitoring Reports 95





Relinquished Areas 95


National Parks and Nature Reserve Areas 96





Expenditures 96


Pre-existing Conditions 96





Suspension of Operations 96





Clause 38 - Decommissioning 97


Acknowledgement of future Law 97





Decommissioning Plan and Budget 97


Decommissioning Reserve Fund 98





Clause 39 - Assignment; Change of Control 99





General 99





Assignment to Affiliates and other Contractor Entities 99


Assignments to Third Parties 99





Government 100


Change of Control 100





Taxes 100


Clause 40 - Force Majeure


101


Definition 101





f//«t 101





Clause 41 - Sovereign Immunity 103





Clause 42 - Dispute Resolution 103





Cxclmlon 103














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Notice of Dispute 104


Negotiation 104


Mediation 104


Arbitration 104


Expert Determination 105





Clause 43 - Fiscal Stability 106


Genera) 106


Acknowledgment of Future Laws 106


Change of Tax Law 106


Disputes 107


Clause 44 - Communications; Notices 107


Clause 45 - Termination 108





Genera) 10B


Contractor Termination Rights 109


Automatic Termination 109


Corrupt Practices ioivs 109


Other Grounds for Termination 109


Consequences of Termination 111





Clause 46 - General Provisions 112


Counterparts 112


Amendments; Waivers 112


Regional Oil and Gas Council Approval 113


Costs 113


Effective Date 113


Governing Law 113


Entire Agreement 113











ANNEXES:


Annex A


Map of Contract Area


Annex B Accounting Procedure


Annex C Form of Guarantee


 PRODUCTION SHARING CONTRACT











Thu Production Sharing Contract (this "Contract' ) H between:




<21 REPSOl YPF ORUNTC Ml DIO S.A., a tooedod andnima Incorporated and cluing


under the laws ol the Kingdom of Spain, whose registered office is at Paseo de la


Cauellana 278/280 Madrid 2804b (the ''Contractor' and a 'Contractor Entity"!








Recitals


A. The Government has determined that this Contract will facilitate the development of


the petroleum wealth of the Kurdistan Region In a way that achieves the highest benefit


to the people of the Kurdistan Region and all of Iraq, will promote the economic


development of the Kurdistan Region and Iraq and the social welfare of its people, uses


the most advanced techniques, and accesses best market principles to encourage


Investment.


B. The Government enters into this Contract pursuant to the Government's rights and


authorities under the Constitution of Iraq and the Kurdistan Oil and Gas law 2002. In


accordance with the Constitution of Iraq, the prevaihng Laws of the Kurdistan Region


comprise the Kurdistan Region law and, with regard to a matter wholly within the


exclusive jurisdiction ol the Government of IraQ. the federal laws of Iraq.


C. The Contractor and the Government each affems its ongoing commitment and


adherence to the Prmoples and CrAeria ol the Extractive Industries Transparency


Initiative |£ITI|.


0. The Contractor has assured the Government that the Contractor has. together with its


Affiliates:


(1) the financial capability, and the technical knowledge and technical ab*ty. to


carry out Petroleum Operations in the Contract Area under the terms of this


Contract; and


(2) a record of compliance w-th the principles of good corporate crtuenship.


1. This Contract is a production sharing contract. The obfect ol this Contract is lor the


Contractor to undertake Petroleum Operations in the Contract Area at the Contractor's


sole risk and expense


». Neither the Contractor, nor any Contractor Entity wil receive any compensation loi its


servwes. nor any reimbursement ol its expenditures under this Contract, except for the


share ol Petroleum from the Contract Area to which it may become entitled undei this


 Protiuclian Shoring Conuocl (lota 0/1








Contract. If there is no Commercial Discovery in the Contract Area, or if the production


achieved from any Production Area is insufficient to reimburse the Contractor or any


Contractor Entity, each Contractor Entity will bear its own losses without any obligation


of the Government to provide any reimbursement or other compensation.


G. It is the policy of the Government to: (1) ensure that Natural Gat is first made available


to satisfy the consumption requirements and needs of the people of Iraq, |2) determine


and control all e»ports of Natural Gas produced in the Region, and (J) act. directly or


indirectly through a designated Affiliate of the Government or other designee of the


Government, at the aggregator of all Natural Gas produced In the Rrgton for eaport


H. Nothing in this Contract Is intended to confer any right upon the Contractor other than


those rights e.pressly granted In this Contract. This Contract does not transfer


ownership of any Petroleum in the ground to the Contractor or any Contractor Entity.


I. The Contractor and Repsol VPF, S.A. have provided the Government with a letter of


representations and warranties dated concurrently herewith |the ‘Repsol letter of


Representations') as an Inducement for the Government to enter into this Contract,


and upon which the Government is relying In entering Into this Contract.


J. Concurrently with the signing of this Contract, Repsol YPf, S A. has delivered a


guarantee in favour of the Government as required by this Contract


K. Prior to this Contract. Repsol Eapioracion S.A delivered a Confidentiality and Pro





Contractual Understandings Agreement, which continues in accordance with its terms


and is not impaired by this Contract, eacept as eapressly set forth herein








Clause 1 - Definitions: Construction





Dowtiom


I 1 Unless otherwise specified:


Abroad means outside of the Kurdistan Region and other parts of Iraq.





Accounts is defined in clause 150-


Accounting Procedure means the Accounting Procedure attached to this Contract as


Anne* B and constituting an integral part of this Contract-


Act of Insolvency meant, ir. respect 0» any Person, its insolvency, winding-up.


dissolution, admmistraton or bquidatum. the Making by it of any arrangement or


composition with Ns creditors or the takes* of possession by an Encumbrance of. or the


appointment of a receiver or administrative receiver over, the whole or any substantial


part of its property or assets or its ceavng or threatening to cease to carry on business


and any equivalent or analogous procedures by whatsoever name known and in


whatsoever jurisdiction The "winding-up" of a Person also includes the amalgamation,


reconstruction, reorganisation (by way of voluntary arrangement, scheme of


arrangement or otherwise), administration, dissolution, liquidation, merger or


consolidation of that Person and any equivalent or analogous procedure under the law











2


 Production Sharing Controct Qala Ore








of any jurisdiction in which that Person is incorporated. domiciled, or resident or carries


on business or has assets.


Adjacent Contract Area is defined In clause 34.1.


Adjustment Date is defined In clause 27.7.1.


Affiliate means, in relation to an. Person (the 'first Person'), another Person that is:


(a) the ultimate holding company of such first Person and an, subsidiary (other


than the fast Person) of the first Person’s ultimate holding company or


(b) •» the first Person is not a subsidiary of another compan,. any subsidiary of the


first Person


for the purpose of this definition, 'holding company' and 'subsidiary' hare the


meanings given to those expressions in Section 11S9 of the Companies Act 2006


ICngland)


Annual Reconciliation Statement is defined m clause 32.9.


Agreed Rate means interest compounded on a monthly basis, at the rate per annum


equal to the three month term. London Interbank Offered Rate (UBOR rate) for U.S.


dollar deposits, as published the Financial Times llondon Edition) or if not published,


then by The Wal Street Journal (New Vork Edition), plus 4.00V applicable on the first


International Business Day prior to the due date of payment and thereafter on the first


Business Day of each succeeding calendar month. tf the aforesaid rate Is contrary to an,


applicable usury law. the rate of interest to be charged shal be the maximum rate


permitted by such applicable law.


Applicable law means, as ol an, lime of determination, Kurdistan Region Law and


lederui laws ol Iraq recognised by the Government as applicable in the Kurdistan


Region.


Appraisal and Appraisal Operations means appraisal work Ibrlng part ol Exploration)


and a program carried out following a Discovery for the purpose of delineating the


Reservoir to which that Discovery relates in terms ol ineoiurement of thickness and


lateral extent and estimating the quantity ol recoverable Petroleum therein, and


Includes geological, geophysical, aerial and other surveys, stratigraphic tests, the drilling


ol shot holes, core holes, Appraisal Wells and other related holes and wells, and the


purchase or acquisition of Assets and Materials therefor


Appraisal Area means the area defined in clause 12 4.


Appraisal Report means. In respect of a Appraisal Operations In respect ol a Discovery, a


report in such form as required by the Government and that Includes:


la) geological conditions, such as structural configuration, physical properties, and


stratigraphy;


(b) the thickness and extent of Reservoir rocks.


(c) petrophysical properties of the Reservoirs.


(d) type of substances obtained;


(c) Volumes of Crude 0.1 and Natural Gas imtutty .« place;











3


 P'otfvcnon Sficns-a Contract Qe» D;r


(f) the chemical composition. the physical properties and Quality of any Crude Oil


discovered;


(g| pressure, volume and temperature analysis ol the reservoir fluid;


(h) the productivity indices for wells tested at various rates of flow;


(i) Crude Oil characteristics, including oil gravity, sulphur percentage, sediment


and water content and product yield pattern;


(j) Natural Gas composition;


fk| estimates of recoverable reserves;


(l) the estimated production capacity of the Reservoirs;


(m) production forecast per well;


(n) a preliminary estimate of recoverable reserves; and


(o) such other information as reasonably required by the Government or generally


provided in such reports in accordance with Best Practices.


Appraisal Work Program is defined in clause 12.4.


Approved means approved by the Management Committee and the Government


Approved Budget means a Budget that has been approved by the Management


Committee and the Government together with an Approved Work Program


Approved Domestic Gas Marketing Work Program and Budget is defined in clause 14 1.


Approved Gas field Appraisal Work Plan and Budget is defined I" tlame 14 1


Approved Work Program means a Work Program that has been approved by the


Management Committee and the Government


Approved Work Program and Budget means an Approved Work Program together with


a Budget with respect thereto that has been approved by the Management Committee


and the Government.


Arm's-length Salels) means, m respect of s ales of Petroleum, a sale in freely convertible


currencies between tellers and buyers having no direct or indirect relationship or


common interest whatsoever with each other that could reasonably influence the sales


pnee. The following are no« Arm's length Sales


(a) sales between or among any of the Contractor Entities and their respective


Affiliates:


(b) sales involving the Government or the Government of Iraq;


(e) sales involving swaps or exchanges: and


(d) transactions which are not a routine sales practice in the international od and


gas industry.


Assets means equipment and other property, whether real or personal, owned or


leased, used or eapected to be used by the Contractor in connection with Petroleum


Operations.


Assets and Materials s defined in clause 19 1











4


 Production Stianno Conlron Qola Ore








Assign and means any transfer. conveyance. novation. ntr|H |usclud*ng


'rttme irtMgi** mergers). [ncu"bnfie 01 other dealing in any manner whatsoever or


howsoever accomplished or characterised (whether legaty. bene heady, or otherwise,


into any form of trust or fiduciary holding, and whether conditionally or not). Assignee


meant a Person accepbng an Alignment from a Party, and Assignor means the Party


making an Assignment to another Person


Associated Gas means Natural Gat found in association with Crude Od. either d.ssobred


in the Crude Oil or at Gas cap Gas. that is recovered as Natural Gas at the surface by


separation or other primary field processes.


Audit Request Period it defined in clause 15.3(a).


Available Crude Oil > defined In clause 25.1.


Available Gas Is defined In clause 25.2.


Available Petroleum n defined in clause 25.3.


Barrel means a quantity of 42 US gallons as a unit to measure liquids, at a temperature


of 60' f ahrenhelt and pressure of 14.7 psi.


Base Exploration Term is defined in c ause 6.3.


Best Practices means standards that aie no lets stringent than the best practices,


methods, and procedures in carrying out petroleum operations consistent with a


reasonable degree of prudence, as evidenced by the best practices of experienced


operators in the exploration, development, and production of petroleum principally


aimed at ensuring:


(a) conservation of Petroleum resources, which wipes the utilisation of methods


and processes to maximise the recovery of Petroleum ■« a techmca*y and


economic ally sustainable mariner, control of reserve declme. and minimisation


of losses at the surface:


lb) operational safety, including the use of methods and processes that promote


occupational security and the prevention of accidents.


(c) environmental protection and worker safety, including best methods and


processes which minimise the enpact of Petroleum Operations on the


environment


(d) that al materials, resources, and supplies are available to meet the


Contractor*i obligations hereunder under normal conditions and anticipated


abnormal conditions;


(e) that sufficient engineering, design, construction and safety personnel are


available, are adequately experienced and trained to conduct Petroleum


Operations, and provide required training properly and within Applicable law,


manufacturer's guidelines and specifications, and are capable of responding to


abnormal conditions and anticipated abnormal conditions.


(f) that appropriate monitoring and testing is done to ensure that Assets are


capable of functioning, and will continue to function, as designed and to


provide assurance that Assets will function properly under normal conditions


and anticipated abnormal conditions;


 Production Jiia‘i"9 Controct Qota 0/e








IhI that jppropriiitr protective devices and design features are provided lo ensure


that sate, reliable, long term Petroleum Operations tan be achieved;


(h) that equipment is operated at all times in a manner compliant with Applicable


Law, applicable Permits, and this Contract, In accordance with all


manufacturers' warranties, and in a manner sale to workers, the general public,


the environment, plant and Assets;


(I) notwithstanding the requirements of the ASM! Boiler & Pressure Vessel Code


Section VIII, that all pressurlied equipment handling hydrocarbons (whether


such Asset Is new or used| is subject to hydraulic pressure testing prior to use;


and


(|) that full and complete records of accounts are kept and maintained.


Budget means an estimate of Income and expenditure approved, or as the contest may


require, to be approved by the Management Committee in accordance with this


Contract in respect of all Petroleum Operations included in a Work Program.


Calendar Year means a period of 12 consecutive Months, beginning 1 January and


ending on 31 December of the same year.


Capacity Building Account means a segregated bank account with a reputable bank in


the name of, and maintained by, the Government for the purposes set forth in clause


12.16.


Capacity Building Bonus - First Tranche is defined in clause 32.1(a).


Capacity Building Bonus - Second Tranche is defined in Article 32 lit).


Capacity Building Payment meant the obligators of each Contractor Cntity to pay an


amount equal to the Capacity Bunding Value


Capacity Building Payment Monthly Statement is de'-sed us clause 12.7


Capacity Building Value meant duces* any period lor each Corstiactor ( ntity:


(a) rero USS untrf the R factor it first equal to one; and


(b) after the lest time that the R Factor equals or eaceeds one |R i 1), and


notwithstanding if the actual It Facto* determined with respect to a period


occurring after the first tune the R Factor equals or eaceeds one may be less


than 1


(1) an amount in USS equal to the value, drier mused m accordance wish


clause 27, of 10* of the Profit Petroleum attributed to such Contractor


t nuty.


Chairman is defined in clause • 9


Change of Control is defined in clause 19.10.


Change of Taa law is defined In clause 41.4.


Commercial Discovery means a Discovery, after taking us to account available technical,


operational, commercial, and financial data, including recoverable reserves of


Petroleum, sustainable regular production levels and other material technical,


operational, commercial and financial parameters, which is eipected to result in both


full recovery of Petroleum Costs and a reasonable return on investment.


 Production ihanng Cont/oct Qala Oie








Commercial Production means Production ol Petroleum under an Aporoved Production


Work Program and Budget ol regular production and sale or other disposition.


Constitution ol Iraq means the permanent constitution ol Iraq approved by the people


ol Iraq in the general relerendum ol IS October 2005.


Contract means this production sharing contract.


Contract Area means, as ol the Ellective Date, the area shown on the map in Anne» A.


as such area may be relinquished or otherwise reduerd m accordance with this Contract.


Contract Year means a period ol 12 consecutive Months starting Irom the Ellective Date


or any anniversary ol the said Ellective Date. In the case ol the linal Contract Year ol this


Contract, the Contract Year will end on the termination date.


Contractor means all the Contractor Entities, together.


Contractor Entity means, as at any time ol determination. Repsol and its respective


Permitted Assignees and successors The Government n not a Contractor Entity. A Public


Company or other Person that is a Government Interest Holder is not a Contractor Entity


solely by virtue ol being a Government Interest Holder


Control is delined in clause 39.10(b)


Corrupt Practices Laws means, as applicable:


(j) the laws ol the Kurdistan Region and ol Iraq In respect ol bribery, kickbacks,


and corrupt business practices;


(b) the principles ol the laws ol the Kingdom ol Spain in respect of bribery,


kickbacks, and corrupt business practices;


|c) the principles ol the Foreign Corrupt Practices Act ol 1977 ol the United States


ol America (Pub. L No. 9S-213 §§ 101-104 rt seq). as amended.


(d| the principles ol the OECD Convention on Combating Bribery ol Foreign Pubt*


Officials in International Business Transactions, signed in Parts on 17 December


1997. which entered into force on IS February 1999. and the Convention's


Commentaries; and


(e) the principles of the UK Bribery Act 2010.


Cost Gas is defined in clause 2S.9.


Cost Oil is delined in clause 253-


Cost Petroleum -.s defined in clause 2S.11.


Cost Recoverable means recoverable Sy the Contractor as Petroleum Costs m


accordance with the provisions ol this Contract (including the Accounting Procedural


Crude Oil means al quid hrdrocarbons (including crude m -eral oi, condensate


asphalt. ocokerAe. and bitumens) in both solid and liquid form in its natural state or


obtained from Natural Gat by condensation or extraction.


Cumulative Costs ts del "ed m clause 26.1.


Cumulative Revenues s defred m clause 26.1.


Data means records, information, or data ol any sort, whether raw. derived, processed,


interpreted or analysed, obtained or produced pursuant to this Contract, including








7


 r-o4*e» sncooo Contnxr Qa* Oir








geological, goophyslcal, petrophysical, engineering, drilling, production, well location,


well log, core sample and completion status records. Information and data.


Date of Commencement of Commercial Production means the date as of which the


Management Committee determines that Commercial Production is first achieved in the


Contract Area


Decommission Msg Cost* means all the costs and expenditures incurred t*y the


Contractor when carrying out Decommissioning Operations. Inchidrg those defied m


the Accounting Procedure.


Decommissioning Operations mean closing down, decommissioning, abandoning, or


wholly or partly removing Assets and Materials m or from the Contract Area, keeping


Assets and Materials in the Contract Area m a safe condition following cessation of


production pending abandonment, and restoration of land in the Contract Area.


Decommissioning Plan and Work Program Is defined m clause 38.2.


Decommissioning Reserve Fund is defined m clause 38 6 and includes all conlribulions


paid Into such fund and all interest accumulated In such fund


Delivery Point means the point after extraction either as specified in an Approved


Development Plan for a Production Area, or at such other pom! {including a point of sale


In respect of Natural Gas| which may be agreed by the Parlies, at which Petroleum


produced and saved is metered for the purposes of clause 37.5, valued for the purposes


of clause 27.1, and, in the case of Crude Oil, available lo be lifted by a Party.


Development Costs means all the costs and expenditures incurred by the Contraclor


when carrying out Development Operations in accordance With an Approved


Development Work Program and Budget (subject to dause 2.6|.


Development and Development Operations means, in respect o* a Production Area, all


operations or works conducted in accordance with an Approved Development Plan ar-d


Budget up to the Oebvery Point with a view to developing a Production Area


Development Period n the period during the term of this Contract (a) that is not the


Exploration Period or a Gas Field Molding Period and (b| during which the Contractor is


entitled to conduct Development Operations.


Development Plan means a plan prepared by the Contractor in accordance with Best


Practices, and which includes details of:


(a) the delimitation of the Production Area, taking into account the results of the


Appraisal Report regarding the importance of the Petroleum Field within the


Appraisal Area:


(b) dHdmg and completion of Development Weis;


(c) driimg and completion of Injection Wells;


Id I the sequencing and timing of the development of Reservoirs;





(e) Use eipected First Production of Petroleum;


(0 laying of pipelines;





c«> •nstj ijtoft of iepjritorv Unki. pump* And any other associated production


and infection facilities foe the production:


 Production Sharing Contract 0o/o Ore








(h) treatment and transportation of Petroleum to processing and storage facilities;


(i) the construction of transportation pipelines inside or outside the Contract


Area;


(j) construction of storage facilities for Petroleum;


|k| plans for the use or flaring of Natural Gas;


(l) training commitment in accordance with clause 23;


(m) preliminary decommissioning and site restoration plans;


(n) a detailed forecast of annual capital expenditures, operating expenditures, and


abandonment expenditures,


(o) each Contractor Entity's source of capital; and


(p) any other operations and expenditures not expressly provided for in this


definition, but the Contractor expects will be reasonably necessary for


Development Operations, Production Operations, and delivery of Petroleum


and disposition of Natural Gas produced from the Contract Area,


Development Work Program and Budget means the Work Program and Budget


prepared by the Contractor pursuant to clause 13-2.


Discovery means the finding of a previously unknown accumulation^! of Petroleum in


one or more Reservoirs within the Contract Area and which have, for the first time, been


demonstrated through drilling to contain Petroleum that can be recovered at the


surface in a flow measurable by conventional petroleum industry testing methods and


may be considered for Appraisal.


Discovery Report is defined Bi clause 12.2.


Dispute means a dispute or claim of any and every kind or type, arising out of or relating


to this Contract (including those sounding in tort) between all or any of the Parties


Domestic Gas Marketing Operations is defined in clause 14 1


Domestic Gas Plan n defined In clause 14.1.


Domestic Market .s defined in clause 14.1.


Effective Date .s defused us clause 46.8.


EH$ Monitors mean accredited professionals, including certified safety professionals,


certified industrial hygienists, registered occupational hygienists or the.r equivalents


EMS Standards n defused m clause 37J.


ElAit defined m clause 17 7.


EIR is defused in clause 17 6


EMMP n defined m clause 17J.


Encumbrance and Encumber means any mortgage, charge, pledge, hypothecation, en.


assignment by way of security, title retention, option, right to acquire, right of pre¬


empt ion. right of sel oil. counterclaim, trust arrangement, overriding royalty, net profits


interest, or any .it., security, preferential right, equity or restriction, any agreement to


give or to create any of the foregoing and any transaction which, in legal terms, is not a


 f'Muilloa ihon*9 Conlrorl a ala 0*r








secured borrowing but whkh hat an economic or financial effect sender to that of a


secured borrowing


Invlronment fund is defined In clause 21 l1


Ixpatriate meant any employee not normally resident m the Kurdhtan ftegion or Iraq,


who It employed by either Contractor tntitlet or Subcontractors for purpotes of thii


Contract and who It engaged on termt whkh provide lor the payment of passages to


and Irom the Kurdistan Region or Iraq.


taper! meant, with respect to a Dispute, an Independent person with appropriate


qualillcations and experience who:


(a) hat been agreed upon between the Parties to the Dispute; or


|b) hat been nominated by President ol the I nergy Institute in London, England, on


the application of any Party to the Dispute failing agreement within 14 days of


either:


(1) approval by the Management Committee of the Terms of Reference.


(2) the date the Parties receive notice that the Expert is unable or


unwilling to complete the reference to Expert determination


■ •ploration means such geological, geophymal. aerial and other surveys as may be


contained in an Approved Work Program and Itudget with a view to discovering


Petroleum in the Contract Area previously not known to have existed using gcoksgx >


geophysical and other methods and the drilling ol Exp oration WeH(si and includes (a)


any activity in connection therewith or ,n prepar jt.on therefor, and any relevant


processing, and |b) Appraisal


Exploration Costs means Petroleum Costs incurred by the Contractor Entities when


carrying osrt (>p orators Operations us accordance with an Approved Exploration Work


Program and Oudget (subject to clause 2.6|.











Exploration Period .s defined m clause 6 1


Exploration Rental is defused in clause 6 2.


Exploration Work Program and Budget -seam an exploration work program and Budget


prepared pursuant to clause 111 or 11.2.


Export Gas Marketing Operations >s defined m clause 14 1


Export Markets is defined m clause 14.1


Export Plan Evaluation Period is defused in clause 14 27


Extended Exploration Term >s defmed m clause 6 1 I


Tint Exploration Well s defined .n tla,»e 10 lid)














10


 Production Shoring Contrail Qato Ore





tint Production mcjni the moment when Comraerc iaf Production at Crude Oil or Non-


Associated Gas (as the case may be) first commences, by flowing at the rate forecast in


the Development Plan without interruption for a minimum of 48 hours.


fust Sub-Period is defined in clause 6.4(a).


force Majeure is defined in clause 40.1.


force Majeure Estimate is defined in clause 40.11.


Gas means Natural Gas. both Associated Gas and Non-Associated Gas. and all of its


constituent elements produced from any Well in the Contract Area Gas may be


produced from Natural Gas Weis or in association with Crude 04 from Crude Oi Wells.


Gas-cap Gas means free gas that overlies and is in contact with significant quantities of


Crude Od in a Reservoir.


Gas (sport Plan

Gas field means an area in the Contract Area consisting of a single reservoir or multiple


reservoirs all grouped or. or related to. the same "di.idual geological structural feature,


stratigraphic conditions, or both, which either:


(a) Is a Discovery of Non-Associated Gas: or


(b) Is a Discovery of Crude 04 w*h Associated Gas that cannot be a Commeroa


Discovery without a plan for the economic disposition Including ftar-ng or re


injection) of the Associated Gas. and notwithstanding that liquids and


condensates are induded m the definition of Crude Od (i.e.. a condensate


Reservoir a a Gas field)


Gas field Holding Period is defined in clause 14.10.


Gas field Molding Period Application is defused in clause 14 $


Gat field Molding Period Rental't defined In clause 14 1)


Gat Marketing Costs means costs and expenditure incurred by the Contractor in


accordance with a Domestic Gas Marketing Work Program and Budget.





Government is defined in the preamble


Government Business Day means a day between the hours ol 9:00am and 3:00pm


when the offices of the Government are legally required to be open to conduct the


buwntit of the Government.


Government Interest is defined m clause 4 1


Government Interest Holder is defined m clause 4.J














11


 • ns the Federal Government of the Republic of Iraq, which holds


o»*Ke under the Constitution of Iraq and any minister, ministry. deDJrtment. sub¬


division. agency, authority, council, committee, or other constituent element thereof.





: in the form and content as set forth in Ar.nei C.





Guaranteed Amount means either the First Sub-Period Guaranteed Amount or the


Second Sub-Period Guaranteed Amount, as applicable.


Holding Period tarty Termination Notice is defined in clause 14.28


Income Tax and Incomes Taxes mean, in respect of any Person. Tales imposed by


Kurdistan Region laws on the income of such Person.


International Banking Day means, in respect of a Party making a payment and a Party is


to receive a payment, a day on which banks are open to conduct business by electronic


transfer of funds in both the place from where the funds are to be sent and the place


where the funds are to be received.


International Market Price is defined in clause 27.2.


Iraq means the entirety of the Repubbe of Iraq, including the Kurdistan Region.


lolnt Operating Agreement means an agreement between the Contractor Entities for


the purpose of regulating the relationship between the Contractor Entities in respect of


this Contract.


Kurdistan Region means t~e Federal Regon of Utdistan recognised by t"r Constitution


of Iraq and having the same meaning as 'Region' in the Kurditan Region Oi’ and Gas


law.


Kurdistan Region law means laws of the Kurdistan Region and the laws of any


governmental authority of any disttict, sub district, municipality, territorial, or other


political subdivision of the Kurdistan Region.


Kurdistan Region Oil and Gas law means the Oil and Gas law of the Kurdistan Region


Iraq (law ho. 22 of 20071.


laws means any statutes, rules, codes, regulations, decisions, proclamations, notices,


directives, constitutions, instruments, rules of court, guidance, or any other instrument


of any governmental, intergovernmental, or supranational body, agency, department or


of any regulatory, self-regulatory or other authority or organisation having the force and


effect of a law


LCIA a defined In clause 42.4.


loss or Expense means any liability, loss, claim, settlement payment, cost and expense,


interest, award, Judgment, damages (including consequential, Indirect, and punitive


damages), fees or other charge and, to the extent permitted by applicable law, any court


filing fee, court cost, arbitration fee or cost, witness fee, and each other fee and cost


(including attorneys' fees, other professionals' fees, and disbursements! of investigating


and defending or asserting a claim (including a claim for Indemnification!





Management Committee is defined in clause 8.


 Production Sharing Contract Qala Oie








MIR ('Maximum Efficient Rate'l meant In respect ol a Reservoir. the maximum rate of


production of Crude Oil, without excretive decline of production or excessive loss of


Reservoir pressure, in accordance with good oil field practice and the provisions of


clause 16.16.


Minimum Exploration Obligations .t defined in clause 10.2.





Minimum financial Commitment means:


fa) In respect of the First Sub Period, the amounts set out in clause 10.3: and





(b) In respect of the Second Sub Period, the amounts set out in clause 10.4.


Month means a calendar month according to the Gregorian calendar.





Natural Gas means a mixture of hydrocarbons and varying quantities of non-


hydrotarbons that exist either In the gaseous phase or in solution with Crude Oil in


natural underground Reservoirs remaining alter the extraction of liquid hydrocarbons


(Including condensates) from wet gat.





Natural Gat BOC means 6.000 standard cubic feet of Natural Gas to one 8arrel of Crude


Oil.





Non Assodatod Gat means Natural Gas that Is found in a Reservoir either (a) without


association with Crude Oil, or (b) In association with quantities of Crude Oil that, without


a plan of disposition of the Natural Gas other than by flaring or reinjection, by itself


cannot be commercially produced


Notice of Dispute is defined In clause 42 2.





Notice of Early Termination of Gas field Molding Period is defined us clause 14 14





Oil field means within the Contract Area consisting of a single Reservoir or


multiple Reservoirs all grouped on. or related to. the same individual geological


structural features, stratigraphic conditions, or both, and that (a) may become part of a


single Production Area for Crude Oil and (b) is not a Gas f wld





the entity designated by the Contractor pursuant to clause 5 at the


'Operator*.


Original Contractor Entity :s defined in clause 414





Parties mean the Government and each Contractor Entity, and Party any of the


Contractor Entities or the Government. The Government or a Public Company m its


capacity as holder of al or part of the Government Interest is Party onty Ml respect of


such Government Interest.


Permit means a licence, permit, consent, authorisation, or other permission of the


Government or any relevant public authority « the Kurdistan Region m respect pf


Petroleum Operations.


Permitted Assignee means, as applicable: (a) an Assignee that has received an


Assignment m compliance with clause 39. or. |b) in the case of the Government Interest,


an Assignee of the Government Interest that received an Assignment thereof in


compliance with clause 4.














::


 Production in anno Con Iron Qata Oit








Person means an individual or a corporation, limited liability company, partnership


(Whether or not haying separate legal personality!, joint venture, trust, unincorporated


organisation, association, government, agency or political subdivision thereof or any


other entity


Petroleum meant:


(a) any naturally occurring hydrocarbon In a gaseous or liquid Mate;


(b) any mixture of naturally occurring hydrocarbons In a gaseous or liquid Mate; or


(c) any of the foregoing that has been returned to a Reservoir.


Petroleum CoMt mean* all costs and expenditure incurred by the Contractor In reipect


of Petroleum Operation! that the Contractor It entitled to recover under this Contract.


Petroleum field meanv a Cai field or an Oil Field.


Petroleum Operation! meant all exploration Operations. Gat Marketing Operation!,


Development Operations, Production Operations, and Decommitsioning Operations,


and any other activities or operations related to any of such operations authorised,


required, or contemplated by this Contract or Applicable law


Pipeline Coils Is defined In clause 13.5.


Production Area meant an area within the Contract Area:


(a) encompassing the areal closure of a Petroleum bearing Reservoir outlined


following Appraisal; and


(b) which is delineated and designated as a 'production area' in an Approved


Development Plan.


Production Bonus is defined in clause 32.2.


Production Costs means all the costs and expenditure incurred by the Contractor


Cntitxes in carrying out the Production Operations in accordance with an Approved Work


Program and Budget Isubject to clause 2 i) which the Contractor is entitled to recover


as a Petroleum Cost.


Production Operations meani operations and all activities related thereto earned out By


the Contractor for Petroleum production from a Production Area from the start of


Commercial Production, such as extr acton. injection. Mins uUt ion, treatment, storage


withm the Production Area, idling, and related operations No operations or activities of


the Contractor after the Oehvery Point are within the scope of the definition.


Production Rental is defused m clause 11 6


Production Work Program and Budget means a Work Program and Budget prepared for


Production Operations pursuant to clause 1) 4.


Profit Gas a defined in clause 25 9.1.


Profit Oil is defined in clause 25.8 1.


Profit Petroleum is defined In clause 26.1











14


 Prad.







Public Company meant: (a| any entity created by the Kurdittan Region Oil and Gat law.


Including the Kurdluon f xploration and Production Company; |b) a legal entity


established by Kurdistan Region law at a separate legol entity, whether or not fully


autonomous and whether or not having independent sources of revenue, to undertake


commercial activities on behalf of the Government, which legal entity cannot be


declared bankrupt under Kurdistan Region law; and (c| any separate and autonomous


company organised under Kurdistan Region law which it controlled, directly or


indirectly by a wholly Government owned and controlled entity, by the Government,


the Parliament of the Kurdistan Region, or which It under the guidance of the


Government or the Parliament of the Kurdittan Region Iwhether or not in any such case


partially or fully funded by the Government or the Parliament of the Kurdistan Region}.


A department, division, or agency of the Government, whether or not operating under a


separate name, is not a Public Company.


Quarter means a period of three consecutive Months starting on the first day of each of


January, April. July, and October.


Regional Tax law means any Kurdistan Region law m respett of Taxes.


Relevant Day is defined in clause 40.11(a).


Reptol it defined in the preamble.


Reptol letter of Representations is defined in the preamble


Reservoir means a subsurface rock formation containing an mdrviduai and separate


natural accumulation of producible Petroleum characterised by a vngie natural pressure


system.


Revenues is defined in clause 26.1.


R Factor is defined in clau&c 26.1.


Rights Sale is defined in clause 32.10.2.


Royalty n defined in clause 24.4.


Royalty Crude Oil is defined in clause 24.1.


Royalty Gas is defined in clause 24.2.


Royalty Petroleum is defined in clause 24.3.


Royalty Rate Is defined in clause 24 6.


Second Exploration Well n defined In clause 10.4(b).


Second Sub-Period is defined m clause 6 4(b)


Semester means a period of 6 consecut ive Months starting from the first day of each of


January *nd July.

















IS


 Predurfw Sftcncg Connor Oit








Subcontractor meant any Person providing uMcn or undertaking works relating to the


Petroleum Oserationson behalf of. the Contractor, any Contractor Entity, or the


Operator, whether directly or indirectly at any contracting ter


Sub-Period and Sub-Periods are defined in clause 6 4


Ta« or Taaes means all current or future tanas, duties, payments, charges, impositions,


imposts, withholdings, fees, ta.es (including value added tea or other sales or


transaction based tan. corporation lax. income tai. capital gams la«. stamp duty, land


ta*. registration tax. capital and wealth tax. profit la>. dividend tai or withholdings,


transfer tan. customs duties, branch or permanent estabbshmenl tai or withholdings,


tai on income from movable capital and n«ed tai on transfers) or coninbutmns. in each


case as imposed by Kurdistan Region law.


rule Transfer Date is defined In clause 20.1


USS and US Dollars meant the legal currency (do'Ur) of the United States of America


Vice Chairman is defined m clause « ».l-


Well means a borehole, made by drilling in the course of Petroleum Operations.


Categories of Wets are defined


(a) Exploration Wall means a well other than an Appranal Well drflled for the


purposes ol searching for undiscovered Petroleum accumulations on any


geological entityllci) (be it of structural, stratigraphic, faces. or pressure


nature) to at least a depth or stiatigfeph* level specified m the Work Program.


(b) Appraisal Well means a well drilled for the purpose of delineating and


evaluating the extent, the production capacity, the potential and commercially


of recoverable reserves of a Discovery in a geological structure or feature


established by an Eaploration Well


(c) Development Well means a well dr died, deepened, or completed after the dale


of approval of the Development Plan pursuant to Development Operations or


Production Operations for the purposes of producing Petroleum, increasing


production, sustaining production or accelerating extraction of Petroleum


including production Weis. Injection Weis, and dry Wells


(d) Injection Well means a well drilled within a Production Area which injects


Natural Gas or a fluid in order to enhance the recovery of Petroleum by


pressure maintenance or by improving the qualrty of the leservoir.


Work Program means any of the following: an Exploration Work Program, a Gat


Marketing Operations Work Program, a Development Work Program, a


Decommissioning Work Program, or any other program which details the Petroleum


Operations to be conducted by the Contractor and the schedule for performing such


program.








Unless the context otherwise requires or is specifically otherwise stated:


(a) headings are to be ignored:


 Production Shoring controlt Qala Die








(b) "including' and similar wards do not imply any limitations; and


|c) singular includes plural arid vice vena.


1.3 Reference to a "clause" Is to a clause ol this Contract, and reference to a 'paragraph' is


to a paragraph in the Accounting Procedure.


1.4 Reference to "gross negligence' and "grossly negligent* means with respect to any


Person, a marked and flagrant departure from the standard of conduct of a reasonable


and prudent person acting in the circumstances at the time of the purported


misconduct, or such wanton and reckless conduct as constitutes in effect an utter


disregard for harmful, foreseeable, and avoidable consequences.


1.5 Reference to "participating Interest' means. In respect of each Contractor Entity. it*


undivided share, expressed as a percentage, of its participation m the rights and


obligations of the Contractor under this Contract where such rights or obligations are


not joint with the other Contractor Entitles.


1.4 Reference to:


(a) 'significant* means important enough, from the perspective of a reasonable


person in the Government's position, to merit attention, and it inckjdes a lesser


level of significance than does the term 'mater.a *, and


lb) 'material' means of such a nature that knowledge of the item would affect a


Person's decision.


1.7 The Contractor will be considered to have 'knowledge* m respect of a matte' perta.nmg


to this Contract or Petroleum Operations if such knowledge n held or ought reasonably


to be held by any Contractor Entity, the Operator, any Subcontractor, or any consultant,


or agent of any Contractor Entity, the Operator, or Subcontractor


18 A reference to conduct includes an omission, statement, or undertaking, whether or not


In writing.


1.9 Reference fo any contract, agreement, instrument, guideline or document includes any


amendments, restatements, and replacements thereof


1.10 References to a law or any provision of law are references to that provision as


amended, extended or re-enacted and include all laws and official requirements made


under or deriving validity from it or enacting such modification


1.11 In computing any period of time, the day of the act. event or default from which such


period begins to run shall be Included. All references to time are fo the time in Crbll.


Unless specifically provided otherwise:


la} any payment falling due on a day that is not an International Banking Day will


be due and payable on the following International Banking Day;


|b) any notice or other communication to Government that is received on a day


that is not a Government Business Day or after 3:30 pm on a Government


Business Day will not he considered received, unless acknowledged by the


recipient, until the next following Government Business Day.











17


conflict between or among standards of performance for the Contr j««o». the most


stringent star Sard Mill apply In no event will the Contr actor be required to take an


action that is prohibited under Applicable law.


l.H Any Joint 0 porn ting Agreement between Contractor Entities, including os approved by


the Government In accordance with douse 5, Is only binding as between such Contractor


(nilties. It not relevant for the construction or interpretation of this Contract, and dors


not establish any approved course of dealing as between the Government and any


Contractor Entity or the Contractor.


MS Nothing in this Contract constitutes or implies any contractual relationship or other


relationship between |i) Ihe Contractor or any Contractor Entity and H) the Government


of Iraq, any region of Iraq (other than the Kurdistan Region), or any govetnorate or other


political or administrative subdivision of Iraq


I.lt No Party shall conitrue any provision in this Contract as establishing that any Contractor


f ntiiy is an employee, agent, or representative of the Government or any public


authority in Ihe Region or in Iraq.


