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

 LICENSE


AGREEMENT

















for the Development and Production of Petroleum in


PATOS-MARINZA Oilfield


between


The Ministry of Industry and Energy


as represented by


The National Petroleum Agency


and


“Albpefrol” Sh. A., Fier


Dated ............2004


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield














CONTENTS








Art. Pg


1 DEFINITION S AND INTERPRETAT1 ON 5


2 ANNEXES TO THE LICENSE AGREEMENT 13


3 SCOPE OF THE LICENSE AGREEMENT 3 4


4 TERM 1.9


5 RELINQUISHMENT 20


6 PA AND OPERATOR 21


7 ANNUAL PROGRAMS AND BUDGETS 24


8 PETROLEUM OPERATIONS AND APPROVAL OF THE DEVELOPMENT PLAN 29


9 LICENSEE'S RIGHTS AND OBLIGATIONS 32


10 ALLOCATION OF AVAILABLE PETROLEUM 35


1.1 ASSOCIATED GAS 39


12 CUSTOMS EXEMPTION 40


13 LOCAL SUB-CONTRACTORS 41


14 TAX ON PROFIT 42


15 BOOKS OF ACCOUNT, ACCOUNTING AND AUDIT 44


16 RECORDS, REPORTS, INSPECTION AND CONFIDENTIALITY 46


3 7 TITLE TO AND SALE OF ASSETS 50


18 FINANCIAL RIGHTS 51


19 EMPLOYMENT AND TRAINING OF PERSONNEL 53


20 OFFICE AND SERVICE OF NOTICE 54


21 NATIONAL EMERGENCY OR OTHER TAKINGS 55





22 TRANSFER OF RIGHTS AND OBLIGATIONS 57


23 FORCE MAJEURE 59


24 BREACH OF LICENSE AGREEMENT 60


25 DISPUTES AND ARBITRATION 62


26 GOVERNING LAW 65


27 APPROVAL OF THE LICENSE AGREEMENT 66


28 MISCELLANEOUS 67





A CONTRACT AREA 70


B EVALUATION PERIOD MINIMUM WORK 71


\W


i\ tP


 License and Production Agreement for the Deivlna Gas-Condensate Field








LICENSE AGREEMENT








THIS LICENSE AGREEMENT is made and entered into this 7 day of June

2004


By and between:


(1) The Ministry of Industry and Energy (hereinafter called ‘‘Ministry”), as


represented by the National Petroleum Agency (hereinafter called “NPA”), and


(2) “Albpetrol” Sh. A., a state company organized and existing under the laws of


the Republic of Albania (hereinafter called "Albpetrol”).








RECITALS


A. WHEREAS pursuant to the agreement between the Ministry and Albpetrol,


dated 26 July 1993 (the "Albpetrol Agreement”), the Ministry authorized


Albpetrol to perform Petroleum Operations, among other areas, in the Contract


Area, Albpetrol has so far developed and produced Petroleum in the Contract


Area in conformity with the Albanian Law (Legislation);


B. WHEREAS Article 3 of the Petroleum Law envisages that all petroleum


deposi ts existing in their natural condition in strata lying within the jurisdiction


of Albania, including the maritime areas, are the exclusive property of the


Albanian State, represented by the appropriate Ministry and all such resources


are to be used for the benefit of the people of Albania;


C. WHEREAS, pursuant to Article 12 of the Petroleum Law, the Ministry may


grant a License Agreement which will authorize Albpetrol, under the terms and


conditions defined therein, to lawfully, develop and produce Petroleum in the


Contract Area, and it is intended that such grant be made in this License


Agreement;


D. WHEREAS, pursuant to Article 12 of the Petroleum Law, and without any


prejudice to the general character of Recital C. this License Agreement may


permit Albpetrol, with the Ministry's approval, to transfer or to delegate all or


part of its rights, title and interests hereunder to a foreign or local juridical


person or international financial institution with which Albpetrol wishes to


cooperate in accordance with the Petroleum Law and the Albpetrol Agreement;


E. WHEREAS, pursuant to Article 4 and Article 12 of the Petroleum Law, and for


purposes of implementing this License Agreement, Albpetrol may enter into a


Petroleum Agreement with a partiier(s) in accordance with this License


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





Agreement, which petroleum agreement is subject to approval from the Council


of Ministers of Albania;


F. WHEREAS Albpetrol, in conformity with the Petroleum Law, now seeks the


authorization to perform Petroleum Operations in the Contract Area according


to the terms and conditions contained herein;


G. WHEREAS this License Agreement will enter into full force and effect upon


the approval by the Council of Ministers of Albania of a Petroleum Agreement


Albpetrol may enter with its partners);