1.17 This Contract docs not establish, and no Party shall construe this Contract to have


established, a partnership, or other form of association or fiduciary relationship


between the Government and any other Person, including any Government Interest


Holder.


I.lt Any enumeration of a Party's rights and remedies set forth in this Contract is not


intended to be eana.strve. A Party's derive of a~y r.ght or remedy under tho Contract


does not prechrde the eiercoe of any other right or remedy. Each Party's r^hts and


remedies are cumulative and are m add it on to any other nght or remedy set forth in





















































ia


 Production Shoring Controct Qato Ote








Clause 2 - Scope





EXCIUSIVI RiOHt


2.1 The Government grants to the Contractor the exclusive right to conduct Petroleum


Operations In the Contract Area on behall of the Government (or the term of this


Contract.


2.2 Hatural resources other than Petroleum are excluded from the scope of this Contract,


even rf the Contractor discovers any such resources in the conduct of Petroleum


Operations.


2.3 Nothing in this Contract conveys any right, title, or interest to the Contractor or any


Contractor Entity in Petroleum before the Delivery Point.





CcuniA«ct


2.4 The Contractor is responsible to the Government for the conduct of Petroleum


Operations.


IS Each Contractor Entity shall at ad times comply, and procure that each Subcontractor


complies, with the Kurdistan Region Oi and Gas Law and all other Applicable taw No


provision of this Contract will: |a| excuse the Contractor or a Contractor I nlity Of any


Subcontractor from compliance with Applicable law. or |b) impair any right or privilege


of the Government under Appbcable Law.


24 Subtext to clause 40 (force Mo,cure), the Contractor shall: (a) conduct Petroleum


Operations only In accordance with on Approved »Vor» Program and budget: and (b) not


suspend or abandon performance of Petroleum Operations except in accordance with


an Approved Work Program and Budget.


2.6.1 In cases of emergency, the Contractor shall undertake such additional efforts


and incur such additional expenditures as the Contractor considers necessary


to protect life, the environment, or property


24.1.1 The Contractor shall promptly report ns Incurrence of such additional


expenditures to the Management Committee.


24.1.2 Such additional expenditure will be Cost Recoverable.


i 6.2 The Contractor Is entitled to incur expenditures not Identified In an Approved


Budget, provided that: (a) the aggregate amount of such expenditures do not


exceed 10% of such Approved Budget in any Calendar Year; and (b| the


Contractor hat pramglly reported 2he incurrence ol such excess expenditures


lo the Management Committee.


244.1 Excess expenditures incurred in compliance wdh and within the limits


set forth in clause 2.6.2 w« be Cost Recoverable.


2444 Any expenditure above the 10% threshold w4l only be recoverable by


the Contractor with the unanimous approval of the Management


Committee.











19


 Production Shoring Conlrocl Qaia Die








PUMITS


2.7 Upon the Contractor's request, the Government shall provide or procure the provision


of all Permits lor Petroleum Operations to be performed in accordance with an


approved Work Program and Budget, Including those relating to any extension and


renewal periods II the Government determines that a Permit Is required Irom the


Government ol Iraq and unless the Government otherwise Instructs, the Government


shall be responsible for securing such Permit on behalf of the Contractor, provided that


the Contractor shall provide all necessary assistance.





Btsr PxAcrtcts


2.8 In performing Petroleum Operations, the Contractor shall do so at all times in


accordance with Best Practices, Including:


(a) using all technical, human and material resources reasonably required for


execution of the Petroleum Operations in accordance with Best Practices; and





(b) implementing all appropriate management and administration techniques for


execution of the Petroleum Operations in accordance with Best Practices.


Sosi Risk


2.8 The Contractor shall conduct all Petroleum Operations at its sole cost and risk.





1*1 The Contractor shall provide all funding for the performance of its obligations


hereundor.


i.j.i If no Commercial Discovery is determined, or if production of Petroleum s


insufficient to reimburse the Contractor, the Contractor wil bear all losses


arising under or related to this Contract.


IU Each Contractor Entity shall only have the right to receive and drsoose o* its


share of the Petroleum produced and saved from the Contract Area as


reimbursement of costs incurred and compensation for sconces rendered


pursuant to this Contract.


AuuuU'kon


2.10 The Contractor is entitled to:


(a) access and operate freely within the Contract Area and wherever Assets and





Materials of a Contractor Entity or Subcontractor may be located.


(b) freely use access roads located within the Contract Area and outvote the


Contract Area for the construction, installation, maintenance, operation and


removal of pipelines and other facilities required lor the Petroleum Operations:


(c) use in Petroleum Operations sand, gravel, and water belonging to the public


domain by prior arrangement with the relevant authorities and on payment of


the generafty prevailing charge for such resources m the locality of use,


(d) employ quaified Expatriate and local personnel and retam Subcontractors for


the conduct of Petioieum Operations in accordance with clauses 22 and 23


(provided any Expatriate personnel working In the Kurdistan Region will require











20


 Pro€fCt»o+ Stocncq Co*tfoct Qoic 0/t








j Permit, not to be unreasonjbly withheld or delayed, and the Government w«U


procure any Permits required from the Government of Iraq);


(e) import any goods, materials, equipment required for the Petroleum Operations


in accordance with clauses 19, 22. and 30: and


(f) use land or property belonging to the Kurdistan Region outside of the Contract


Area on reasonable commercial terms to the extent made available, and the


Government wi assrst the Contractor securing the use by the Contractor of any


private property in the Kurdtstan Region.





La«h *





1.11 The conduct of a Subcontractor of any Contractor Entity (at any tier) or of the


Operator wil be binding upon, and conskJered to constitute the conduct of the


Contractor.








Clause 3 - Contractor; Participating Interests


ContftACVoa


3.1 The obfcgjltont ol the Contractor constilute joint jnd several obligations ol the


Contractor Intake*, ricept only where specifically provided otherwise.





P*»nci»#n*& Inm«<» or ftiesoi


1.2 As of the Effective Date, the Contractor has an 80* part*, pa ting intern!








Clause 4 - Government Interest


GlMXAl


4.1 The Government has a participating interest of 70* in Petroleum Operations and all


other rights, duties, and obligations of the Contractor (except as provided in this clause


4), carried by the Contractor (the 'Government Interest’).


4.2 No holder of all or anv part of the Government Interest la “Government Interest


Holder') (including the Government), in such capacity:


(a) Is a Contractor Entity; or


(b) has any obligation or liability to the Contractor or any Contractor Entity


whatsoever, including any obligation or liability to contribute any share of


Petroleum Costs and any other obligation or liability arising out of or related to


Petroleum Operations, all of which are carried by the Contractor.


No default or tailure to perform of a Government Interest Holder under this Contract


may be considered a breach of this Contract by the Contractor or anv Contractor Entity


or invoked by the Government to terminate this Contract as to the Contractor or any


Contractor Entity.


4.3 Subject to clause 4.4. a Government Interest Holder is not. If that n its only capacity


under this Contract, entitled to any notices under this Contract (rom the Contractor or








21


 Production Shoring Control! data 0/e








entitled to provide any contents, except. in each case as specifically provided otherwise,


but a Government Interest Holder has rights under clause 42.





«.a Any term of this Contract may be waived or amended without prior notice and consent


of a Government Interest Holder, unless such waiver or amendment would change any


right or obligation of a Government Interest Holder.


*4.1 Any waiver or amendment which purports to change any right or obligation of a


Government Interest Holder is only effective with prior notice to and the


consent of such Government Interest Holder.


44.1 Ihe consent of a Contractor Entity is not required for the Government to waive





or amend this clause 4, unless such waiver or amendment would materially


alfect a right or Interest of a Contractor Entity.





4,9 A Government Interest Holder is not an indispensable party for any Dispute between the


Parties, unless a determination of such Dispute would change or impair the rights of a


Government Interest Holder under this Contract.





ASSIONMint


4.A Else provisions of clause 39 do not apply svith respect to any assignment by any ho dee of


a Government Interest of all or any part of its Government Interest


4.7 An Assignee of a Government Interest Holder writ have, in respect of the Government


Interest which has been Assigned, the same rights and obl^ations as the Assignor of


such Government Interest prior to the Assignment.


4.1 The Government may at any time designate a Public Company as a Government Interest


Holder without the consent of, or prior notice to. any other Party A Public Company as


holder of the Government Interest will be lndnridua»y liable (and not>ointfy and


severally liable with the Contractor) for any obligations to the Government under this


Contract.


4.4.1 The Government shall provide the Contractor svith a not.ee notifying the


Contractor of such designation of a Public Company by the Government, and


the Contractor shall be entitled to rety on such notice for a* Purposes under


this Contract,


«.4.7 A Public Company will not be required to sign any formal assignment or


accession agreement except as required by the Government.


4.4.3 Only lor the purposes of clause 37 of the KurdlstJn Region Oil and Gas law.


whenever and to the extent the Government Interest Is held by a Public


Company, the Government Interest will be deemed held by the Government.


4,44 As a consequence of any deemed ownership as vet forth In clause 4.8.1, the


Government:


(a) Incurs no liabilities or obligations |dlrectly, Indirectly, or impUdtlyl to


any other Party solely by virtue of such deemed holding: and














22


 Production Wion«« CoiU'Oct Qata Oic








(b) dors no! guarantee, and must not be considered to have implicitly


guaranteed, any obligation ol a Public Company at a Government


Interest Holder solely by virtue ol such deemed holding.


•-9 Subiett to clause 4 12. the Government may at any time Assign all or part ol its


Government Interest to a Person that is not a Public Company without the consent ol


any other Party.


Ul Such Assignee must s«gn an assignment agreement as required by the


Government


• • * The Government «4I provide the Contractor with a notice ol such assignment


by the Government, and the Contractor shall be entitled to rely on such notice


lor al purposes under this Contract.


*40 Subject to clause 4 12. a Public Company |as a Government Interest Holder) may Assign


part or al of its Government Interest to another Public Company, to the Government, or


any other Person wfthout the consent ol. or prior notice to. the Contractor or any


Contractor Entity, but shall not make any such Assignment ol al or any part of its


Government Interest wdhout the prior content ol the Government and m accordance


with any assignment and novation or other agreements and conditions required and


approved by the Government.


i ll I Any Assignment by a Public Company ol aH or pari ol its Government Interest


to another Pubhc Company or any other Person wrthout the prior consent ol


the Government or in accordance with the requirements ol the Government


will be void.


c.io.l The Public Company shall promptly notily the Contractor ol any an gnments ol


the Government Interest held by such Public Company, and the Contractor will


be entitled to rely on such notice lor all purposes under this Contract


4.11 Subject to clause 4.12. a Government Interest Holder that Is not the Goverrment or a


Public Company may Assign part or all ol its Government Intern! to any oiler Person


without the consent ol. or prior notice to. the Contractor or any Contractor Entity.


<411 Such Government Interest Holder shal not make any Assignments without (be


prior notice to and consent ol the Government and only m accordance with any


assignment and novation or other agreements and conditions required by the


Government.





I.1U Any Assignment by a Government Interest Holder w.thout the prior consent ol


the Government and in accordance with the requirements of the Government


will be void.





The Assignor and the Assignee shad jointly and promptly notify the Contractor


of any Assignments of the Government Interest pursuant to this clause 4 11.


and the Contractor wl be entitled to rely on such notice for al purposes under


thO Contract.














li


 Prodvcbo- Sfienaq Ccsn-oet QM On








4.11 No ptoviion of this Contract prohibit* a Contractor Entity from at any time offering to


acQuire or acquiring al or any part of the Government Interest from any Person that n a


Government Interest MoWer.


a ll t If at any time a Government Interest Holder (including the Government and a


PubK Company) intend* to offer to Assign al or part of it* Government


Interest to any Person that is not a Public Company or the Government, the


applicable holder of the Government Interest may notify the Contractor of the


availability of the Government Interest


a li_i No Contractor Entity has or may have any preemption or similar priority rights


« respect of the Government Interest, and a Government Interest Holder is


never required by this Contract to sel and assign to a Contractor Entity.





4.11 The Government reserves the right (but is not obligated to any Party with respect


thereto) either to cancel or terminate any Assignment of aR or part of the Government


Interest to any Person, if the Government at any time determines that such Assignment


•as contrary to Apphcable law or public policy.


i.ui Upon any rierose by the Government of its rights under this clause 4.13. the


Government Interest wl automatically revert to the Government.


4-is.l The Government's rights under this clause 4.13 are exclusive to the


Government, are not subject to a claim from any Contractor Entity, and clauses


41 and 41 do not apply with respect to this clause 4.13.


a.u.i The Government expressly reserves aR sovereign immunities in respect of any





Dispute arising out of or relating to the exercise of its rights under this clause


4.13. and any Dispute with respect to this clause 4 between the Government


and any Government Interest Holder may exclusively be resolved in accordance


with Kurdistan Region laws before a competent authority In the Kurdistan


Region located m Erbil.








Clause 5 - Operator; joint Operating Agreement


Ommioi


U The Contractor designates Repsol. and Rrpvol agrees to act, as Operator on behalf and


In the interest of the Contractor under this Contract.


S.l.l The Contractor authorises the Operator to represent the Contractor and to take


such actions as agent on behalf of Contractor and to exercise such rights,


privileges and posvers and to comply with such obligations under this Contract


as arc attributed or imposed to Contractor by the terms of this Contract. In


such capacity, the Operator will, subject to the terms and conditions of this


Contract and to the extent agreed in the Joint Operating Agreement, have all of


the rights, privileges, powers, and responsibilities of the Contractor as set forth


In this Contract, including responsibility for the conduct of all Petroleum


Operations and other activities of Contractor as contemplated by this Contract.

















24


 Pradvrhpn inane* Contract <3*0 On








13 The Goverrmrnt ni| deal with, and rely on. the Operator lor aH purposes under thes


Contract.


sj.i The obligations, fcabibtiet. acts and omissions of the Operator are the


obhgations. liabilities. acts and omissions ol the Contractor.


S^J The conduct of the Ooerator wl be binding upon, and considered to


constitute, the conduct of the Contractor.


5.3 The Conductor shall at any timr have the right to appoint another Contractor Entity as


the Operator, upon giving the Government not less than 30 days' prior written notice of


such appointment.


5.4 The Contractor shall cause the Operator not to resign, and the Contractor shall not


remove an Operator until such time as a substitute Operator has been appointed by the


Contractor and notice therefor has been given to the Government.


5.5 Upon any change of Operator pursuant to clause 5.3, the replaced Operator will be


released and discharged of all Its rights and obligations as Operator hereunder, and the


replacement Operator will be considered to have assumed all such obligations, rights,


and privileges.


5.6 Without limiting the Government's rights under clause 45, If either of the following


occurs and on not less than 30 days' prior notice from the Government, the Contractor


shall appoint a replacement Operator as soon as is reasonably practicable:


(a) an Act of Insolvency has occurred In respect of the Operator unless, within such


30-day notice period, the Contractor has established to the satisfaction of the


Government that the Act of Insolvency does not apply and the Government


cancels 4s notice: or


lb) the Contractor is not fuKHIang its obligations under this Contract as a


consequence of the acts or omissions of the Operator.


5.7 If the Contractor, .n accordance with clause 5.6. does not comply with the obligation to


propose another Operator within 30 days from the date when the Government gave


not«e to the Contractor, the Government aril be entitled to eiercise its rights under


clause 45 to term mate this Contract.








it A Contractor Entity shal not enter into any Joint Operating Agreement, e.cept if the


terms ol such Jomt Operating Agreement:


(a) have been approved by the Government:


|b) are in full compliance with Applicable Law as of the date of the approval by the


Government;


|C) are consistent with the provisions of the Contract: and


fd) otherwise comply with the requirements of clauses 5.9 through 5.11.


5-9 A Joint Operating Agreement must provide for the termination and release of any and


al Encumbrances, pre-emption rights, trust arrangements, and al other types of claims


or rights impairing the transferability of the participating interest of a Contractor Entity








25


 ProAKBba Sr-ocg Contract Qaio D/t








by the Government in the event ot any termination of a Contractor Entity by the


Government pursuant to this Contract


5.10 A Joint Operating Agreement mud provide that a Contractor Entity party to such Joint


Operating Agreement shall not mate an Assignment:


(a) which would result in the Assignee holding less than a S’* participating interest:


(b) svhich would result In the Assignor. If the Assignor is Assigning less than 100*4


of its interests, holding less than a participating interest;


(e) without the consent of the Government in accordance with this Contract; and


(d) unless the proposed Assignee has entered into an instrument satisfactory to


each of the Contractor Entitles and the Government so as to assume and to


perform the obligations of the Assignor.


5.11 The Contractor shall submit to the Government foi approval any agreement to amend


any Joint Operating Agreement








Clause 6-Term


GlNIRAl


6.1 The term of this Contract comprises an Exploration Period and a Development Period. In


respect of a Diicovery of a Gas field, the term of this Contract may also comprise a Gas


Field Holding Period as provided In clause 14 {Natural Gat\.


Iinouios RtNfU


6.2 Front the First day ol the Exploration Period until expiry of the C xploration Period, the


Contractor shad pay to the Government an annual surface rental for the Contract Area


of USSlO.OO pee square kilometre per Contract Year ('Exploration Rental*)


12.1 The Exploration Rental is due and payable in arrears on or before each


anniversary of the Effective Date and on the last day of the (apor at on Period


or termination of this Contract (whichever is earlier), and is subject to prof aton


In any Contract Year during which there has been a relinquishment or expiry of


the Exploration Period, based on actual number of days m such Contract Year.


6-2-2 Exploration Rental wiU not be Cost Recoverable.


(xnoxAnon Pinos


U The Exploration Period is for a base term of five Contract Years from the Effective Date


(the 'Base Exploration Term*).


6.1.1 The Base C xploration Term is extendable on a yearly basis in accordance with


clauses 6.5 and 6.6 up to a maximum term of 7 Contract Years (the Base


Exploration Term as so extended, the 'Extended Exploration Term*).


6.1.2 The Exploration Period a subject to further extension beyond the Extended


Exploration Term as provided in clauses 6.6 and 6.7.














26


 Production Sharing control! data Ore








6.s.s The exploration Period is subject to early termination as provided in this


Contract.





Sua-PtNiODS


6.4 The Exploration Period consists o( two sub periods (each such sub period, as it may be


extended, a Sub-Period*), each ol which is extendable pursuant to clauses 6.5 and 6.6,


provided the Exploration Period may not exceed the Extended Exploration Term except


as provided in clauses 6.6 and 6.7:


(a) a first Sub-Period of three Contract Years from the Effective Oate I'first Sub-


Period'); and


(b) a second Sub-Period of tsvo Contract Years beginning from the fust day of the


Second Sub-Period {'Second Sub-Period*).





filiations or Sui-PieiODt


6.5 Subject to clauses 6.S.1, 6.S.2, 6.S.3, and 6.7. the Contractor will be entitled to


extensions, each of no more than one Contract Year, of the then current Sub-Period, If


the Contractor has notified the Government of a Discovery of Crude Oil or of a Gas field


In such Sub Period in accordance with clauses 12.1 and 12.2 {Discovery Report;


Relinquishment), but reasonably considers that additional work is necessary before


deciding whether to:


(a) submit a proposed Appraisal Work Program and Budget in respect of such


Discovery m accordance with clause 12 4 (Appranot lVo/» Program ond


fludgel}; or


(b) in respect of a Discovery of Crude Oil. declare such Discovery to be a


Commercial Discovery


H i The Base Exploration Term plus the extensions provided in accordance with this


clause 6.5 may not exceed the Extended Exploration Term.


tu To be entitled to exercise its right to an extension pursuant to this clause 6 5.


the Contractor must notify the Government at least 30 days before the end of


the applicable Sub-Period (as it may have been extended pursuant to this


clause 6.5) of its intention to exercise such right of extension, the proposed


duration of such extension, ar.d the proposed Work Plan and Budget for such


extension.


6-S.J The Contractor wil not be entitled to an extension unless there it an Approved


Work Program and Budget with respect to such extension.


•4 Subject to clause 6.7. if at the end of the Extended I xploration Term the Contractor


wishes to conduct additional Exploration Operations, the Contractor wil be entitled to


«n extension of the Exploration Period of one year beyond the Extended Exploration


Term, provided:


(a) the Contractor has notified the Government, at least 30 days prior to the end of


the applicable Sub-Period, of the Contractor's exercise of such entitlement and


proposed Work Program and Budget with respect thereto:


 Production Sharing Contract Quia Ore








the Contractor's proposed Work Program and Budget for such extension is


acceptable to the Government; and


(0 the Contractor it not In breach of any material obligation or doty under this


Contract or Applicable law.


Il l Subject to clause 6.7. upon the expiration of an extension under this clause 6.6


and il the Contractor considers it has still not completed its evaluation of the


Contract Area, the Contractor will be entitled to a second extension of one


Contract Year; provided:


(a) that the Contractor has notified the Government thereof at least 30


days before the last day of the first extension; and


(b) the Contractor's proposed Work Program and Budget is acceptable to


the Government for such extension.


6.6.2 The Contractor Is not entitled to any t>ngle extension under this clause 6 6 of





more than one Contract Year, and the Contractor is not entitled to more than


two extensions pursuant to this clause 6.6.


*7 The Contractor will not be entitled to any extensions under clauses 6.5, 6.6, or 6.6.1;


(a) unless the Government is satisfied that the Contractor has fulfilled Its Approved


Work Program (including Minimum exploration Obligations) In respect of the


preceding Sub-Period or extension, as applicable; or


(b) If the Contractor is in material breach of any obligation or duty under this


Contract or Applicable law.





•4 The Exploration Period w.n expire at the end of the First Sub-Period (as it may be





extended pursuant to clauses 6.S and 6.6). and this Contract wifi terminate, unless:


(a) the Contractor has notified the Government at least 30 days before the expiry


of the First Sub Period of the Contractor's intention to enter into the Second


Sub-Period, or





(b) clause 6.5 it appUable-





6.9 The Exploration Period will expire at the end of the Second Sub-Penod (as it may be


extended pursuant to clauses 6.5, 6.6, and 6.11.1).





6.10 The Contractor may terminate this Contract at any time during the Exploration Period


(as it may be extended pursuant to clauses 6.5, 6.6, and 6.7) upon 30 days' prior notice


to the Government.


6.11 The Exploration Period will expire on the earlier of the first day of the |a| Gas Field


Molding Period and |b) Development Period.


,11, Sub|ect to clause 6.7. the Exploration Period will be automatically extended


during the pendency ol the Government's consideration of a Gas Field Holding


Period Apolicatlon In accordance with clause 14 (Natural 6os|, if the


Exploration Period would otherwise expire during such consideration period














78


 Production SXanea Contract a a/a Ore








S1U If the Government denws a Gas Field Holding Food Appfcation. the


Exploration Food ■! not be shortened, eitrndfd. or otherwise affected


solely because of such denial.








6.12 If this Contract is terminated during the Exploration Period, and if the Contractor has not


completed the Minimum I.ploralion Obhgatiom relating to the then current Sub-


Period. including additional minimum work obligations i" respect of any applicable


extensions of the applicable Sub Period, then the Contractor shatt pay to the


Government the applicable Guaranteed Amount (if any).





OtvtiopMtN' Peaioo


6.13 Subject to extension as provided .n clause 6.14. the Development Period for:


(a) all Commercial Discoveries of Crude Oil is 20 years from the date of the first


declaration of a Commercial Discovery of Crude Oil by the Contractor pursuant


to clause 12 6(a); and


(b) all Gas Fields is 20 years from the last day of the Gas Field Molding Period.


a.U.I If the Contractor considers that a Discovery of Crude Oil is a Commercial


Discovery, the Contractor will have the exclusive right to develop and produce


such Commercial Discovery of Crude Oil pursuant to the terms of this Contract.


•ill If the Contractor agrees a Gas Export Plan or a Domes!* Gas Plan with the


Government and there Is an Approved Development Plan with respect thereto


as provided m clause 14 (*ofumf Gas), the Contractor wM have the exclusive


right to develop and produce the Gas Fields subject to such Approved


Development Plan pursuant to the terms of this Contract


6.14 If Commercial Production from a Product*" Area (whether an Od Field or a Gas Field) is


still possfele at the end of the Development Period, the Contractor wdi be entitled to an


automatic extension of the Development Period m respect of such Production Area.


The term of any such extension of the Development Period will be S Years.


MM To be ebgible for an extension under this clause 6.14. the Contractor must


notify the Government of the Contractor's intention to exercise its right to an


extension at least 180 days before the end of the Development Period, and the


Contractor must not be in material brrach of any obligation under this Contract


or Applicable Law.











6.16 Upon not less than 90 days' prior notice to the Government, the Contractor may


termmatc Production Operations for any Production Area.


MM Upon such termination, the Production Area shall be considered relmquished


to the Government.





Mil This Contract *« terminate on the date when the Contractor notrfies the


Government that Production Operations for al Production Areas are stopped,


will not be resumed, and the Contractor has relinquished all Production Areas.


 Production Shoring COM'Olt Qaia Ore








*is.s Termination of Production Operations will not relieve a Contractor Entity of any


liabilities or obligations under a gas sales and purchase agreement with the


Government (or any Public Company or other Affiliate of the Government, or


otherwise, as designated by the Government! in respect of any Gas Export Plan


or Domestic Gas Plan, except as otherwise provided in the relevant


agreements


Clause 7 - Relinquishment


MAhOATOKY AKO COKSIUtniD RlimaUISMMtKr


7.1 By no later than the last day of the Base Exploration Term (without any extensions), and


subject to clausrs 7.7, 7.8, and 7.10, the Contractor shall relinquish 25% of the Contract


Area that is then not (a) the subject ol Appraisal, |b) a Gas Field subject to a Gas Field


Holding Period, or |c) a Production Area


7.1.1 At the end of the first extension to the Base Exploration Term (if any) granted


pursuant to clause 6.S or clause 6.6. the Contractor shall relinquish 25% ol the


remaining Contract Area that Is then not: (a) the subject of Appraisal, |b) a Gas


Field sub|ect to a Gas Field Holding Period, or |c) a Production Area.


7.1.1 The Contractor shall give the Government not less than 30 days' prior notice of


the boundaries of the portion of the Contract Area to be relinquished.


7.2 As of the first day of the Development Period or a Gas Field Holding Period, whichever is


first to occur, all of the remaining area of the Contract Area will be cons>dered to be


relinquished that is then not (a) a Gas Field subject to the Gas Field Holding Period, or


(b) a Production Area.


7.1 The Contractor shall relinquish a Discovery as provided m clause 12 3 and a Discover,


will be considered relinquished as provided in clause 12 4 S


7.4 On not less than 30 days’ prior notice to the Contractor by the Government, the


Contractor shall relinquish a Production Area if, in respect ol such Production Area.


(a) for reasons other than Force Majeure in accordance with clause 40 (Force


Majeure), the Contractor has ceased normal production of such Production


Area for more than 180 consecutive days; or


(b) if the Contractor has failed to resume Petroleum Operations In such Production


Area within 90 days’ following the occurrence of an event entitling the


Contractor to claim Force Majeure in accordance with clause 40 (Force


Majeure).


7.5 If the Contractor has notified the Government of its intention to terminate Petroleum


Operations in a Production Area in accordance with clause 6.15 (Termination of


Production Operation), the Contractor shall relinquish the Production Area effective as


of the date of the expiration of the 90-day notice period with respect thereto as


provided in clause 6.1S.


7.6 To the extent not set forth in this clause 7. Gas Fields will be considered relinquished as


provided in clause 14 (NaturalGot).








30


Durir.g the Exploration Period, the Contractor njy relinquish al or Wf part of the


Contract Area on not less than 90 days' prior notice to the Government of its intention


to relinquish and the boundaries of the portion of the Contract Area to be relinquished.





f.f.t The Government sha* credit any voluntary relinquishments during the:


(a) First Sub Period against the Contractor's mandatory reinquishments


obligations under clause 7.1;


(b) the first extension of the First Sub-Period against the Contractor's





mandatory relinquishments obligations under clause 7.1.1


Our mg the Development Period, the Contractor may relinquish a Production Area for


Crude 0* as provided »n clause 6.1S (Termmofion :/ Production Operof»onx).


Our mg a Gas Field Holding Period, the Contractor may relinquish the Gas Field on not





less than 90 days* prior notice to the Government The re»>nQuishment will be effective


as ol the lest day of such 90-day notice period











For the application of clause 7.1:


(a) eicept as provded m clause 7.11, the Contractor «s entitled to determine the


area, shape, and location of the Contract Area to be kepi; and


(b) the Contractor is entitled to retam for 74 months that part of the Contract Area


which contains a Discovery and which, m the opmon of Contractor, may.


together with any other Discovery within the Contract Area, constitute a


Commercial Discovery of Crude Oil.


For the application of clauses 7.1, 7.7, and 7.8, the refcoquished portions of the Contract


Area must be contiguous and be of a shape and site of which wd: read ly permit


delineation.








Prior to relinquishment of any area, the Contractor shat . m accordance with Best


Practices. Applicable Law. and the EMS Standards:


(a) perform all necessary clean-up activities to restore such area as nearly as


possible to the condition in which it existed on the Effective Date, including


removal of such Assets and Materials, faculties, or instalation as the


Government may reasonably instruct;


(b) safely cap aB Web and. unless otherwise instructed by the Government, and


contingent upon safety and additional cost considerations, ensure that any


Wei technically capable of production is left in a condition that it may be re


entered for further testing or completion; and


(c) take all actions to prevent hazards to the natural environment, human Me. or


property


 Production Sharing Contract Qota Ott








EfFCCVOt Rl lINQUbMMCNT


7.13 This Contract will terminal*:


upon the relinquishment (whether mandatory, considered, or voluntary! of


the entire Contract Area; and


(b) with respect to all relinquished areas immediately upon relinquishment,


and the Contractor shall have no further rights with respect to such areas


7 14 No relinquishment by the Contractor will relieve the Contractor from any liabilities


arising from or related to the relinquished Contract Area or of any continuing


obligations of the Contractor under this Contract. A relinquishment that constitutes


a termination of this Contract will be governed by clause 45.14.


7.15 If the Contractor relinquishes the entire Contract Area during the Exploration Period


without having fulfilled its Minimum Exploration Obligations with respect to the


then current Sub-Period, the Contractor shall promptly pay to the Government the


applicable Guaranteed Amount (if any|.


7.14 Upon any relinquishment of any Gas Field when the Contractor retains rights under


this Contract to conduct Exploration Operations or Production Operations, the


Government and any contractors of the Government and their representatives and


subcontractors will have the absolute right to move freely within the Contract Area,


provided no such Person causes any unreasonable interference in ongoing


f Kploration Operations or Production Operations of the Contractor.








Clause 8 - Management Committee


EllABUIMMiMI


8.J Within 30 day* following the Effective Oate. the Contractor and the Government vhai:


(a) establish a Management Committee for the purpose ol providing orderly


direction of all matters pertaining to the Petroleum Operations and Wotk


Programs; and


(b) by notice to the other, each nominate Its respective members of the


Management Committee and their alternates.


8.2 The Management Committee shall comprise two members designated by the


Government and two members designated by the Contractor.


a.t.l A Government interest Holder (solely In respect of such capacity) is not entitled


to representation on the Management Committee.


81 Upon 10 days' prior notice to the other, each of the Government and the Contractor


may replace any of its members of the Management Committee.


B.s.t Decisions of the Management Committee are to be made at the meetings.

















12


 14 The Management Commatee shaB review, deliberate, decide, approve, and |irt advice,


'.uiieiteni and recommendations to the Parties regndi«| the following subject


matters:


(a) Work Programs and Budgets:


(b) the Contractor's activity reports;


(c) production levels proposed by the Contractor.





(dl Accounts of Petroleum Costs:


(e) procurement procedures for potential Subcontractors;


(f) Development Plan and Budget for each Production Area;


(g| any matter having a material adverse affect on Petroleum Operations: and


(h) any other subject matter that the Contractor and the Government are wiling to


consider.





Rt uutAi MtttiNot; Vi nui


a.S Unless otherwise agreed by the Management Committee, all meetings of the


Management Committee will take place In the Kurdistan Region, alternately at the


offices of the Government and those of the Contractor, at least (a| twice each Contract


fear prior to the date of the first Commercial Discovery and (b) three times each


Contract Vear thereafter.


L>ra«o*i>in«Ki Mettutos


■A Cither the Government or the Contractor may call an extraordinary meeting of the


Management Committee to discuss important issues or developments related to


Petroleum Operations where


(a) the meeting of the Management Committee w* have a quorum m accordance


with clauses « 11 through 1 11. but not all members of the Management


Committee are present, subject to reasonable notice

10 days): or


(b) al members of the Management Committee wifl be present at the meeting,


without notice.


»-».i The Party caBmg an extraordinary meeting shall speedy the matters to be


discussed at the meet mg


Ac to* ar Mtuaeis wiihout Mtttmo


8.7 Any action required or permitted to be taken at a meeting of the Management


Committee may be taken without a meeting if the action is evidenced by the written


consent of the members approving such action and delivered to the Contractor





Aoenoa; Mmufss


8A The Contractor shall {a) piepair the agendas lor meetings ol the Management


Committee in accordance wdh instructions of the Chairman and (b| provide such











33


 PretfMfto* Ifterup Co»ITOtl Q*c Oir








agendas to the Government and the members at least IS days before the date of the


meeting.


• a l Each agenda must include any subject matter proposed by either the


Government or the Contractor.


tat The Contractor shall be responsfcle for preparing and keeping minutes of the


decisions made at the rneetings.


aa l The Contractor shall send a copy of such minutes to the Government and the


members for review and approval. The Government and the Contractor shad


review and approve or disapprove such minutes within 10 days after receipt of


the draft minutes.


IK Unless either the Government or the Contractor notifies the other of its


disapproval of the minutes within such 10-day period, the minutes wid be


considered approved by the Government and the Contractor at the end of such


10 day period








The chairman of the Management Committee shad be one of the members designated


by the Government (the ‘Chairman’).





»-».i The vice-chairman of the Management Committee shad be one of the members


designated by the Contractor (the 'Vice-Chairman';.


»,P.l In the absence of the Chairman or his alternate, the Vice-Chairman shall act as





the Chairman.





■.10 Each of the Contractor and the Government may send advisers and experts to meetings


of the Management Committee.


a.to.t Unless the Government agrees otherwise, the cosls of the Contractor’s advisors


and experts incurred in attending meetings of the Management Committee will


not be Cost Recoverable.





Quo«um


■.11 The Management Committee cannot validly deliberate, unless each of Ihe Government


and the Contractor is represented by at least one of Its members or Its alternate.


1.12 II at least one member or its alternate representing each of the Government and the


Contractor is not present, the Management Committer must be adfourned


(.11 If the meeting is adjourned pursuant to clause 8 12. Ihe Party present at the adjourned


meeting shall then notify the other Party of a new date, time, and location lor the next


meeting.


Votmo





(.14 Each o( the Government and the Contractor will have one vote In the Management


Committee. The two members appointed by the Government, and the two members


appointed by the Contractor, are required to vote as a single block A vote cannot be


fractionalised.








24


 PredMftO* IScnc? Contract Q*B 0/e








• IS An abstaining vote will be considered at a vole m support of the voting member.


•■IS Unanimous approval of the Management Committee is required for all matters, eiccpt


as set forth in clauses 8.18 and >19.


».l» If the Management Committee cannot reach unanimous agreement on a matter, the


Management Committee shall meet a second time within 14 days to attempt to reach a


unanimous decision.


t.l> Eacept as provided m clause 8.19. t the Management Committee n unable to reach a


unanimous agreement at the second meeting, the vote of the Government shall be


considered the tie-breaking vote.


Ill The Contractor shall have the tie-breaking vote during the £«ploration Period m respect


of approval of the Iiploration Work Program and Budget.


SoacoMMims


■ 10 The Management Committee may request the creation of a technical Subcommittee or


any other subcommittee to assist it.


*-ie.i Any such sub committee sha> be composed of a reasonable number of eaperts


from the Government and the Contractor.


I.29J After each meeting, the technical subcommittee or any other subcommittee


sha> deliver a written report to the Management Committee.


I.M.S Any costs incuired by the Contractor for meetings of the Management


Committee and in respect of technical subcommittees or any other sub¬


committees win be Cost Recoverable


Clause 9 - Guarantees


fiast tua-Piaioe Oiiumom


9.1 Concurrently with the t«nmg of this Contract, the Contractor shall cause to be delivered


to the Government a jomt and several payment guarantee of Repsol YPf. SJ>.. the


ultimate parent company of the Contractor.


»-!.« Such guarantee must be (a| m form and content acceptable to the Government


and (b) m respect of the Contractor's obligation to pay the Capacity Building


Payment and the Contractor's payment obligation pursuant to clause 10.5.3


(such obl^atons of the Contractor, the *Knt Sub-Period Guaranteed


Amounts*) in respect of the first Sub Period.


Stcono Sua-Ptaioo


91 Not laser than 60 days after the first day of the Second Sub-Period, the Contractor sh j>


proride the Government, unless the Government waives this clause 9.2 pursuant to


notice received by each Contractor Intity within 30 days following start of the Second


Sub-Period, with a icxnt and several guarantee of the ultimate parent companies of each


Contractor Intity. m form and content as set forth in Inhibit C and otherwise acceptable








3S


 Production Shanty Control' Qata 0/e








lo the Government, with respect to the Contractors payment obligations pursuant to


clause 10.5.4 (such obligation ol the Contractor, the "Second Sub-Period Guaranteed


Amount*}.


*M II a Contractor f ntlty does not have an ultimate parent company, the


Government the Contractor Entity shall cause a controlling beneficial


shareholder or other Person with sufficient credit Quality In the opinion of the


Government and otherwise acceptable to the Government to be a party to


such Guarantee.


til If the Government does not receive such guarantee within 30 days fallowing


start of the Second Sub Period as provided In this clause 9.2. the Government


may notify the Contractor to suspend all operations in the Contract Area until


the requirements of this clause 9 2 have been satisfied.





G»» Pi*n Guahaniiii


« 1 tach Contractor [ntlty shall deliver such guarantees or other form of credit as are


required In respect of any gas sales and purchase agreement entered into among the


Parties for the sale ol Natural Gas to the Government or any other Person.








Accission


*.4 In the event of an Assignment by a Contractor Entity to a third party in accordance with


clause 39, an ulllmatr parent company of such Assignee acceptable to the Government


must accede to the applicable guarantee, effective as of the effective date of the


Assignment, as a condition precedent to the approval of the Assignment by the


Government.








Clause 10- Minimum Exploration Work Obligations


Commencement


10.1 The Contractor shall start Exploration Operations within 30 days of the Management


Committee's approval of the Exploration Work Program and Budget in accordance with


clause 3.


Minimum Woa« OsiiciAtiONS


10.7 The Contractor shall perform geological, geophysical and drilling works as provided


under clauses 10.3 (f/rsf Sub-Period) and 10.4 ISeeond Sub Prriodl (such works, the


"Minimum Exploration Obligations''!.


fiHSt Sua-Ptmoo


10.3 Subject to clause 10.5 lOuoli/rcofrons), during the fust Sub Period the Contractor shall:


(a) carry out geological and geophysical studies, comprising:


(1| the compilation of a technical database;


(2| the performance of a remote sensing study; and


<3| a field visit to verily Initial geological and geophysical work and remote


sensing results and plan for two dimensional seismic acquisition; and








36


 Production Mono? Conl/oct (Iota 0/e








(b) perform field work compiling structural. stratigraphic and lithologic mapping


and sampling;


(c) acquire, process and Interpret ISO line kilometre* of two dimensional seismic


data, or a three dimensional seismic data program by agreement between the


Parties, committing for this purpose a minimum financial amount of


USS4.000.000; and


(d) exeat only if the Contract terminates because the Contractor does not pay the


Capacity Building Bonus - Second Tranche in accordance with Article 32.1. drill


one C.ploration Well (the “Hot C.ploration Weir), including testing and coring


as appropriate, and commit for this purpose a minimum financial amount of


USS1S.000.000 for such first f.ploratlon Well.


StconoSuti-Peaioo


10.4 If the Contractor has notified the Government that the Contractor will enter Into the


Second Sub-Period in accordance with clause 6.9 (f.pirpfion a/ Stploiation Penod],


then, subject to clause 10.5 (Quali/rcaffons), during the Second Sub-Period the


Contractor shall:


(a) acquire, process and interpret further seismic data Ibeing cither two


dimensional or three dimenslonall, if the Contractor considers that the results


from the first C.ploration Well |ustlfy the acquisition of further seismic data;


and


(b) drill one C.ploration Well (the ‘Second C.ploration Well'), including testing


and coring as appropriate, and commit tor this purpose a min.mum financial


amount of USS1S.000.000. unless the Data from the fust £»ploration Well


demonstrates that there rt rso reasonable technical case lor dribng the Second


(■pioration Well in the Contract Area.


Qu*uiiCAno«


10.5 In respect ol the Minimum I>ploret>on Obligations under clauses 10.3 and 10.4. this


clause 10 5 apples


193.1 The Contractor shall satisfy the Minimum I.pteraton Oblations for a Sub


Period, even if satisfaction require the Contractor to spend more than the


Minimum financial Commitment for such Sub-Period


id.s.j If the Contractor has satisfied Its Minimum C.ploration Obligations for a Sub


Period without having spent the total Minimum financial Commitment for such


Sub-Period, the Contractor will be considered to have satisfied Us Minimum


f.ploration Obligations for such Sub-Period


io.s.s l.ccpt only if the Contract terminates because the Contractor does not pay the


Capacity Building Bonus - Second Tranche In accordance with Article 32.1, if


this Contract »s terminated during the first Sub-Period, and If the Contractor


has exprnded levs than USS1S.000.000 ns required by clause 10.3(d). and if


Clause 10.S 2 or douse 10.5 6 is not applicable, then the Contractor shall pay


the Government an amount equal to the difference between (») USS1S.OOO.OOO


and (y) the amount actually e.pended in accordance with the Approved Work


Plan and budget in respect of the Minimum Work Obligations for the first Sub








37


 SAeiw* C«tfron QMS Dir








Period. The Contractor shall make such payment on the Termination Date, and


the Contractor's obligation to make such payment will survive termination ol


this Contract.


to*.* H this Contract Is terminated during the Second Sub Period, and If the


Contractor has expended less than USS15.000.000 at required by clause


10.4(b), and If clause 10.5.2. clause 10.5.6. or 10.5 « Is not applicable, then the


Contractor shall pay the Government an amount equal to the dillerence


between |.| USSlS.000,000 and

accordance with the Approved Work Plan and Budget In respect of the


Minimum Work Obligations lor the Second Sub Period. The Contractor shall


make such payment on the Termination Date, and (he Contractor's obligation


to make such payment will survive termination ol this Contract.


lo.s.s The Contractor shall drill each exploration Well to the depth set forth in the


Approved fxploration Work Program, unless:


(a) formation Is encountered at a lesser depth than originally anticipated;


(b) basement Is encountered at a lesser depth than originally anticipated;


(c) in the Contractor's reasonable opinion, continued drilling of the


Exploration Well Is too haiardous because of abnormal or unforeseen


conditions,


(d) it is impractical to continue drilling with the Contractor's Assets,


because insurmountable technical problems have been encountered


(e) Petroleum formations have been encountered, penetration of which


will require laying protective casing as a consequence of which the


1 "ploration Well cannot be drilled to the depth required by the


Approved exploration Work Program;


(f) the Government and the Contractor agree to terminate the drilling


operation; or


(gl the Government confirms that the drilling obligation has been fulfilled.


>o.s» If the Contractor stops drilling for any of the reasons set forth in clause 10.5.5:


(a| the Exploration Well will be considered to have been drilled to the


depth required by the Approved Exploration Work Program; and


(b) the Minimum Exploration Obligations in respect of the Exploration


Well will be considered to have been satisfied,


lo&.r Any geological or geophysical work earned out or any seismic data acquired,


processed or interpreted or any Exploration Well drilled or any other work


performed in excess of the Minimum Exploration Obligations and any amounts


spent in excess of the total Minimum Financial Commitment in any given Sub-


Period, shall be carried forward to the next Sub-Period or any extension period


and shall be taken into account to satisfy the Minimum Exploration Obligations


and the total Minimum Financial Commitment for such subsequent Sub-Period


or extension period.











38


 rWucflon snoring Control! (Iota 0/e








lot.a The Minimum Exploration Obligations performed in the Fun Sub Period will


satisfy Ihe same Minimum Exploration Obligations (or Ihe Second Sub Period:


(a) lo Ihe extent, in the first Sub-Period. Ihe Contractor hat performed


Ihe Minimum Exploration Obligation! required (or Ihe Second Sub


Period; and


(b) l( the Contractor has notified Ihe Government thal Ihe Contractor will


enter into the Second Sub-Period In accordance with clause 68








Clause 11 - Exploration work Programs


GtntKM


11 1 Within 90 days following the Effective Date, the Contractor shall prepare and submit to


the Management Committee a proposed work program and budget in respect of


Exploration Operations (the “Exploration Work Program and Budget') for the


remainder of the Calendar Year.


11.7 Thereafter, no later than 1 October in each Calendar Year, the Contractor shall submit a


proposed Exploration Work Program and Budget to the Management Comrr.'ttee for the


following Calendar Year.


11.1 The Contractor shall not conduct any Exploration Operations unless there is an


Approved Exploration Work Program and Budget.


DtlARS


11.4 Each Exploration Work Program and Budget shall include deta.ls of. but not be limited


to, the following:


(a) work to be undertaken;


(b) materials, goods and eituipment to be acquired;


(c) cost estimate of services to be provided, including services bv third parties


(Including Affiliates of a Contractor Entity); and


(d) estimated expenditures, broken down by cost centre in accordance with the


Accounting Procedure.


AeraovAi ay Mahaoimmii Comwiiiii


11* The Management Committee shall meet within 60 days following its receipt of


Contractor's proposed Exploration Work Program and Budget, and either approve,


approve with conditions, or reject the proposed Exploration Work Program and Budget


11A Within such 60 day period, the Government may notify the Contractor of any


modification to the proposed Exploration Work Program and Budget requested by the


Government, and the Contractor shod promptly notify the Government of the


Contractor’s comments to the Government's requests.


lit.i If there is a deadlock in respect of the approval of a proposed Exploration Work


Program and Budget, then clause 8 19 will apoly.











39


Clause 12 - Discovery; Appraisal; Development 9 Contract Q«* On











Discovirtr Rirorti; RtimQutSHVtNt


12.1 The Contractor shall notify the Government of a Discovery within 4* hours of


completing tests confirming the presumed existence of the Discovery


12.2 Within 30 days following notification of the Discovery to the Government pursuant to





clause 12.1, the Contractor shall driver a comprehensive report (the 'Olscovery


Report"! to the Management Committee and the Government The Discovery Report


must detail all technical Data then available to the Contractor together w«h:


(aj the Contractor's opinion on the commercial potential of the Discovery, and





(b) a statement as to whether the Contractor (1) Intends to conduct Appraisal


Operations with respect to such Discovery. (2) will request an extension


pursuant to clause 6. or (3) both of the foregoing


11.1.1 The Contractor shaB promptly provide such other mformation relating to the


Discovery ai the Government reasonably requests.


Ill II the < untraetor notifies the Government m the Discovery Report that the Contractor





does not Intend to conduct Appraisal Operations, the Contractor shall send a not

relinquishment to the Government wrth.n not more than 10 days foRowmg the date of


the Discovery Report.


ll.ll In such notice of retosqunhment. the Contractor must provide 30 days' notice


to the Government of the relinquishment of an area contaeung. at a minimum,


the geological structure or feature m which the Discovery was made


11.1.1 Such relinquishment wl be effective as of the last day of such 30-day notice


period and will be credited to the Contractor's mandatory relinquishment


obligations under clause 7.1.


11.1.1 If the Corsuactor fails to deliver a notice of rebnquishment as provided in this


clause 12.3. an area containing, at a minimum, the geologicalstructure or


feature in which the Discovery was made will be considered relinquished as of


the 90” day following the date of the Discovery Report.


A?rhaiiai Won P«06«am a*o B joc.tr


114 If the Contractor has stated an intention m the Discovery Report to conduct Appr aital


Operations, within 60 days following the date of the Discovery Report the Contractor


tha< submit to both the Management Committee and the Government the Contractor's


proposed Work Program for Appraisal of the Discovery (the ‘Appraisal Work Program")


and proposed Budget with respect to such proposed Appraisal Work Program


114 i The Contractor shall include in such proposed Appraisal Work Program


(a) the area to be Appraised (the ‘Appraisal Area*), the surface of which


may not eiceed twice the surface of the geological structure or


prospect to be appraised; and


(b) the date the Contractor wil start Appraisal Operations and the date


the Contractor eipecls to complete Appraisal Operations








40


 Production Shanng Control! data 0/r








it.4.1 The Management Committee and the Government must complete their


respective review of the proposed Appraisal Work Program and Budget within


30 day' of its receipt by the Management Committee and the Government


11.4.3 If the Government requires any modification to the proposed Appralv.il Work


Program and Budget, the Management Committee shall meet to distuvv the


proposed Appraisal Work Program and Budget and the required modifications


thereto within 60 days from its receipt of the Government's required


modifications.


It.4.4 If the Management Committee does not receive a proposed Work Program and


Budget for Appraisal Operations within 60 days after the date of the Discovery


Report, at any time thereafter the Government may send a notice to the


Contractor setting forth that the Discovery will be considered as relinquished as


of the date set forth in such notice (which may not be less than 30 days), unless


the Management Committee has received a proposed Work Program and


Budget for Appraisal Operations.


11.4.» If the Management Committee has not received such proposed Work Program


Budget for Appraisal Operations within the period set forth in the notice from


the Government to the Contractor as set forth in clause 12.4.4. the Discovery


will be considered relinquished as of the last day of the notice period (subject


to clause 40 |fo»re Majeurr]).


A»»haisai Rieoar and Dtciaiaiions


12.5 The Contractor shall submit an Appraisal Report to the Management Committee w.thm


90 days following completion of the Approved Appraisal Work Program


12.5 Together with its Appraisal Report, in respect of ea

submit a declaration to the Management Committee specifying that the Contractor has


concluded one of the folowmg:


(a) the Discovery is a Commercial Discovery of Crude Oil;


(b) the Discovery is not a Commercial Discovery of Crude Oil or a Discovery of a


Gas Field;


(c) the Discovery is a Discovery of Crude Oil that may become a Commercial


Discovery of Crude OR. subject to additional Exploration or Appraisal w thus or


outside of the Appraisal Area;


(d) the Discovery is a Gas field and stating that the Contractor either intends to (1)


submit a Gas Field Holding Period Application in accordance with clause 14 J


(Goi field HoMmg Period Application!, or (2) the Contractor is rebnquishing the


GasFwId


12 1 If. with respect to a Discover, the declaration of the Contractor pursuant to clause 12.6


H that:


(a) the Discovery is not a Commercial Discovery of Crude Oil or a Discovery of a


Gas Field, then cUuse 7 3 will apply; or











41


 (b) lh* OrMovert it a Discovert of a Cat field, anfl the Contractor intends to


submit a Cat freld Molding Period Application * accordance with elaute 14


(MoiirofGotl. then clause 14 w>4 appfy-


12.« If. with respect to a Dncover* the decUrat>on of the Contractor pursuant to clause 12.6


it that the Discover* it a Commercial One over* of Crude 04 or that the Discover* ma*


become a Commercial Discovery of Crude Orl subject to additional Exploration or


Appraisal within or outside of the Appraisal Area, then the Government shall examine


the Appraisal Report and any studies, conchjwons. and other Data that it may obtain


within a reasonable period of time, taking into account the declaration submitted by the


Contractor in accordance with clause 12.6


ilt.i The Management Committee and the Government may each obtain opinions,


reports and studies, including a feasibility study, from independent third


parties.


12-4-2 If. in the yiew of each of the Management Committer and the Government, the


results of the Appraisal Report, studies or independent third party opinions


confirm that the Discovery is a Commercial Oncovery of Crude 04. then, unless


the Contractor has terminated the Contract or eaerersed *s rights to


relinquishment, the Management Committee shat erther:


(a) in the case of a Commercial Oiscovery. declare a Commercial Discovery


of Crude 04 and instruct the Contractor to submit a proposed


Development Plan m accordance w4h clause 12.9; or


(b) subject to clause 14 (Uiurnolicn). m the case of Discovery that may


become a Commercial Discovery subject to additional f ■ pioraton or


Appraisal within or outside of the Appraisal Area, Instruct the


Contractor to submit its proposed Appraisal Work Program and Budget


10 the Management Committee within 30 days.





Divctoeratrar Pi»n - Cnuot On


12 0 If the Management Committee has declared a Commercial Discover* of Crude Oil


pursuant to clause 12.8. the Contractor shall submit a proposed Development Plan for


Crude Oil to the Management Committee and the Government within 180 days


following the date of the Appraisal Report submitted pursuant to clause 12.S.


12 10 The Government shall endeavour to complete its review of the Contrattor’s proposed





Development Plan within 60 days after receipt of such plan by the Government


12.10.1 The Development Period for each Commercial Discovery within a Development


Plan will be extended for the number of days in excess of such 60 day period


that it takes for the Government to approve the Development Plan


12 11 If the Government requests any modifications to the Development Plan, and If the


Contractor notifies the Government of any objections or has other concerns with any


such requested modifications, then the Government and the Contractor shall meet as


soon as practical to attempt to reach agreement on a Development Plan.


11.11.1 The Contractor and the Government shall endeavour to have such meeting m


all events within 60 days of receipt by the Contractor of the Government's


written notification of requested modification* accompanied by ai: the


documents justifying such requrst.


12.11.2 If the Contractor and the Government arr able to agree on changes proposed


by the Government or any other modificatK>ns. and there are no further


requested changes on the part of the Government, the Contractor shall


formally submit the agreed Development Plan to the Management Committee,


and the Management Committee shall promptly approve the Development


Plan.


12.12 If the Contractor does not deliver a Development Plan in accordance with clause 12.9,


the Government may send the Contractor a warning notice that the Contractor is in


breach of clause 12.9 and that failure to comply within 20 days from the date of such


notice

structure or feature in which the Discovery was made.


12.12.1 If the Contractor does not deliver a Development Plan in accordance with


clause 12.12, the Government may send the Contractor a notice that the


Contractor is in breach of clause 12.9 and that failure to comply within 15 days


from the date of such notice will result in relinquishment of an area containing,


at a minimum, the geological structure or feature in which the Discovery was


made.


11.12.2 If the Contractor does not deliver a Development Plan in accordance with


clause 1 2.12.1, an area containing, at a minimum, the geological structure or


feature in which the Discovery was made will be considered relinquished as of


the IS'"' day loBow*»g the date o» the not.ee tent m accordance with clause


12.12.1.


Clause 13 - Development work Program


GtVMAI


1U The Contractor shall perform Development Operation* in accordance with a


Development Man approved by the Government and the Management Committee and


an Approved Development Work Program and Budget.


Ull This clause 13 appWs to Gas fields and Oil Fields.


Il l Within 90 days following approval ol a Development Plan by the Management


Committee and the Government, the Contractor shall prepare and submit to the


Government and to the Management Committee a proposed Work Program and Budget


lor Development Operations (the 'Development Work Program and Budget') to be


carried out in the Production Area lor the ei pec ted duration ol the Development


Operations.


IUI No later than 1 October m each lollow.ng Calendar Year, the Contractor shall


submit to the Management Committee updates in respect o1 its Development


Work Program and Budget.


 Production snoring Con foci (Iota 0/e








lf.j.I Inch Development Work Program and Budget shall include details of the


following:


(a) works to be carried out;


(b) Assets and Materials to be acquired,


(c) service providers and services to be provided by third parties and


Affiliates of a Contractor Entity;


(d) In the case of no production, the estimated start date for production;


and


(c) expected Petroleum Costs.


13.3 If the Government considers that modifications must be made to the Development


Work Program and Budget:


(a) the Contractor shall communicate its comments on any such requested


modifications to the Government as promptly as reasonable; and


(b) the Management Committee shall meet to discuss the Development Work


Program and Budget and the Government's proposed moddlcatons thereto


within 60 days from its receipt of the proposed Oeve cpmmt Wo»k Program


and Budget.


PnooucnoN Woa* PROdRAM ano Buoctt


13.4 No later than 1 October of the Calendar Year preceding the estimated start date for


production as set forth M an Approved Development Plan, and thereafter no later than 1


October in each Calendar Year, the Contractor shal preparr and submit to the


Management Committee a proposed Work Program for Production Operations (the


Production Work Program and Budget”) for (hr following Cav-dar Year


is.4.1 To enable the Management Committee and the Government to forecast


Petroleum Costs, the Contractor shall include details of the following in the


proposed Production Work Program and associated Budget


(a) svorks to be carried out;


(b) Assets and Materials to be acquired,


(c) type of services to be provided, distinguishing between third parties


and Affiliates of Contractor Entities; and


(d) all expected Petroleum Costs.


13.5 If any modification to a proposed Production Work Program and Budget or Approved


Production Work Program and Budget is requested bv the Government, the


Management Committee shall meet to discuss the Production Work Program and


Budget and proposed modifications thereto. The Contractor shall communicate Its


comments on any such requested modifications to the Government prior to such


meeting.


P«00UCII0N RtNVAl


li b From the first day of First Production from any Production Area (whether In respect of


an Oil Field or a Gas Field) in the Contract Area, the Contractor shall pay to the








44


 Government, in arrears. an annual surface rental ('Production Rental'I for the Contract


Area, of US$100 00 per square kilometre per Contract Year The Contractor shall pay the


Production Rental on the fust day of the first Month following first Production and


continual* thereafter on each anniversary thereof Production Rental payments will not


he Cost Recoverable








Clause 14 - Natural Gas


DinnmoMs


14.1 As used in this Contract:


'Approved Domestic Gas Marketing Work Program and Budget" Is a Work Program for


Domestic Gas Marketing Operations and associated Budget that has been approved by


the Management Committee and the Government.


Approved Gas Field Appraisal Work Plan and Budget" means an Approved Work Plan


and Budget for the Appraisal of a Gas Field.


'Domestic Gas Marketing Operations' means Gas Marketing Operations solely in


respect of the Domestic Market for Natural Gas, In all events carried out pursuant to and


in accordance with an Approved Domestic Gas Marketing Work Program and Budget.


'Domestic Gas Plan* means a plan for the sale or other disposition of Natural Gas to the


Domestic Market.


'Domestic Market" means sales or other gas projects within the Region where the


entirety of the Natural Gas is intended foe consumption wrthm Iraq.


'(■port Gas Marketing Operations' means alGas Marketing Operations n respect of


an Eiport Market for Natural Gas.


'(■port Market* means sales ol Natural Gat. including lor transportation outside of the


borders of Iraq, whether the dekvenes or pomt of sale occur msuSe or outside the


borders of Iraq where the ultimate destination of the vohimes sold is outside ol Iraq A


sale to the Government (whether directs or mdeecOy through a Pubic Company or


other Affikate of the Government designated by the Government) meeting the


foregoing criteria wit be within this definition


'Gas (aport Plan' meal's a plan for the sale or other dupos t on of Natural Gas to an


E«port Market, Including a sale of Natural Gas to the Government, a Public Company, or


otherwise. In accordance with a gas sales and purchase agreement with the Contractor


Entitles, as proposed by the Government.


'Gas Marketing Operations' means any activity relating to the evaluation of markets or


projects for the potential delivery, sale, processing, compression, and transportation ol


Natural Gas, including evaluations of potential markets and projects, the quantities ol


Natural Gas that could be sold, delivery specifications and requirements, production


costs, transportation arrangements, and all other activities generally relevant to the


Identification ol a sale or other disposition ol Gas from the Contract Area, and Includes


such activities as they may relate to Gas from other Natural Gas producers In the Region.


 Production Shone? Contract Qom On








"Gas Marketing Operations* does not Include the actual entry into any contract or


contract* for the vale, dedication, designation, commitment, or other disposal of Gas


from the Contract Area.








GlkliAi


1* 2 This clause 14 applies to (a) Gas (including Associated Gat) from the Contract Area and


(b) al Gat fields


1«.» H tech" tally and economicaBy justified. and sublet to clause 14.6. the Contractor may


freely use Gas that is produced from the Contract Area for Petroleum Operations in


accordance with an Approved Work Plan and lodge!


l«,4 tf technical* and economically justified, the Contractor shod, in priority, use Associated


Gas from nri Oil field in an Oil Field for the purpose of enhancing recovery of Crude Oil in


accordance with Best Practices.


14.5 The Contractor Entities each acknowledge that ■( is In their Interest to sell, dedicate,


designate, commit, or otherwise dispose of their respective entitlements to Gas


produced from the Contract Area on a jointly dedicated basis together with the


Government.


U.s.i Notwithstanding the lifting entitlements of a Contractor Entity under this


Contract, a Contractor Entity shall not land Is not authorised to| sell, dedicate,


designate, commit, or otherwise dispose or ship Its entitlement to Gas. except


on a jointly-dedicated basis together with the Government


14.1.1 A Contractor Entity shall not land is not authorised toj to »U. dedicate.


designate, comma. Of Of otherwise dispose of of ship the Government's Of


Government interest Holder s entitlement to Gas.


la.t.s Neither the Government, nor a Government Interest Holder has any right to


tel dedicate, designate, comma, or or otherwise dispose of or ship a


Contractor Cntdy's entitlement to Gat. except, in the case of Associated Gas. as


provided m clause 14.17.


»*-»-« The Government controls and determmet the interests of each Government


Interest Holder m respect of the sale, dedication, designation, commitment, or


other disposal or shipment of Gas. A Government Interest Holder shall not


commit, or otherwise dispose or ship at entitlement to Gas (and no


Government Interest Holder it authorised to set. dedicate, designate, comma,


or otherwise dispose of or shg> its entitlement to Gas|. except on a jomtly-


dedicated basis together wah the Government


»«»» No Contractor Entity is obligated to seB. dedicate, designate, comma, or


otherwise dispose of or th*> as entitlement to


(a) Non Associated Gas to the Government or any other Person, except


on such terms as are acceptable to the Contractor Entity; or


(b) Associated Gas to the Government or any other Person, except as


provided in Clouse 14.37.














40


 *»d*tno» Shaneq Co*met QMO Oit








KM The Government will not sell, dedicate, designate, commit, or otherwise


dispose of o« sh* its entitlement to Cat (including. m respect of the


Government, pursuant to clause 12 111. except on a jointly dedicated basis


together with the Contractor Entitles.


i4.s.r The Government may at any time by notice to the Contractor designate a Gas


Field or Gat Fields at exclusively dedicated and reserved For the Domestic


Market or the Eaport Market.


14.ta Nothing In this Contract prohibits the Government from inviting the Contractor





Entities to participate In any Person organited to undertake all or any part of a


Gas Export Plan or Domestic Gas Plan.








FlAHIMd


ia.6 flaring of Natural Gas Is prohibited, except:


(a) in accordance with an Approved Work Program and applicable Permits; or





(b) in an emergency.





14.7 The Contractor shall submit any request |0( a Permit For flaring to the Government.


M 7.1 The Contractor mutt Include in such rpquest for a Permit:





(a) an evaluation of reasonable alternatives to flaring that have been


considered by the Contractor together with information on the


expected amount and quality of Natural Gas to be flared and the


proposed duration of the requested flaring; and


|b) its consideration and plant for taking jb commercuBy reason able





measures to ensure the extracton of natur ai gasoline and other


liquids from Associated Gas to be flared





14 tt The Government may refuse to grant such Permit m the Government's sole


discretion, including in circumstances where the request reasonabfy shows that


flaring would be in the economic interest of the Parties or is necessary for the


production of Petroleum, and the Government has no implied duty to pronde


any Permit for flaring.








14i If the Contractor submits a declaration in accordance with 12.6(d) in respect of a


Discovery of a Gas Field, the Contractor may. not less than 90 days thereafter, submit a


written application (a 'Gas Field Holding Period Application') to the Government to


hold such Discovery as a Gas Field for a period at set forth m clause 14.10.


I4.».i The Contractor wd not be entitled to submit a Gas Field Molding Period


Application in respect of a Gas Field after the •" anniversary of the Effective


Date, and the Government will have no obligation or duty, and no implied


obligation or duty, to consider a Gas Field Holding Period Application received


after such date or to grant a Gas Field Holding Period with respect thereto.





■4.*.} If the Contractor does not submit o Gas Field Molding Application within such


90-day period, and elfective as o( the 120" day following the date the











47


 Production Sharing Contract Qata Die








Contractor lubrnittrd its Appraisal Report and declaration in accordance with


clause 12.6(d), the Contractor shall relinquish either:


(a) the entire Contract Area when there is no other Discovery and no


exploration Operations; or


(b) the structures containing the Gas Field, when the Contract is entitled


to conduct further Exploration Operations or there is a Discovery


14 0 The Contractor must Include Iri a Gas Field Holding Period Application:


(a) the proposed delineation and related surface area of the Gas Field;


(b) the estimated reserves in the Gas Field;


(c) a proposed Gas field Appraisal Work Plan and Budget, if either: (II the


Government has notified the Contractor that the Government requires


additional Appraisal Operations, or (2) the Contractor wishes to undertake


further Appraisal Operations; and


(d) Its proposed Domestic Gas Marketing Work Plan and Budget. ■! the


Government has notified the Contracted that the Gas Field Has been detonated


by the Government as e»clusrrefy dedicated lor the Domett* Market


14.5.1 Nothing in this clause 14-9 precludes the Government Irons instructing me


Contractor to prepare a Domestic Gas Marketing Work Plan and Budget at a


later date.


Gas Fltio HotOlNO Pt»«00


14 10 Upon the Government's approval of a Gas Field Holding Appixation and additional


submissions in accordance with clause 14 9. the Contractor will be entitled to hold the


subject Gas Field for a period as set forth by the Government in a notice to the


Contractor setting forth Its approval ol a Gas Held Holding Period Application |s..ch


period, as it may be shortened or extended In accordance with this Contract, the “Gas


field Molding Period*) as set forth in clause 14.11


14 11 The Government shall set forth a Gas Field Holding Period In accordance with this clause


14.11.


14.11.1 II the date the Contractor has submitted a Gas Held Holding Application Is


before the S" anniversary ol the Effer Uve Date, thrn the Government shall


provide a Gas Held Molding Period ol four years (such period terminating on


the 9" anniversary of the effective Oatel


14.11.2 If the date the Contractor has submitted a Gas Field Molding Application is on or


after the 5" anniversary ol the Effective Date and before the 6" anntversary of


the Effective Oate. then the Government shall provide a Gas Field Holding


Prnod of three years (such period terminating on the 9” anniversary of the


Effective Date),


14.M.1 If the date the Contractor has submitted a Gas Field Molding Application Is on or


after the 6*' anniversary of the Effective Date and before the 7"' anniversary of


the Effective Oate, then the Government shall provide a Gas Field Holding


 HWtnoa ft* 9 Contract Qan 0/t








Period of two years (such period termviatirg on the 9'* anniversary of the


effective Date).


IUU If the date the Contractor hat submitted a Gat Field Mold.nf Application is on or


after the 7“ anniversary of the effective Date and before the 8* anniversary of


the effective Oate. then the Government shad provide a Gas Field holding


Pecod of one year (such period terminating on the 9"' anniversary of the


Effective Date).


la.ii.ft If the date the Contractor has submitted a Gas field Holding ADpl>cation is on or


after the 8" anniversary of the Effective Date, Iri accordance with clause 14.8.J


the Contractor will not be entitled to a Gas Tield Holding Period.


14 12 If the Contractor submits a declaration in accordance with 12 G|d)in respect of





subsequent Discoveries of Gas fields, the Contractor may in respect of each such


subsequent Discovrry and not levs than 90 days thereafter, submit Gas Field Holding


Period Application to the Government to hold such Discovery as a Gas Field within the


eiistlng Gas Field Holding Period.


14.1*1 the Contractor must include in such Gas f 'rid Holding Period Application the


same Information as provided in clause 14.9.


14.11.1 The Contractor is not entitled to separate Gas field Holding Periods for each


Gas field, and Is entitled to only one Gas field Holding Period for all Gas Fields.


I*.II.I If the Contractor does not timely submit a Gas field Holding Period Application


In respect of an additional Discovery of a Gas field, such Discovery of a Gaft


Field .* not be entitled to a Gas field Holding Period.





Gas Fitio Hoiorna PtbOO RtniM


14.13 From the firit day of the Gas field Holding Period until e.pny of the Gas Field Holding


Period, the Contractor shad pay to the Government an annual surface rental lor that


portion of the Contract Area that is sublet to the Gas field Molding Period of USS 10.00


per square kilometre per Contract Year (the 'Gas Field Holding Period MnUl*|.


14-13.1 The Gas Field Holding Period Rental is due and payable m arrears on or before





each anniversary of the Effective Date and on the last day of the Gas Field


Holding Period or termination of this Contract (whichever is earlier), and is


subject to proration m any Contract Year during which there has been a


relinquishment or eapny of the Gas Field Holding Period, based on actual


number of days m such Contract Year.


U lij Gas Field Holding Period Rental wil not be Cost Recoverable.


f«u Tiaaraianoa aao liinovniuiai





14 14 If the Contractor fails to undertake and complete all work contemplated by and in


accordance with an Approved Gas Field Appraisal Work Plan and Budget with respect to


a Gat Field, the Government may provide not less than 90 days* prior notice (a 'Notice


of Early Termination of Gas Field Holding Period') to the Contractor that the Gas Field


Holdmg Period will terminate at the end of such 90-day notice period, unless the


 Production Sharing Contract Qata Die








Contractor completes. within such period. all such required work in accordance with the


Approved Gas field Appraisal Work Plan and Budget.


14.14.1 In any such notice of termination, the Government must provide reasonable


detail of all work that the Government considers that the Contractor has not


completed.





GOVINNMINI Pa 1041 TV Rights


14.IS The Government (directly or indirectly through a Public Company or an Affiliate of the


Government designated by the Government, or other designee of the Government! has


the exclusive right:


(a) to conduct all Export Gas Marketing Operations with respect to Natural Gas:


and


(b) to purchase for resale to Export Markets the entitlement of each Contractor


Entity to Natural Gas.


14 il l The Contractor shall not (and each Contractor Entity shall not and is not


authorised to:


(a) conduct any Export Gas Marketing Operations; or


(b) enter into any agreements for the sale, designation, dedication,


commitment, or other disposal of Natural Gas to Export Markets,


except to the Government (directly or indirectly through an Affiliate of


the Government designated by the Government or other designee of


the Government).


The Government hat no obfafation to And an Export Market lor all or any Natural Gat


14.16


produced from the Contract Area.


i4at.i The Government will incur no kjb.uty whattoever to the Contractor or to any


Contractor Entity or to any Government Interett Holder. 4 the Government


does not provide a Gat Export Plan that it acceptable to all other Partws.


Except as provided in clause 14 17 I. all expenses incurred by the Government m


14.17


respect of Export Gat Marketing Operetont are solely for the account of the


Government.


14.1M The Contractor shall reimburse the Government for all expenses meurred by


the Government •« its conduct of Export Gas Marketing Operations


(a) within 10 days after receipt of an invoice therefor; and


(b) provided that the Parties have signed a gas sales and purchase


agreement.


14.1U Payments made by the Contractor to the Government pursuant to clause


14.17.1 wl be Cost Recoverable.


The Contractor shall provide all assistance reasonably requested by the Government


14.18


with respect to the Government's Export Gas Marketing Operations.


1418.1 Expenses incurred by the Contractor »n providing assistance to the Government


in accordance with this clause 14 18 w4l only be Cost Recoverable if such


 Production Sharing Contract Quia 0/c








expenses are nscludrd in an Approved Work Plan and Budget, o*. if such


expenses are not included m the Approved Woek Plan and Budget or exceed the


amounts set forth m the Approved Budget, as provided in clauses 14.18.2 or


14.18.3.


i< it) Individual line dem eipenses m any Calendar Year of more than that set forth rts


the Approved Budget but less than 10% over such line-item amount will be Cost


Recoverable, if the Contractor has not died the Government of all such expenses


as soon as practical.


ta • Individual line-item eipenses in any Calendar Year of more than 10% of the line


item amount set forth In the Approved Budget svill only be Cost Recoverable only


if each such line Item eipensc ol more than 10% is approved by the Government


before the expense is incurred, unless the Government otherwise agrees


DoMtsitc G*s Mahiiiing Oi'ihahons


14.19 The Contractor and the Government:


(a) are each entitled to conduct Domestic Gas Marketing Operations; and


(b) shaU cooperate and coordinate m their Domes’.* Gat Marketing Operations


14.20 Eipenses incurred by the Contractor in its conduct of Domestic Gas Marketing


Operations wit only be Cost Recoverable if such costs are escluded m an Approved


Domestic Gas Marketing Work Program and Budget.


14JC.1 All expenditure incurred by the Contractor in the performance ol Domes’.* Gas


Marketing Operatont pursuant to an Approved Domestic Gas Marketing Work


Program and Budget will be Coit Recoverable.


14.10.1 The Contractor shall Include In each proposed Domestic Gas Marketing Work


Program all details as required by Government, including:


(a| works to be carried out;


(b) type of services to be provided, distinguishing between third parties


and Affiliated companies of each Contractor Entity; and


(c) categories of general and administrative expenditure


14.10.1 No later than 1 October of the Calendar Year preceding each Calendar Year in


which the Contractor proposes to conduct any Domestic Gas Marketing


Operations, the Contractor shall prepare and submit to the Management


Committee and the Government a proposed Domestic Gas Marketing Work


Program and Budget for the following Calendar Year


14.10.4 If the Government requests any modification to the Domestic Gas Marketing


Work Program and Budget, the Government and the Contractor shall meet to


discuss the proposed Domestic Gas Marketing Work Program and Budget and


proposed modifications thereto promptly alter the Contractor's receipt of the


Government's requested modifications of the proposed Domestic Gas


Marketing Work Program and Budget. The Contractor must communicatr its


comments to the Government in respect of any modifications requested by the


Government before such meeting.








SI


 Production snoring Conirott data Ore





14JB.S If the Government and the Contractor are not able to agree on the


modifications proposed by the Government, expenses incurred by the


Contractor wall not be Cost Recoverable.


IUI* Individual line-time expenses in any Calendar Year of more than that set forth





in the Approved Budget but less than 10% over such line-item amount mil be


Cost Recoverable, if the Contractor has notified the Government of ad such


expenses as soon as practical.





14 is l Individual line-item eapenses m any Calendar Year of more than 10% of the


line-item amount set forth in the Approved Budget will only be Cost


Recoverable only if each such line-item eipcnse o* more than 10** is approved


by the Government before the expense is incurred, unless the Government


otherwise agrees.





neither the Government, nor the Contractor:


(a) has any oblation to find a Domestic Market for Natural Gas produced from


the Contract Area; or





(b) w* incur any fcabifcty whatsoever to any Party (or any Government Interest


Holder), if such Party does not provide a Domett* Gas Plan that is acceptable


to all other Parties.





14 72 fhr Contractor is not obligated or otherwise responsible for 4->r npei dime incurred sv


the Government in the Government's conduct of any Domett* Gat Marketing


Operations.





CoNSlDtaAiioN 0f G*S DitPOtiiiON Pv**t - Ei'oai mo Oomistk


14.11 Neither the Contractor, nor the Government has any obbgation to agree to any Gas


(■port Plan or Domett* Gas Plan proposed by the other Party.


i4_2»a The Contractor and the Government must both agree on any Gat Iiport Plan or


Domett* Gat Plan.


14.7S-2 A Government interest Holder hat no right to evaluate, consider, or otherwise


approve a Gat Export PUn or a Domett* Gas Plan, and each Government


Interest Holder will be bound by the decision of the Government and the


Contractor with respect thereto


14.2* The Government has no obligation to consider any Domestic Gas Plan proposed by the


Contractor, unless the Government hat designated a Gas Field as exclusively reserved


for the Domestic Market.


14.24-1 No provision of this Contract peohRMt the Government from considering and


approving a Domestic Gas PUn proposed by the Contractor


14.25 The Parties may agree on both a Gat 14port PUn and a Domestic Gas PUn. or may agree


a Domestic Gas PUn on a standby basis « the event the Government does not propose a


Gas Export Plan.

















52


0»i Eaeoar Piau





14 24 The Covernment must provide a proposed |ai tele end purchase agreement as part of


Ihe Government's proposed Gat liport Plan


14.27 The Contractor »il have not lest than 90 days from the date that the Government first


provdrt a Gas Export Plan to the Contractor (such 90 day period. at it may be extended


by Ihe Government pursuant to clause 14 27.1. the 'Export Plan Evaluation Perlod'l to


evaluate the Gas Export Plan, make any recommendations with respect thereto, and


■ons-der the reouirements of a Development Plan that would be necessary to enable the


Contractor to determine whether Gas Esport Plan renders a Gas field economic lor the


Contractor to develop


I4j».i The Government may agree to extend the f sport Plan Evaluation Period for


such period as the Government sets forth in a notice to the Contractor.


UJtj If the Export Plan Evaluation Period extends beyond the last day of the Gas


Holding Period, the Gas Holding Period will be extended for such excess days.


14 21 If. at the conclusion of the Export Plan Evaluation Period, the Contractor and the


Government have not agreed a Gas Export Plan as proposed by the Government, the


Government may send a notice (a 'Holding Period Early Termination Notko') to the


Contractor that the Gas field Holding Period will terminate as of the date set forth in


such notce.


is la i The date set forth in the Holding Period Early Termination Notice may not be


earlier than the scheduled expiry of the Gas field Holding Period and may not


be earlier than the JO dayt after the date of the notice.


is.is.2 II at Ihe conclusion ol Ihe notice period as set forth in the Molding Period I ariy


Termination Notice land any c.tensions thereto provided by the Government


to Ihe Contractor In a subsequent notice), the Contractor and the Government


have not agreed on a Gas Export Plan, the Gas Field Holding Period shall


terminate and all Gat fields subject to the Gas field Holding Period will be then


be considered as fully relinquished to the Government.