H. WHEREAS the License Agreement dated July 22, 1994 in respect of the Patos-


Marinza Field has been terminated;


L WHEREAS the Albanian Government wishes that Reservoirs underlying the


Contract Area be exploited with high efficiency and in a rational manner, in


conformity with the generally accepted practices of the international petroleum


industry;


J. WHEREAS LICENSEE agrees to be bound to the terms and conditions of this


License Agreement;


WHEREAS this License Agreement is a “license” as mentioned in the


Albpetrol Agreement and will have the effect of a contract between the parties;


and


L. WHEREAS NPA, on the basis of the Decision of the Council of Ministers,


No.445, dated 3 September 1993, will act on behalf of the Ministry and on the


Ministry’s behalf will give necessary approvals and issue the necessary


authorizations for the performance of the Petroleum Operations in the Contract


Area.


NOW THEREFORE, in consideration of the premises and the mutual agreements


contained herein and for other good, valuable and binding consideration, the receipt


and sufficiency of which are hereby acknowledged, and subject to the terms hereto, the


Parties, intending to be legally bound, hereby agree as follows:
































4


 License Agreement for the Development and Production of Petroleum in the Palos-Marinza Oilfield








STATEMENT OF AGREEMENT








ARTICLE 1


DEFINITIONS AND INTERPRETATION





1.1. Defined Terms.


In this License Agreement, including its Recitals and Annexes and this Article


i, except where the context otherwise indicates, the following terms appearing


in initial capitalization shall have the respective meanings herein ascribed.


“Abandonment” means the final abandonment through decommissioning,


removal, and/or disposal of wells, facilities and equipment used for Petroleum


Operations and the rehabilitation of the land in the immediate vicinity of an


abandoned well to a condition not worse than its condition as of the time


immediately before commencement of Petroleum Operations in respect of such


well or facilities, and the term “to Abandon” shall have the corresponding


meaning.


“Abandonment Costs” means costs and expenditures (whether of a capital or


operational nature) incurred or to be incurred in connection with the


Abandonment of facilities or equipment.


“Abandonment Plan” means a plan prepared by the LICENSEE or anyone


designated by and in (on) behalf of the LICENSEE for the Abandonment of the


wells, facilities and equipment used for the Petroleum Operations.


“Accounting Procedure” means the accounting procedure mentioned in article


15, Section 15.5 and set forth as Annex B to the Petroleum Agreement.


“Affiliate” means a subsidiary company, a parent company or a sister company


to a Party or an entity comprising a Party. For the purposes of the foregoing


definitions:


(a) a subsidiary company is a company controlled by a Party or an entity


comprising a Party;


(b) a parent company is a company that controls a Party or an entity


comprising a Party;


(c) a sister company is a company that is controlled by the same Person as a














5


 License Agreement for the Development and Production of Petroleum In the Pstos-Marinza QilfieW








“Control” means that a Person owns share capital, either directly or


through other Persons, which confers upon it a majority of the votes at


the stockholders’ meetings of the company, which is controlled.


“Albania” means the Republic of Albania.


“Albanian Government” means the Government of Albania.


“Albanian Law” means any law or statute or any judgment, order, decree, rule


or regulation in force in Albania, which the LICENSEE is subject to or is


obliged to follow.


“Albpeiror has the meaning set forth in the introductory paragraph to this


License Agreement, and shall include its permitted successors and assignees.


“Albnetrol Agreement” means the agreement entered between the Ministry and


Albpetrol, dated 26 July 1993 as it is mentioned in the Petroleum Law.


“Albpetrol Share” has the meaning given to that term in the Petroleum


Agreement entered into between Albpetrol and Contractor.


“Annual Program” means an itemized statement of the Petroleum Operations to


be carried out within or with respect to the Contract Area and the time schedule


thereof.





“Associated Gas” means Natural Gas found in association with Crude Oil if


such Crude Oil can by itself be commercially produced.


“Available Petroleum” has the meaning set forth in article 10, Section 10.1.


“Budget” means any estimate of expenses in respect of a Annual Program.


“Calendar Quarter” means a period of three (3) consecutive Months beginning


January 1, April 1, July I or October I and ending March 31, June 30,


September 30 or December 31, respectively.





“Condensate” means blends mainly consisting of pentanes and heavier


hydrocarbons, directly recovered from the hydrocarbon reservoirs or obtained


from gas conditioning, which are liquid under ambient conditions of


temperature and atmospheric pressure.