14.JI.I The Contrac tor and Ihe Government will only be considered to have agreed to


a Gas Export Plan proposed by the Government when the Parties (as sellers)


have signed a gas sales and purchase agreement with the Government |or any


Affiliate of the Government or other Person designated by the Government as


contemplated by the Gas Export Plan) as the purchaser


Domisiic Gas Pian


14.29 If the Government notifies the Contractor that the Government has designated a Gas


field as reserved for Domestic Markets, the Contractor shall:


(a) propose a Work Program and plan for Domestic Gas Marketing Operations and


associated budget;


(b) carry out Domestic Gas Marketing Operations In accordance with an Approved


Domestic Gas Marketing Plan and Budget; and


(c) propose a Domestic Gas Plan at any time.


 Co-r-oct Qmd«








14.30 If the Government ha* designated the Gat field at exclusively reserved foe Oomestie


Markets, the Government shal give reasonable consideration to a Domestic Gat Plan


proposed by the Contractor.


DtvtioeMtNt Pt»*


14.31 WKhm 90 dayt alter Government and the Contractor have agreed to a Gat C■port Plan


or a Domestic Gat Plan, the Contractor shal prepare and deliver a Development Plan lor


the Development ol the Gas fields m the Contract Area, me hiding the sequencing and


timing of the development of the Gas fields and the ea pec ted first Production


corresponding to the required delivery requirements under the appl«able agreed plan.


14.32 If the proposed Development Plan is not satisfactory to the Government, the


Government shall so notify the Contractor and meet with the Contractor to discuss the


proposed Development Plan.


14.33 If the Government has not approved a Development Plan withm ISO days following


agreement of a Gas Export Plan or Domestic Gas Plan, as applicable, the Government


may send the Contractor a notice (the "Gas Development Period Early Termination


Notice" I setting forth a date, which must not be less than 30 days from the date of the


Gas Development Period Early Termination Not

relinquished as of the date set forth m such notice unless the Government has accepted


a Development Plan for the Gas f

14.34 If at the conclusion of the 30-day notice period 4% set forth m the Gas Development


Period Early Termination Notice land any extensions thereto provided by the


Government to the Contractor in a subsequent notice), the Government has not


accepted a Development Plan proposed by the Contractor, all Gas fields will Be


considered as fully relinquished to the Government. If the Contractor is not then


entitled to any rights to produce and develop Crude Oil. this Contract mil thereupon


terminate.


14.35 If the Conlractor does not develop a Gas field within the periods as set forth in


Approved Development Plan, subject to clause 40 (force Mojeure). the Government may


send the Contractor a Gas Development Period Early Termination Notice setting forth a


date, which must not be less than 30 days from the date of the Gas Development Period


Early Termination Notice, that the Gas field wil be considered reSnqurshed as of the


date set forth in such notice.


Gas Dtvtioesatut Ptaeo


14.36 The approval of the Development Plan for a Gas field by the Government ail entitle the


Contractor to retain its rights in respect of the Gas Field subject to such Development


Plan lor the duratmn of the Development Period.


Suaeuis Assoc lam o Gas


14.37 The Contractor shall, at the request of the Government on not less than 90 days' prior


not*e. deliver to the Government all Associated Gas produced that is not (a) used in the


Petroleum Operations. |b) re-injected, (cl permitted to be flared in accordance with


clause 14 6.ot |d) sold m accordance with a Gas Eaport Plan or a Domestic Market Plan.











U


 Production Shanty Contracl Qaia Ore








14.J7.1 The Contractor shall separate. gather, compress, and deliver tuch Associated


Gav to the Government at a delivery point at the boundary of the Contract Area


or gat processing plant at agreed between the Government and the Contractor,


free of charge to the Government.


ic.sm If at any time there It a regional main gat pipeline, the Contractor thail


trantport and deliver the Associated Gat to tuch He m point at It determined


by the Government, meeting pipeline tpedficatlont, unlett It It uneconomic.


i«.»M All expenditures Incurred by the Contractor up to tuch agreed delivery point.


Including pipeline construction and operation, compression, treatment, and


procetting, will be Coil Recoverable.





14.38 The Government will be tolely I a | retpontible for collecting, treating, compretting, and


trantportmg from the agreed delivery point all Atvociated Gat delivered to the


Government purtuant to claute 14.18; and |b) liable for all com, expenses. and


liabilitiet In retpect of tuch Atiociated Gat after the agreed delivery point.


14.39 fach Contractor tntlly't entitlement to Atiociated Gat from an Oil field will be


governed by the duration allowed for the production of Crude Oil under claute 6.13 and


6.14.





Gas PmuNts


14.40 The Contractor land no Contractor Entity or Government lotereit Ho’>Ser| it not entitled


to (and shall not| thlp or otherwite trantport Natural Gat outside of the Contract Area,


except on a joint dedicated, common stream basts with each other Contractor tntity and


the Government.


14 41 The Contractor a not authorised to construct any pipe net for the transportation of


Natural Gas to the Export Market or the Domestic Market, except m accordance wdh a


Gas Export Plan or a Domestic Gas Plan, as applicable, and the applicable Approved


Development Plan and Approved Work Plan and Budget.








Clause 15-Accounts: Operations


Accounts


IS 1 The Contractor shall maintain in accordance with the Accounting Procedure and


accepted accounting practices generally accepted m the international Petroleum


industry and. to the extent compatible with such practices. «n accordance with US


GeneraBy Accepted Acccunlmg Principles or International f -ancial Repotting Standards,


(in either case consistently appliedl. at its business office m the Kurdistan Region, al


records of account and such other records in respect of the work performed under this


Contract, the costs incurred, and the amount and value of al Petroleum produced and


saved from the Contract Area (the 'Accounts*)


iS-i-i The Accounts must reflect in detail a« expenditures incurred and revenues


received.


 Production Sharing Controct Ooia Ore








It.1.1 The Contractor shall keep copies o( the Accounts for the entire term of this


Contract.





ti l l All Accounts shall be prepared in the English language.


It.1.4 The Contractor shall record and maintain the Accounts in US$.





It.l.t The Contractor shall make the Accounts ava able at its offices in lurdistan


Region at all reason asle times for inspection and audit by representatives of


the Government, including independent auditors that may Be employed by the


Government-


In addition to all other reports required by this Contract, within 90 days following the


IS 2


end of each Calendar Year, the Contractor shall submit to the Government a detailed


statement of |a| all Petroleum Costs incurred in respect of such Calendar Tear and (b)


calculations of Profit Petroleum pursuant to clause 26.


Ill i The reports must be accompanied by a report of Repsofs ultimate parent





company's auditors confirming the accuracy of such statement.


1111 The Contractor shall provide the Government with such production statements


and reports as required pursuant to clause 16.4.





Auo«t


IS.I The Government is entitled:


(a| to mspect and audit the Accounts with respect to each Calendar Year at any





time within a period of five Calendar Years following the end of such Calendar


Year (the 'Audit Request Period*}: and


(b) to appoint an auditor of International standing familiar with international


petroleum industry accounting practice to undertake or assist the Government


with respect to any audit


The Contractor shall pay all costs and fees ol an auditor appointed by the Government


15.4


pursuant to clause IS.3(b). whtch costs and expenses will be Cost Recoverable.


IS. 5 The Contractor shall provide all supporting records and information requested by the





Government In support of a Government audit.


IS.6 If, as a consequence of an audit, the Government considers that there is significant


mistake or Irregularity in respect of the Accounts, the Government shall notify the


Contractor of such mistakes or irregularities within 6 Months following the date the


Government completes the audit. If the Government fails to notify the Contractor of any


audit exceptions within such six month period, the relevant Accounts subject to the


Government’s audit will be presumed to be rorrect.


Within 60 days of any notification from the Government pursuant to clause 15.6. the


IS 7


Contractor shall either (a) make necessary corrections, adjustments or amendments, or


(b) notify the Government of the Contractor's objections, concerns, or other comments


with respect thereto.














56


 Prodvctto* Snore? Co*iroct Qo-c Die








15JJ If the Contractor notifies the Government of objections. concerns, or other


comments as provided m clause 15.7. the Government shall, within 30 days


following receipt of such notice, notify the Contractor of the Government’s


response to the Contractor's objections. concerns, or other comments.





15.8 Any Dispute between the Parties under clauses 15.3 through 15.7 that cannot be settled


amicably within 60 days of the Government's final notice under clause 15.7 is subject to


resolution by an Expert »n accordance with clause 42.








Clausc 16 - Other Contractor Rights and Obligations


Pum*w»t RliaillMKInl


U I WrEh*s 90 days follow** the Effective Date, each Contractor Entity than open an office


and appoint a permanent representative in the Kurdistan Region


Couponoi Pit toil uu OriMidti


11 1 The Contractor thall be responsAite foe the conduct, management. control and


admin istrat*>n of Petroleum Operation! In accordance with th

it J In conduct** itt Petroleum Operations, the Contractor may use any All date of each


Contractor Int.ty. .It and their Subcontractor!, and the employees, consultants, and


agents ol each of the focegomg.


lufO«M*tiONANuRtro»is


IS 4 The Contractor shall provide the Government with periodic Data and activity report!


relating to Petroleum Operation!. The Contractor vtsall include detail! of the following in


such period Data and activity reports:


(a) information and Data regarding all Petroleum Operation! performed during the


Calendar Vear. including any Quantities of Petroleum produced and sold;


(b) Data and information regarding any transportation facilities built and operated


by the Contractor:


(e) a statement specifying the number of personnel, their title, their nationality as


well as a report on any medical services and equipment made available to such


personnel; and


(d) a descriptive statement of all Assets deployed since the previous report.


Including all costs associated therewith.


REQUIREMENT 10" PlIROllOM Oft RADONS


16.S The Contractor may freely use any Petroleum produced within the Contract Area for (he


Petroleum Operations.





Supervision


16.6 The Contractor shall at all limes provide reasonable assistance as may reasonably be


requested by the Government during its review and verification of Accounts and records


 rtoduttton snorifi^ Contract Qo/o O/e








and of any other information rotating to Petroleum Operations at the offices, worksites


or any other facilities of the Contractor.


16.6.1 Upon giving reasonable prior notice to the Contractor, the Government may


send a reasonable number of representatives to the work sites or any other


facilities of the Contractor in the Kurdistan Region to perform such reviews and


verifications.


16.6.2 The representatives of the Government shall at all times comply with any safety


regulations imposed by the Contractor, and the Government shall use


reasonable efforts to ensure that such reviews and verifications do not hinder


Petroleum Operations.


Access to f ACIUTItS


16.7 For the performance of the Petroleum Operations, the Contractor, any Affiliate of each


Contractor Entity, its and their Subcontractors and the employees, consultants and


agents of each of the foregoing shall at all times be granted free access to the Contract


Area and to any facilities for the Petroleum Operations located within or outside of the


Contract Area or within or outside the Production Area, for the purpose of carrying out


the Petroleum Operations.





Usi or f acmins


16.8 Upon notice from the Government, the Contractor shall make available to a reasonable


number of representatives of the Government those of the Contractors facilities which


are necessary to enable such representatives to perform their tasks related to this


Contract and the Kurdistan Region O.l and Gas Law including, in case of works to be


performed on work sites, transportation, accommodation and board, under the same


conditions as those provided by the Contractor for its own personnel.


16 * Notwithstanding clause It «. the Government shal indemnify and hold harmless each


Contractor Entity against ad losses and Eapenses in respect of any claim, demand, action


or proceeding brought against any Contractor Entity by any representative of the


Government in connection with the access to or use of the facilities by such


representatives, e.cept for any losses or Eipenses caused by the gross negligence or


wMul misconduct of any Contractor Entity, any of its Subcontractors, or any of their


respective employees or agents


loss oa Dimm t


16.10 The Contractor shall be responsible for any loss and Iipcnse or other damage caused to


third parties by any Contractor Entity or its Subcontractors or their respective personnel


in the conduct of Petroleum Operations or otherwise m accordance w.th Kurdistan


Region laws


lattuictuAt PaoMilv Rich is


16.11 The Contractor shall not mfnnge on any .ntellectual property rights of any other Person.


birflATtorr





16.12 The Contr.ii tor shall as soon as reasonably practicable inform the Government ol any


litigation relating to Petroleum Operations or this Contract.


 Proevd'C* SKcneg Con r-o* I OMo On








P«OOuCtM>« Rates


U II In connection with a generat flumon to reduce production across Iraq. the Government


nji require the Contractor to vet the production rate ol Reservoirs below the MIR lot


such Reservoirs at provided lot «n the Development Plan.


IUM II the Government issues a requirement as provided in clause 16.16, the


Government vhall allocate any such reduction fairly and equitably among the


variouv production areat then producing in the Kurdistan Region, pro 'Ola thee


revpectve production rate* at of such allocation date, and with a view to


prudent J location among tuch blocks.





L»n*6 The Government and. subject to clauiei 32.11(a) and (b). each Government Interest


16.14


Holder, and each Contractor (ntity have the right and the obligation to take in kind and


separately sell or otherwise dispose of their respective shares of Petroleum in


accordance *«h clauses 2S. 26 and 27.





It It Not less than 12 Calendar Months prior to the Date of start of Commercial Production


from any Development Area. Contractor shal submit to the Management Committee


and the Government lot respective approvals proposed procedures and terms in respect


of the scheduling, storage, and bfting of Petroleum by each Contractor Entity, the


Government, and each Government Interest Holder from each Production Area,


including rights of kftmg Parties, notification time, mairnum and minimum quantities,


duration of storage, scheduing. conservation, spdlage. liabilities of the Parties, and


penalties for over and under lifting, safety and emergency procedures. None of the


Government, the Contractor, a Contractor Entity, or a Government Interest Holder may


lift any Petroleum until vuch procedures and agreements have been established by


agreement of the Contractor and the Government,


Ri&iorras Consumrtioii RtQuintMirm





U.lt The Contractor Entities shall sell and deliver to the Government, upon written request of


the Government, any amounts of Crude Oil that the Government shell request to meet


Kurdistan Region Internal consumption requirements.


is.16.1 The Government shall pay the International Market Price lor such Crude Oil.


The Contractor Entities and the Government shall enter Into a sales agreement


covering such purchase and sale containing normal commercial terms


prevailing In the International petroleum industry.


1616.2 The Government shall provide the Contractor Entitles with not less than 180





days' advance written notice of its intention to buy such Crude Oil.


IS.I6.S On such notice, the Government shall specify the volume ol Contractor's


entitlement required, the particular quality desired |wherc more than one


Petroleum quality Is produced In the Contract Area) and the duration lor which


such Petroleum will be purchased.


is.16.« On such notice, out ol the total quantity of Crude Oil to which the Contractor is


entitled from the Contract Area m a Calendar Tear, each Contractor Entity shall


 Production Shorn**) Control! data OH








providr tor the period requeued Dy Government up lo such Contractor Entity *


pro rata share of Crude Oil.


16.16.0 The Government l» entitled to trade *uch Crude Oil. whether tor a quality that


meet* the Government'* requirement* or otherwise.





16.17 In case ot war or imminent apprehension ot war or grave national emergency, the


Government may requliitlon all or a part ot the Petroleum production trom the Contract


Area and require the Contractor to maximise such production. The provision* of dau»e


16.16.1 regarding delivery, price, and payment thall al*o apply to any Crude Oil »o


requisitioned from the Contractor.





16.18 It the Government impose* an obligation on the Contractor or the Contractor tnt.tie* to


sell to the Government In accordance with dauiet 16.16 or 16.17. the Government shall


use reasonable endeavour* to impose such obligation proportionally among the


operator* then producing in the Kurdistan Region bated on each operator's product***


rate.








Clause 17 - Use of Land and Existing Infrastructure


GlNEDAl


17.1 The Government thal make available to the Contractor any land W the Kurdistan Region


outside ot the Contract Area which the Government n satisfied i* reasonably required


for Petroleum Operation*. The Contractor than hove the nght to build and maintain,


above and below ground, anv facilities required for the Petroleum Operation*





i*t> Pamty Land*


17.2 If it becomes necessary for conduct of the Petroleum Operations to occupy and u*e any


land in the Kurdistan Region belonging to third parties, the Contractor shall endeavour


to reach amicable agreement with the owners of such land. If such amicable agreement


cannot be reached, the Contractor shall notify the Government.


17.2.1 On receipt of such notification:


(a) the Government shall determine the amount of compen*ation to be


paid by the Contractor to the owner, if occupation will be for a *hort


duration: or


(b) the Government shall expropriate the land or property in accordance


with Kurdistan Region law, if such occupation will be long lasting or


makes it henceforth impossible to reiurne original usage of »uch land


or property.


17.2.2 Any property rights shall be acquired by and recorded in the name of the


Government, but the Contractor shall be entitled free use of the land or


property lor the Petroleum Operations for the term of this Contract.


17.2.3 The amount of the compensation in clause 17.2(a) shall be fair and reasonable,


in accordance with clause 29 of the Kurdistan Region Oil and Gas law, and thall


take into account the rights of the owner and any effective use of the land or


property by its owner at the time of occupation by the Contractor.





60


 Production snortng Conuocl Qaia Die








17.1.4 All reasonable tow, expenditure! and fair and ip.ivon.iblr compensation (as


required pursuant to clause 29 of the Kurd.stnn Negron Oil and Gas Law) which


results from such expropriation shall be paid by the Contractor and will be Cost


Recoverable.





iNtRASIRUCTUM


17.3 for Its petroleum Operations, the Contractor shall have the right in the Kurdistan Region


to use. sub|ect to Applicable law, any railway, tramway, road, airport, landing field,


canal, river, bridge, or waterway, any telecommunications network and any existing


pipelines or transportation Infrastructure, on terms no less favourable than those


offered to other Persons and, unless generally in force, to be agreed.


17.4 The Government shall have the right in the Kurdistan Region to build, operate and


maintain roads, railways, airports, landing strips, canals, bridges, protection dams, polite


stations, military Installations, pipelines (subject to clauses 14 and 38) and


telecommunications networks in the Contract Area, provided this does not increase the


costs, or compromise or have J material adverse effect on the performance of the


Petroleum Operations. If the construction, operation and maintenance of such facilities


by the Government results In Increased cost or expense for the Contractor then such


cost and expense will be Cost Recoverable.


17.J Under national emergencies due to environmental catastrophe or disaster, or internal or


external war, the Government shall have the right to request to use any transportation


and communication facillt.es Installed by the Contractor. Any associated costs, expenses


or liabilities Incurred by the Contractor will be Cost Recoverable.











17.6 In the conduct of Petroleum Operations, the Contractor hat the rght m the Kurdistan


Region, subject to compfcanee with applicable Kurdistan Region law and IMS Standards,


to clear land, excavate, drii. bore, construct, erect, place, procure, operate, emit and


discharge, manage and maintain ditches, tanks. weNs. trenches, access roads,


excavations, dams, canals, water mams, plants, reservoirs, bairns, storage and disposal


facilities, primary distillation units, extraction and processing units, separation units,


sulphur plants and any other facilities or msta'iationt for the Petroleum Operations, in


addition to pipelines, pumping stations, generators, power plants, high voltage lines,


telephone, radio and any other telecommunications systems, as well as warehouses,


offices, sheds, bouses for personnel, hospitals, schools, premises. d*et. vehicles,


railways, roads, bridges, airlines, airports and any other transportation facilities,


garages, hangars, workshops, foundries, repae shops and any other auxiliary facilities


for the Petroleum Operations and. generally, everything which is required for its


performance of the Petroleum Operations The Contractor has the right to select the


location for these faedities.


17 7 Tor the conduct of Petroleum Operations, the Contractor shall have the right in the





Kurdistan Region, subject to compliance with applicable Kurdistan Region law and EMS


Standards, to remove and use the topsoil, fully grown limber, clay. sand. lime, gypsum,


stones lothcr than precious stones) and other similar substances as required for its


Pelroleum Operations.














61


 17.« Subject to Applicable La* and compliance w*h IMS Standards, trie Contractor shad have


the right in the Kurdistan Region to take ot use any urate* necessary lor the Petroleum


Operabons. provided it does not damage any enstmg irrigation or navigation systems


and that land, houses or watering points belonging to third parties are not deprived ol


their use











17.9 Upon request o« the Contractor, the Government shall prohibit the construction o»


residential or commercial buildings in the vicmrty ol lac dities used lor the Petroleum


Operabons that may be declared dangerous due to Petroleum Operations and to


prohibit any mterlerence with the use ol any lacddies required lor Petroleum


Operabons.


Access


17.10 Access to the Contract Area may be granted psrrsuant to an access authorisation, as


detmed in. arid consistent with, the Kurdistan Region OK and Gas law to authorised third


parties on reasonable terms and conddions (including coordination), including Persons


authorised to construct, install and operate structures, fabbbes and installations, and to


carry out other works, provided that nothing m such access authorisation or m this


clause 17.10 authorises the holder of an access authorisation to drdl a Wei or to


perform any Petroleum Operations in the Contract Area.


17.11 The Government shal give the Contractor adequate advance notice of any access


authorisation in respect of the Contract Area and shad not grant any access


authorisation In respect of the Contract Area until it has taken into account any


submissions made by the Contractor nor in such a way that there is undue interference


with or hindrance of the rights and activities of the Contractor.


Clause 18 - Government Assistance


18.1 To the client allowed by Applicable law and at the specific request of the Contractor,


the Government shall take all necessary steps to assist the Contractor Entities in. but not


limited to, the following areas:


(a) securing any necessary Permits for the use and Installation of means of


transportation and communications;


(b) securing regulatory Permits in matters of customs, import, or export;


(c) securing entry and exit visas, work and residence permits as well as any oilier


administrative Permits for each Contractor T ntity's. its Affiliate's and its


Subcontractors' Expatriate personnel (Including their family members) working


In the Kurdistan Region and any other part of Iraq during the implementation of


this Contract;


(d) securing any necessary Permits to send Abroad documents. Data or samples for


analysis or processing for the Petroleum Operations;


(e) relations with federal and local authorities and administrations, including for


the purposes of the remainder of this clause 18.1;


(f) securing any necessary environmental Permits;








62


 (si obtaining any other Permits requeued by any Contractor Entity for the


Petroleum Operations:


(h) access to any eOstmg Data and information. include* Data and information


relating to the Contract Area held by previous operator* or contractors: and


(i) providing all necessary security for Petroleum Operations.


IH The Contractor shall pay reasonable and justified expenses mcurred by the Government


with respect to its undertakings under this clause !• against an mvo

from the Government. Such payments anil be Cost Recoverable.








CLAUSE 19 - ASSETS AND MATERIALS


It I The Contractor shall supply, or procure the supply of. Assets, materials, and


consumables required for Petroleum Operations ('Assets and Materiah'|.


It * The Contractor shall provide Assets and Materials in accordance w.th the relevant


Approved Work Program and Budget.


PiocuaiMt*t Paocieuats


It I As soon as possible after the Effective Oate. the Contractor shall provide the


Management Committee with a copy of its procedures for procurement of Assets and


Materials and services for the Petro cum Operations as required by clause I <[r;


including the criteria for tender evaluation.


19.J.1 Such procedures and criteria must provide for Ian and transparent tender


evaluation and be In accordance with Best Practices and Applicable law.


19.4 If the Management Committee does not request any modification* to the procurement


procedures within JO days after receiving such procedures, the procedures shall be


considered approved by the Management Committee


19.5 The Conlrat tor shall give priority to Assets and Materials that ate readily available in the


Kurdistan Region and other parts of Iraq to the extent their price, grade, quality,


quantity, specifications, purchase, delivery and other commercial and technical terms


are comparable In all material respects with those otherwise available to the Contractor.








Clause 20 - Title to Assets


TiHtTiawsrt*


20.1 'Title Transfer Date" means the earlier of:





(a) the first date on which Use *R* factor. a* calculated m accordance with clause


26. Iv equal lo 1.00: or




 Production snoring Com rod (I ola 0/e








10 2 Subject to (Imm 2 1. on the Title Transfer Oate. all Assets ol the Contractor a Contractor


Entity. or the Operator (or any ol their respective Affiliates) in the Kurdistan Region will


become the property ol the Government


10 I Unti the Title Transfer Oate. all Assets in the turdnUn Region are the property ol the


Contractor, the applicable Contractor Entity. any Af Abate ol a Contractor Cntdy. the


Operator, or a Subcontractor, as the case may be





10.4 The provisions ol clause 20 2 » ■ not aaply to any Assets


(a) leased by the Contractor, a Contractor Intity. or the Operator m accordance


with an operating lease that has been approved by the Management


Committee; or


|b) belonging to or leased by a Subcontractor or an AIMutr ol such Subcontractor.


Clause 21 - use or assets


••Out


11 1 Whether before or alter the Title Transler Oate and whether before or alter recovery ol


the cost ol any Assets, the Contractor, each Contractor Entity, and the Operator shall at


all tlme» have the nclutne right to use aH Assets in the Kurdistan Region for Petroleum


Operations free ol any charge by the Government


No TR«NSrca »rGovta*wtat


21.2 During the terra ol this Contract, the Government shall not transler or otherw ite


dispose of any Assets without having received prior notice ol the Contractor's consent.


Comaacioe Rioirior w ruts


21.3 The Contractor may freely move any Assets and Materials from any relinquished portion


of the Contract Area to the remaining part ol the Contract Area or If ora any other


contract area m the Kurdistan Region with respect to which the Contractor is a party to a


production sharing contract with the Government lor use Ml petroleum operations


under such contract








Clause 22 - Subcontractors





GfMBAt


22.1 The Contractor shaB ensure m accordance with Best Practices that each Subcontractor


has all requisite experience and quabficationt.





Loon Pititathct


22J The Contractor shall give priority to Subcontractors from the Kurdistan Region and other


parts of Iraq to the eaten! thee competence, rates, eaperience. reputation,


qualifications, specialties, financial capacity, availability, delivery and other commercial








64


 Production Shanty (ontocl Qaia D:e








lorm* are. In the Contractor'* sole opinion, comparable In all material reipocti with


tho*e provided by foreign companies operating in the international petroleum industry,


and will not cause any Contractor Entity or its Alllluites to violate any law applicable to


It, including Corrupt Practices Laws.


11,11 A Subcontractor will not qualify as "from the Kurdistan Region and other parts


of Iraq" unless it is organised under Applicable law or the laws of Iraq,


domiciled In Iraq, and majority-owned and Controlled by otliens of the


Kurdistan Region or Iraq.





Piocurimini PaociouHis


11.1 The Contractor shall select its Subcontractors In accordance with the procurement


procedures approved by the Management Committee pursuant to clause >9. J.


ll.l.l Each contract with Subcontractors must include a provision that obligates such


Subcontractor to comply with Corrupt Practices laws In the Subcontractor’s


performance of the contract.


11 « The Contractor shall provide the Government with copies of each contract with


Subcontractors where the contract amount eaceeds the limit set by the Management


Committee from time to time.








Clause 23 - Personnel; Training; assistance


Expatriate Work Permits


23.1 Any Eapatriate personnel working in the Kurdistan Region wil require issuance of a


Permit from the Government (such Permit not to Be unreasonably delayed or withheld)


and the Government shii obtai* any Permit required by the federal government o* Iraq


loc*i Pitftiiaict


23.2 for the Petroleum Operations, the Contractor shall give, and shai requite its


Subcontractors to give, preference to citiaens of the Kurdistan Region and other parts of


Iraa to the eatent such citizens have the technical casaSlity. qualifications, competence,


and eiperience required to perform the work, are available at competitive


compensation rates, and their employment would not cause the Contractor, any


Contractor Entity, any of its Affiliates, or any of its Subcontractors to violate any law


applicable to it.


233 Each Contractor Entity and its Affihates and Subcontractors have the right to hue


Eapatriate personnel whenever the personnel from the Kurdistan Region and other parts


of Iraq do not have the requisite technical capability, qualifications or eiperience for


positions to be filed as required pursuant to clause 23 .2.


isi.i In the event any Eapatriate personnel or a member of such (ipatnate's family


engages in an activity or commits an act in breach Kurdistan Region law. the


Contractor shaR. at the request of the Management Committee, tale the


necessary steps to repatriate such mdrviduaKs).


 ProOuction snoring Contrail Qota O/e








MinistryCapacity Buuoino Paymjnis and In Kino Assisianci





23.4 The Contractor shall give tcasonable consideration to the secondment o( Government


personnel to the Contractor and of the Contractor's personnel to the Government


during the various phases of the Petroleum Operations. The Government and the


Contractor shall agree on trrrns and conditions for such secondment, and any costs


associated therewith will be Cost Recoverable


23.5 For the first five Contract Years, the Contractor shall pay to the Government USS2S0.000


In advance each Contract Year for the recruitment personnel, whether from the


Kurdistan Region other parts of Iraq or Abroad, to the Ministry of Natural Resources.


The selection of such personnel shall be at the discrete of the M mster of Natural


Resources. Such costs will be Cost Recoverable


23.0 The Contractor shall promptly provide to the Government such technological and


logistical assistance to the Kurdistan Region petroleum sector as the Minister o' Netura


Resources may request, up to the value of US$1,000,000. including geological


computing hardware and software and such other equipment 'hr Contractor and the


Government shall agree the form of such assistance Atl costs of the Contractor


associated therewith will be Cost Recoverable.


Tnaikino


21.7 The Contractor shall traits all its personnel from the Kurdistan Region and other parts of


Iraq directly or indirectly involved in the Petroleum Operations for the purpose of


Improving their know ledge and professional qualdacations in order that such personnel


gradually reach the level o1 knowledge and professional qualification held by the


Contractor Entities' Expatriate workers with an equivalent resume


H.t.i Such training shall also include the transfer of knowledge of petroleum


personnel from the Kurdistan Region and other parts of Iraq to apply advanced


and appropriate technology ms the Petroleum Operations, to the extent


appropriate confidentialdy agreements


23.1 The Contractor shall submit its plan for the recruitment, integration, and training of


personnel from the Kurdistan Region and other parts of Iraq to the Management


Committee for its approval Such trammg plan |a) must take into consideration the


requirements of clause 21.7. and |b) may include training for the Government's


personnel, depending on the eatetst to wfxh the amount allocated to the trainmg plan


in accordance with clause 21.10 n available after taking into consideration the training


of the Contractor Entities' Kurdistan Region and other Iraqi personnel.


lit Within 90 days of the Effective Oate. the Contractor shall submit to the Management


Committee a proposed training plan for the remainder of the Calendar Year. Thereafter,


no later than 1 October in each Calendar Year, the Contractor shal submit a proposed


training plan to the Management CommAtee for the following Calendar Year.


>l%\t AllATATUt AMR PATkflimf





il 10 The Contractor shall allocate lor training the amount of:


 (a) USS150.000 lo> each Contract Year durmg the Ccpkxation Period: and


(bj US$300,000 lor each Contract Year dura* the Development Pered


aiu To the e«tent an* amount allocated for a Contract Year is not utilised in a


Contract Year, the Contractor shall pay the unutilised allocation to the


Government wdhifi GO days after the end of the apphcable Contract Year


21.11 Each Contractor Entity shall be responsible for the training costs which such Contractor


Entity may incur in respect ol the personnel it employs from the Kurdistan Region and


other parts of IraQ.


iuu A1 such reasonable costs will be Cost Recoverable.


1UU Costs incurred by the Contractor lor trammf programs for the Government's


personnel shal be borne by the Contractor only to the eatent that they are


included in the Contractor's approved trammg plan pursuant to clause 23.8.


and wiR be Cost Recoverable.


25.1 S l The cost of aR other training programs for the Government's personnel will be





the Government's responsibility.


>MMt«T Funo ParHtats


23.12 The Contractor shal pay to the Government:


(a) USS 150.000 in advance each Contract Year during the E .ploration Period; and


(bj US$300,000 m advance for each Contract Year durmg the Development Period


21.11 The Government will credit all such payments to the environment lund to Be established


by the Government for the benrllt of thr natuial environment of the Kurdistan Region,


pursuant to the Kurdistan Region Oil and Gas Law (the "Environment Fund').


21 14 Payments by the Contractor pursuant to clause 23.12 will be Cost Recoverable.








Clause 24 - royalty


DiriNtnohs


14 1 "Royalty Crude Oil" means Crude Oil. regardless of gravity, produced and saved from


the Contract Area.


24.2 "Royalty Gas" means Gas produced and saved from a Gas Field


24.3 "Royalty Petroleum’ means Royally Crude Oil and Royalty Gas.


Osiigmio*


24.4 The Contractor shall pay to the Government a portion of Petroleum produced and saved


from the Contract Area, either in kind or in cash as directed by the Government, as


provided in this clause 24 (such payment, the "Royalty*!.














67


 Productico Srtcncg Contrail OM0 On





24a i The Government wiH be compered lo *l<» elected to receive the Royalty m


cash. unless the Government has |~r« not less than 90 days' prior notice to


the Contractor of the Government's election to receive the Royalty in kind


in) |1 the Government has elected to receive the Royalty in kind, the Contractor


shall deliver to the Government at the Delivery Point the quantity ol Royalty


Petroleum equal in value to the Royalty payable with respect thereto. Title and


Risk ot loss ol Royalty pa.d in kind will transfrr to the Government at the


Delivery Point.


i««i II the Government has elected to receive the Royalty in kind, the Government





may require the Contractor to assist In the sale ol all or part ol the Royalty


received In kind pursuant to clause 2B.


24.s The Royalty is payable on all Royalty Petroleum





ja.S.l No Royalty is payable In respect ol Associated Gas Irom an Oil Field.





RovAiir Ram


24.6 The Contractor shall calculate the Royalty dally by applying the following rate (as


applicable the 'Royalty Ratd'l to the Royally Petroleum produced and saved on that


day lor:


(a) 10* lor Royalty Crude Oil; and


(b) 10* lor Royalty Gas.


Dtuvtnr


24.7 II Ihe Royally Is payable in kind, the Contractor shall deliver to the Government at the


Delivery Pomt each day a volume of Crude Oil or Natural Gas. as applicable, equal to the


applicable Royalty Rate multiplied by the apphcable quantity ol Royalty Petroleum.


24.8 II the Royalty is payable in cash, the Contractor is entitled to take delivery at the


Delivery Pomt ol the quantity o1 Royalty Petroleum corresponding to the value ol the


Royalty Petroleum determined in accordance with clause 24.6.


14.8.1 Subject to clause 14 (Natural Gcs( in respect at Natural Gas. the Contractor wil


be entitled to freely sell such Royalty Petroleum.


14.8.1 Title and risk ol toss to Royalty Petroleum with respect to which the Contractor


has taken delivery under this clause 24.7 will pass to the Contractor Entities at


the Delivery Point in accordance with their participating interests.


24 8 Disposition ol paid-in-kind Royalty Gas by the Government is governed by clause 14


(NolurnlGosl.


Pavmini ih Cash


24.10 II the Royalty is payable In cash, the Contractor shall:


(a) value Royalty Crude Oil at the International Market Price for each Month and


Quarter in accordance with clause 27;


(b) value Royalty Gas lor each Month and Quarter in accordance with clause 27;








68


 Protvcno* Sharu^ Contract Qolc 0;r








(c) calculate the Royalty payable based on the valuation! of Royalty Crude Oil and


Royalty Gas for each Quarter; and


(d) pay to the Government the applicable Royalty quarterly. In arrears, within 30


days of the end of each Quarter.








Clause 25 - Recovery of Petroleum Costs


1* I 'Available Crude 04* means aB Crude Oi and Associated Gas produced and saved from


the Contract Area after deduction of any quantities of Crude 04 to be delivered to the


Government tor payment ol Royalty in kind or delivered to the Contractor in respect of


the payment of Royalty In cash pursuant to clause 24.


25.2 "Available Gas" means all Gas produced and saved from a Gas field In Ihe Contract


Area, except for Gas that a used in Petroleum Operations, re Infected, flared in


accordance with clause 14.6, or is not used or sold.


25.3 "Available Petroleum* means Available Crude Oil and Available Gas


Com Rtcovtn


25.4 The Contractor It entitled to:


(a) recover Petroleum Costs in accordance with this clause 25 and the Accounting


Procedures; and


(b) allocate, as Between the Contractor Int.Iies. to each Contractor fntrty its


proportionate share of Avatable Petroleum in accordance with the respective


participating interest ol such Contractor Entity in relation to the afC'r(air


participating interests of the other Contractor Entities.


li 5 Cost Recovery by the Contractor Entities in any period wil be achieved by a Contractor


Entity when it has taken delivery of its participating interest share of Ava4able


Petroleum from the Contract Area ol equivalent value (as determined pursuant to this


clause 2S) to the Petroleum Costs to be recovered by the Contractor in accordance with


this Contract.


V»iu«rKin or Avanaptt Ptraouuw


2» S The Contractor shall value Ava able Crude 04 at the International Market Price obtained


at the Oeiivery Point by the Contractor Cntdies and the Government.


25.7 The Contractor shall value Ava^aMe Gas at the actual prices obtained at the point of sale


In accordance with clause 145 m accordance with a Gas Eiport Plan or Domestic Gas


Plan The 'point of sale' wi be such pomt as identified by the Parties in relevant Gas


Eaport Plan or Oomestic Gas Plan


Conrnactoe CanuiMiai to Cost Oa


25 8 Subject to Ihe Accounting Procedure, from Ihe first Production from any Production


Area in the Contract Area and thereafter from .ill Production Areas, the Contractor (and








69


 froduction SJlfffiftf Controlt Qato Oie








each Contractor Entity) is entitled to recover all Petroleum Costs from up to 40% of


Available Crude Oil (such amount. "Cost Oil") within any Calendar Year.


Il.l.t Available Crude Oil that is not Cost Oil is "Profit Oil”.








CONTHACTOA INIItltMlNT TO COST GAS


23 9 Subject to the Accounting Procedure, from first Production from any Production Area in





the Contract Area and thereafter from all Production Areas, the Contractor (and each


Contractor Entityl is entitled to recover Petroleum Costs from up to 50% of Available


Gas (such amount. "Cost Gas'') produced within any Calendar Year.





2M-1 Available Gas that is not Cost Gas is "Profit Gas”.


Rt cuvi h * Watiaiau; Limitations





25.10 Petroleum Costs arc Cost Recoverable under clauses 25.8 and 25.9 in the following


order:


ID Production Costs;


(2) Exploration Costs Including Appraisal costs within the Contract Area)





(3) Gas Marketing Costs;


(4) Development Costs;


(5) Crude Oil Pipeline Costs; and lastly





(6) Decommissioning Costs.





*5 II The Contractoc b (and She Contractor f nt • ei afcl - -l enl.tlcd to recover acjreRatc


Petroleum Com dorm* any Calendar Year. e.prewed in cuani«t.e» ol Petroleum, m


e*cei» ol the percenta«rt of Avadable Petroleum at wt forth m dauiei 7S t and 2$ *.


mil If in any Calendar Yeer. Co»t 0.1 and Coil Gai (Coil Od and Coil Gat. to|ether





or cither. 'Cott Petroleum'| It not sufficient to abo* the Contractor Cntdmt to


recover al Petroleum Cotlt lor iuch Calendar Year, the amount of Petroleum


Com not recovered m wc» Calendar Year may be la) carried forward


■ndefmitety to tubiequent Calrndar Yean and |b) charted to Cott Petroteom


(at applicable) until the earher of ful recovery ol all Petroleum Com or





It III The Government never hat any obfcgat.on or liability to the Contractor or any





Contractor Int.ty in reipect of Petroleum Com that are not recovered by any


Contractor Int.ty from Cott Petroleum.