“Contract Area” means on the Effective Date, the area described in Annex A,


and thereafter, such area in respect of which at any particular time LICENSEE


continues to have rights and obligations under this License Agreement











(5


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





“Contractor” means a the Person who may enter into a Petroleum Agreement


with Albpetrol in relation to the Contract Area,


“Cost Recovery Petroleum” has the meaning set forth in article 10, Section


10-2la).


“Crude Oil” has the same meaning ascribed to this term in the Petroleum Law.


“Delivery Point” means whichever point(s) within Albania as may be agreed


between NPA and LICENSEE. Such points) may or may not be the same as


the Measurement Point.


“Deemed Production” has the meaning given to that term in the Petroleum


Agreement entered into between Albpetrol and Contractor.


“Development” means the Petroleum Operations performed after the approval


of the Development Plan and shall include, but not be limited to:


(a) the drilling, plugging, deepening, side tracking and redrilling, completing


and equipping of development wells, and completing and changing of the


status of a well, and


(b) designing, engineering, construction, procurement and installation of


equipment, lines, system facilities, plants and global changes of panels


and the related operations which will enable LICENSEE to exploit and


operate the said development wells, and the collection, gathering,


processing, manipulation, storing, transportation and delivering of


Petroleum, and the implementation of IOR/EGR Methods on a large


scale throughout the Contract Area.


“Development and Production Operations” means all operations and related


administrative and other activities, within or outside the Contract Area, which


are carried pursuant to an approved Development Plan in connection with the


development, production, extraction, separation, processing, gathering,


transportation, storage and disposition of Petroleum.


“Development and Production Area” has the meaning given to that term in the


Petroleum Agreement entered into between Albpetrol and Contractor.


“.Development and Production Period” means the period described as such in


Section 8,3.


“Development Plan” means a plan, including the works, relevant activities, and


■’ ’ 1 ‘ ■1 ' J' " ' ' ^ r the development and











7


 License Agreement for the Development am Production of Petroleum in the Patos-Ntarinza Oilfield








“Effective Date” has the meaning set forth in ARTICLE 27.


“Evaluation” means the evaluation of the technical and economic data produced


pursuant to previous Operations for purposes of determining the commercial


viability of implementing the Development Plan.


“Evaluation Area” has the meaning given to that term in the Petroleum


Agreement entered into between Albpetrol and Contractor.


“Evaluation Operations” means Petroleum Operations related to the Evaluation


of IOR/EOR Methods during the Evaluation Period in the Contract Area.


“Evaluation Program” has the meaning given in Annex B.


“Evaluation Period” has the meaning set forth in article 7, Section 7.3(a).


“Expert” means an individual or an entity who is not and has never been


employed by NPA or LICENSEE and who, by training and extensive


experience, has highly developed knowledge in the technical area wherein lies


the dispute or disagreement which he is to resolve and who is appointed


pursuant to the provision of Article 25, Section 25.4.


“Fiscal Year” means the period of twelve (12) consecutive months according to


the Gregorian calendar starting January 1st and ending December 31st, both


dates inclusive, for which tax returns or reports are required according to any


applicable income, Profits or other tax law or regulation in accordance with


applicable Albanian Law.


“Improved/Enhanced Oil Recovery Methods” or “IOR/EOR Methods” means


Petroleum Operations which aim at reaching the Maximum Efficient Recovery


from a Reservoir through improving its natural energy system and its


hydrocarbon drainage by applying, without being limited to, recompletion,


reworking, cold heavy oil production methods, steam-assisted gravity drainage


methods, water injection, repressuring, thermal heating, vertical and horizontal


drilling and other enhanced production methods.


“Leke” means the lawful currency of the Republic of Albania.


“LICENSEE” means Albpetrol and, in conformity with “Albpetrol Agreement”


provisions, any its permitted transferee, successor or assignee.





“License Agreement” means this document, including the Annexes attached to


it, as the same may be amended or supplemented from time to time.











8


 License Agreement for the Development arid Production of Petroleum in the Patos-Marlnza Oilfield





“Maximum Efficient Recovery” means recovery of Petroleum, which equals the


maximum overall extraction of Petroleum from a Reservoir having regard to


generally accepted international petroleum industry practice.


“Measurement Point” means the point mutually determined by NPA and


LICENSEE, where appropriate equipment and facilities will be located for the


purpose of performing all volumetric measurements and other determinations,


temperature and other adjustments, determination of water and sediment content


and other appropriate measurements, to establish, for the various purposes of


this License, the volumes of Petroleum. All said measurements and


determinations will be acknowledged in writing by NPA and LICENSEES


representatives at the Measurement Point. The Measurement Point may or may


not be the same as die Delivery Point.


“Natural Gas” means any hydrocarbons or mixture of hydrocarbons consisting


essentially of methane in a gaseous state under normal conditions of pressure


and temperature, extracted from the subsoil separately or together with liquid


hydrocarbons.


“New Evaluation Area” has the meaning set forth in Section 8.4(a).


“New Evaluation Program” has the meaning set forth in Section 8.4(a).


“NPA” means the National Petroleum Agency of Albania as further specified in


Recital K and ARTICLE 3, Section 3.6.


“Operator” has the meaning set forth in article 6, Section 6.2(a).


“Party” means NPA or LICENSEE.


“Person” means any individual, corporation, partnei*ship, joint venture,


association, joint stock company, trust, unincorporated organization, Albanian


governmental authority, or other form of entity.


“Petroleum” means Crude Oil, Condensate and Natural Gas.


“Petroleum Agreement” means a petroleum agreement as defined in the


Petroleum Law and the Albpetrol Agreement, and as described in Recital E and


ARTICLE 6, herein.


“Petroleum Costs” means costs and expenditures incurred for the performance


of or in connection with the Petroleum Operations.


“Petroleum Law” means the Albanian “Petroleum Law (Exploration and


Production)”, No.7746, dated 28.07.1993. as amended by Law No.7853 dat








9


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








29.07.1994 “On some changes in Law No.7746 dated 28.07.1993 “Petroleum


Law (Exploration and Production)” and by Law No.8297, dated 4.3.1998


“Amendment of law No.7746, dated 28.7.1993 "Petroleum Law (Exploration


and Production)”, as amended by law No.7853, dated 27.7.1994 “On some


changes in Law No.7746 dated 28.07.1993 “Petroleum Law (Exploration and


Production)”.


“Petroleum Operations” means all or any of the operations including the


Abandonment aimed or authorized by this License Agreement and operated by


the LICENSEE on or after the Effective Date, including without limitation the


testing, development, extraction, production, treatment, transportation and


storage of Petroleum of or from the Contract Area pursuant to this License


Agreement.


“Petroleum Profit Tax” means the tax assessed pursuant to Law 7811 dated


April 12, 1994, as amended by Law 8345 dated May 13, 1998, and as may be


amended from time to time.


“Production” means every type of operations to produce Petroleum and operate


wells, and taking, saving, treating, handling, storing, transporting, metering, and


delivering of Petroleum, and any other type of operation required to obtain


primary and enhanced recovery of Petroleum, and transportation, storage and


any other work or activities necessary or ancillary to such operations. (The verb


“Produce” means conducting Production).


“Profit” has the meaning set forth in article io, Section 10.3(a).


“Project” means the rehabilitation and redevelopment of the Contract Area


through IOR/EOR Methods.


“Project Area” means:


(i) during the Evaluation Period, that portion of the Contract Area


which is designated from time to time as the Evaluation Area;


(ii) during the Development and Production Period, that portion the


Contract Area which is designated from time to time as Development


and Production Area; and


(iii) if LICENSEE undertakes a New Evaluation Program, that portion


of the Contract Area which is designated from time to time as the New


Evaluation Area.


“Reservoir” means a porous and permeable stratum capable of producing


Petroleum and which must be considered, because of the character of








10


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








substances it holds (similitude of physical properties, density, gas-oil ratio,


viscosity and a pressure relationship) as a unit in regard to its natural


exploitation.


“Six Month Period” means, respectively, the period of the first six consecutive


months of the Fiscal Year and the period of the last six consecutive months of


the Fiscal Year.


“Taxes and Duties** means all taxes, duties, tariffs, fees and other payments of


whatever nature payable to the Albanian Government (or to any of its agencies)


or to any of its political or administrative sub-divisions (or agencies).


“U.S. Dollars” or “USD” means the lawful currency of the United States of


America.


“Willful Default” means, with respect to a Person, an intentional and conscious


or reckless act or omission made by any director, supervisory or managerial


personnel of such Person, its agents or contractors, not justifiable by any special


circumstance, but shall not include any error of judgment or mistake made by


any director, supervisory or managerial personnel, agent or contractor of such


Person, as the case may be, in the exercise, in good faith, of any right conferred


upon such Person under this License Agreement


1.2* Other Terms.