HIM Any Petroleum Com that are subject to Dispute and have not been finaby





reiolved by the Partiei thab not be included at Cost Petroleum until fin a By


revolved by the Part** or pursuant to clause 42 (Odpute Resokittyni








DCUMBV


25.12 each Contractor Entity may take dehvery of itt proportionate share of Petroleum from





the share of AvaBabte Petroleum allocable to the Contractor for the recovery of


Petroleum Costs at the Oel.very Po.nl














70


 Production Sharing Controct Ooia Ore








2S.12.1 Title and risk of loss of such Available Petroleum will transfer to such


Contractor Entity at the Delivery Point.





Ring FlUCC


21.11 Subject to clause 38.4, Petroleum Costs under this Contract are not recoverable against


other areas in the Region in which any Contractor Entity is party to a production sharing


Contract or has any other interrst








Clause 26 - Profit Petroleum


Dl'INIIIONS


M.l Under this Contract:


(a) "Cumulative Costs* means, as of any time of determination, total Petroleum


Costs actually Incurred by the Contractor from the Effective Date to such time


of determination.


(b) "Cumulative Revenues* means, as of any time of determination, total


Revenues actually received by the Contractor Entities from the Effective Date to


such time of determination, howsoever characterised, including Revenues


characterised as recovery of Petroleum Costs. Profit Petroleum, or otherwise.


(c) "Profit Petroleum" means Profit Oil and Profit Gas.


(d) "Revenues" means funds actually received by the Contractor Entities in respect


their respective shares of Petroleum from the Contract Area


fe) '* Factor* means a ratio calculated:


* • i«y»i


where


Ri the R factor;


■ ■ Cumulative Revenues: and


T ■ Cumulative Costs


C«:cujio» or R Facto*


26.2 Within 30 days from the first day of each Semester starting ots the l- of January of the


Calendar Year foftowmg the Calendar Tear in which Frrtt Production occurs, the


Contractor shall calculate the R Factor as of the last day of the preceding Semester and


promptly notify the Government thereof


263 Front First Production until the end of the Calendar Year in wfuch Fust Production


occurs, the R Factor shall be deemed to be less than one.


Jt4 The Contractor shall include, m Its notification in accordance with clause 26.2.


comprehensive detail in respect of each element of Cumulative Revenues arid


Cumulative Costs supporting each calculation of the R factor.














71


 Proamt>c>i 5ncncq Ccn'-'txt Qle Dir








26.5 The calculation of she R factor it apply to all Production Areas in the Contract Area tor


uoti a pci* R factor calculation hai been made m accordance with clause 26.2








IniiutMtaiS


26-6 from first Production and as and when Petroleum is being p'oOuced:


(a) the Contractor is to be attrfcuted and allocated a oertentage share of Profit


Petroleum, in consideration for the Contractor's in*estment in the Petroleum


Operations:


(b) each Contractor Entity a to be attributed and allocated a percentage share of


the Contractor's share of Profit Petroleum in accordance with each Contractor's


participating interest:


(c) the Government Interest Holders are to be attributed and allocated a


percentage share of Profit Petroleum in accordance with the participating


interest of the Government Interest: and


|d| each Contractor Entity shall pay Capacity budding Payments based on the value


of Profit Petroleum attributed to each Contractor Entity.





16 7 The total amount of Profit Petroleum which will be attributed and allocated to the


Contractor and the Government Interest Holders from first Production in accordance


with thee respective participating interests a:


(a) lor Profit Od. an amount equal 10 the quantities of Petroleum resulting from


the application of the relevant percentage as indicated below to the daily


volume of production of Profit Od within the Contract Area at the


corresponding Delivery Point:





*R" factor Total Amount


R < or = 1 32%





1 < R< or = 2.25 32 - ((32 16» i




R >2.25 16%


and





(b) for Profit Gas. equal to the quantities of Gas resulting from the application of


the relevant percentage as indicated below to the dally volume of production


of Profit Gas within the Contract Area at the corretpondmg Delivery Point:





'R" factor Total Amount


R< or=1 38%


l




R >2.75 19%





26 H Profit Petroleum which is attributed and allocated neither to the Contractor or


Government Interest Holder in accordance with clause 26.7 Is to be attributed and


allocated to the Government.














72


 Production Sharing Controct Ooia Ore








26 0 When the Contractor it unable to calculate the ft Factor tor the relevant Semester


betorp an allocation ol Profit Petroleum tor such Semester must be made, then the


Contractor shall apply the allocation of Profit Petroleum appl cable to the previous


Semester Upon the calculation of the R Factor foe the relevant Semester


(a) if the attribution and a location of Profit Petroleum m the previous Semester





and the relevant Semester is the same, then no ad|ustment than be made; and


(b) rf the attribution and aBocation of the Profit Petroleum In the two Semesters is


different, then the Contractor shall make any adjustments to the Partws* and


Government Interest Holders* respective shares of Profit Petroleum to restore


them to the position that they would have been m had the R factor lor the


relevant Semester been available from the start of such Semester.


»ft 10 Subject to clause 2t. 10 2. if the Contractor makes an error m the calculation of the ft





Factor. resulting in a change m the Contractor's percentage share of Profit Oil. Profit


Gas. or both, the necessary correction shal be made and any adjustments shall apply


from the Semester m which the error occurred


0*4# l The Party hav.ng benefited from a surplus of Profit Petroleum shal surrender


such surplus to the other Party, begmnmg from the first day of the Semester


f(Showing the Semester in wh*ch the error was recognised.


2ft. MJ loch lifting of Petroleum relating to such error by the Party receiving the





surplus shall not eiceed 2S% of the share of Profit Petroleum to wh

surrendering Party is entitled.





Duivtur En'ITuminis


26.12 Subject, in the case of Gas, to clause 14 INoturof Go»|, each Contractor Entity is entitled


to receive at the Delivery Point, take In kind, and to export freely its individual share of


the Contractor s entitlement to Profit Petroleum In accordance with its participating


interest, and to retain Abroad any proceeds from the sale of all such Profit Petroleum.


26.11 Subject, in the case of Gas. to clause 14 \Nolurol Gos|. each Government Interest Holder


is entitled to receive at the Delivery Point, take in kind, and to export freely its individual


share of the Government Interest entitlement in accordance with its participating


interest, and to retain Abroad any proceeds from the sale of all such Profit Petroleum.


26 14 The Contractor shall deliver quantities of Profit Petroleum due to the Government at the


Delivery Point.


20.IS Title and risk of loss to Profit Petroleum will pass to each Party and Government Interest


Holder at the outlet llange of the Delivery Point.


20.lt The Government Is not entitled to increase the share of Profit Petroleum to which the


Government is entitled In any Calendar Tear because of the Government’s payment of


Incomes Taxes on behall of all or any Contractor Entities pursuant to clause 31.2.2.




















73


 Vw* C0-t-0







PtOOUCtlO* ESHMAttS


26.17 A! least 21 days before Contractor's estimated date of First Production and 10 days


before the first day of each Semester thereafter, the Contractor shall deliver to the


Government the Contractor s


(a) production forecast lor the next four Semesters; and


(b) forecast of the Quantities of Crude Oil and Hatural Gas to which each Party and


the Government Interest Holders will be attributed and abocated during the


not four Semesters.


26.IB Ihe Contractor shall endeavour to produce in each Semester not less than the forecast


quantity for such Semester.





ANNtMt PaooucnoN Rimohi


26 It Within 90 days following the end of each Calendar Year, the Contractor shall prepare


and deliver an annual production report to the Government.


is.ie.i The Contractor shall set forth in such annual production report the quantities of


Crude Oil and Natural Gas to which each Party and the Government Interest


Holder is entitled to be attributed and allocated, the quantities of Crude Oil and


Natural Gas lilted by each Parly and Government Interest Holder, and the


resulting over lilt or under lilt position ol each Party and Government Interest


Holder as at the end ol such Calendar.





Cost Ricovuv ioh Goviunmini Cosis


26.20 Any costs o» expenditure incurred by the Contractor m respect to the bfting ol the


Government's or Government Interest Holder's share of Petroleum will be Cost


Recoverable.








Clause 27 - Valuation and Metering


Valuation or Cauot O*





27.1 The Contractor shall determine the value of Crsrde Ol produced m the Contract Area at


the end of each Month and each Quarter at the Delivery Pomt based on the


International Market Price





27 2 International Market Price* means the we^hted average price per Barrel, repressed in


USS. obtained by the Contractor at Ihe Delivery Pomt, by netback if necessary, during


the Quarter or Month ending on the date of valuation for Arm s length Sales ol Crude


Oil.


17.1.1 The Contractor shall provide evidence to the Government that the sales ol


Crude Oil for purposes ol determining International Market Price arc Arm's


Length Sales.





17.1.1 Any Dispute as to whether any sales are or are not Arm's length Sales may be


referred by the Contractor or the Government to an Cxpert for decision


pursuant to clause 42.








74


 Coarrort Qaic Ore








UJt In the event that there either „ no lifting of Crude Oil in the relevant Quarter or


Month, or r»o Arm's length SiWl. the applicable 'International Market Price'


lor such Quarter or Month shall be the er«Mrd average price per Barrel


obtained during that Quarter or Month from equivalent vale* of Crude Oil ol


the *ame or sunder gravity and quakty from other production area* in the


Kurdistan Region told in market* competing with Crude Oil produced from the


Contract Area, taking into account gravdy and quality difference* and


transportation and other potl Delivery Point co»t*-


itja for purpotet of clau*e 27 2.1. the Government and the Contractor thall. P'«>


to the »tart of f ir*t Production. agree on a baiket of Crude 0.1 from other


producer* in the Kurdittan Region comparable to thoie produced In the


Contract Area and *old in the mternational market.


»J.» Price* obtained thaB be adiuited to account for any variation* *uch at quality,


tpecific gravity, tulphur content. tran*portat>on costs. product yield, teatonal


variation* in price and demand, general market trend* and other term* of sale


Valuation or Naum Gas


273 The Contractor shall determine the value of Natural Ge» the end of each Month and


each Quarter at the Delivery Point bated on the actual price received from gat tale*


contract* entered into in accordance wdh claute 14 (Wolurof Go*|.


Pnooucnon Staumini


274 By the 10,h day of each Month, the Contractor thall provide a stdtemcr.t to the


Government (together with the Capacity Building Payment Monthly Statement a*


required by claute 32.7| showing the Contractor's calculations of the value of Petroleum


produced and told from the Contract Area for the previous Month. Each such statement


mu*t include:


(a) quantities of Crude Oil told by the Contractor Entities during the orcceding


Month conttUutlng Arm's length Sales together with corresponding sale prices;


(b) quantities of Crude Oil told by the Contractor Entities during the preceding


Month that do not fall in the category referred to in (a) above, together with


sale prices applied during such Month;


(e) Inventory In storage belonging to the Contractor Entities at the beginning and


at the end el the preceding Month; and


(d| quantities of Gas told by the Contractor Entities and the Government together


with sale prices realised during the preceding Month.


MlASueCMtHl


27.5 The Contractor shall meature all Petroleum at the DeSvery Point in accordance w th Best


Practxei and Applicable law.


HU The Contractor shall mstal and operate all metering equipment.


llS-2 The meters must be to fiscal meter standards in accordance with Best Practices














7S


 Proaucftoa Sftcncg Contract OoJo 0;r








*».»-• The Contractor shall per«>d

Contractor's metering equipment uimg means and methods in accordance with


Beit Practices.





lt.%» Al meaiurernenli shall b* adrusled SO a pressure of 14.73 pounds pec square


inch and a Semperalure of 40' fahrenhert.


27.6 The Government may as any lime "specs She metering equipmenl installed by She


Contractor and all records, charts, measurements, and lest Data at aB reasonable lunes.


27 7 If any metering equipment is defective or not functioning properly, the Contractor shall





promptly notify the Government upon the discovery thereof and use all reasonable


endeavours to repair, adjust, correct, or replace it promptly (and in any event within 15


d4T»)


27.7.1 The 'Adjustment Oate' meant the last date that the metering equipment was


known or agreed to have been measuring correctly, or if not known or agreed,


the date that is midway between the date the delect was discovered and the


last date the equipment was known to have measured correctly.


27.7.2 The results from the defective equipment shall be disregarded for the period


from the Ad7u»«m»"« Oate untd the date the defective equipment is repaired or


replaced, and the measurement lor such period shall be estenated:


(a) tf check measuring equipment rs instaBed and registering accurately,


then by using the measurements recorded by such check measuring


equipment;


(b) if check measuring equipment is not installed or not registering


accurately, then by correcting the error If the percentage of error is


ascertainable by verification, calibration or mathematical calculation;


or


(c) if neither method is feasible, then by estimating the volume or


quantity delivered (or both| based on deliveries during the preceding


comparable period of time when the metering equipment was


registering accurately.


27 H Thr Parties shall resolve any Dispute arising under this clause 27 by Expert


determination in accordance with the provisions of clause 42.








Clause 20 - Sales Assistance


1H.1 The Government may at its option and upon at least 90 days’ prior notice require the


Contractor to market ail or part of the Government's share of Crude Oil produced from


Oil fields in the Contract Area. In such event the Government and the Contractor shall


enter into an appropriate agency contract with reference to international petroleum


practice.





2H.2 As soon as possible after receipt of any such notice from the Government under clause


28.1, the Contractor shall provide the Government all information available to it


concerning possible purchasers of the Government's Crude Oil, the price therefor, and











76


 Production Sharing Contract Qoia 0/e








olhrr tirrm* 4nd conditions of sale. With transmittal of such information Contractor shall


specify the time within which the Government must determine whether or not


Contractor should oroceed with such sale.





28 1 The Contractor's obligations in respect of Natural Gas are governed by clause 14


{Notural Goi|.








Clause 29 - Currency; Financial Provisions


Rtitatrice Cuibcnci


29.1 The US$ shall bp the unit of currency lor all payments (whether revenue or cost),


bookkeeping, record*, the Account!, reporting, and all other purpose! under this


Contract.


CuRifticr Convibsioh


29.2 Payment! in currencie! other than USS shall be translated into USS at the average daily


veiling and buying rate! ol exchange ol the Calendar Month preceding the Calendar


Month In which the due date lor payment! lallv, a! luch average rate can be calculated


from the aloreiaid daily ratei ol exchange publuhed by the Central Sank ol Iraq.


29 j Any currency conversion to be made under thlt Contract tliall be at the exchange rate of


the Central Bank ol Iraq, provided luch exchange rate applied to the Contractor Entities


shall not be less favourable than the rate offered by other private, commercial or


industrial banks in the international market. In the absence ot the Cenltal Sank of Iraq


or In the event that the Central Sank of Iraq a unable to provide the relevant exchange


rate, any currency conversion to be made under this Contract ihai be at the exchange


rate of a reputable commercial bank carrying on business in the international market


and approved by the Parties.


29.4 The Contractor shall record any gam resulting from the exchange of currency at revenue


and credit such amounts to the Accounts, and any loss will be Cost Recoverable.


Pallium; No O’fMf AOAMSI CoviXNWKT


**.» A Party makmg a payment to the Government. including to the Capacity Budding


Account or to any revenue sharing account as agreed between the Government and the


government of the ftepubl* of Iraq. shaB: (a) make such payment in USS on or before


the d»te when due in cleared funds by wire transfer from a reputable bank In


accordance with wire Instruction! provided by the Government; and (b) shall pay all


payments without (and free and clear of any deduction for) set off or counterclaim.


19.9.1 If any payment is due to be paid to the Government on a day that is not an


International Banking Day, then the payment will be due on the next following


International Banking Day.


29.!.2 If a Party fails to make any payment to the Government when due, such Party


shall pay interest on such unpaid amount, compounded monthly, al the Agreed


Rate from the date when due to. but not including, the date when paid














77


 Prodmtioa Sitcncq Conrrocf OMB 0/t








HS i Each Contractor Entity acknow edges and accepts that a fundamental principle


of this Contract n that the Contractor and each Contractor Entity must pay


amounts owed by it as and when required.


29A.* Each Contractor Entity wanes any right to raise by way of set off or invoke as a


defence to dt obligations to make any payments to the Government as


required by this Contract, whether in law or equity, any failure by the


Government or any Contractor Entity to pay amounts due and owing under any


claim the Operator, a Contractor Entity, or any other Person may have agamst


the Government, whether such claim arises under or relates to this Contract or


otherwise


was The making of any payment to the Government, or the acceptance or use of


any payments by the Government, does not impair the rights of the Contractor,


any Contractor E nlity. or the Government under clause IS or English law


19.S.6 Each Parly receiving a payment from another Party under this Contract s-ai


upon receipt of a notice requesting a receipt therefor, endeavour to provide


the other Party with a notice of receipt of such payment.


Par minis to Fund »ob Rivinui SiiaiiNO


29.6 Upon receipt ol an Instruction and wire instructions therefor from the Government ane


in the event of the establishment of a fund for revenue sharing between the federal


government of Iraq and other regions (including the Kurdistan Region) and govnroutes


of Iraq, the Contractor shall pay into such fund:


(a) any Royalty payable In cash due to the Government pursuant to the provisions


of clause 24.


(b) proceeds from the sale ol any Crude 0 undertaken by a Contractor Entity on


behalf of the Government pursuant to clause 28 to which the Government is


entitled pursuant to clause 26: and


(c) ai Production Bonuses


ChiikiAssimus


2*7 Each Contractor Entity shall at all times be entitled to freely convert into USS or any


other foreign currency any Iraqi dinars received M the framework of the Petroleum


Operations and to Ireefy transfer the same Abroad the conversion rate shall be as


provided unde' clauses 29.2 and 29.3.


2*I Each Contractor Entity shall have the right to be pad. receive, keep, transfer, and use


Abroad, without any restrictions, al proceeds of its share of Petroleum.


29* Each Contractor Entity and its Subcontractors shall have the right to freely open and


maintain bank accounts for Petroleum Operations within or outside the Kurdistan


Region and other parts of Iraq.


2*10 Each Contractor Entity shall have the right to pay m any freely convertible currency al its


financial requirements for the Petroleum Operations and to convert these currencies to


Iraqi dinars m any bank in the Kurdistan Region or other parts of Iraq, at the same


exchange rate as provided under clauses 29 2 and 29.3.








78


 fVotfxtto* sncr>a« Coavott Qua Oir


2».U Each Contractor Entity shall have the right, without an* restriction*. to freely repatriate


Abroad and to freely dispose of:


(a) an* proceed* recerved * the Kurdistan Region or other part* o» Iraq from the


sal* of Petroleum;


(b) an* proceed* recerved front other operation* and actrvitiet carried out under


thi* Contract M the Kurdistan Region or other part* of Iraq


29.12 Each Contractor Intity sha'i have the right to pa* m an* foreign currency its





Subcontractor* and it* lapatnate personnel, either m the Kurdistan Region, other parts


of Iraq, or Abroad.


29.12.1 Subcontractors and lapatriate personnel thal he obbged to transfer to the


Region the amount of foreign currency required for their local needs and »h*■


have the right to repatriate and the proceeds ol the sale of their belonging* in


accordance w«h the regulations in force in the Region-


29.13 £ach Contractor Entity's Affiliates. Subcontractors and their personnel shall equal!*


benefit from the same rights as such Contractor Entity and its personnel as regards this


clause 29.


29-i11 Where the Contractor, or an* subcontractors of Contractor, hat guaranteed the


full and proper discharge b* an* Expatriate Employe* engaged m Petroleum


Operations of his liability to the personal Income Tax under Kurdrstan Region


law. that employee wl be entitled 10 receive the whole or any part of his


remuneration in the country m which he is normal* resident.


29.1* In respect of the auurancet provided in clauses 29.6 through 29.13. the Contractor shad


comply with the procedure* and formalities required by Applicable law m rctpecl of


foreign exchange.








Clause 30-Customs


10.1 All services, Asset* anil Material*, vehicle*, fool*, spare pari*, consumables, product*,


and other item* Imported Into the Kurdutan Region by the Contractor, any Contractor


Entity, its Affiliate*, any Subcontractor or any agent of any of Ihe foregoing, for use or


consumption in the Petroleum Operation* shall be admitted free and exempt from any


and all Taxe* on Import.


so.1.1 The Contractor, any Contractor Entity. It* Alfil.ate*, its Subcontractors, and any


agent of any of the foregoing shall have the right to re export from the


Kurdistan Region, free from all Taxes on export, any Assets and Material*,


equipment, good*, machinery, vehicles, tools, spare parts, consumables,


products, and other Item* thal are no longer required for the Petroleum


Operation*, except where title ha* passed to the Government In accordance


with clause 20,


30.2 The Contrar lor, any Contractor Entity, Its Affiliates, any Subcontractor, and any agent of


any of the foregoing, and the employees of the Contractor, a Contractor Cntily or its


Affiliates, and Subcontractors (Including Iheir family membersl shall have Ihe right to


freely import Into the Region and other parts of Iraq and re-export from Ihe Kurdistan








79


 t/oducuon Shanng Contract Qato 0/e








Region and other parti ol Iran any personal belongings and furniture free and exempt


from any taxes on Import or export. The lale In the Kurdistan Region and other parti of


Iraq of perional belonging* and furniture of Expatriates mutt comply with Kurdlitan


Region Law.


Lath Contractor Entity and it! Affiliate! t It a II be entitled to freely e»port (lubject. m the


30.3


cave of Natural Gat, to clause 14( from the Kurdlitan Region, Iree of any Ta«ei. any


10.4 Petroleum to which it is entitled purtunnt to the provlilont of thli Contract.


The Gotfernment shall indemnify the Contractor, any Contractor Intity. it* Affiliates, any





Subcontractor or any agent of any of the foregoing, and their pertonncl (including thru


family member*) for any import or export Taxes referred to In clauiei 30.1, 30.2 or 30.3.


Clause 31








- Taxes





GlM**l


II.X Except as expressly provided in this clause 31, and without prejudice to the exemptions


expressly provided for In clause 30, each Contractor Entity, its Affiliates and any


Subcontractor shall, for the entire duration of thli Contract, be exempt from all Taxes as


a result of Hi incomr. Aiseti, and activities under this Contract.


ti.l.i The Government shall Indemnify each Contractor Entity upon demand against


any liability to pay any ro.es aliened or imposed upon such Contractor Entity


which relate to any of the e.einpttons granted by the Government under this


clause 31.





hxOMi !»■


31.2 Each Contractor Entity *>■ be subject to Income la. on its income from Petroleum


Operations.


llAI Each Contractor Entity shall, in accordance with Appbceblr Law, provide a


return to the appropriate Kurdistan Region ta. authorities m accordance with


Kurdistan Region law of its income subject to Income Ta*. together with a


calculation of the amount of Income Ta* due


•I J l The Government she! pay all Income Ta. directly to the applicable Kurdistan


Region authorities for the account of each Contractor Ent«y in accordance with


the Contractor Entity's ta. return The Government shall pay such Income


Taxes from the Government's share ol Profit Petroleum.


»«-»-» The Government shai. withm 90 days alter the end of each tax year, provide to


each Contractor Entity ta. receipts from the appropriate Kurdistan Region


authorities confirming the payment m lul of the Contractor Entity's Income Ta«


for such tax year and that no Income Ta* is owmg.


As of the Effective Date, the Income Ta* rate for companies under Kurdistan Region law


31.1


is 1591 of taxable income-

















80


 e/odutlion Vlionnfl Controct Qala 0/e








ExtMHiONl


31.4 Each Contractor entity, its Affiliates, and foreign Subcontractor shall be exempt from any


withholding tax on any interest or dividend paid by such Contractor Entity. Affiliate, or


Subcontractor.


31.5 Each Contractor Entity and its Affiliates shall be exempt from Additional Profits fax.


Surface Tax. and Windfall Profits Taxes, as each of the foregoing is referred to In clause


<10 of the Kurdistan Region Oil and Gas law. or any successor equivalent Tax.


WiiMMOioirro io« Ixaq NaiionaiS


31.6 I acts Contractor Entity shall pay or withhold (and shall cause each Subcontractor to pay


or withhold) the personal Income Tax and social security contributions for whtch such


Contractor Entity or Subcontractor is obligated to pay or withhold In respect of Its


employees who are Iraqi nationals, pursuant to the law of Taxation (law No S of 1999)


and otherwise In accordance with Applicable law. A Contractor Entity or Subcontractor


Is only obligated in respect its own employees who are Iraqi nationals, and is not liable


under this clause $1.6 with respect to employees of any other Person.





Douan Tax TxtAiits


11.7 Double tax treaties, to the extent recognised by the Government as effective in the





Region, will have effect to give relief from Taxes to, but not limited to. the Contractor


Entitles, Subcontractors, and their respective employees in accordance with the


provisions of such double tax treaties, but w’U not impose an additional burden of


taxation on any such Contractor Entity. Subcontractor, or employee.





VAT Cost RfCOVtar


31.S Any Tax that is a value added or similar t,Be of Tax *41 be considered as a Petroleum


Cost and *« be Cost Recoverable, il not otherwise recovered under Applicable law.





iuotni OeuOAhOMS


31.9 The provisions of this clause 11 apply individually to each Contractor Entdy. There o no


habibty. duty, or obligation referred to in this clause 11 that it a jo.nl and several liability


of the Contractor Entities together








Clausb 32 - Bonuses; Capacity Building Payments


Caxacim Sjuoivc Sonus


12.1 (a) Withm 10 days of Use Effective Date the Contractor shall pay USS10.000.000





(the ‘Capacity Building Bonus - first Tranehe'l to the Government for deposit


m the Capacity Building Account.





(b) On or before the earbest of


«*> IS August 2011;


(n) commencement of the drilling of the first Exploration Well; and





(ill Ihe first day ol the Development Period;








81


 Production Shonoq Contract Onto 0/r








the Contractor shall pay USS40.000.000 {the ‘'Capacity Building Bonus" -


Second Tranche') to the Government lor deposit In the Capacity Building


Account.


(c) I* the Contractor does not pay the Capacity Building Bonus - Second Tranche,


this Contract will terminate automatically in accordance with Articles 6.9 and


4$.


PaooucnoN Bonuses


M l Inch Contractor fntlty shall pay to the Government the amounts as provided in clauses





32 4 and 32.S separately for, and In respect of. each Production Area (such payments


pursuant to clauses 12 4 and 32.SI, each a 'Production Bonus', and collectively.


"Production Bonuses').





1)1 Tor purposes of colculatlng the cumulative amount of production in order to determine


whether a Production Bonus Is payable. Natural Gas BOC: la) does not include Natural


Gas used for Petroleum Operations (including re Injection), but (b| does include flared


gas.


124 In respect of production of Crudr Oil and Natural Gas from the Contract Area the


Contractor shall pay the following Production Bonuses to the Government within 30


days of the following relevant occurrence


(a) US52.SOO.OOO on first Production.


(b) USSS.OOO.OOO when production reaches • cumulative amount of 10.000.000


Barrcb of Crude Oil and Natural Gas IOI;


(e) USS10.000.000 when production reaches a cumulative amount of 2S.000.000


Barrels of Crude 0.1 and Natural Gas BOE: and


(d) US$20,000,000 when production reaches a cumulative amount of S0.000.000


Barrels ol Crude O.I and Natural Gas BOI





n*6 Pa.utnts





32.6 Each Contractor Entity shall pay Capacity Building Payments to the Government in


accordance *«h clauses 32.7 through 32 16




uu Each Contractor Entity .s separately liable (and not jointly and severally liable


with any other Contractor Entity) to the Government for its obligations, duties


and Uabdg.es under clauses 12.7 through 12.16(b).





ID On or before the lO* day of each Month in the Development Period, the Contractor


shag provide to the Government, together with the monthly production statement


prepared by the Contractor in accordance with clause 27 4 and paragraph 6.1. and the


monthly valuation statement in accordance with clause 2$ and paragraph 7.1. a


statement (the 'Capacity Building Payment Monthly Statement') setting out the


Contractor's calculation of the Capacity Budding Value attributable to each Contractor


Entity for the preceding Month





•U-i In each Capacdy Bu.id.ng Payment Monthly Statement, the Contractor shall


detail each .tern taken mto account m making its calculation of the Capacity


Buikfmg Payments due from each Contractor Ent.ty. the quantities of Profit








B2


 Production Shoring Controct Qota Oie





Petroleum produced during the Month covered by *uch Capacity Building


Payment Monthly Statement, the volume* of such production told, the


Capacity Building Value attributed to such sale*, and the Capacity Building


Payment reoulred to be paid with respect thereto by each Contractor Entity,


I .cept as provided in clauses 32 8.1 and 32.8.2, and *ub)ect to clause 215. on the samp


date on which the Contractor provides the Contractor Entity's Monthly Statement to the


Government in accordance with clause 32.7, each Contractor Entity shall pay to the


Government the Capacity Building Payment stated as owed by such Contractor Entity in


the Capacity Building Payment Monthly Statement.


M.e.i II the Contractor Entity has sold its Profit Petroleum to (a| the Government or a


Public Company |or a company or an entity owned and controlled, directly or


Indirectly, by a Public Company or the Government!, or |b) the State Oil


MarSetlng Organisation (SOMO) or any Person owned or controlled by the


Government ol Iraq, then

the Capacity Building Payment when and to the extant the Contractor Entity ha*


received payment by such Person


IMI Clause 32.8.1 does not apply when a Contractor Entity sells It* share of Profit


Petroleum to any Person not identified m clause 32.8 1.


Within 30 calendar days following the date on which the Contractor delivered the final


I nri-of-Year Statement (as defined In Paragraph 10 of Annex B) to the Government lor


each Calendar Year in accordance with clause 26.11 and paragraph 10 of the Account mg


Procedure, and based on the information In *uch final End of-Year Statement, the


Contractor shall provide to the Government, in respect of each Contractor Entrty. a


reconciliation of the actual aggregate amount of the Capacity Building Value and the


actual aggregate of the Capacity Building Payments payable by each Contractor Entity


for such Calendar Year period (the ‘Annual Reconciliation Statement'').


ftt.n.i If the results of an Annual Reconciliation Statement show that a Contractor


Entity was. in the aggregate over the Calendar Year period coveted by the


Annual Reconciliation Statement, obligated to pay Capacity Building Payments


in an amount less than the actual aggregate Capacity Building Value attributed


to such Contractor Entity for such Calendar Year period, within 30 calendar


days following the same date on which the Contractor sent the Annual


Reconciliation Statement to the Government such Contractor Entity shall pay


(sublet t to the same exceptions as provided in clauses 32.8.1 and 32.8.2) the


amount of the underpayment as shown in the Annual Reconciliation


Statement.


>1.1.1 Sub|cct to clause 32.1 2.1. if the results of an Annual Reconciliation Statement


show that a Contractor Entity has, in the aggregate over the Calendar Year


period covrred by the Annual Reconciliation Statement, made Capacity Building


Payments In excess of the Capacity Building Value attributed to it during such


Calendar Year period, such Contractor Entity may submit an invoice to the


Government for relmbursemcnf of excess Capacity Building Payments.


mi l The Contractor Entity must srnd an Invoice to the Government within


SO days following Ihe dale of the Annual Reconciliation Statement. If


the Contractor Entity fails to send an Invoice within such 60-day


 r.oe*(!-c» s*crv>0 cc«::oct o On


period, the Contractor Entity will M considered to have waived any


Cleon for reimbursement.


Wrtbm 30 days of receipt of such invoice, the Government shall either:





(a) pay such invoice in fui. or (b) notify the Contractor Entity that the


Contractor Entity will be entitled to deduct IS* of the amount


otherwise payable from the next following Capacity Building Payments


until the amount of the invoice has been paid in full.


52.9.2.1 The right to receive payment under clause 32.9.2.2. either in full or by


way of set off against future Capacity Building Payments as provided in


thn clause 32.9, will be a Contractor Entity's only remedy in respect of


any overpayment of Capacity Building Payments, and the Government


svill have no obligation to make any reimbursement or other


compensating payments to an affected Contractor Entity.


11.10 The Government may enter Into one or more Rights Sales without the consent of the


Contractor or any Contractor Entity


92.10.1 The Government shall provide timely notice to a Contractor Entity of any Rights


Sales to the extent that such Rights Sale may require the Contractor Entity to


make Capacity Building Payments to an account other than the Government or


the Capacity Building Account.


12.10.2 A "Rights Sale" means an Assignment of the Government's rights to receive the


Capacity Building Payments.


12.11 Subject to clause 32.12. and notwithstanding any o*h»r pro. son of this Contract, any


lifting agreement, ony sales or marketing agreement, or any other agreement: if a


Contractor Entity falls to pay a Capacity Buddmg Payment in full when due. the


Government will automatically be entitled, on not less than 60 days’ prior notice to the


defaulting Contractor Entity and the Contractor m the case of the first default, and not


less than 30 days’ In the case of any subsequent default, to:


laj lift, at the Delivery Point, such amount of the defaulting Contractor Entity’s


Profit Petroleum as is equal to the value thereof in default; and


(b) continue to lift up to 35* of such defaulting Contractor Entity’s Profit


Petroleum for the remainder of the Development Period.


12.11.1 The rights of the Government to sell or otherwise dispose ol Natural Gas will be


subject to clause 14.





12.12 A defaulting Contractor Entity will have a single cure period of 30 days only in respect of


Its first default.


12.12.1 If the defaulting Contractor Entity pays the defaulted Capacity Building


Payments In full plus interest at the Agreed Rate within such 30 day cure


period, the Government shall not exercise its lifting rights under clause 32.11 In


respect ol such defaulting Contractor Entity.


12.12.2 In the case of any subsequent default by the same defaulting Contractor Entity,


the Government may exercise Its right to lift, whether or not the defaulting


Contractor Entity cures Its default within the 30-day cure period or otherwise.








84


 Production Sharing Con tract Qata Ore








IMI The lifting right* of the Government pursuant to clauses 32.11 and 32 12 are exercisable


by nay of set off, without first resort to legal process, and without any liability or claims


of the defaulting Contractor Entity, the Contractor the Operator, or any other Person,


and notwithstanding any other provision of this Contract, any provision In any lifting


agreement, any provision of any Joint Operating Agreement, or any other agreement to


which the Contractor or a defaulting Contractor Entity is a party.


sa.15.1 Each Contractor Entity shall ensure that all agreements in respect of the lifting


or sale (Including swaps or other sales arrangements) of Profit Petroleum of


such Contractor Entity sets forth the Government's priority rights as srl forth In


clauses 32.11 through 32 13.


32.11.2 Any Dispute between a Contractor Entity and the Government in respect of a


claim that the Government, In exercising its rights under clauses 32.11 through


32.13, will be subject to:


(a) resolution in accordance with the lifting agreement among the


Contractor Entitles and the Government in the same manner as any


other overllft or underlill is to be resolved between the parties


thereto; and


(b) clause 14 In respect of Natural Gas


12.14 A defaulting Contractor Entity shall Indemnify the Government from any loss or Expense


that may in any way arise from the exercise by the Government of Its rights In respect of


such defaulting Contractor Entity under clauses 32 11 through 32.13.


12.14.1 The Government will retain control ovec the defence of. and any resolution or


settlement relating to. such loss o» Expense


11.14.1 A defaulting Contractor Entity shall cooperate with the Government and


provide reasonable assistance in defending any claims against the Government


II ■« i A claim for a loss or Expense as set forth in a notice from the Government to a


defaulting Contractor Entity wHI be conclusively deemed to be a Loss or


Expense if the Contractor Entity fals to dispute the Government's liablitr by


the end of a 30-day period following the effective date of the nolK* from the


Government. The Contractor Entity shall promptly pay the detmed loss or


Expense on demand.


12.14.4 The Government's rights under clauses 32.11 through 32.14 are not cxclusrve


and are without prejudice lo any other rights or remedies the Government may


have under law or this Contract.


32.15 Any Dispute between the Government and a Contractor Entity in respret of the


calculation of Capacity Building Value and the Capacity Building Payment due with


respect thereto that cannot be settled amicably svithin 60 days of the Government's


final notice under clause IS.7 is subject to resolution by an Expert in accordance with


clauses 1S.8 and 42.

















8S


 Production Sharing Controct flow Ore








C Af ACI1V BUIIOINQ ACCOUKI


11.11 To the extent permitted bv law» o( the Kurdistan Region or a* otherwise agreed with


the Government o( Iran, the Government will


(a| maintain the Capacity Building Account;


(b) instruct the Contractor and the Contractor Entities, as applicable, to make all


Capacity Building Bonuses and Capacity Building Payments to the Capacity


Building Account In accordance with wire instructions therefor provided by the


Government;


(c) apply funds from the Capacity Building Account to fund infrastructure and


capacity building projects m the Kurdistan Region selected by the Government


In Its sole discretion; and


(d) periodically publish reports of the Government's application of funds from the


Capacity Building Account in sufficient detail to Identify the projects to which


the Government has applied the funds therein


NO CoS' RtcoviH"





32.17 No Capacity Building Bonus, Production Bonus, or Capacity Building Payment will be


Cost Recoverable











Clause 33- Pipelines


C«uoi On Pm nuts


II I The Government shall obtain any required Permits for the transportation of Crude Oi in


the Kurdistan Region and in Iraq, as weft as any necessary Permits and easement rights


for the construction of any pipelmes and related facilities required for the Petroleum


Operations.


112 The Government undertakes to transfer to the Contractor its rights for transportation of


Crude Od by pipebne. to the extent of available capacity and in the natmnal and regional


interest. The Contractor is entitled to design, construct, operate, and maintain ppebnes


and any related facilities in the Kurdistan Region for the transportation of Crude Oil


produced under this Contract.


11.3 Prior to the construction of any Crude Oil pipeline and related facilities as provided in


clause 33.2. the Contractor shat submit the following information to the Management


Committee in respect of any pipeline protect


(a) proposed pipeline route and related facilities;


(b) forecasted pipeline flow rate and capacity.


(e) estimate of capital costs and operating costs of the pipeline and related


facdities;


(d) proposed financing schedule.


(e) construction schedule;


(0 general technical description of the pipelme and related facibtws.


 SKjrv^a Co-tree Qoia Olt








(g) construction plans and tests:


|h) preventive measures for damage to the envaonment and third parties; and


|i) an* other information relating to the p>pehne project


The Management Committee shad eiamm* all the above information and shall, within


90 days, approve or disapprove the proposed pipeline protect


l»« Subject to available capacity, tie-in agreements, and pipeline crude Oil minenura quality


specifications, the Contractor shall perm.t thud panes to transport their Petroleum


through any Crude 01 pipeline constructed by the Contractor on terms to be agreed


between the Contractor and such third party.


IM I Such terms must be reasonable commercial terms and must not discrimmate


among potential third party users


HA l The Contractor and the Government shall always have priority of access to such


pipebnes.





Ill A« costs associated with the design, construction, operation, and maintenance of Crude


Oil pipelines and related facilities by Contractor upstream of the deliver, pom I of the


P'Pebne under this clause 33 (‘Pipeline Costs*) will be Cost Recoverable


111 The Contractor shall have the absolute right, without any exceptions and lor the entire


duration of (hit Contract, to use. free of Tax or tanlf imposed by the Government, any


Crude Oil pipeline and related facilities constructed by the Contractor in accordance


with this clause 33 to: (a) transport Crude Oil produced from any Production Area and


(b) operate and maintain such Crude 01 pipelme and related facilities.


13.7 All tariff and other payments to the Contractor from thud party shippers (which ndtde


all payments in respect of ship or pay obligations) for use of any pipeline and related


facilities under this clause 33 shall be app: ed to the recovery of Petroleum Costs unl.i al


Pipeline Costs have been fully recovered by the Contractor pursuant to the provisions of


this Contract.


u 7.1 The Government wll only be entitled to receive tariffs paid by thud part*


shippers for their use of the Crude Oil p>pebne and related facilities after


Pipeline Costs have been fully recovered by the Contractor.