In this License Agreement, including its Recitals and Annexes and this


ARTICLE 1, unless the context otherwise requires:


(a) words denoting the singular number shall include the plural and vice-


versa;





(b) reference to a law is the same also regarding amendments, modifications


or the replacements made now and then and regarding any legal act


deriving from laws, regulation, rule, order or right delegated by law or


order in compliance with them;


(c) reference to an agreement or instrument shall be deemed to include


references to such agreement or instmment as amended, supplemented or


replaced from time to time;


(d) reference to any Party is to a Party to this License Agreement ,J_





successors and permitted assigns;

















il


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





(c) references to Recitals, Articles, Sections, Appendices and Annexes are


references to Recitals, Articles, or Sections of, or Appendices or Annexes


to this License Agreement, unless otherwise indicated;


(f) “included”, “other than” and other similar phrases will not be interpreted


as definitions;


(g) reference to numbered or lettered paragraph “above” or “below” is to the


paragraph so numbered or lettered immediately above or below such


reference; and


(h) if not otherwise defined in this License Agreement, the words and


phrases adopted in the Petroleum Law will carry the same meaning in


this License Agreement.


1,3. Headings.


As used herein, the headings are used as a facility and are not part of, and will


be ignored in interpreting this License Agreement,




































































12


 License Agrseciect for the Development sn<J Production of Petroleum in tha Patos-Marinza Oilfield

















ARTICLE 2


ANNEXES TO THE LICENSE AGREEMENT








2*1 Annexes








The Annexes A and B to this License Agreement are hereby made a part of this


License Agreement and they shall be considered as having equal force and


effect with the provisions of this License Agreement. However, in the event of


any conflict between the Annexes and the body of this License Agreement the


provision as described in the body of this License Agreement shall prevail.





Annex A: CONTRACT AREA

Annex B: EVALUATION PERIOD MINIMUM WORK
















































































































13


 Ucense Agreement for tti$ Development and Production of Petroleum in the Patos-Marinza OiKieW











ARTICLE 3


SCOPE OF THE LICENSE AGREEMENT








3.1. Application of Law and Stability of Terms.


(a) The provisions of this License Agreement shall have full legal effect in


accordance with article n.


(b) Subject to Section 3.1(c) below, to the extent that any provision of


Albanian Law (whether existing before, on or after the Effective Date)


conflicts or is inconsistent with a provision of this License Agreement,


the provision of the Albanian Law shall prevail.


(c) Notwithstanding Section 3. lfb) above, if, as a result thereof, any right or


benefit granted (or which is intended to be granted) to LICENSEE under


this License Agreement is infringed in some way, a greater obligation or


responsibility shall be imposed onto LICENSEE or, in whatever other


way the economic benefits accruing to LICENSEE from this License


Agreement arc negatively influenced by Section 3.1fbL and such an


event is not provided for herein, the Parties will immediately amend this


License Agreement, or NPA and the Ministry will immediately


undertake other necessary actions to eliminate the negative economic


effect on the LICENSEE.


(d) Other than those Taxes and Duties set forth in article 12 and_article 14,


LICENSEE and its respective Affiliates, subcontractors and expatriate


personnel shall be exempted from Albanian Taxes and Duties, with


respect to all activities relating to the Petroleum Operations to the extent


so provided in Albanian Law, This exemption does not include normal


port, warehouse and postal charges and other similar customary charges


of general application for actual services rendered.


3.2. Grant of Rights.


Pursuant to and in accordance with the terms and conditions of the Petroleum


Law and this License Agreement the Ministry authorizes and grants the


LICENSEE the exclusive right;





(a) to conduct Petroleum Operations in the Contract Area;


(b) to treat, store and transport the Petroleum extracted from the


Area;














14


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





(c) to construct and install all facilities and equipment (including storage,


treatment, pipelines and other means of transportation) required for the


Petroleum Operations; and





(d) to use for its own account, sell, exchange, export, realize or possess the


Petroleum extracted from the Contract Area, and take Profit from and


title to such extracted Petroleum.





Notwithstanding Section 3.2(a). (b). fch and (dh any other contractor may


conduct petroleum operations for development and production of Petroleum


outside of the Contract Area in accordance with any agreement reached


between a contractor and NPA. Ministry, NPA and the contractor shall ensure


LICENSEE that those petroleum operations will not interfere and unreasonably


prevent the normal development of Petroleum Operations of die LICENSEE in


the Contract Area, not: shall LICENSEE unreasonably prevent or interfere with


the petroleum operations of such other contractor.





3.3, The Primary Obligations of the LICENSEE.