Il ia Except as provided in clause 11 7.1. the incremental costs of providing


transportation services for Ih.rd party shippers up to the transportation


delivery point mil be considered Pipehne Costs and wi« be Cost Recoverable.


UIJ Incremental costs sril not be Cost Recoverable m respect of payments to


shippers for lost or unaccounted for Crude Oil. indemnities, damages for breach


of contract, costs and liabilities from Crude Oil purchase contracts, non¬


contractual liabilities, personal m|ury. third party environmental claims, and


any other form of expense that is not a direct operating expense.


IIS Upon recovery by the Contractor of all Pipeline Costs, the operating and maintenance


costs of any pipeline and its related facMiet shall be borne by the Contractor, be


considered Petroleum Costs, and will be Cost Recoverabte-











•7


 Proavcnoa Sftcncg Contract OoJo 0;r








»»* The Government shad have the unr rghts as the Contractor for use. free of charge, of


any pipeline and related facilities constructed by Contractor under this clause 33 for the


transportation of the share of Petroleum to which the Government is entitled under this


Contract.





UK The Contractor shall bear the cost oI operation and maintenance of any Crude Oil


p>pebne and related fee A ties constructed by Contractor under this clause 33 and all risKs


of accidental loss or damage to such ppelmc and related facilities while they are


required for Petroleum Operations


3111 Tale to pipelines and related facilities m the Kurdistan Region belongs to the





Government.





G*s Pirtiwis


3113 The Contractor has no rght and is not authorised to construct Natural Gas primes or


to ship Natural Gas. except m accordance with an agreed Domestic Gat Plan or an


agreed Gas I xport Plan and related Approved Development Plan. Pipelines and related


facdites lor the transportation of Natural Gas are governed by clause 14 (Wolurof Gosl


Clause 34 - Unitisation





14.1 II a Reservoir extends beyond the Contract Area into an adjacent area (an ’Adiacent





Contract Area "I which is the lubfcct of another Petroleum Contract (as defined by the


Kurdistan Region 04 and Gas lawL or in the event a Reservoir of an Adjacent Contract


Area extends into the Contract Area, the provisions ol clause 47. Paragraph Second, o*


the Kurdistan Region Oil and Gas Law wfl apply


34.2 The Contractor must agree with the contractor of the Adpcril Contract Area upon a





schedule for reaching agreement of the terms of the unitisation of the Reservoir, based


on reliable technical operational, and economical parameters and in accordance with


Best Practices.





Clause 35 - Indeunification: Insurance





LlASIUTT


15.1 Subject to the other provisoes of this Contract, the Contractor, m its capacity as the


entity responsible for the execution of the Petroleum Operations within the Contract


Area, shal be liable to third parties to the extent provided under Appfccable law for any


Loss and Expense caused to such third parties hi the conduct of Petroleum Operat>ons-


35.2 Notwithstanding the other provisions of th,s Contract and except as provided in clause


3S.2.1. the Contractor wdl not be iable to the Government or a Government Interest


Holder, or any governmental authorities, bodies, courts, or pobtical subdivisions in the


Kurdistan Region for any loss or Expense resulting from the Contractor's conduct of


Petroleum Operations (other than personal miunes. industrial iBness. or death).











88


 Production snaring Control! Qata ore








JS.2.1 Clause 35.2 does nol apply in respect of any low or Expense arising out ol or


related to (a) the wiiful misconduct or grots negligence of the Contractor, or


(b)a material failure to conduct Petroleum Operations in accordance with the


terms of this Contract.


iNDCMNIfICATION


IS I rite Contrar tor shall indemnify the Government against all Low and Expense arising


under any claim, demand, action, or proceeding brought or Instituted against the


Government by any


(a) employee of the Contractor or of any Subcontractor or by any dependent


thereof, for personal injuries, industrial illness, death or damage to personal


property sustained in connection with, related to or arising out of the


performance or non-performance of this Contract regardless of the fault or


negligence In whole or in part of any entity or Individual other than the


Government; and


(b) a with respect to all claims, demands, actions, or proceedings made by third


parties anslng out of or related to Petroleum Operations.


IS« The Government wrfl retain control over the defence of, and any resolution or settlement


relating to. all claims, demands, actions, or proceedings made by third parties. Including


any employee of the Contractor or of any Subcontractor or by any dependent thereof.


IS.*.t The Contractor shall cooperate with the Government and provide reasonable


assistance in defending all claims, demands, actions or proceedings made by


third parties, including any employee of the Contractor or of any Subcorstractor


or by any dependent thereof, agamst the Government.


ss*J A claim foe loss or Eapense m respect of any claim, demand, action, or


proceeding made by thud parties agamst the Government fmcludmg those made


by any employee of the Contractor or any Subcontractor or by any dependent


thereof), as set focth in a notice from the Government to the Contractor al be


conclusively considered a loss o« Expense payable by the Contractor 4 (a) the


Contractor consents thereto, or |b| the Contractor fads to dispute the


Government's ijbity. in whole ot in part, by the end of a 10 day period


following receipt of the notice from the Government to the Contractor. The


Contractor shall promptly pay such loss or Eipense on demand








It * The Contractor shall take al necessary steps to respond to. and shall promptly notify the


Government of. all emergency and other events (mehiding personal injuries. e«plosions.


leaks and spdb). occurring m relation to the Petroleum Operations which are causing or


llefy to cause material environmental damage or material risk to health and safety.


Such notice shall include a summary description of the circumstances and steps taken


and planned by the Contractor to control and remedy the situation.


IS l > The Contractor shall provide such additional reports to the Government as are


reasonably necessary in respect of the effects of such events and the course of


al actions taken to prevent further loss and to mitigate deleterious effects.


 Production Sharing Controct Qaia Ore








IS 6 In (he event of emergency situations as set out In {lame 3S.5 and at the request ol the


Conliaclor. the Government shall assist the Contractor to the extent possible in anv


emergency response, remedial, or repair effort by: (a| making available any labour,


materials, and equipment In reasonable quantities requested by the Contractor that are


not otherwise readily available to the Contractor and (b| facilitating the measures taken


by the Contractor to bring Into the Kurdistan Region personnel and Assets and Materials


to be used In any such emergency response or remedial or repair effort.


It.a.i Ihe Contractor shall reimburse the Government's reasonable and necessary


costs incurred In such efforts, which reimbursed amounts shall be considered


Petroleum Costs and will be Cost Recoverable, unless the emergency was


caused by the gross negligence or wilful misconduct of the Contractor or a


breach of the Contractor's obligations hereunder.


IM.I Any assistance that the Government provides will be without prejudice and In


addition to any indemnification lights the Government may have under this


Contract or Applicable Law.


COhSiQUIMfiat Damaois Limiiatujh


j».T Except as expressly provided otherwise, no Party ei be keble to another Party uoder


the Contract for or in respect ol any indirect, modental. consequential, or exemplary


loss or damages, including with respect to Ihe Contractor, any IsabiSty or damages with


respect to actual or abeged damage to any fteservo* withes the Contract Area (and any


extension of such fteservo* outside of the Contract Areal, and any loss of Petroleum


production by the Contractor, unless caused by the wilful misconduct or gross


negligence of the Contractor.


iNIUKAhCe


15.8 The Contractor shall obtain and maintain any insurance required by applicable Kurdistan


Region Law. in accordance with Best Practices, and any Insurance required by the


Management Committee; which insurances, at a minimum, must provldr sufficient


cover for:


(a) loss of and damage to Assets and Materials; and


(b) personal injury, damage to third parties, and pollution caused by or arising


from Petroleum Operations.


15.9 The Contrar tor shall ensure that all Insurance policies shall name the Government as an


additional Insured party and include a waiver of subrogation protecting the Government


against any Loss or Expense resulting from any Petroleum Operation conducted by or on


behalf of the Contractor under this Contract, to the extent that the Contractor is liable


for such Loss or Expense under this Contract.


ss.9.1 The Contractor is not obligated to purchase insurance cover for any claims


arising from negligence or wilful misconduct of the Government or of any


Public Company or ol any of their respective subcontractors or personnel.


IS 10 Upon the Government's written request, the Contractor shall provide the Government


with insurance certificates, including necessary details, for any insurance policy


maintained by the Contractor,











90


 Co-rnxt OM 0:c








M.ll fach Contractor Entity shall be responsible lot the l*ng °* «“ claim* made under any


tnuiamr policy maintained by such Contractor Entity which relates lo this Contract


Any premiums and payments relating to such insurance policies (other than pohtical risk


insurance) shall be considered Petroleum Costs and ■« be Cost Recoverable.


IS.12 In tiny Insurance oolicy which is required by this Contract, the amount lor which the


Contractor itself is liable will, in the even! ol any Insurance claim, be considered a


Petroleum Cost, and will be Cost Recoverable Political risk insurance is never Cost


Recoverable, unless such uninsured amount Is contrary to Best Practices or Applicable


Law,








Clause 36 - Records; Confidentiality





IM0«M«tl0N


16.1 The Contractor shall keep all records, Oata and Information relating to the Petroleum


Operations in accordance with Kurdistan Region laws and Best Proctices.


16.2 Upon the Government's written request, the Contractor shall provide the Government





with samples ol any rocks or any other items extracted during the Petroleum


Operations,





10 ] The Government shall have title to all Data and information, whether raw. derived,


processed, Interpreted or analysed, obtained pursuant to thu Contract,


16 * Each Contractor Entity sha" have the right. »about any mitation. to send Abroad


copies of all reports and Oata. magnetic tapes and other Data relating to the Petroleum


Operation*. Magnetic tapes or other Oata. the original of which must be analysed and


processed Abroad, may be transported out of the Kurdistan Region.


W.s Any representatives authorised by the Government and notified to the Contractor shall,


upon reasonable prior written notice, have reasonable access to any information and


Data relating lo the Contract Area m the po**e**«>n of the Contractor which the


Contractor a obliged to provide to the Government pursuant to this Contract. It is


understood that, when eiercismg such right, the Government thal ensure it does not


unduly interfere with or hmder the Contractor's r«ht* and activities


16 6 The Contractor shall provide the Government with al information, analyses reports,


tapes. Oata. and other information


(a) as it is obliged to provide the Government pursuant to this Contract; and





(b) upon the request ol the Government and upon termination of this Contract, .n


respect of Petroleum Operations as requested by the Government











If f Except a provided in clause J6 i. each Party shal |j| keep all Oata and information


relatmg to this Contract and the Petroleum Operations confidential during the entire


term of this Contract and (b) not divulge or disclose such Oata or inform jton to third


partes without the specific consent of the other Parties, such consent not to be


 unrr asonably withheld or delayed. The foregoing confidentiality obligators don not


apply to information or Data which:











Ibl is known to the recipient at the date of Sisclosvie.


|c) is required to be furnished in compliance with any law applicable to it. by a


competent governmental authority with jurisdiction over such Party or it*


Affiliates by a court order or any other legal proceeding! with jurisdiction over


such Party or an Affiliate; or


Id) is required to be disclosed pursuant to the rules or regulations of any


government or recognised stock exchange having Jurisdiction over a Contractor


Entity or an Affiliate.


H I Notwithstanding the foregoing in clause 16.7. tm accordance with Best Practices and


subject to clause 36 8.1. such Data and mformaton may be disclosed to:


la) Affiliates of each Contractor Entity;


|b) employees, officers and directors of each Contractor Entity and then respective


Affiliated Companies for the purpose of the Petroleum Operations, sub|eet to


each such entity taking customary precautions to ensure such information is


kept confidential;





(c) consultants or agents retained by any Contractor Entity or its Affiliates lor the














(e) bono /tde prospective assignees of a participate* interest under this Contract


Contractor Entity are conducting Bond Mr negotiations directed towards a


merger, consolidation or the sale of a material portion of its or such Affiliate's


equity ownership interests);


If) prospective or actual Subcontractors and suppliers engaged by a Party where


disclosure of such information is essential to such Subcontractor's or supplier's


fg) a«y other Person or entity wish the prior consent of the non disclosing Party.


•aa | No Contractor Entity may make a d.sclosure pursuant to clauses M l UJ. fd).


less encompasses* than the provisoes hereof.


M * A»y Data and information relating to rvVsqunhed or surrendered areas under this


have the nghl to use such Data and n lor mat on lor any purpose, and m particular for


the purpose of promoting such re&nqaished areas Each Contractor EnMy shad be











92


 entitled lo keep cop*! of such Data and informalon and lo use such Data and


information fo» any purpose.





No Tiuomo





16 10 Subject to the provisions of this clause 36. the Contractor may not tall nor exchange any


Data related to Petroleum Operation* without the approval of the Government, which


approval shall not be unreasonably withheld or delayed where, in the Contractor'*


reasonable opinion, iuth vale or exchange would benefit Petroleum Operations.











Clause 37 - Environmental; Worker Safety and Health


GlMKAi


37.1 The Contractor shall carry out Petroleum Operations, and procure that they ate carried


out. in such a manner as to:


(a) protect the natural environment and ensure that Petroleum Operations result


In minimum ecological damage or destruction;


(b) ensure the safety, health and welfare of Persons in or affected by Petroleum


Operations;


(c) manage the resources in a way which has long-term benefits to the Kurdistan


Region and the Contractor;


(d) maintain In sale and goad condition and repair, the Contract Area and all


structures, facilities. untalljtioni. equipment and other property, and other


works, used or to be used m Petroleum Operations;


(e) on the earner of: (i) the termination of this Contract, and (u) when no longer


required for Petroleum Operations: and. in either cate, eacept with the consent


of the Government; or unless this Contract otherwise provides, abandon,


decommission, remove or dispose of the property and other works mentioned


in paragraph (d). clean up the Contract Area and make it good and safe, and


protect and restore the natural environment;


(0 control the flow and prevent the waste or escape of Petroleum, water or any


product used in or derived by processing Petroleum;


(g) prevent the escape of any mixture of water or drilling fluid with Petroleum;


(h) prevent damage to Petroleum-bearing strata in or outside the Contract Area.


(i) eicept with the consent of the Government, keep separate each Reservoir


Discovered m the Contract Area, and such of the sources of water discovered m


the Contract Area as the Government directs:


()) prevent water or any other matter entering any Reservoir through wells in the


Contract Area, except when required by. and in accordance with, the


Development Plan and Best Practices and the CHS Standards.


(k| minimise interference with pre-existing rights and activities; and


remedy in a timely fashion any damage caused to the natural environment.











93


 CtMfott QUOit








17.2 The Contractor shall implement a health. safety and environment program and tale


neccssjry measures to ensure hygiene, health and safety of its personnel tarrying out


Petroleum Operations in aecordante with Best Practices ('£HS Standards’)


17.3 The IMS Standards must be no less stringent than those set out in the relevant World


Bank Group Environmental. Health, and Safety Guidelines


(http://www.ilc.orK/HcMl/sustainablHty.nsf/Contcnt/EHSGuidelines).


17 4 The measures the Contractor must take include the following:


(a) supplying first aid and safety equipment for each work area and maintaining a


healthy environment for personnel;


(b) reporting to the Government within 72 hours of such accident, any accident


where personnel has been Iniuted while engaged in Petroleum Operations and


resulting in such personnel being unable to return to work;


(c) implementing a permit to work procedure around hazardous Assets and


Materials and irsstadations.


(d) providing safe storage areas for explosives. detonators and any other


dangerous products used In the operations;


(e) supplying lire extinguishing equipment In each work area;


(f) measures for the purpose ol taking control of any blow out or fire which could


damage the environment or Petroleum field, in accordance with Best Practices;


and


(g| measures for the purpose of preventing any Involuntary injection of fluids In


Petroleum formations and production of Crude Oil and Natural Gas at rales


that do not conform loMIP


ITS WfeMi 90 days from the Effective Dale, the Contractor shad propose IMS Monitors to


the Government to conduct period* momtor.ng of the Petroleum Operations of the


Contractor's health, safety, and enveonment peograra.


im The Government may. at any Vmr. PPPOiM wets IMS Mongers as « wishes


5ISJ The Contractor shad pay the reasonable fees and e-peeses of the IMS Menton


S7-SJ The fees and expenses of the (MS Motors ri be Cost Recoverable


lift


17.6 Within 130 days of the Effective Date, the Company must deliver a comprehensive and


detailed environmental impact report (‘EIR’) prepared in accordance with Best


Practices.


>7.6.1 The Government may require that sue h HR be reviewed and validated by a


recognised independent environmental consultant selected by the Government


(at the cost of the Contractor, which < osts will be Cost Recoverable), and may


post the report on the Government's website to invite public comments.

















94


 *ro4*«te» Srtcneg Co-C-oct OM On








Cl*


31.1 The Contractor mutt provide an environmental impact nu«™r: ('Cl*') report


together with Hi Development Plan and a fnsal II* not Ini than 180 days before the


scheduled start of decommissioning operators* of the scheduled ecp-atioo of this


Contract. whichever it earlier.


»»J.l If the Contractor does not eause the Inal 11* to be deleted In accordance


with this clause 17.7. then the Government will be entitled to produce such CIA


and the Contractor shall pay all costs in respect therewith (which costs will be


Cost Recoverable).


IMMP


17 H The Company must provide an environmental management and monitoring plan (the


’IMMP*) satisfactory In all respects to the Government, before the Government will


authorise start of Petroleum Operations.


ir.ai Such CMMP must establish such procedures as may be reasonably necessary to


continuously determine and assure that:


(a) all Petroleum Operations are m compliance with and do not violate the


requirements of Applicable law or this Contract;


(b) no hazardous substances or solid wastes are disposed of or otherwise


released on or to any property except in compliance with the CHS


Standards;


(c) no haiardous substance will be released on or to arsy property in a


quantity equal to or edeeding that quantity which would require


reporting under Applicable law or the CMS Standards; and


(dl no waste or hazardous substance is released so as to pose an


imminent and substantial endangerment to public health or welfare or


the environment


17.* The Contractor shall provide self monitoring reports to the Government following


RrpioTs standard practice as set forth Hi the fobowmg Repsol documents, each o< which


has been provided to the Government


(a) DGU HSf Due Diligence, dated 1 November 2009;


(b) DGU Hazard Identification Study, dated 1 January 2010;


(c) DGU MS! Bridging Document, doted 1 January 2010; and


(d) DGU environmental. Social, and Health Impact Assessment, dated 1 July 2009.


RtlINQUISHID A lit AS


17.10 Prior to relinquishing a portion of the Contract Area, the Contractor shall ta»e


reasonoble measures to abandon the areo to be relinquished in accordance with Best


Practices and the IMS Standards in similar physical arid ecological environments.


•7.10.1 Such measures shall include removal or closure In place of facilities and Assets


and Materials together with reasonable measures necessary for the


preservation of fauna, flora and ecosystems, all In accordance with Best





9S


 l,'Ottu







Practices in similar phy»ic-al and ecological environment*. The Contractor shall


only be responsible for site restoration or environmental damage to the extent


the tame pertains solely and directly to Prtrdeum Operations conducted


pursuant to this Contract.








J7.ll The Contractor shall lake reasonable measures in accordance with Applicable law. Best


Practices, and the CHS Standards m similar physical and ecolog *al environments to


minimise any adverse material impact on national parks and nature reserves which may


arise directly at a result ol the Petroleum Operations





Eivtnottuiu


37.12 Any reasonable expenditure Incurred by the Contractor In relation with this clause J7


will be Cost Recoverable.


P*E-EXdtlN6 CONDITIONS


37.13 The Contractor Is not responsible for and will bear no cost, expense or liability lor


claims, damages or losses arising out ol or related to any pre-existing environmental


conditions or any acts of unrelated third parties.


st.D.i The Contractor shall submit to the Government, for the Government's


approval, a baseline environmental study of the Contract Area svithln 1R0 days


of the Effective Date.


Summio* o»Om»*tion»


17.14 The Government may. on not less than id hours' not**, order the Contractor to


suspend al or any part of its operations pendmg conclusion of a Government


investigation into the circumstances of any incident, including possible violations of IMS


Standards, involving:


(a) personal injury to any person in connection with the Protect.


|b| an emission of herardous substances or other release ol hatardous substances


causing damage, injury, claims, or a threat of any of the loregomg const rtutmg a


potential molation of EMS Standards;


(c) the presence in. on. under, or m*ratmg from any part oI the Contract Area (or


surface water on or groundwater under the Contract Area ol any substance at a


concentration above the concentration at which the substance is normally


present in. on or under land in the same locality; or


|d| the disposal of hatardous wastes in violation of the EHS Standards.


17.It On not less than JO days' prior notice to the Contractor, the Government may order the


Contractor to suspend al or any part of its Petroleum Operations when the Government


has determined that the Contractor has either significantly or persistently failed to


satisfy the IHS Standards or is conducting project operations in a grossly negligent


manner that could endanger its employees, third parties, or the environment. Any


suspension order under this clause 37.IS wl not be lifted until the Government is


satisfied that the Contractor has a plan (satisfactory in al respects to the Government)


to come mto full compliance with the EHS Standards.











96


 Pradvcftoa SftcrM* Co»ITOtl Q*c Oir








17.U On no! lew than 30 day*' prior notice «o the Contractor, the Government may order the


Contractor to luipend al or any part ol Petroleum Operation* until the Contractor hat


fully paid aU outstanding faabitie* anting horn or related to significant environmental


damage* or personal injur**, in either cate cauved by Petroleum Operation* «n breach


of the Contractor'* obligation* hereunder or Applicable lan.








CLAUSt 38 - DC COM MISSIONING


AccnonuooiMini or htMl Uw


»t I The Contractor acknowledge* that there wd I* eh be eitenine future regulation of


Oecommniionmg Operation* under Appl

Mil The Contractor acknowledge* and accept* that Appbcable law may obhgate the


Contractor, and possibly the ihareholder* and ultimate parent company of


each Contractor (ntity. to po*t bond* or guarantee* and to be hable for unpaid


decomirmtoning obligation*.





38 2 The Contractor *hall undertake Decommission mgOperation* m accordance with Sett





Practice* m umilar phytical and ecological environment* The Contractor thall *ubm« to


(he Management Committee and the Government for their respective approval*, m


accordance with clauie $.4. a detailed plan and work program for decommnuoneg the


Production Area facility* and vte retloration (the 'Oecommitiioning Plan and Work


Program *) and forecasted Budget no later than 24 Months before the date estimated by


the Contractor for the end of Commercial Production from each Production Area


ll.l.l The Management Committee shali sro. de comment*, if any. on the


Decomminioning Plan withm 90 day* after receipt.





ll.l.l The Contractor'* completion of Decommissioning Operation* in accordance, -r


al material reipect*. with the Decommissioning Plan for a Production Area


approved by the Management Committee and the Government wl satisfy al


of the Contractor'* obligation* with reipect to the performance of


Decomminioning Operation* for such Production Area.





Il l The Management Committee shal meet within 60 day* following it* receipt of


Contractor1* propoia! to eaamine and approve the Decommissioning Plan and Budget.


IB 4 The Contractor shall not undertake Decommissioning Operation* unless the


Government ha* approved the Decommissioning Plan. Work Program, and Budget.


U l The Contractor shall on the lint anniversary of the submission of the lint





Decommissioning Work Program and Budget and annually thereafter (or at such


ntendrd period* a* may be agreed by the Government) during the term of this


Contract, submit to the Government revised Decommissioning Work Program* and


Budget* taking into account change* in the Development Plan and advance* in Best


Practice*














97


 Product** S**neq Co+tro







1*0 Rti*«v£ Fu*o





Mi To enable the Contractor to recover the costs associated with Decommission^


Operations, the Contractor shal either establish a segregated fund to fund


decommissioning and site restoration (a "Decommissioning Reserve fund') at a


financial institution satisfactory to the Government and under such escrow or trust


terms as the Government may require, or provide such corporate or third party


guarantees or bonds as the Government may require in accordance with Appbcable Law.


The Decommissioning Reserve Fund must be established before the final 10


Calendar Years of the term of the Production Operations of a Production Area.





SS-S-2 Once established, the Contractor shall make regular contributions to the


Decommissioning Reserve Fund based upon estimated decommissioning and


site restoration costs in accordance with Best Practices.





stij The Contractor shall pay its contributions to the Decommissioning Reserve


ru*d .x uss.





W.7 II. at the r"l ol the term of the Production Operations of a Production Area, the


Government decades to take over production operations in the Production Area:


(a) the Government shall become liablr lor Decora missioning Operations in such


Production Area:


lb) the contributions and ary Interest accumulated In the Decommissioning


Reserve fund. to the e»tent that such contributions have been recovered as


Petroleum Costs, shall be delivered and pa*d over to the Government; and


(c) the Government shall release the Contractor and the Contractor Entities Irom


any obligations relating lo Decommissioning Operations and shall Indemnity


the Contractor and the Contractor Entities lor any coils, liabilities, expenses,


claims or obligations associated therewith to the extent permitted by


Applicable law (Including any caps on such liability as inay be required by


Applicable law or Government poltcyl.


38.8 II the Contractor undertakes Decommissioning Operations In a Production Area, the


Contractor may use the contributions and any interest accumulated m the


Decommissioning Reserve lund lor the Decommissioning Operations


38.9 II the Decommissioning Reserve lund Is paid to the Contractor and the


Decommissioning Reserve lund Is not sullicient to cover all Decommissioning Costs lor


the Contract Area, the Contractor shall pay the balance and the Contractor Intltirs, or


any ol their Alliliates, may recover such balance Irom any other area which it the


subiect ol another Petroleum Contract (as delined by the Kurdistan Region Oil and Gas


law) anysvhere in the Kurdistan Region and. lo the extent the balance is not recoverable


at aforesaid, such remaining balance shall be paid by the Government to the Contractor,


18 10 II the Decommissioning Reserve fund is paid to the Contractor and the


Decommissioning Reserve lund exceeds all Decommissioning Costs (or the Contract


Area, the balance shall be transferred to the Government.














98


 Product.oa SNJnej Contract Qaxr O/t








II II Any expenditure incurred by the Contractor in relation with tho clause 38. includ •"! *n»


contributions to the Decommissioning Reserve Fund, shall be deemed Petroleum Costs


and w* be Cost Recoverable.








CLAUSE 39 - ASSIGNMENT: CHANGE Of CONTROL


Gimiai


It I Clauses 39 2 through 39.6 do not apsly to Government Interest Holders in respect ol the


Government Interest- The consent of any Government Interest Holder, in its capacity as


Government Interest Holder, is not required for any Assignment by a Contractor Entity


19.3 Cicept as provided m clause 39.3. no Contractor Entity may Assign to any Person, in


•■hole or in part, any ol rt» rights, privileges, duties or obligations under this Contract


without the prior consent ol the Government, which consent the Government shall not


unreasonably withhold or delay


39.3 Any Assignment of al or any part of a Contractor Entity's rights, obligations, or interests


under this Contract without the prior consent of the Government or that otherwise d m


breach of this Contract or Appl«able law wil Or void as to the Assignee and the


Assgnor wdl remam liable under this Contract.


39.4 No consent ol the Government m respect of an Assignment by a Contractor Entity is


valid unless In wr.t/ng and s^ned by the Prune Minister and the Minister of Natural


Resources of the Kurdistan Region.


IBS No Contractor Entity is entitled to make an Assignment when it or the Contractor n m


default undri any obligation under this Contract.





AtiioNMtm to Airmails ano ornia CONiaatro* Entities


IB b A Contractor Entity that li not in default under any obligation under this Contract is


entitled to Assign Its rights, privileges, duties and obligations under this Contract to an


Affiliate or to another Contractor Entity, provided the assignee enters into an agreement


with the Government, acceptable in form and content to the Government, to be bound


by the terms and conditions of this Contract.


IB.B.l If a Contractor Entity Assigns any of its rights, privileges, duties or obligations


under this Contract to an Affiliate of such Contractor Entity, the Assignor will


remain |olnOy and severally liable with the Assignee for the performance by the


assignee of all obligations, duties, and liabilities pertaining to the Assignment





Assionwinis to Tm«i> P*ks»*


191 A Contractor Entity proposing to Assign al or any part of its rights, obligations, and


interests under this Contract shall request the consent of the Government and the other


Contractor Entities, and accompany such request with:


(a) evidence of the technical and financial capability of the proposed third party


assignee and its controllmg (directly or indirectly) shareholders:


|b) a letter of representations and warranties from the proposed assgnee in form


and content acceptable to the Government including a representation that the


 P/oaunion Sharing (onion Qaia 0/e








proposed assignment will not lo the knowledge ol such Conic.ictor f n*l«v alter


reasonably diligent investigation violate any Corrupt Practices lawv applicable


to the Contractor Entity; and


(c) a letter ol representation* from the assignor in form and content satisfactory to


the Government, including a representation that the proposed assignment will


not lo the knowledge of such Contractor Entity after reasonably diligent


Investigation violate any Corrupt Practices laws applicable to the Contractor


Entity.


IV 8 For any Assignment to be effective, the Parties and the relevant thud party, if any. must


enter Into a binding and enforceable instrument of assignment and novation with the


Government, svhich must include an undertaking b* the assignee to fulfil the obligations


under this Contract which correspond to the assigned participating interest.





GOVtKHWtNt


39.9 E acept as provided in clause 4 in respect of the Government Interest, and as provided in


clauses 32.6 through 32.14, the Government shall not Assign all or any part of its rights


and obligations under this Contract to any Person.





C««N6(0f CoNtaos


39.10 “Change of Control' means;


(at any direct or indirect change of the Identity of the Person who Controls a


Contractor Entity (whether through merger, sale of shares or of other equity


interests, or otherwise, through a single transaction or series of transactions,


from one or more transferors to one or more transferees): where


|b) 'Contror means the power (including contingent powers) to cause Contractor


Cntity to do. or not do. an act that may otherwise be in the interest of such


Contractor Entity to do or not do. and whether such power is exercisable


pursuant to shareholders agreements, financing agreements, voting rights


agreements, management agreements, board membershgss. direct or


beneficial ownership, or in any other direct or indirect way. For this purpose,


and without limitmg the foregoing, any Person that owns SOU of the


outstanding voting securities (or equivalent ownership mterests). determined


after accounting for all securities that are convertible into voting securities, of


any other Person wiB be conclusively considered to control such other Person.


I* II A Contractor Entity shai: (a) promptly notify the Government when such Contractor


Entity expects to be subject to a Change in Control and (b) request the consent of


Government with respect to such Change of Control.





T*m


IV.12 If a Contractor Entity Assigns all or part of its rights, obligations, and interests under this


Contract, in compliance with this clause 39, or is subiecl lo a Change of Control


accomplished with the Government's consent, neither such Assignment nor Change ol


Control will constitute a taxable event as to the assignor, assignee, or any other Person


under Kurdistan Region Law.











100


 rtodu







Clause 40 - Force Majeure














Cox tract Sue* events rnclude:


(a) war. whether declared or not. tiW war. insurrection. riolv end wmotion,


terrorism, any other hostile acts, whether internal or eilermil,


(b) strikes or other labour conflicts;


(c) accidents or blowouts;


(d) quarantine restrictions or epidemics;


(e) any act, event, happening or occurrence due to natural r aules, in particular,


but without limitation, floods, storms, cyclones, fires, lightning, earthquakes, or


lack of water necessary for Petroleum Operations, and


(f) any acts or orders of any competent foreign governmental authority validly


asserting (urlsdKtlon over the Contractor or a Contractor I nt.ty


(nut


40 1 No delay, drfault, breach or omission of the Contractor or a Contractor I ntity m the


performance of any of the. respect orators, under this Contract w« be considered


force Manure


40 1 The Contractor shall promptly notify the Government of the occurrence of a force


Majeure Cvent and take all reasonably appropriate measures to perform its obligations


under this Contract to the e.tent possible.


40.4 The time resulting from any such delay or csirtailment in the execution of such


obligations, increased by the time necessary to reparr any damage resulting from or


occurred during such delay or curtailment, shall be added to any time period provided


under this Contract (including the Captoration Period and any mention thereto, any


Sub Peimd and any extension thereto and any Development Period and any eatenuon


thereto!


40 S The Government and the Contractor shall meet as soon at possOle after the not dicat «xi


of force Majeure with a view to »wng reasonable endeavours to mitigate the effects








40 t An event affretmg 4 Contractor (nwy efl be considered force Majeure affectmg the


Contractor if the conseowence of such force Mafeure prevents the performance of any





application of any law appticabfe to a Contractor Entity or any of its AffAates. other


than Kurdistan Aeglon law or other laws of the Republic of Iraq, which could resuft in a


criminal or civil penalty or sanction, is not force Majeure








101


 Production Wionnp Contract Qato Ore








•O' *•'* following events or circumstances will not constitute Force Majeure:


|.i) any event or circumstance arising in connection with .my Assets and Materials


or facilities other than the Assets and Materials and facilities of the Contractor


or a Contractor tntily or a Subcontractor;


lb) the breakdown or failure of any Assets caused by normal wear and tear or


caused by the failure of the Contractor to maintain such Assets or to maintain a


suitable stock of spares;


lc) any event or circumstance affecting any third party.


|d) any event or circumstance which comprises or results from an* wiful


misconduct or gross negligence of the Contractor, or any act or omission by the


Contractor which could have been prevented or overcome by the exercise by


the Contractor of the standard of a reasonable and prudent operator acting m


accordance wdh Best Practices:


(e) the imposition of sanctions by the Government due solely to the failure of the


Contractor to comply with any Applicable Law;


10 change of Applicable law; and


|g| the inability or the failure of the Contractor to raise sufficient financing for the


performance of the Contractor's obligations hereunder.


*0.1 The Contractor wil not be entitled to relief in accordance with this clause 40. or having


become entitled will cease to be so entitled, to the extent that the Contractor faib to


comply with the requirements of this clause 40. unless such failure would itself qua-fy


is Force Majeure.


40 0 The Contractor shall, to the greatest extent possible, continue to perform its obligations


In accordance with this Contract to the extent not prevented, impeded, or delayed by


force Majeufo.


40 10 If Force Ma)eure occurs, the Contractor shall taka reasonable endeavours to bring the


force Ma|eure to an end and to resume full and proper performance of the obligation to


which the Force Ma|eure relate!.


40.11 The Contractor shall give notice {a 'Force Majeure estimate') to the Government a!


each of the following times:


[a) forthwith after the day (the • Relevant Day") upon which the Contractor first


knew or ought reason ably to have known of the inabity to perform an


obl«ation In accordance with this Contract for which rebel is sought.


(b) within 7 days from the Relevant Day and on the last day of each subsequent


period of 7 days thereafter; and


|C) forthwith after the Contractor anticipates that it will be able to resume


performance of the covenant or obkgat>on for which relief n sought


M U lech Force Majeure Istimate shall contain the Contractor's good faith best estimates of


the foBowing information:


|a) full particulars of and the reasons for the Force Majeure event;








102


 Production Sharing Con free I data Oir








lb) ts* fip»iied Minx of the Contractor*! m*b>Uy to perform an* covariant or


oblation m accordance w*h this Contract.


l«)








force Maiejre relate! •* be returned (whether mcrrmentaty or m whole):





(d) the action! wh

erent to an end and to rewire fuB and proper performance of the obkgato*' to


wtxh the force Maieure relate! and the Contractor*! estimate of the opected


tchedule thereof.





40 II The Contractor thali ensure that each subsetjuent force Manure Cstsmatc w>" contain


a«» of the above information not previously given notice of. a full report confirming or


updating and amplifying the information contained in any previout force Manure


f itimatei and wch further information at the Government may reasonably requeit








Clause 41 - Sovereign Immunity


*U Thu clause 41 does not apply to the Government in respect of any Orsputr arnmg out of


or related to |a) the eiercise of rights by the Government as set forth tn clauses 12.11


and 32 12.










*11 lath Party hereby fuby and irrevocably waives any claim lo immunity for itself or any of


in aiteli Thu waiver includes any claim to immunity from:


(a) any e.pert determination, mediation, or arbitration proceedings commenced


pursuant lo clause 42;


(b) any judicial, administrative or other proceeding! lo aid Ilie e.pert


determination, mediation, or arbitration proceedings commenced pursuant lo


clause 42; and


(c) any effort lo confirm, enforce or execute any decision, settlement, award,


lodgment, service of process, execution order, or attachment (bul not any pro


ludgmenl attachment) that results from an e.pert determination, mediation,


nrbitratlon or any judicial, administrative, or other proceedings commenced


pursuant lo this Contract.


Clause 42 - Dispute Resolution


l.CIUSIO*


«M This clause 42 does not apply to any Dispute arising out of or relatmg to the e.ercise of


rights by the Government as set forth m clauses 32.11 through 32 13. whkh O.sputes


shall be subject to the e.clusive jurisdiction of the courts of the Kurdistan *cgk>n located


In frbrl.














101


Novtcc o# Damn





42.2 Subject to the provisions of clause 42.1, a Party who desi

resolution which has not been resolved by negotiation shall commence the Dispute


resolution process by providing each other Party that Is a party to the Dispute with a


notice of the Dispute (a 'Notice of Oispute').


42.2-1 A Notice of Dispute must (a| identify the parties to the Dispute, contain a brief


statement of the nature of the Dispute, and the relief requested and (b|


request negotiations among the senior representatives of the parties to the


Dispute as set forth in clause 42.3.


Nf&oiiAiioa


42.1 The parties to the Dispute shai first seek to settle the Dispute by negotiation between


senior representatives with authority to negotiate the settlement of the Dispute. Such


senior representatives shall meet at a mutually acceptable date. time, and place to


attempt to resolve the Dispute.


Mtoutio*


42.4 If the Dispute is not resolved by negotiation in accordance with clause 423 within 60


days after the date of the receipt by each party to the Dispute of the Notice of Dispute


or such further period as the parties to the Dispute may agree in writing, any party to


the Dispute may seek settlement of the dispute by mediation in accordance with the


London Court of International Arbitration (*LCIA*| Mediation Procedure, which


Procedure shall be deemed to be incorporated by reference into this clause, and the


parlies lo such Dispute shall submit lo such mediation procedure


AumriMiorr


42.5 If the Oispute is not settled within the earlier of |a) 60 days ol the appointment of the


mediator, or such further period as the parties lo the Dispute may otherwise agree


under the mediation procedure under clause 42.4. and (b) 120 days alter the delivery of


the Notice ol Dispute, any party to the Dispute may reler the Oispute to. and seek final


resolution by. arbitration under the LCIA Rules, which Rules are Incorporated by


reference into this clause 42.5.


42.1.1 An election by a Party to reler a Dispute to arbitration shall be construed as


meaning such Dispute shall be resolved by binding arbitration under the LCIA


Rules.


42.5.2 Cucept as specifically provided otherwise, no Dispute Is subject to decision by


any court, and the Government specifically does no! submit to the jurisdiction


of any court outside of the Kurdistan Region.


42.5. s Any arbitration shall he conducted by three arbitrators


42.5. a II the parties to the Oispute are the Government and all the Contractor Emilies.


the Government and the Contractor shall each appoint one arbitrator. If the


parties to the Dispute are the Government and more than one. but not all the


Contractor Entities, the Government shall appoint one arbitrator and such


Contractor Entities shall appoint one arbitrator. If the parlies to the Dispute are











104


 Production snoring Control I (lota O/e








the Government and one Contractor Entity, the Government and such


Contractor Entity shall each appoint one arbitrator.