(a) The LICENSEE shall:


(i) secure all financial resources and pay one hundred percent (100%)





of ail costs and expenses associated with the Petroleum


Operations in respect to the Contract Area subject to the Cost


Recovery Petroleum provisions of this License, and


(ii) secure all technical resources and employ advanced scientific


methods, procedures, technologies and equipment generally


accepted in the international petroleum industry necessary to cany


out Petroleum Operations in compliance with this License


Agreement at its sole risk and cost, and





(iii) indemnify the Albanian Government, the Ministry and NPA, and


their employees, officials, officers, directors and respective agents,


for all claims by third parties for personal damage or property


damage resulting from the performance of the Petroleum


Operations, including without limitation, reasonable attorneys fees


and costs of defense unless such third party claims are as a direct


or indirect result of any fault or breach of legal duty by the


Albanian Government, the Ministry or the NPA. In the event of


such claims the LICENSEE shall be notified within thirty (30)


days.





(b) LICENSEE may perform the Petroleum Operations itself or by


employing sub-contractors. LICENSEE shall not be relieved of any














15


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








obligation under this License Agreement and Albanian Law by reason of


employing sub-contractors.


(c) If LICENSEE is comprised of more than one party, each such party shall


be jointly and severally liable and responsible for LICENSEE’S


obligations under this License Agreement including without limitation


LICENSEE'S indemnification obligations unless specifically provided


otherwise in this License Agreement.


(d) Unless otherwise stated herein or otherwise agreed, LICENSEE shall


receive no compensation for its services, nor any reimbursement of its


expenditures under this License Agreement, except for the share of


Petroleum from the Contract Area to which it may be entitled under


ARTICLE 12.


(e) This License Agreement does not award LICENSEE ownership rights to


the Petroleum in situ in the Contract Area. However, LICENSEE shall


have the right to receive in kind, dispose of and freely export its share of


Petroleum from the Contract Area in accordance with the provisions of


this License Agreement. Title to LICENSEE’S portion of Petroleum


hereunder shall pass to LICENSEE at the relevant Delivery Point.


3.4. Entitlements of LICENSEE.


As of the Effective Date, and during the term of this License Agreement,


LICENSEE will be entitled to use:


(a) exclusively, free of charge, all the existing facilities and equipment in the


Contract Area for the performance of the Petroleum Operations for:


(i) the implementation of the Evaluation Operations and the


Development and Production Operations;


(ii) application of IOR/EOR Methods in the whole Contract Area and


in accordance with the conditions and terms of this License


Agreement; and


(iii) Production of Petroleum in the Contract Area;


(b) free of charge and for the performance of the Petroleum Operations, all


other assets, equipment, means and infrastructure (including roads,


electricity power lines and water, oil and gas pipelines) formerly owned


or in die possession of AAP and existing on the Effective Date of this


License Agreement in the Contract Area or elsewhere as described in


Annex F of the Petroleum Agreement, on an "as is" basis and available v


If





16


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








for delivery, but (unless otherwise agreed with the supplier) subject to


payment, on a non-discriminatory basis, at reasonable cost for electricity,


water, oil and gas used;


(c) under commercially reasonable terms and conditions, the pipelines that


transport the Petroleum produced in the Contract Area to the ports and


refineries in Albania; and


(d) all technical data available to NPA pertaining to the Contract Area


provided that LICENSEE shall reimburse NPA for all reasonable cost


incurred for the preparation of such data transfer and the cost of copying


such data.


3.5* Use of Entitlements.


(a) The Ministry and NPA shall ensure that there is no change in the


intended use or operation of any of the equipment, means and


infrastructure (including pipelines) referred to in Section 3.4, without


prior approval of the LICENSEE which, approval not to be unreasonably


withheld.


(b) The Ministry and NPA shall ensure that LICENSEE has use of the


railways, roads, highways, water, land surface, timber, electricity,


sanitary structures and other infrastructures in Albania, at commercially


reasonable rates and on a non-discriminatory basis, so as to be able:


(i) to perform the Petroleum Operations in compliance with this


License Agreement; and


(ii) to produce, transport, export and sell Petroleum in or from


Albania as provided in this License Agreement and the Petroleum


Law.


(c) The Ministry and NPA shall ensure that the LICENSEE is granted, in


accordance with Articles 7 and 10 of the Petroleum Law, all the rights,


permits, licenses, approvals and other authorizations that it may


reasonably require in order to perform the Petroleum Operations in


conformity with this License Agreement, and that any compensation


which LICENSEE may be required to pay, pursuant to Article 10(2) of


the Petroleum Law, shall be reasonable and non-discriminatory.


3.6. NPA Authority.


On the basis of the Decision of the Council of Ministers, No. 445, dated


September 3rd 1993, following the Effective Date, NPA will, on behalf of the








17


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











Ministry, provide approval or issue the necessary authorizations for the


performance of the Petroleum Operations in the Contract Area, y


 license Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield














ARTICLE 4


TERM








Unless sooner terminated in accordance with the terras hereof, this License


Agreement shall remain in effect during the the Evaluation .Period and any


extension hereof (Section 73) and any Development and Production Period if


entered pursuant to Section 7.4 and ARTICLE 8.


Pursuant to Article 5(3)(a)(ii) of the Petroleum Law, at the end of any


Development and Production Period the Parties may agree to further five (5)


year extensions in accordance with the procedures set forth in articij


Section 8.3(c) hereof.








































































































19


 License Agreement for the Development and Production of Petroleum in the Patos-Marlrtta Oilfield











ARTICLE 5


RELINQUISHMENT





5.1. Relinquishment.





(a) LICENSEE may relinquish its rights under this License Agreement to


conduct Petroleum Operations in all or any part of the Contract Area by


providing NPA with written notice thirty (30) days in advance of such


relinquishment. Once LICENSEE has notified NPA of its decision,


(b) LICENSEE shall relinquish all its rights and obligations with regard to


this License Agreement and the Petroleum Agreement.


In case LICENSEE intends to relinquish any part of the Contract Area


the LICENSEE shall provide NPA with written note describing the


portions of the Contract Area to be relinquished at least thirty (30) days


in advance and shall ensure that each individual portion of the Contract




size and shape to enable further petroleum operations to be conducted


thereon.





Upon the date on which any relinquishment is due or is to take effect or


upon the termination of this License Agreement the LICENSEE shall


(d) have no further rights or obligations in regard to the relinquished area(s).


No relinquishment made in accordance with this License Agreement and


this Article 5 shall relieve LICENSEE from its unfulfilled minimum


commitments or any other unfulfilled obligation accrued prior to


relinquishment written notice.


















































20


 License Agreement tor the Development and Production of Petroleum in the Patos-Marinza Oilfield








ARTICLE 6


PETROLEUM AGREEMENT AND OPERATOR


6.1. Petroleum Agreement.


In compliance with the Petroleum Law, the Albpetrol Agreement, and this


License Agreement, LICENSEE is authorized to conduct Petroleum Operations


for the Project in the Contract Area only on the basis of a Petroleum


Agreement, which:


(a) shall be in full accordance with this License Agreement and, in


accordance with Article 13(2) of the Petroleum Law, will enter into full


force and effect only upon and following the Effective Date;


(b) shall incorporate the exclusive rights to the Contract Area granted in


accordance with this License Agreement;


(c) notwithstanding the definitions set forth within the Petroleum Law, will


contain and/or define, but not be limited to, the following matters:


(i) the obligations and schedules of the Evaluation Period as well as


of other phases of the performance of the Petroleum Operations,


which shall be in conformity with the schedules and obligations of


this License Agreement;


(ii) contents of the procedure of selection and determination of the


Operator by the parties to such agreement and the Operator's


primary rights and duties, provided that replacement of Operator,


if necessary, will be conducted in conformity with article 6,


Section 6.2(b) herein;


(iii) the Accounting Procedure, which will be subject to article is,


Section 15.5 of this License Agreement and Annex B of the


Petroleum Agreement;


(iv) the relations among parties to the Petroleum Agreement,


procedures for making and implementing decisions, contributions,


individual and collective liabilities, duties and rights, form and


share of Profit, obligations, and similar matters; and


(v) the organization and performance of the Petroleum Operations.


r











21


 License Agreement lor the Development and Production of Petroleum in the Patos-Marin2a Oilfield











6.2. Project Area


In the event LICENSEE is comprised of more than one party, such parties may


provide in the Petroleum Agreement for an area (the "Project Area") within the


Contract Area where Operator will be solely responsible for conducting Petroleum


Operations described herein, separately from Petroleum Operations conducted in the


balance of the Contract Area. The Petroleum Agreement may provide for the


allocation between or among the parties comprising LICENSEE of the rights,


obligations, liabilities and indemnities relating to the Project Area separately from the


balance of the Contract Area. Jn the event of such allocation, and notwithstanding


anything to the contrary in this License Agreement:





(a) each of such parties comprising LICENSEE will be separately responsible for


activities in the Project Area and the balance of the Contract Area to the extent


set forth in the Petroleum Agreement; and


(b) Operator shall be liable and responsible only for Petroleum Operations


conducted in the Project Area and not elsewhere (including without limitation:


obligations pertaining to Abandonment; paying costs and expenses of


Petroleum Operations; indemnities; the preparation of the Development Plan


and Annual Programs and Budgets for the Project Area; the calculation and


payment of Petroleum Profit Tax; compliance with operational and


environmental standards; the preparation of baseline studies; the preparation of


books, records and accounts of Petroleum Costs, Cost Recovery Petroleum and


revenues; force majeure and termination for force majeure; and breach and


termination provisions).