42.5.5 The two arbitrator! »o appointed shall, in good faith, use all reasonable


endeavour! to agree on the appointment of the third arbitrator, who wll chair


the arbitral tribunal. In case of failure to appoint an arbitrator or to agree on


the appointment of the third arbitrator, the Rules of the LCCA shall apply.


42.5.6 the seat of arbitration shall be london. England. The language to be used In


any pr.or negotiation, mediation and in the arbitration shall be English. The


arbitral award may be enforced by any court of competent jurisdiction. Any


award shall be expressed in US$,


42.S.2 The Parties agree that the arbitral award will be final and not subject to any


appeal, Including to the Courts of England on issues of Law.





Ixnxi DittitMinAtiON


42 0 Any Dispute between all or any of the Parties in respect of clauses 15.8. 27.2 and 27 7.


and any Oispute the disputing parties agree to refer to an Expert, shall be submitted to


an Expert In accordance with this clause 42.6.


42.7 The Management Committee shall prepare and agree appropriate terms of reference


("Terms of Reference*) for the Expert In respect to a Dispute to be submitted for


resolution by the Expert.


42.2.1 The Terms of Reference must set forth the duties of the Espert.


42.2.2 The Terms of Reference must require the Expert to use reasonat'e endeavours


to issue an opinion within 4S days of the Expert's receipt of the Terms of


Reference and the information referred to in clause 42.2.


42.2.J The Management Committee shaB promptly provide the Expert with approved


Terms of Reference.


47.8 Each Party to the Dispute shall have the right to prc< de the Expert with any written


information which such Party considers relevant, provided such written information is


provided to the Expert within 45 days after the Expert's appointment


42.8.1 Such information shall be provided to each other Patty at the same time and


each such other Party shall be entitled to provide comments on such


information to the first Party and the Expert svithin 30 days after receiving such


information.


42.8.2 The Expert may consider any information the Expert considers useful to reach a


decision.


47 11 Subject to the provisions of clause 15.9. any decision of the Expert shall be final and shall


not be subject to any appeal, except in the case of manifest error or fraud.


47.10 Each Party to the Dispute shall pay an equal share of the costs and expenses ol the


Expert.


 Production Shanty Con trod Qato Die








Clause 43 - Fiscal Stability


GlKIKAl


43.1 flip Government shall maintain thp liability ol the final conditions ol Ihu Coniract. as


they mult from Applicable law In force as of the Effective Date, for thp entire duration


of this Contract in accordance with Ihu clause 43.


431 The provisions of the clause 41 do not apply to Government Interest Holders.


Ac.nowiioomini or fuiunt Laws


43.1 Thp Contractor acknowledges that the Government has advised It may propose Laws


which could have a beneficial or detrimental effect upon the fiscal position of the


Contractor, including lows the primary purpose of which may be


(a) the protection of the environment to the standards of the European Union,


(b) the promotion of the health and safety of cilliens of the Kurdistan Region to


the standards of the European Union,


(c) the promotion of the health and safety of personnel engaged in Petroleum


Operations to the standards of the European Union;


(d) the regulation of hazardous substances, Including the transportation and


disposal theieof, to the standards of the European Union;


(e) decommissioning of petroleum facilities. including WeBs and rotate***, to the


standards of the European Union and Atoerta. Canada;


(f) regulation of pipelines; and


(gj the regulation of companies.


The introduction of such Laws will not entitle the Contractor or any Contractor Entity to


any rights to any alteration to the terms ol this Contract


Cnuti or Tu Law


43-4 If. at any time after the Effective Date


(a) there is any change to Regional Ta« laws Ms force on the Effect*# Date (a


'Change of Ta« law'l. and


(b) the fiscal position of the Contractor Entities under this Contract a materiaRy


either beneficially or detrimental^ affected by such Change of Ta« law; then


(c) the Contractor and the Government shall negotiate to alter the terms of this


Contract so as to place the Contractor Entities in the same overalt economic


position (taking into account home country taxes) a. thal which the Original


Contractor Entity ("Original Contractor Entity" means Repsol) would have been


without any Change of Ta* law


43.5 The Government will undrr no circumstances be liable to any Party or Person for any


consequential or indirect losses because of any Change of Tax law.

















106


 Production Sharing Controct (lata Ore








Durum


4j.e II a Party believes that a Change at Tax law has benelicially or detrimentally allotted the


Contractor Entity a* proy>ded in clause 43.4. and upon that Contractor Entity's reciuest,


the Government shall meet with the Contractor Entities to decide on any necessary


measures or making any appropriate amendments to the terms ol this Contract to place


the Contractor Entitles In the position (taking into account home country Taxes lor the


Original Contractor Entity) as the Original Contractor Entity was in prior to the


occurrence ol the Change ol Tax law.





4) 7 Should the Government not agree with the Contractor in respect ol the elfect ol the


Change ol Tax law, within 90 days ol the request ol the Parly relerred to in clause 43.6


(or such other period as may be agreed by the ParlirtI, a Party may reler the Dispute to


arbitration as provided in clause 42 without lust relernng the matter to negotiation and


mediation.








Clause 44 - Communications: notices


44.1 A Party giving any notice or making any request, demand, or other communication to





another Party (each a 'notice') shall do so in writing, express the notice in English,


address such notice as provided In clause 44 2, and use one ol the lollosving methods to


deliver such notice, each ol svhich, lor purposes ol this Contract is a writing:





(a) personal delivery;


(b) email; and


(t) internationally recognised air courier, with aB lees prepaid, and. in the case ol


any notice to the Government, with a reputable international air courier


company with an establishment in Erbtl in the Kurdistan Region.


*4 2 Any notice or communication not provided in English a not valid unless acknowledged





and accepted by the recipient


*4 J Each Party shall address not«es us respect ol this Contract:





To the Government:


Attention: Mis Excellency the Minister ol Natural Resources





Address: Ministry ol Natural Resources


Kurdistan Regional Government





trbd. Kurdistan. Iraq


Email: mnr#krgodxom





























107


 »ad*tno» Vfccrwq (o*noct QMoOit








To a Contractor Entity:


REPSOl TPE ORIENT! MEDIO SA.





Attention Mr. Martin George Barrowman


Address: Al fattan Maia. 0«<* 1001 PO Box 7S700


Dubai, United Arab Emirates





Telephone: *9714 283 2111


fa«: *9714 283 2100


Email: mgbarrowm»n£ repsol.cain





44 4 A notice is effective only if the Party giving or making the notice has complied with thn


clause 44 and if the addressee has received the notice.


If a notice is delivered to the recipient in person, the notice wiB be considered


received by the addressee by the date set forth in the s^ned receipt


u.u If a Party sends a notice by an internationally recognised air courier in


accordance with this clause 44. the notice will be considered received by the


addressee by the date set forth in the signed receipt


«*l If a Party sends a notice by email and the email transmission is followed by


delivery of the Notice by ai> courier in accordance with this clause 44 or is


acknowledged by the recipient, the notice wiH be considered to have been


delivered to the addressee when the email departed the gateway of the


vender.


44.5 A Party may change its address as set lorth in clause 44.2 by a prior notice to the other


Party us accordance with this clause 44.








Clause 45 -Termination


QthtRAl


45.1 The Government undertakes to exercise its termination rights under this clause 4S in a


reasonable and proportionate manner, having regard for the nature and severity of the


triggering act or event, the identity of the Person at fault, and the relative significance of


any adverse consequences to the Contractor or a Contractor Entity that may arise (torn


the Government's exercise of its rights under this clause 45.


45.2 In any notice of termination given by the Government under this clause 45. the


Government must specify the grounds lor exercising the termination right and the date


on which the Contract or the rights and Interests of a Contractor Entity, as applicable,


will terminate.


45.3 The Contractor is not entitled to claim force Majeure as a consequence of the


Government's exercise of its rights under this clause 45, and no obligation of the


Contractor svill be suspended as a consequence of any Dispute with resqect to the


Government's exercise of its rights under this clause 45.








108


 Production snoring Control! Qflltf 0/e








CONlRACtOR TlAMINAtlO* RtdMIl


45.4 The Contractor may terminate this Contract at any time during the exploration Period


(•» It may be eatendrd pursuant to clauses 6.S. 6.6, and 6 7) or the Gas field Holding


Penod upon 30 days’ prior notice to the Government.


AulOMMIC TtRMINAtlON


45 * This Contract will automatically terminate the end of the exploration Period (Including


any extensions as provided In clauses 6.S. 6.6, and 6.7| without notice to the Contractor


If, as of the last day of the (xploratlon Period, If:


(ii| the Development Period has not started In respect of a Olscovery of Crude Oil


or Gas field; or


(b) no Gas field Holding Period Is applicable with respect to a Gas field.





45.B In accordance with clause 7.13, this Contract will terminate:


(a) upon the relinquishment (whether mandatory, considered, or voluntary! of the


entire Contract Area; and


(b) with respect to all relinquished areas immediately upon relinquishment, and


the Contractor shall have no further rights with respect to such areas.





CoRiuer Practicis Iaws


45.7 On not less than 30 days' prior notice to the Contractor, the Government may terminate


this Contract if a competent authority has reasonably determined (In a proceeding


applying due o'occv.V


(a) that this Contract has been obtained by the Contractor, or any Person acting on


behalf of the Contractor. *i notation of Corrupt Practices Lavrs; or


(b) that a permit, approval, consent, or waiver in connection with th.s Contract or


Petroleum Operations has been obtained by the Contractor, or any Person


acting on beha* of the Contractor, m violation of Corrupt Practices laws.


45.• Any final determmatiofi. judgment, sanction, or comnetion (not subject to further appeal


on the issue). mclsid.ng under a consent order In which there is a fmdmg or admission of


the factual circumstances descried m clause 45.7(a) or

regulatory authority m the United States of America. Ingland, or a legal jurisdiction


where a Contractor Intity or its ultnate parent company is incorporated, with


jurisdiction over a Contractor Intity or an Affiliate of such Contractor tntrty. w* be a


reasonable determination for the purposes of douse 4S.3 and wJ be conclusively


determinative


45.9 Unless the Government has cancelled a notice o f termination this Contract will br


terminated as of the end of such 30-day notice period.





OtHfcH G*OU*DS f OR TtHMIHAIKJN


45.10 The Government may terminate this Contract, on not less than 90 days' pnor notice. If


the Contractor:


(a) fails to meet a material financial obligation in this Contract;


 Production Wionnp Contract Qata Otr








(b) during the f Irst Sub-Period does not carry out dolling and seismic acquisition,


as dotaltad In clause 10.1 or, during the Second Sub Period (or earlier), does not


carry out dolling and seism* acquisition, as detailed In clause 10 4;


(c) Interrupts Production lor a period o( more than 90 consecutive days with no


cause or justification acceptable in accordance with this Contract or under Best


Practices, it being recognised that force Ma/eure Is an acceptable justification


for such interruptions;


(d) unless such extraction or production is expressly authorised or unavoidable as a


result ol operations carried out in accordance with Best Practices, extracts or


produces any mineral or object which Is not covered by this Contract and does


so wilfully or In a manner that constitutes gross negl^ence or persistently after


receiving notice thereof; oi


In) refuses to abide By any negotiation, mediation, arbdration or eipert decision


under clause 42.


asaa.i If. within the 90da> notice period, the Contractor has either remedied the


default identified in such notice to the satisfaction of the Government, or the


Government has agreed another remedy with the Contractor, mehjding


compensation, the Government shall cancel such notice of termination


«».!§» If. within such 90 day notice period, the conditions set forth in clause 4S • have


not been satisfied, the Government may. on not less than 30 days’ notice,


terminate the Contract, and. unless such notice is cancelled by the Government


before the end of Such 30-day period, this Contract will be terminated as of the


termination date set forth In the notice Irom the Government.


•Ill This Contract is subject to termination as provided In clause 14


45.12 Where the Contractor comprises only one Contractor Entity, the Government may


terminate the Contract on not less than 30 days’ notice to such Contractor Entity


following the occurrence ol an Act ol Insolvency, unless, within such 30-day period, the


Government cancels its notice based on evidence provided by the Contractor Entity that


the Insolvency Event has been dismissed, discharged, or otherwise is no longer


applicable


45 II The rights and interests of an Individual Contractor Entity will be automatically


terminated, without prior notice from the Government, II such Contractor Entity:


la) is subject to a Change of Control for which the Government has not given its


authorisation in accordance with clause 39.11; or


lb) has made or has purported to nuke an assignment of all or part of its interests


hereunder (including under any provision of a joint operating agreement)


without the prior consent of the Government in accordance with clause 39.























110


 Production Vhoring CW'oit QOto 0/e








CONttQUtMCCSOf TttMINMION


*4.14 Upon termination or expiration of this Contract


(a| the Contractor land each Contractor fntityl will no longer have, a* ol the


elfective date ol *uch termination, any further right* and mtereits under this


Contract;


(b) all accrued right* and liabilltle* of the Contractor and of each Contractor Entity


will »urvivo; and


(c) the provltion* of dauiei 169.10,11,15.1. 35.3.15.4,15.7.16, 38.7

42 will *urvlve the termination or expiry of thi* Contract.


44.14 If the Government terminate* the participating Interest* of a Contractor Entity, but not


the Contract, and there are remaining Contractor entitle*:


(a) *uch terminated Contractor Entity will no longer have, a* of the effective date


of »uch termination, any further right* and interest under this Contract;


(b) all accrued right* and liabilltle* of *uch terminated Contractor Entity will


»urvlve; and


(c) a* to ancf In retpect of »uch terminated Contractor Entity, the provision* of


dauiet, 16.9, 10, 11, 15.1, 35.1, 15.4. 15.7, 56. 38 7|c), 41. and 42 will survive


such termination..


44.U If the participating mtere*t* of a Contractor Entity (or of Contractor Entitle*! are


terminated, but the Contract n not terminated and there are remaining Contractor


Entities, the Government may offer, on not le** than 15 days’ prior notice from the


Government to the other Contractor Entities, to assign and novate »uch terminated


Contractor Entity's participating interest, or any part thereof, to the remaining


Contractor Entities on such terns and in such amounts as the Government may


determine.


*4-14-1 The Government has no obligation to make such alocation and may retain the


term mated interest, provided that the Government will use reasonable


endeavour* to find a new buyer for such interest*


45 17 No assignment, novation, transfer, or other disposition of a terminated Contractor


Entity's undivided mterest* to another Contractor Entity pursuant to thi* clause 45 will


be a taxable event under Applicable law as to the Contractor Entity receiving the


undivided interests ol a terminated Contractor Entity.


44 It Neither the Government, nor any Contractor Entity, wl assume any tuthbties.


obligations, or duties of a terminated Contractor Entity i" retpect ol the terminated


Contractor Entity's undivided interest arising or accrued prior to the Utter of:


(a) the effective date of the termination of such Contractor Entity, and


(b) In the cate of assignment and novatmn to the remaining Contractor Entities,


the elfective date of the reassignment and redistribution of the terminated


Contractor Entity's interests to another Contractor Entity


45 I* The Government will in no circumstances assume accrued UabitAies. obligations, or


duties of a terminated Contractor EnMy m retpect of the terminated Contractor Entity's








111


 Production Sharing (ont/ott Qaia o/c








undivided interest, whenever ariking or accrued. All accrued liabilities will remain the


vole obligation of the terminated Contractor fntity.


4510 No termination under thiv Contract, Including In this clause 45, llmitv or Impalrv a Party's


rights under f ngiish law or Applicable law In revpect of termination,








Clause 46 - General Provisions


COUNIt*P*HI*


46.1 The Contractor Entities and the Government may execute thiv Contract in counterpart!,


each of which convtitutei on original, and all of which, collectively, canvtltute only one


agreement. The vignaturev of all of luch Partiev need not appear on the vamc


counterpart, and delivery o( an executed counterpart signature page by facsimile or


electronic scan is as effective as executing and delivering this Contract in the presence of


the other Parties. In proving this Contract, a Party must produce or account only for the


executed counterpart of the Party to be charged


Amcndmcnis; Waivixs


46.2 The Government and the Contractor may amend this Contract only by a written


agreement of the Government and the Contractor that identifies itself as an amendment


to this Contract.


«6.t.t A Government Interest Holder, m such capacity, is not emitted to be a party to


any agreement amending this Contract, unless the terms ol such amendment


affect any right or obligation of such Party as a holder of all or part of the


Government Interest.


46.2.2 The Government shall notify Government Interest Holders of any proposed


amendments and signed amendments, and the Contractor will have no


obligation to notify Government Interest Holders of any proposed amendments


and signed amendments.


46.3 A Party may waive any condition or obligation of such Party in this Contract only by a


svriting executed by such Party. A waiver made on one occasion will be effective only In


that instance and only for the purpose staled A waiver once given Is not to be


construed as a waiver on any future occasion, No waiver or amendment us respect of


this Contract will constitute a waiver or amendment of any other agreement or contract,


except as expressly set forth in such waiver or amendment.


46.4 No failurp or delay by a Party in exercising any right hereunder, or tn requiring the


satisfaction of any condition under, this Contract, and no act. omission, or course of


dealing between the Parties (or any other them), will operate as a waiver or estoppel of


any right or condition or any provision, right, or condition of this Contract.


46.5 Any single or partial exercise of any right, power or remedy by a Party will not preclude


any other or future exercise thereof by such Party or the exercise by such Party of any


other right, power or remedy.


 Production Sharing COhlroil data 0/e








RlOIONM Otl »*o Gas Council AfPROVAl


46 A The Government warrants that this Contract is approved lor the purposes of the


Kurdistan Region Oil and Gas law.





Com


46 7 lath Party shall beat all costs incurred by it in connection with the preparation and





negotiation of and entry into this Contract and all documents to be entered into


pursuant to it. Such costs will not be recoverable as Petroleum Costs.





EfMCirvi Omi


46 6 This Contract is effective as of the date set forth on the signature page (the -Effective


DatO.


GOVIKNIhO l»w


46 V This Contract, including any dispute arising therefrom, thereunder or In relation thereto


and the agreement to arbitrate in clause 42. is governed bv Snjih law. I nept «s


respect of Government Interest Holders, no term of this Contract is enforceable under


the Contracts (Rights of Third Parties) Act 1999 by a Person who is not a Party to this


Contract.


Enmi Aoatuamr


46.10 As of the I 'fectwe Date, this Contract and the Repso! letter of Representations


commute the Anal, complete and exclusive expression of the Parties' agreement on the


matters contained in this Contract


46.10.1 All prior and contemporaneous negotiations and agreements between the


Parties on the matters contained in this Contract are eipressly merged into and


superseded by this Contract.


46.10.7 The provisions of this Contract may not be explained, supplemented or


qualified through evidence of trade usage or a prior course of dealings.


46.10.3 In entering into thn Contract no Party has relied upon any statement,


representation, warranty or agreement of any other Party or any other Person,


except for those expressly contained in this Contract, in the Rrpsol letter of


Representations, and the Guarantee.


46.10.4 There is no condition precedent to the effectiveness of this Contract (except for


signature and delivery by the Government and the Contractor Entities).


46.10.5 There are no representations or warranties, in each case other than those


expressly stated In this Contract and the Repsol letter of Representations.








[Signature page follows.;


Repsoi YPF Oriente Meoio S.A.


 ffertive Dale ior.











‘or and on behalf of (he GoVf RNMENT OF THE KURDISTAN REGION OF IRAQ




















Barham Satn


Prune Minister





Kjrcfctan Regional Government


On behalf ol the Regional Coundl


for the Oil and Gat Affairs of the Kurdistan Region - Iraq














*:-------------------------


Ashti Hewrami





Minister of Natural Resources


Kjrtfcsian Regional Govemrrent


On behalf of the Ministry of Natural Resources In the


Kurdistan Regfcn














For the Contractoi and each Contractor Entity:











RepsoiYPF OniiNif Mroio S.A.














I £ ' hol&Ti <-


\isMiicM**











/Signature page to Production Stoma Control - Qoh Orel


 Production Sharing Contract Qa/o Dzc























Annex A











Map showing coordinates of the Qala Dzc Contract Area corner points


















































































































































































































































































































































A • I





 Production inat/og Contioct Oalo Die








Annex B


Accounting Procedures











PARAGRAPH 1 - GENERAL PROVISIONS


1.1 Purposo


The purpose of this Annex B - Accounting Procedures It to classify expenditures, define further


Petroleum Costs (In addition to those defined at such In the Clouses of the Contract), and


prescribe the manner in which the Accounts shall be prepared and approved.





1.2 Definitions


Words and phrases to which a meaning has been assigned its clause 1 or other clauses of the


Contract shall have the same meaning when used in this Annex.





1.1 Inconsistency


In the event of any inconsistency or conflict between the provisions of these Accounting


Procedures and the main body of the Contract, the provisions of the main body of the Contract


will control





1.4 Accounting Records and Reports


14.1 The Contractor shall maintain the Accounts m accordance with clause IS and this


Accounting Procedure


14.1 Within 60 days of fhe effective Date, the Contractor shall submit to and dacuss with the


Government a proposed outline of charts of Accounts in accordance with generally


accepted standards and recognlied accounting systems and consistent with normal


petroleum industry practice end procedures.


14.3 Within 90 days of receiving the above submission, the Government shall either provide


written notification of its approval of the proposal or request in writing revisions to the


proposal.


144 Within 180 days after the effective Date, the Contractor and the Government shall agree


on the outline of charts of Accounts which describe the basis of the accounting system


and procedures to be developed and used under this Contract.


14.s Following such agreement, the Contractor shall expeditiously prepare and provide the


Government with formal copies of the comprehensive charts of Accounts and manuals


related to the accounting, recording and reporting functions, and procedures which are,


and shall be, observed under the Contract.


14.6 Notwithstanding the generality of the foregoing, the Contractor shall provide regular


statements relating to the Petroleum Operations


(a) Production Statements (Paragraph 6).


(b| Value of Production and Pricing Statements (Paragraph 7);


(C| Cost Recovery and Share Account Statements (Paragraph 8|;


(d| Statements of expenditures and Receipts (Paragraph 9);








D-l


 Proflxcioo S* or0*9 Coct/ocr Ce.'a 0;e








(•) Fmal Endof Year Statements (Paragraph 101: and


(f) Budget SMamnb (Paragraph 12).


lA t Al reports and statements shall be prepared in accordance with the Contract. Applicable


la*, and where there are no relevant provisions of either of these. in accordance with


6e»« Practices.


11 language and Unit* of Account


Al Accounts shal be mamlamed and prepared in the English language and shall be recorded in


l/S Dollars. Where necessary lor clarification, the Contractor may also maintain Accounts in


other currencies.


1.4 Audit and Inspection Rights of the Government


The following provisions shal apply to any audit carried out in accordance with clauses 1SJ to


1S.7:


It.I For purposes of auditing, the Government, acting reasonably, may examine and verify


at reasonable times upon reasonable prior written notice to the Contractor, al


accounting records, including charges and credits relating to the Petroleum Operations,


such as records of account, accounting entries, supporting records and inventories,


vouchers, payrolls, invoices and any other documents, correspondence and records


including electronic records reasonably considered necessary by the Government to


audit and verify the chatRes and credits, values and treatments


1.6.2 The auditors are entitled to vlilt and Inspect at reasonable tm.es all snes. plants.


facilities, warehouses and offices of the Contractor directly or ."d.rectfy serv.ng the


Petroleum Operations and to question personnel associated with those Petroleum


Operations.


1.6.1 Where the Government requires verification of charges made by an Affl .ate of a


Contractor Entity, the Government shal have the right to obtain an audit certificate for


such chjnges from an Internationa, -< recognised firm of pub' c accountants acceptable


to both the Government and the Contractor.


1.6.4 Al agreed adjustment* resulting from an audit shal be promptly made in the Accounts


and any consequential ad)ustments to payments due to the Contractor or to the


Government, as the case may be. shall be made promptly.


1.6.4 When issues jre outstanding with respect to an audit, the Contractor shal maintain the


relevant documents and permrf inspection thereof until the issue is resofved.


1.7 Accrual Basis. Cash flow Basts and Reports


Al Accounts shall be prepared on an accrual basis in accordance with generally accepted


accounting prviciples used in the international petroleum industry.


U Values and Treatments


Values and treatments proposed by the Contractor relating to all Petroleum Costs shall be


subject to challenge by the Government in the course of audit to ensure that they are in


accordance with the provisions of this Accounting Procedure.














B-2


2.1 Segregation ol Com and l ipemri


M.l Petroleum Cotlt mutt be tegregated in accordance with the purpotet for which tuch


Petroleum Com .ire made The purpotet which oualify are


(a) Ihote which have been included in the approved Work Program and Budget for


the yen' Iri which the Cottt and Expenditure* are made;


(b| expenditure! meurred in catet of emergency under the Contract;


(C| any other purpotet agreed in the Contract, and


(d| other demt which haw been agreed by the Government and the Contractor


aaj Al Petroleum Cotlt recoverable under Paragraph I at Petroleum Operation! than be


treated at tet out m the balance of thb Paragraph 2


2.2 Exploration Co.lt


Exploration Cotlt are all direct and allocated indirect cottt and expenditure! incurred m carrying


out the C xptoration Operation., including all direct and allocated indirect cotlt and expenditure!


incurred in the tearch for Petroleum in an area which it. or wat at the time when tuch cottt and


e.pentet were incurred, part of the Contract Area, including:


(a) aerial, geophytical. geochemical, paleontological, geological, topographical and teitmic


turveyt and tludlet and their interpretation and purehated geological and geophytical


Information,


III) ttratlgraphic tetl hole drilling and water well drilling;


(cl labour. material!, tuppliei. and letvket uted in dr.ii.-n* and formation tett ng of writ


with the object ol finding Petroleum or Appraita! Welt excluding any com of the


tubteQuent completion of tuch welh at producing welh.


(d) facMiet to the extent uted m tupporl of the purpotet detcr.bed m (a). |b). end (cL


including accett roadt:


(e) that portion of a* tervnee expenditure! and that portion oI a* general and edmmittratrve








(f) any other expenditure incurred = the tearch for and appratol of Petroleum after the


Effective Date and not otherwise eowred under thw Paragraph 2 2.


!J Gat Marketing Com


Gat Marketing Com are al dvect and aJocated indirect cottt and expend.turet incurred m


carrying out Gat Marketing Operation! in accordance with an Approved Gat Marketing Plan and


Budget and mclude that portion of alt tervice expendKuret and that portion of ad general and


jdmxnitlratwe expenditure! directly attributable to Gat Marketing Cotlt or allocated thereto on


a continent and fair bam.





2.4 Development Cottt


Development Com are all direct and allocated indirect cottt and expenditure! Incurred in


carrying nut Development Operation! including all direct and allocated indirect cottt and


expenditure, incurred in:


(a) drilling wcllt which are completed as producing welh and drilling well, for purpotet of


producing from a Petroleum retervoir. whether thete well* are dry or producing and


drilling wellt for the injection of water or gat to enhance recovery ol Petroleum.








B- 3


 (b) completing well* l»v ol •>• 111*II10r« ol uii"« or equipment ur athriwitr alter a well


hat been drilled for the purpose of bringing the well into use at a producing well or at a


l«» well lor the injection of water or gas to enhance recovery of Petroleum


the costs of Petroleum production, transport and storage facilities such at pipelines.

















Id) engineering and design studies for the weds and facilities referred to m |e). fb|. and |cfc


and


fr) that portion of ad service expenditures and that portion of all general and administrative





consistent and equitable basis, and any other expenditure mcurrrd •* the Development


Operations and not otherwise covered under Paragraph 2.4.





2.S Production Costs


Production Com are all direct and allocated indirect costs and expenditures incurred in carrying


out Production Operations, mi kid mu all direct and allocated iiulirect costs and expenses incurred


in Petroleum Operations after first Production which are other than exploration Costs. Gas


Marketing Costs. Development Costs and Decommissioning Costs. Production Costs include that


portion of a* sec.

duvet* attributable to Product** Costs or allocated thereto on a consistent and equitable basis





Decommissioning Costs are all d.rect and allocated indirect costs and expenditures incurred m





carrying out Decommissioning Operations and include that portion of all lervx e expenditures


and that portion of all general and administrative expenditures directly attributable to


Decommissioning Costs or allocated thereto on a consistent and equitable bain, and the


Decomems




*.M Service expenditures are expenditures in support of Petroleum Operations including








warehouses, vehicles, inotoriced rolling equipment, aircraft, fire »nd security stations,


workshops, water and sewerage plants, power olants, housing, community and


recreational facilities and furniture, tools and equipment used in these activities.











»M AH service expenditures shall be regularly allocated as specified in Paragraphs 2.2. 2.J.


2.4, 2.S and 2.6 to I •ploratlon Costs. Gas Marketing Costs, Development Costs,


Production Costs and Decommissioning Costs respectively and shall be separately showi-








M l Where service expenditures are made in respect of shared facilities, the basis of


aHocation of costs to Petroleum Operations shall be consistent and equitable and shall


be specified.














B - 4


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 Saermp Coeirarr Gala On








The foregoing percentages nj| be (evirated but not more often then annually.


and any approved jppropriate adjustment shall be made, it necessary,


prospectively.


u.s t Development, Production and Decommlnlonlng Operation* Overhead


The overhead rate* applicable to Development Operation*, Production


Operation*, and Decommissioning Operation* *hall be agreed between the


Partie* and »hall Incorporate the following guidelines:


(a) The Contractor'* charges must be charged as direct charges whenever


possible. Overhead charges exist only to compensate the Contractor's


Affiliates for costs which are properly allocable to Petroleum


Operation* under the Contract but which cannot, without


unreasonable effort and/or release of confidential Oata proprietary to


the Contractor's Affiliates, be charged under any other section.


Overhead costs are billed monthly. Overhead must be commensurate


with services tendered and based on actual cost studies but may not


exceed an amount calculated as a percentage of certain annual


expenditures excluding exploration Costs.


(b| That percentage as well as the types of expenditures, which affect


overhead and those, which do not, shall be agreed among the Parties.


(c| The maximum percentage rate* may be revised by mutual agreement


not more often than annually. The initial maximum percentage rates


and the types of expenditures to which they apply thall be agreed as


soon as the Patties possess reasonably reliable cost estimates for the


relevant Production Area.




(•) The Contractor shad upon request furnish at the end of each relevant


Calendar Tear to the Government a confirmation by its statutory


auditor that the overhead co»t* actually charged do not duplicate any


other charge* and that the method u*ed in allocating overhead to


Petroleum Operation* hereunder a* opposed to other activities is


reasonable and in accordance wdh generally accepted accounting


practices.


(f) The Contractor must budget lor overhead charge*


l-tJ *■ general and administrative expenditures shall be regularly allocated as specified in


Paragraphs 23. 2.3. 2.4. 2.5. and 2.6 to Exploration Cost*. Ga* Marketing Cost*.


Development Costs. Production Costs and Decommissioning Costs, respectively and shall


be separately shown under each of these categories.


PARAGRAPH 3 - COSTS. EXPENSES. EXPENDITURES AND CREDITS


3.1 Costs Recoverable Without further Approval of the Government


The following Petroleum Costs incurred by the Contractor pursuant to the Contract as classified


under the headings referred to in Paragraph 2 shji be recoverable for the purpose of clause 25


of the Contract (except to the extent provided m Paragraph 4 or elsewhere »* this Annex) without


the requirement for obtaining any further approval of the Government, subject to audit as


provided for in clause IS and in Paragraph 1.6.











B- 6


 Picket** Saar*** Coal'ocr data Du








in Surf ate Rights


All dirref costs necessary lor the acquhrlion. renewal or refciquithment ol surface nghts


acquired and maintained m force for the purpose! of the Contract








(a) the Contractor's locally recruited employees based in the Kurdistan Region


Costs ol all the Contractor's locally recruited employees who are directly


engaged M the conduct of Petroleum Operations under the Contract m the


Kurdistan Region. Such costs shall include the costs of salaries, wages, bonuses,


overtime, employee benefits and Government benefits for employees and levies


imposed on the Contractor as an employer, transportation and relocation costs


within the Kurdistan Region of the employee and such members ol Ihe


employee’s family (limited to spouse and dependent children) at required by


Apphcable la* or customary practice in the Kurdistan Region. If such employees


are engaged m other activities in the Kurdistan Region. m addition to Petroleum


Operations, the cost of such employees shaB be apportioned on a time sheet


bath according to sound and acceptable accounting prmcqAes







Contractor's employees directly engaged in the conduct ol the Petroleum


Operations under the Contract, whether temporarily or permanently attuned,


irrespective of the location of such employees, it being understood that .n the


case of those personnel only a portion of whose time it *hoOy dedicated to


Petroleum Operations under the Contract, only that pro rata portion of


applicable salaries, wages, and other costs as de mealed m Paragraphs 1 l 2(0.


(d|, (e), (f) and (g). shall be charged and the bash of such pro rata allocation


shall be specified.





<0 The Contractor's costs regarding holiday, vacation, sickness and disability


benefits and living and housing and other customary allowances applicable to


the salaries and wages chargeable under Paragraph 3.1.2(b).


(d) fapentet or contributions made pursuant to assessments or obligations imposed


under Applicable law which are applicable to the Contractor’s cost of salaries and


wages chargeable under Paragraph 3.1.2(b).


(e| The Contractor's cost of established plain for employees’ group life insurance,





hospltaliialion, pension, slock purchases, savings, bonus, and other benefit plans of


a like nature customarily granted to the Contractor's employees, provided however


that such costs are In accordance with generally accepted standards in the


international petroleum industry, applicable lo salaries and wages chargeable to


Petroleum Operations under Paragraph 3 1 2(b).





(f| Actual transportation and travel expenses of employees of Contractor, including


those made lor travel and relocation of the I ■ patriate employees, including their


families and personal effects, assigned to the Kurdistan Region whose salaries and


wages are chargeable to Petroleum Operations under Paragraph 3.1.2(b).


(1| Actual transportation expenses ol f lpatnate personnel transferred to


Petroleum Operations from their country of origin shall be charged to the


Petroleum Operations Transportation expenses of personnel transferred


from Petroleum Operations to a country other than the country of their


origin shaB not be charged to the Petroleum Operations.











B - 7


 Ptoovctio* Saar** (oai'acr Goto Of#








(21 Transportation and travel expenses" as used in this sub parag'ash (f)


means the cost ol freight and passenger service. mult, hotels, insurance


and other expenditure! related to vacation and treniier travel and


authored under the Contractor'! standard personnel poixies The


Contractor shall ensure that all expenditures related to transportation


com arc equitably alloialed to the activities, which have benefited from


the personnel concerned.


(g) Reasonable personal expenses of personnel whose salaries and wages are


chargeable lo Petroleum Operations under Paragraph 3.1.2(b) and lor which


expenses such personnel are reimbursed under the Contractor’s standard personnel


polities. In the event such expenses are not wholly attributable to Petroleum


Operations, the Petroleum Operations shall be charged with only the applicable


portion thereof, which shall be determined on an equitable basis.


J.i.i Transportation and Employee Relocation Coils


The cost of transportation of employees, equipment, materials and supplies other than as


provided in Paragraph 3.1.2(f) necessary for the conduct of the Petroleum Operations under


the Contract along with other related costs such as, but not limited to. Import duties,


customs fees, unloading charges, dock fees, and Inland and ocean freight charges


■ 14 Charges for Services


(a) Third Parties


The actual costs of contract services, services of professional consultants, utilities,


and other services necessary for the conduct of the Petroleum Operations under the


Contract performed by third parties other than an Affiliate of the Contractor.


(b) Affiliates of the Contractor


(II Professional and Administrative Services Expenses

and administrative services provided by any AHrfalrs of the Contractor for


the direct benefit of Petroleum Operations, including services provided by


the product***, exploration. legal, procurement. Imanoal. Insurance,


accounting and computer services divisions other than those covered by


paragraphs 3 14 (DII2). 3.1.6. and 3.15 (b) whtch Contractor may use m


lieu of having its own employees. Such charges shall reflect the cost of


providing their seonces. Such charges shall not include any element of


profit and shall be no more or less favourable than umdar charges lor


other operations earned on by the Contractor and Its Affiliates. The


charge-out rate shall include all costs incurred by Affiliates Incidental to


the employment of such personnel including all labour and associated


labour costs and the cost of maintaining and operating offices and


providing all support services for such personnel Costs of travel of such


personnel In respect of Petroleum Operations will be directly charged. The


charges for such services shall not exceed those prevailing If performed b,


non Aff.bated thud parties, taking into account the quality and availability


of such services. Where the work is performed outside the home office


base of such personnel, the dady rate shad be charged from the date such


personnel leave the home office base where they usually work up to their


return thereto, including days which are not workm* days in the location


where the work is performed, excluding any holiday entitlements derived


by such personnel from their employment at then home office base.














B-l


 ProdvrlXm J«o»«b Conf/ocf Oafo O/r








(21 Scientific or Technical Personnel cost ol Klentlfic or technical personnel


services provided by any Affiliate of th«- Contractor for the direct benefit of


Petroleum Operations, which cost shall be charged on a cost of service


basis and shall not include any clement of profit. The chargcout rate shall


include all costs incurred by Affiliates incidental to the employment of such


personnel including all labour and associated labour costs and the cost of


maintaining and operating offices and providing all support services lor


such personnel costs of travel of such personnel In respect of Petroleum


Operations will be directly charged The charges lor such services shall not


exceed those prevailing if performed by non-affiliated third parties, taking


into account the quality and availability of such services. Unless the work


to be done by such personnel Is covered by an approved Work Program


and Budget, the Contractor shall not authorize work by such personnel


without approval of the Government


(3| Equipment and facilities: use of equipment and facilities owned and


furnished by the Contractor's Affiliates, at rates commensurate with the


cost ol ownership and operation; provided, however, that such rates shall


not exceed those currently prevailing for the supply of like equipment and


facilities on comparable terms In the area where the Petroleum Operations


are being conducted and shall be on an arm's length basis. On the request


of the Government, the Contractor shall provide the Government with


evidence of such rates being on an arm's length basis. (If the Government


considers that arty such rat* is not on an arm's length basis :nen We


Government has the right to refer the matter to an expert pursuant to


clause 42.2 and 42.B of the Contract). The equipment and lacdities referred


to herein shaB eicludr major investment items such as (but not limited to)


drilling rigs, producing platforms. Oil treating faculties. Oil and gas loading


and transportation systems, storage and terminal facilities and other major


faculties, rates for which shal be subject to separate agreement with the


Government.





»».» Communications


Cost of acquiring, leasing, installing, operating, repairing and maintaining communication





systems including radio and microwave facilities wrthm and between the Contract Area and


the Contractor's nearest base facAity.


s.x.i Office and Miscellaneous facilities


Net cost to the Contractor of establishing, maintaining and operating any office, sub-office,


warehouse, housing or Other facility directly serving the Petroleum Operations. H any such


facihty services mo** than on* contract area the net costs thereof shall be aBocated on an


equitable basis m accordance w.th Best Practices.





Ill Ecological and Environment


(a) Costs incurred m the Contract Area as a result of legislation for archaeological and


geophysical surveys relating to identification and protection of cultural sites or


resources;


(b) Costs incurred m environmental or ecological surveys required by regulatory


authorities, including an environmental impact assessment commissioned pursuant


to clause 37.7 of the Contract and any Other costs incurred m complying with We


requirements of clause 37.


(c) Costs to provide or have available pollution containment and removal equipment;











B- 9


 SAarinq Co«Z'*







(d) Costs of actual control and cleanup of oil spill*. and of such further respons»bibt*t


resulting therefrom as may be required by applicable laws and regulations.


(e) Costs off restoration of the operating environment incurred pursuant to an approved


scheme prepared in accordance with clause || of the Contract;


(f) Any costs incurred for the decommissioning of fecabtie* and site restoration,


including any related activity required by the Government or other competent


authority or by the Contract; and


tg) Any contributions made by the Contractor to the Decommissioning Reserve fund m


accordance with clause 38. when such contributions are made.


I sa Material and equipment Costs


Colts of MWWl and supplies. equ pmrnt. machines, tools and any other goods of a sunder


nature used or consumed in Petroleum Operations subject to the following:


I a I Acquisition Costi - the Contractor sha« only supply or purchase materials for use in


Petroleum Operations that may be used in the foreseeable future. The


accumulation of surplus slock* and inventory shall be avoided so far as ii reasonably


practical and consistent with efficient and economical operations. Inventory levels


shall, however, take into account the time lag lor replacement, emergency needs,


weather conditions affecting operators* and sender considerations.


|b) Components of costs, arm's length transaction* ercept as otherwise provided >n


paragraph 3.1.81(1), material purchased by the Contractor in arm's length


transactions in the open market lor use in the Petroleum Operations under the


Contract shall be valued to Include Invoice price less trade and cash discounts (if


any), licence fees, purchase and procurement feet plus freight and forwarding


charges between point of supply and point of shipment, freight to port of


destination, insurance, ta«es, customs duties, consular fees, note taxes other


items chargeable against imported materials and. where applicable, handbag and


transportation expenses from point of importation to warehouse or operating site


Where an Affiliate of the Contractor has arranged the purchase, coordinated the


forwarding and expediting effort, its costs shouid not cured those current),


pievaibng in normal arm's length transactions on the open market and M any cate


shall not exceed a fee equal to 2* of the value of the materials added to the cost of


the materials purchased.


|e) »IfO - such material costs shall be charged to the accounting records and books in


accordance with the 'first in. first Out' If IfO) method;


|d) Material purchased from or sold to Affdiates of the Contractor or transferred from


other activities of the Contractor to or from Petroleum Operations under this


Contract shai be valued and charged or credited at the prices specified in


Paragraphs 3.1.8(d)(1). 3 18(d)(2). and 3.1 A(dX*|:


(II New material, including used new material moved from inventory


(Condition 'A'|. shall be valued at the current international net price which


shall not exceed the price prevading in normal arm's length transactions m


the open market-


121 Used material (Conditions '8*. T and '0*|:


(A) Material which is in sound and serviceable condition and «


suitable lor re use without reconditioning shall be classified as











• - 10


 Production Sharing Contract Qa/o Dzc








Condition ”0* and priced at 7S% of the current price of new


material defined in Paragraph 3.1.8(d)(1).





(8) Malmal which cannot be clarified as Condition *B" but which


after reconditioning will be further serviceable for its original


(unction snail be classified as Condition "C" and priced at not more


than 50K of the current price of new material as defined in


Paragraph 3.1.8(d)(1). The cost of reconditioning shall be charged


to the reconditioned material provided that the value of Condition


*C“ material plus the cost of reconditioning do not exceed the


value of Condition "IT material;


Material which cannot be classified as Condition or Condition


*0* shall be classified as Condition "D' and priced at a value


commensurate with its use by the Contractor. If material is not fit


for use by the Contractor it shall be disposed of as junk.


(3| Material involving erection costs shall be charged at the applicable


condition percentage of the current knocked-down price of new material


as defined in Paragraph 3.1.8(d)(1).


(d| When the use of material is temporary and its service to the Petroleum


Operations under the Contract does not justify the reduction in price as


provided for in paragraph 3.1.8(d|(2|(B). such materia shall be priced on a


basis that will result in a net charge to the accounts under the Contract


consistent with the value of the service rendered.


(5| Whenever material is not readily obtainable a*, published or bated pruts


because of national emergencies, strikes, or other unusual causes over


which the Contractor has no control, the Contractor may charge Petroleum


Operations for the required material at the Contractor's actual cost


incurred In providing such material, In making It suitable for use, and in


moving It to the Contract Area; provided notice in writing is furnished to


the Government of the proposed charge prior to charging Petroleum


Operations for such material and the Government shall have the right to


challenge the transaction on audit.


(6| The Contractor does not warrant the material furnished. In case of


defective material, credit shall not be passed to Petroleum Operations until


adjustment has been received by the Contractor from the manufacturers of


the material or their agents.


(7| Adjustments arising from material Inventories conducted in accordance


with Paragraph 5.2.


(e) equipment of the Contractor shall not be charged at rates exceeding the average


commercial rates of non affiliated third parties for equipment, facilities, installations


and utilities for use in the area where the same ate used. On request, the


Contractor shall furnish a list of rates and the basis of application. Such rates shall


be revised when found to be either excessive or Insufficient, but not more than once


every 6 Months.


(f| Drilling tools and other equipment lost m the hole or damaged beyond repair may be


charged at replacement cost less depredation plus transportation costs to deliver


like equipment to the location where used








B- 11


 '







(g) Use of leased or hired machinery and/or equipment in the Petroleum Operations


shall be chargrd at lull cost to the Contractor This may include mobilisation and de¬


mobilisation charges, lease and hire lees, as well as other contractual costs.





UJ Rentals and Taxes


{a) All rentals ol every tlrd and nature levied by any Government and all Taxes imposed


in connection with the Contractor's assets. Income or activities under the Contract


and paid directly by the Contractor or any Contractor Entity (except where the


contrary is expressly provided In the Contract) with the exception ol Taxes


(described In clause 31.2), bonus payments. Capacity Building Payments, and any


other payments made under clause 32.


(b) II the Contractor, any Contractor Entity or any ol Its Alliliated Companies is subject





to income or withholding Tax as a result ol services performed at cost lor the


Petroleum Operations under the Contract, its charges lor such services may be


increased by the amount required to cover such Taxes Igrossed up) including Taxes


on such gross up.


me Insurance and losses


Insurance premiums and costs Incurred (or Insurance earned lor the benefit ol the





Petroleum Operations provided that such Insurance Is customary, allords prudent protection


against risk and is at a premium no higher than that charged on a competitive basis by


insurance companies which are not Alliliated Companies ol the Contractor. Except in cases


ol (allure to Insure where Insurance coverage Is required pursuant to the Contract, actual


costs and losses incurred shall be recoverable to the extent not made good by insurance


unless such losses result solely Irom an act ol wilful misconduct by the Contractor. Such costs


may include repair and replacement ol property in the Contract Area resulting f'om damages


or losses incurred by fire, flood, storm, theft, accident or such other cause.


ii.ss legal Expenses





AH reasonable costs and expenses resulting Irom the handling. investigating, asserting,


defending, or settling of any claim or legal action necessary or expedient for the procuring,


perfecting, retention and protection of the Contract Area, and in defending or prosecuting


lawsuits involving the Contract Area or any third party claim arising out of the Petroleum


Operations under the Contract, or sums pad m respect ol legal services necessary for the


protection of the joint interest of the Government and the Contractor shall be recoverable.


Such expenditures shall include attorney's lees, court costs, arbitration costs, costs of


investigation, and procurement of evidence and amounts pad in settlement or satisfaction


of any such litigation and claims provided such costs are not covered elsewhere in the Annex


Where legal services are rendered in such matters by salaried or regularly retained lawyers


ol the Contractor Entities or their Affiliates, such compensation shal be included instead


under Paragraph 3.1.2 or 3.1.4(b) as applicable








Expenditures made in the settlement or satisfaction of any loss, claim, damage, pidgment or


other rxpense arising out of or relating to Petroleum Operations, except as may otherwise


be covered elsewhere in the Annex.























B- 12


 f>roe*iCl>o* S*Oi*4 Contract Qato Ou








nil TniniflS Costs


AN costa and expends incurred by the Contractor in the training of its employees engaged m


Petroleum Operations under the Contract.


i.t i« General and Administrative Costs


The costs described in Paragraph 2.8.1 and the charge descrfced in Paragraph 2 A 2


s i is tanking Charges and Currency Exchange Losses


Charges and fees by the banks for money transfers, payments and foreign exchange


transactions, as weB as currency exchange losses incurred by the Contractor in connection


with the Petroleum Operations.


ixu Other Expenditures


Other reasonable expenditures not covered or dealt with »n the foregoing provisions of


Paragraph 3 which are necessarily incurred by the Contractor for the proper, economical and


efficient conduct of Petroleum Operations.


3.2 Credit Under the Contract


The proceeds, other than the proceeds from the sale of Petrolrum received from Petroleum


Operations under the Contract, including the items listed below shall be credited to the Accounts


under the Contract for the purposes of clause 2S of the Contract:


11 1 The proceeds of any insurance or claim or judicial awards in connection with Petroleum


Operations under the Contract or any assets charged to the Accounts under the Contract


where such operations or assets have been insured and the p/rme charged to the


Accounts under the Contract.


3.1.1 Legal costs charged to the accounts under Paragraph 3.1.11 and subsequently


recoverable by the Contractor.


3.1.3 Revenue received from third partirv for the use of property or assets the cost of wh < i


has been charged to the Accounts under the Contract.


3.1.4 Any adjustment received by the Contractor from the suppliers/manufacturers or their


agents in connection with a defective material the cost of which was previous » charged


by the Contractor to the Accounts under the Contract.


3J.S Rentals, refunds, including refunds of taxes paid, or other credits received by the


Contractor which apply to any charge which has been made to the Accounts under the


Contract, but excluding any award granted to the Contractor under arbitration o' r«pc't


proceedings.


3-1.4 Costs originally charged to the Accounts under the Contract for materials subsequent',


exported from the Kurdistan Region or transferred to another Contract Area within the


Kurdistan Region.


31.7 Proceeds from the sate or exchange by the Contractor of plant or fac Aties used in


Petroleum Operations the acquisition costs of which have been charged to the Accounts


under the Contract.


ill Proceeds derived from the sate or license of any intellectual property the development


costs of which were incurred pursuant to and are recoverable under the Contract














I- 1)


 Production JAor.'/»o Contract Qa/o Dzc








Proceeds derived from the sale, exchange, lease, hire, transfer or disposal In any manner


whatsoever of any other itrm the costs of which have been charged to Petroleum


Operations.


3.3 Duplication of Charges and Credits


Notwithstanding any prov«sion to the contrary in this Accounting Procedure, there shall be no


duplication of charges or credits to the Accounts under the Contract.





PARAGRAPH 4 - COSTS AND EXPENSES NOT TO BE TREATED AS RECOVERABLE


4.1 The following costs and expenditures shall not be included in the Petroleum Costs recoverable


under clause 25:


(a) Taxes on income or profit paid to any Government authority except taxes and duties


that may be included in the costs of material and equipment purchased for the


Petroleum Operations;


(b) any payment made to the Government by reason of the failure of the Contractor to


fulfill its Minimum Exploration Obligations in respect of the relevant Sub-Period under


the Contract.


(c) the cost of any guarantee required under the Contract;


(d) bonuses. Capacity Building Payments, or other payments set out in clause 32 of the


Contract;


(e) costs of marketing or transportation of Petroleum beyond the Delivery Point (excluding


Gas Marketing Costs);


(fj attorney'* fee* and oihc* mti of proceeding* in connection with arbitration under


claute 42 of the Contract or mternationally recognited independent npert


determination ai provided •« the Contract or thh Account** Procedure;


(g| any mtcreit*. fee*. co*t* and eipeniet paid by the Contractor for loan* and any other


form of financing or advance* for the fmancmg of the Petroleum Cott* entered Into by


the Contractor with thud parte* or Affiliated Compan**;


(h) any proemon lor depreciation and/or emortnetion. eidudmg any te,uttments m vah»e


purtuanl to Paragraph S.1J;


|i| dividend*. repayment of equity or repayment of intercompany loan*: and


(j) fine* and penalties impoted under law


PARAGRAPH 5 - RICOROS AND VALUATION Of AiSCTS


5.1 Record*


Contractor thai maintain detailed record* of property m ute for Petroleum Operation* under the


Contract in accordance with Beit Practice* for exploration and production activities





5.2 Inventorie*


iJ-i Inventor** of property m ute m Petroleum Operation* *haB be taken at reatonable


interval* but at lean once a year with reipect to movable at*et* and once every three


year* with reipect to immovable a**et*. The Contractor thill give the Government at


lean 10 day* written notice of it* intention to lake tuch inventory and the Government


*hal have the right to be repretented when *uch inventory n taken.











B- 14


 Profit--- S**«* Coat'Mf 0*4 Die








S-2.2 failure of the Government to be represented at an inventory vhall bind the Government


to accept the inventory taken by the Contractor


S-2-i The Contractor shall dearly inform Government about the prmc^let upon wh

valuation of the inventory has been based. The Contractor shall make every effort to


provide to the Government a fuB report on such inventory withm th-rty (10) dart of the


taking of the inventory. When an assignment of r*htt under the Contract takes place


the Contractor may. at the request of the ass^nee. take a special mventory provided


that the costs of soch inventory are borne by the alienee.


PARAGRAPH 6 - PRODUCTION STATEMENT


6.1 Production Information


Without prejudice to the rights and obligations of the Parties under clause 16 of the Contract,


from the date of f irst Production from the Contract Area the Contractor shal submit a monthly


production statement to the Government showing the following information separately for each


producing Development Area and m aggregate for the Contract Area:


(a) the quantity of Crude OB produced and saved;


(b) the quality characteristics of such Crude Oil produced and save;


(c) the quantity of Natural Gas produced and saved;


(d) the quality characteristics of such Natural Gas produced and saved;


(e) the quantities of Crude Oil and Natural Gas used for the purposes of carrying on driibng


and production operations and pumping to field storage


(f) the quantities of Crude Oil and Natural Gat unavoidably lost;


IK) the quantities of Natural Gat flared and vented.


(h) the tire of Petroleum Hock* held at the beginning ol the calendar Month m question;


(l| the tire of Petroleum ttockt held at the end o( the calendar Month In quettlon;


(I) the quantitiet of Natural Gat reinjected into the Reservoir; and


(k) In retpect of the Contract Area as a whole, the quantities of Petroleum transferred at


the Measurement Point. All quantities shown in this Statement shall be expressed In


both volumetric termt (Darrels of oil and cubic meters of gas) and In weight (metric


tonnot).


6.2 Submission of Production Statement


the Production Statement for each calendar Month shall be submitted to the Government no


later than 10 days after the end of such calendar Month





PARAGRAPH 7 - VAIUD OF PRODUCTION ANO PRICING STATIMINT





7.1 Value of Production and Pricing Statement Information


The Contractor shall, for the purposes of clause 2S of the Contract, prepare a statement providing


calculations of the value of Crude Oil produced and saved during each Quarter and each Month


This "Value of Production and Pricing Statement* shall contain the fallowing information:


(a) the quantities and prices realised therefor by the Contractor in respect of sales of


Natural Gas arid Crude Oil delivered to third parties made during the Quarter and Month


In question; and











B- IS


 Production 5«0i«>a Con I/Of r







(b) the quantities and prices realised therefore by the Contractor In lespcct of sales of


Natural Gas and Crude Oil delivered during the Quarter and Month In question, other


than to third parties.


7.2 Submission of Value of Production and Pricing Statement


The Contractor shall submit the Value of Production and Pricing Statement for each Quarter and


each Month to the Government not later than 10 days after the end of such Quarter and Month


PARAGRAPH 8 - COST RECOVERY AND SHARE ACCOUNT STATEMENT


8.1 Cost Recovery Statement


The Contractor shall prepare with respect to each Quarter and each Month a Cost Recovery


Statement containing the following information:


(aj Recoverable Petroleum Costs carried forward from the previous Quarter and Month, if


any;


(b) Recoverable Petroleum Costs for the applicable Quarter and applicable Month.


(c) credits under the Contract for the applicable Quarter;


(d) Total Recoverable Petroleum Costs for the applicable Quarter and applicable Month


(Paragraph 8.1(a| plus Paragraph 8.1(b|. net of Paragraph 8.1(c)):


(e) quantity and value of Petroleum applied to cost recovery pursuant to clause 2S taken by


the Contractor for the applicable Quarter and applcabie Month; and


(f) amount of recoverable Petroleum Costs to be carried forward into the neat Quarter and


the neat Month (Paragraph 8.1(d) net of Paragraph 8.1|e)).


8.2. Cumulative Production Statement


The Contractor shaR prepare with respect to each Quarter and each Month a Cumulative


Production Statement containing the following mformation


(a) the cumulative production position at the end of the Quarter preceding the Quarter and


Month as question;


(b) Production of (sport Petroleum for the Quarter and Month m question;


(e) the cumulative production position at the end of the Quarter and Month m question;


(d) the amount of Petroleum applied to Royalty pursuant to clause 24. cost recovery


pursuant to clause 2S and Proto Petroleum pursuant to clause 28 taken by the


Government and by the Contractor, respectively, during the Quarter and Month in


question; and


(e) the forecast of production and the share of Petroleum apphed to Royalty pursuant to


clause 24. cost recovery pursuant to clause 2S and Profit Petroleum pursuant to clause


26 due to the Government and to the Contractor, respectively, lor the neit succeeding


Quarter and Month


8.3 Preparation and Submission of Cost Recovery and Cumulative Production Statements


•J-t The Contractor shall submit provisional Cost Recovery and Cumulative Production


Statements, containing estimated information where necessary, on the last day of each


Quarter and Month for the purposes of cUuse 2S of the Contract.


t.i.z The Contractor shall submit final quarterly Cost Recovery and Cumulative Productmn


Statement! w*hm 30 days of the end of the applicable Quarter and applicable Month.








B- 16


 Pioa*ct>o* snot** Conirecr aa'a Ote








8.4 Annual Statement


for the purposes of clause 2S of the Contract, the Contractor shal submit an Annual Cost


recovery and Cumulative Production Statement within 90 days of the end of each Year The


Annual Statement most contain the categories of information fasted in Paragraphs 81 and i 2 for


the Year in question, separated into the Quarters of the Year in question and showmg the


cumulative positions at the end of the Year in question with respect to cumulative unrecovered


Petroleum Costs and Cumulative Production.


PARAGRAPH 9 - STATCMCNT Of EXPENDITURE AND RECEIPTS


94 The Contractor shall prepare w*h respect to each Quarter a Statement of Expenditure and


Receipts under the Contract. The Statement of Expenditure and Receipts mutt distinguish


between Exploration Costs. Gat Marketing Costs. Development Costs. Production Costs and


Decommissioning Costs and w* identify major Items of expenditures within these categories The


Statement of Expenditure and Receipts must show the foBowing:


(a) actual expenditures and receipts lor the Quarter in question:


|b) cumulative expenditure and receipts for the budget Calendar Year m question.


(C) latest forecast cumulative expenditures at the Calendar Year end; and


(d) Variations between budget forecast and latest forecast and explanations thereof


•4 The Contractor shall subm.t to the Government a Statement of E ipenddure and Receipts for each


Quarter no later than )0 days after the end of such Quarter.








PARAGRAPH 10 - f INAL ENO Of TEAR STATEMENT


10.1 The Contractor shall prepare a final End-of-Year Statement co'ta -img information as requeed


for the Production Statement. Value of Production and Pricing Statement. Cost Recovery and


Cumulative Production Statements, and Statement of Expenditures and Receipts, except based


on actual quantities of Petroleum produced and expenses incurred.


10.2 The final End-of Year Statement will be used to make any adjustments that are necessary to the


payments made by the Contractor under the Contract.


10.3 The Contractor shall submit its final End-of-Year Statement of each Calendar Year to the


Government within 90 days of the end of each Calendar Year.








PARAGRAPH 11-AUDITS


Each such report and statement required pursuant to Paragraphs 6 through 10 shall be considered true


and correct, unless the Government raises an exception thereto within the timeframe and under the


process set out in clause IS of the Contract.





PARAGRAPH 12 - ANNUAL WORK PROGRAM AND BUDGET


Each annual Work Program and Budget to be prepared m accordance with clauses 11. 12. 13. and 14 of


the Contract, in respect of Exploration Costs. Gas Marketing Costs. Development Costs, and Production


Costs must show:


la) forecast expendRures for the budget Calendar Year m question, including a quarterly


classification of such expenditures.





B- 11


 Production sno'Mg Coniioci Oala Oit








(b) cumulative expenditure* to the end ol »uch budget Calendar Year; and


(c) a schedule showing the mod important Individual item* ol Development Cost* (II applicable) lor


such bud||pt Year








PARAGRAPH 1J - TAX RECORDS AND HUNGS


13.1 Each Contractor Entity shall timely prepare and (lie ail Tax rrlurns and report* In accordance with


Applicable law. Nothing in thl* Paragraph 13 limit* the obligation ol the Government to pay


Ta«e* on income on behall of a Contractor Entity at provided in the Contract, for the purpotet ol


claute 31.2 ol the Contract, the net taxable profit* ol each Contractor Entity Irom all Petroleum


Operation* carried out under the Contract vhall be calculated in accordance with thn Paragraph


13 and Applicable law.


13.2 Each Contractor Entity *hall maintain separate Account* with re*pect to the Petroleum


Operation* to enable the Government to verily and audit Taxes payable by tuch Contractor Entity


lor a ta* period. Such Account* *hal! be prepared and maintained on a ca*h or accrual ba*l* at


required by Applicable law In re*pect ol Tare* and maintained throughout the term ol the


Contract and lor a period of live year* thereafter.


13.3 The Account* ol a Contractor Entity »hall be credited with tuch Contractor Entity'* snare ol a I


revenue* Irom or related to Petroleum Operation*, Including:


(a) il the Royalty i* paid In cath purtuant to claute 24. revenue* anting Irom the disposal of


Royalty volume*:


(b) revenue* ari*ing Irom the dltpotal ol any Available Petroleum to wh«ch vuch Contractor


Entity I* entitled lor recovery ol It* Petroleum Co*t» in accordance wAh claute 2S;


(c) revenue* Irom the diipoial ol Profit Petroleum to which such Contractor Entity is


entitled under clause 26; and


(d) revenue* arising from the disposal ol related Petroleum subitance* or from the


treatment, storage, or transportation ol product* for third parties.


13.4 A Contractor Entity may debit it* Account* for all Petroleum Cost* and other cost* under this


Contract, Including:


(a) the cost* ol supplies, perionnel and manpower ripenies, and cost* ol service* provided:


(b) if the Royalty I* paid in cash pursuant to clause 24, Royalty payment* made and a*


recorded In tuch entity's Account* and determined in accordance with clause 24;


(c) general and administrative expenditure* lor Petroleum Operation*;


(d| depredation ol capital expenditure in accordance with Paragraph 13.6 below;


(e| losses ol A**et* resulting Irom damage, Anris which are renounced or abandoned during


the year, Atset* which are transferred under clause 20.2, bad debts, indemnities paid to


third pattle* a* compensation for damage;


(l| currency e*change lo*ses realised In connection with the Petroleum Operations, bonuses.


Capacity Building Payments, and other payments provided in clause 32, the Exploration


Rental provided In clause 6.2, the Production Rental provided in clause 13.6. the


allocation to training provided in clause 23.10, the allocation to the Environment fund


provided us clause 23.12, the cost* spec Hied In clauses 23.5, 23.6. 38.6 and 38.11. and


transportation and marketing cost* beyond the Delivery Point; and








B- IB


 f>e4.







{*) losses earned forward from previous Ta Persods.


U.5 The net profit of a Contractor Entity 'hall be equal to the difference between the amounts


credited and the amounts debited from its Accounts.


1 J.5.1 If such difference is negative. It shall constitute a Ion against which no income Tax


will be payable,


13.5.2 If the amount Is positive, tt shall be grossed up to take account of the fact that such


entity's corporate Income tax Is being settled out of the Government’s share of the


Profit Petroleum In accordance with clause 31.2, by applying the following formula


in order to provide such entity's net taxable profits for corporate nonr tax


purposes:


Net Taxable Profits = Net Profits /HOP - Applicable income Tax Rate I


100


lit A Contractor Entity shad not record depreciation or amortuation charges, except as permitted bv


Applicable Law and only with the prior written authoriration of the Government






















































































B- 19


 Production Sharing Contract Qa/o Dzc














Annex C


FORM OF GUARANTEE
































GUARANTEE
































[X]





and


[Y]




















IN FAVOUR OF

















The Kurdistan Regional Government of Iraq























(Qala Dze)





(Second Sub-Period Guaranteed Amount)

































































C - 1


 Pmewriw* Coal'arr Goto O-’f





GUARANTEE


(Second Sub-Period Guaranteed Amount)








Thi» Guarantee, dated_,«» by:


III WallC *1





and


ui tn m


e favour of


|)| The KueorstAA Rigionai Government of Iraq [the 'Government' i








L» Oefinrtionr. Interpretation


U Definition*


ill Unlew defvted m thn Guarantee, term* defined in the Contract have the tame meaning m


thn Guarantee.


IJJ At used m thn Guarantee


Buimew Day* mean* a day on wh«h bank* are open for general buunett in Madrid.


Spam. London. | ngtand and Kevr York City. United State* of Amenta.


'Demand* it deleted n ctaute 1.).


'Government' It defined in the preamble


"Guaranteed Obligation** i* defined in ctaute 2 l


"Guarantor** mean* |X and Y| and 'Guarantor" mean* either of (X or


"Penon* meant any individual, company, corporation, firm, partnership, joint vt' i jre


association, organisation, itate or agency of a itate or other entity, whether or not “j> ng


separate legal personality.


1.2 Construction and Interpretation


i.i.t Any reference to a clause or annex is. unless otherwise stated, to a clause or anno of


this Guarantee.


Ill Any reference to a 'clause* is to a "clause* of this Guarantee.


11.1 Headings and sub-headings are for ease of reference only.


2. Guarantee


2.1 Guaranteed Obbgations


The Guarantors guarantee to the Government the due and punctual payment of the Second Sub-


Period Guaranteed Amount in the manner and Currency prescribed by the Contract for payments


by the Contractor together with any mterett due with respect thereto as provded M the Contract


(the "Guaranteed Obligations'


2 2 Joint and Several


The fubiity of each Guarantor under thn Guarantee is joint and several. Cvery undertaking and


agreement contained in this Guarantee n to be construed at joint and several obhgation* of the


Guarantors.


 Production Snoring Conl/oct Qolo 0/#








2.1 Demand


A Guarantor will have no obligation In respect ol a Guaranteed Obligation unless the Guarantor


has received a written demand for payment (the ‘Demand*). The Government may submit a


Demand to either or both Guarantors. A Oemand must:


(a| male specific reference to this Guarantee;


(b) state the amount that Is demanded and which components of the Guaranteed Obligations


are the subject of the Demand:


(c) state that the Government has not received payment of the relevant Guaranteed


Obligation Irom the Contractor Entity on the date on which It became due and payable;


and


Id) provide the Government's wire instructions for the payment of the Demand.


2.4 Payment


A Guarantor shall make payment to the Government In accordance with a Demand by wire


transfer of cleared funds in US$ in accordance with the Government's wire instructions within 5


Business Days after receipt of a Demand.





1. Nature of Guarantee


1.1 This Guarantee is an absolute, unconditioned and -revocable guarantee of payment when due


and not of collection, and whether by acceleration or otherwise.


1.2 The Government is not required to eierclse any right, assert any da*n or demand, or enforce any


remedy whatsoever against the Contractor, a Contractor Entity, or any ot'er Person before, or as


a condition to, eutdsi^ any of the rights, powers. o« remedies conferred upon the Government


by this Guarantee or by applicable law. Without BnMt»| the generiMy ol the foregomg. the


Government w.l not be required to (a) take any action or obtain judgment in any court agamt


the Contractor, a Contractor Entity or any other Person, or

in a winding up or dissolution of the Contractor, a Contractor Entity or any other Person.


13 Encept as prowded m clause 2 2. each Guarantor hereby e.pres sly waives presentment, demand,


protest, and notice ol dishonour in respect ol each Guaranteed OWgalion


1.4 Subject to clause b. the obligations ol the Guarantors:


(a) constitute continuing oblations, notwithstanding any settlement of account or other


matter or thing whatsoever


(b) w* not be considered saUsBed by any mtermediate payment ol the Contractor's


obl«at>ons W respect ol the Guaranteed ObSgations. and


(c) w4 continue bs lull force and ellect until the Guaranteed Obtg*'**11 ha*e P*-3 *“*


to. and received by. the Government in accordance with the Contract.


1.5 Subject to clause g. neither the obligations o»the Guarantors pursuant to. nor the Hghts. powers,


and remedies conferred upon the Government by. this Guarantee or by la* wi be discharged,


impaired, or otherwise affected by:


(a) the windmg up. dissolution, admosistration. reorganisation or moratorium of the


Contractor or any Contractor Entity or any change in its status, function, control, or


ownership;


(b) time Of other indulgence, including any composition, being granted or agreed to be


granted to the Contractor es respect of any of the Guaranteed Obbgations











C-J


 |C) any change in the lime, manner, or place of payment of. or any other term of. all or any of


the Guaranteed Obligation*, or any other extension or. compromise of the Contractor,


provided that none of the foregoing increases the amount of the Guaranteed Obligation*;





|il) any reduction, limitation, impairment, or term-iallon of any part of the Guaranteed


Obligation* for any reason. including any claim of waiver, relearn, lurrender. alteration, or


compromise;


In) any •"< feme in the amount payable in respect of any Guaranteed Obligation, provided that


the Guarantor ha* provided it* prior written content to any such >ncreate which expressly


Mate* Guarantor’* intention that thi* Guarantee will apply to »uch Increased amount;


(I) the termination ol the Contract or termination of a Contractor I ntlty'i right* under the


Contract, or any withdrawal or abandonment by the Contractor or a Contractor Entity of


It* inlrtetlt under the Contract:


(g| any direct or indirect change in the ownerihip ol the Contractor Intity. including by


|h) any tranefer alof any part of the Contractor or a Contractor Intity1* wnerrst* unde* or *i





respect ol the Contract:


|i) any dispute or clam the Contractor or a Contractor Iel*y may have Jganst the





(rf the rntohency or bankruptcy of. or simiar event affecting, the Contractor or a Contractor


CMfty. or


(k) any other cecum stance or combination of circumstance* which m*ht otherwise constitute


a defense ava-abie to. or a legal or equitable discharge of. the Contractor or a Contractor


Ihfity.


I.t Bach Guarantor waives any right to or claim of any defame or *etoff. counterclaim, recoupment,





or termination b* rniton of (a) the invalidity. Illegality, non genuineness, Irregularity,


compromise, unenforceabllity of, or any other event or occurrence allectlng, any Guaranteed


Obligation; |b| any Halms, set-ofls. or liabilities of the Contracloi Intity to the Guarantor or the


Government; (c) any claims, set-offs, or liabilities of the Guarantor In respect of the Government;


or




3.7 This Guarantee wdl continue to be effective or Be reinstated, if at any time any payment (in


whole or in part) of any of the Guaranteed Obligations is rescinded or must otherwise be restored


by the Government upon the insolvency, bankruptcy, or reorgatwatun of the Contractor or a


Contractor Intity or otherwise, all a* though such payment had not been made Any settlement


or discharge between the Guarantors |or any of them) and the Government will be conditional


upon no payment by the Contractor, a Contractor Entity, or any other Person to the Government


on the Contractor s behalf being avoided or reduced by virtue ol any laws relating to bankruptcy.


Insolvency, liquidation, or similar law*.





«. Taxes


4.1 Tint Guarantor* shall make all payments to the Government free and clear of, and without


deduction for. any present or future Taxes or other charge* of any nature whatsoever imposed by


arty taxing authority.





M any wAhhoMetg or from any sayment to Be made by a Guarantor a rrqo-rd i





l*l pay directly to the relevant authority the full to be to











C -4


 Qa*o Die








(b) promptly forward to the Go»n«mrM an off.cn! recent or other documentatan


satisfactory to th. Covernment evdencmg wch payment to such authority, and


(c) pay to the Government uxh additional amount or amount at n necessary to enturr that


the net amount actuary receded by the Government w* equal the ful amount the


Government would have received had no tuch withholding or deduct on been rrqueed.


4.J If any Taxes are directly asserted agamst the Government with respect to any payment received


by the Government from a Guarantor pursuant to this Guarantee, then:


|a| the Government may pay such laies. and


(b) the Guarantor shall indemnify the Government against any loss or I apense which the


Government incurs as a result or arising out of or in relation to any fadure to pay or delay


in paying any of any such Tax. and promptly pay such additional amounts |*ch>d*g. rf


incurred as a result oI Guarantor's or the Contractor's conduct, any pen allies, interest, or


expenses) as necessary so that the net amount received by the Government, alter the


payment of such Taxes (includirg any Taxes on such additional amount), wii equal the


amount the Government would have received had such Taxes not been asserted


5. Notices


The Government shad:


(a) make any Demand or provide any notice or other communicatioo to a Guarantor in


respect of this Guarantee in writing.


lb) address such Demand, notice, or other communicator as proinded in clause S.l(ci and


(c) use one ol the fofiowing methods to deSver such Demand or other not«e or


communication, each of wh*ch. for purposes of this agreement, is a wrding: (1) personal


delivery; (2) email (followed by deWvery of the Oemand. notice or communication By air


courier); or (31 a reputable, mternatenety recognised a« tourer, with a* fees prepaid, and


sent to the Guarantors


H to 1*1


1*1


Attention


Address:


Phone:


(mad


ffto|Y|


m


Attention


Address:


Phone:


(mad:


II (ffecthreness as to Guarantor


»11 A Demand. noUt or other comnvncalion w* be effective as to a Guarantor onfy d (a)


the Government has complwd with this clause 5 and lb) such Guarantor has received


the Demand, notice. Of other communication








C-5


til If a Demand, notice of other communicator! is personally delivered to a Guarantor, it


wil be considered received by the Guarantor by the date set forth in a s*ned receipt of


such debvery.


til If the Government sends a Demand, notice, or other communication to a Guarantor by a


reputable, internationally recognised air courier In accordance with clause 5.1, the


Demand, notice, or other communication will be considered received by the Guarantor


on the date set forth in a receipt signed by the Guarantor.


tit If the Government sends a Demand, notice, or other communication by email to a


Guarantor and the email transmission Is followed by delivery of the Oemand, notice, or


other communication the Guarantor by air tourer In accordance with clause 5.1, the


Demand, notice, or other communication shall be considered to have been delivered to


the Guarantor when the email Is received by the Guarantor.


*.* Notices to Government


A Guarantor shall give all notices or other communications to the Government In the same


manner as preserved In the Contract for notices to the Government.


i.« Change of Address


A Guarantor or the Government may change its address as set forth in clause 5 by a notice to the


other parties *» accordance with this clause 5,


Term


4.1 This Guarantee Is effective as of the date set forth in the preamble.


4.2 Sub|cct la clause 3.7, this Guarantee will cease to be effective upon discharge of aU of the


Guaranteed Obligations.





Representations and Warranties


Each Guarantor represents and warrants:


7.1 This Guarantee has been authorised by al necessary corporate action, and the Guarantor has at


necessary power and authority to sign and perform Us obligations hereunder.


7.2 This Guarantee is legal. vabd. and bmdmg at to such Guarantor.


7.1 The Guarantor has received a« authorisations and consents necessary for the provision of thrs


Guarantee to the Government, and the vabdity and enforceability agamst *. of this Guarantee


7.4 Eicept as provided in the nest sentence, there it no law applicable to 4 or agreement to wh

is a party that (a) conflicts with or prevents rt from performing this Guarantee in accordance with


its terms, or |b) affects the validity and enforceab Uy agamst it of this Guarantee M accordance


with its terms. No representation n made m respect of the laws of the Kurdistan Region of Iraq or


the Republic of Iraq.


7.* The Guarantor is not a party to any administrative or rud

that could affect the vabdity or enforceabibty of this Guarantee.








Arbitration: Indemnification


• 1 The Guarantors and the Government shall reclusively refer any dispute, claim, or controversy


arising out of or m connection w4h this Guarantee (mcludng a dispute, claim or controversy


relating to any non-contractual obSgalKjns afsrng out of or In connection with this Guarantee! to


and to Be finaty resolved by arbitration under the rules of the London Court of International


Arbitration, which rules are incorporated by reference mto this clause 10.


 Production Snor^fl Contract Qata Ott








8.2 The language of the arbitration w»ll br English, and any award wdl be written In the Engirt)!


language.


8.3 The teat, or legal place, of the arbitration w.ll br London, England-


8.4 The arbitral tribunal will comprise one arbitrator directly appointed by the London Court of


Inter national Arbitration


8.5 The Government may seek enforcement of an arbitral award by any court of competent


jurisdiction.


8 6 Any award must be expressed mi USS.





8.7 The arbitral award will be final and not subject to any appeal


8.8 If any question of law arnes durmg the arbitral proceedings or arises out of an award, neither the


Government nor either Guarantor may make an appKcatiOA or bring an appeal to any court on a


question of law. and both the Government and the Guarantors express* waive thee respective


rights tp make an application or bring an appeal under the Engksh Arbitration Act IW7.


8.9 The Guarantors shall indemnify the Government from and agaesst al costs and expenses


(including legal fees and any taxes or duties) incurred by the Government m the enforcement and


protection of its rights under this Guarantee.





t. benefit; Assignment


t.l This Guarantee mires to the benefit of the Government and .ts land any subsequent! successors


and assigns, each ol which shall be entitled to enforce this Guarantee agamal the Guarantors.


9.2 No Guarantor Is entitled to assign or transfer al or any of 'ts rights, benefits, or obligations under


this Guarantee unless the Government preydes prior written consent to the Guarantor The


Government is entitled to asugn al or any of Its rights and benefits hereunder.





10 Severability


If at any time any ptovnasn of thn Guarantee is determined to be dtegal. mvabd. or unenforceabte m any


respect under the laws of any Jurisdiction, neither (al the legality, vaiddy or enforce ability of the


remaining provisions hereof, nor |b) the legaMy. vafcdity. or enforceabiMy of such provision under the


laws ol any other (urisdction wi. m any such case, in any way be affected or unpaired thereby





11. Variation


XU This Guarantee may be amended only by a written agreement of the Government and the


Guarantors that identifies itself as an amendment to this Guarantee.


112 The Government or the Guarantors may waive any pfovisasn m this Guarantee only by a writing


executed by such party.





IIJ A waiver or consent made on one occasion w« be effective only In that instance and only for the


purpose stated.


11.4 No failure or delay In eurenwg any right or remedy, or m requemg the satisfaction of any


condition, under this Guarantee by a Guarantor ot the Government, and no ad, omission or


course of dealing between the Government and a Guarantor, will operate as a waiver or esloppel


of any right, remedy, or condition





12. Governing law


This Guarantee and all matters arising from or connected with it are governed by English law








C-7


 Pra4uctk)n Snaring Contract Qoia Die








Date:














IX]





................-............---





Name:





Title:











m











®V-«---.....................---


Name:


Title:











Accepted and received for and on behalf of the


Government of the Kurdistan Region of Iraq:




















Prime Minister


Kurdistan Regional Government


On behalf of the Regional Council





for the Oil and Gas Affairs of the Kurdistan Region - Iraq














&V:...........................


Minister of Natural Resources


Kurdistan Regional Government


On behalf of the Ministry of Natural Resources in the


Kurdistan Region











/Signature page to Guarantee of fX/ {Y, et a// in favour of the Government of the Kurdiitan Region of traq (Qola


Dzell

















C-9