6.3 Operator.





(a) “Operator” is defined as the LICENSEE or, subject to Article 5(2) of the


Petroleum Law and Section 6.3(b) of this License Agreement, as such


other Person duly appointed by the LICENSEE for executing and


implementing the Petroleum Operations in the name of, for the account


of, and under the responsibility of LICENSEE.





(b) Any eventual Operator nomination and/or replacement can be made as


follows:





(i) by way of prior notification of NPA, if the proposed Operator is a


LICENSEE or an Affiliate of a LIC ENSEE, and


O')


with the prior approval of NPA, which approval will not be


unreasonably withheld, if the proposed Operator is not a


LICENSEE or an Affiliate of a LICENSEE. ^











22


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











(c) Subject to Section 6.3fa^) and fbK LICENSEE shall inform NPA of the


identity of Operator’s Director General and deputies, all of whom shall


be technically and administratively competent.


(d) LICENSEE shall not be relieved of any intentional and conscious or


reckless act or omission made by any director, technical, supervisory or


managerial personnel of the Operator, its agents or contractors, not


justifiable by any special circumstance.


6.4. Prevailing Document.


Once approved by the Council of Ministers, the Petroleum Agreement, together


with its appendices and exhibits in each of the languages in which it is written


and is valid, shall be provided to NPA. The provisions of this License


Agreement will prevail in case of a conflict or disagreement with the Petroleum


Agreement provisions.



















































































23


 License Agreement tor the Development and Production of Petroleum in the Patos-Marlnza Oilfield











ARTICLE 7


ANNUAL PROGRAMS AND BUDGETS





7.1. Commencement of Petroleum Operations. Advisory Committee.





(a) The Petroleum Operations under this License Agreement will start on the


Effective Date; however, LICENSEE will start the Evaluation


Operations in the Contract Area not later than sixty (60) days from the


Effective Date.


(b) For the purpose of the proper implementation of both this License


Agreement and the Petroleum Agreement, the LICENSEE shall establish


an Advisory Committee which, among others, shall have the rights and.


duties as set forth in the Petroleum Agreement.


(c) The Advisory Committee shall meet at least twice each Fiscal Year and


whenever required by each of the Parties composing the LICENSEE.


Operator shall give at least fifteen (15) days prior written notice to 'NPA


of each Advisory Committee meeting, which notice shall include the


proposed agenda and supporting materials as distributed to the Advisory


Committee. At its own cost and decision, but however giving


LICENSEE ten (1.0) days prior written notice, NPA may attend, but shall


not be entitled to vote, at the Advisory Committee meetings.


7.2. Annual Program and Budget.





(a) No later than sixty (60) days after the Effective Date of this License


Agreement and, thereafter, no later than sixty (60) days before the


beginning of every Fiscal Year, or according to such other schedules as


may be agreed upon by NPA and LICENSEE, LICENSEE will prepare


and submit to NPA a proposed Annual Program and Budget providing


the Petroleum Operations to be carried out during the succeeding Fiscal


Year. Unless otherwise provided herein LICENSEE shall only conduct


Petroleum Operations in accordance with the approved Annual Programs


and Budgets pursuant to this License Agreement. Annual Programs and


related Budgets shall be prepared in accordance with good international


oilfield practice.





(b) A proposed Annual Program shall contain, but will not be limited to:





(i) the Petroleum Operations and the related Budget LICENSEE aims


to carry out according to the phase in which LICENSEE happens


to be in that Fiscal Year, such as the conduct of Evaluation or


Development and Production Operation!











24


 License Agreement (or the Development and Production of Petroleum in the Patos-Marirwa Oilfield











(ii) an appraisal of the investments and activities for the subsequent


fiscal years and for the entire period of performance of the


Petroleum Operations in the Contract Area;


(iii) in the event LICENSEE has concluded the Evaluation Period and





has entered or is conducting the Development and Production


Period, the proposed Annual Program shall be in compliance with


the Development Plan, and shall also include:





an estimate of the capital and operating costs and activities


for the subsequent Fiscal Year that LICENSEE proposes to


perform in the Contract Area;


details and the extent of the Development Area relating to


the said Annual Program and Budget


a description of IOR/EOR Methods selected to be applied


throughout the Contract Area and/or other procedures to be


undertaken;


an appraisal of the Available Petroleum forecasted


production profile for the relevant Fiscal Year, broken


down by Calendar Quarters;


the average daily production planned to be achieved for


each quarter during the said Fiscal Year;


any other data that NPA may reasonably require from time


to time;


a statement of environmental and safety principles to be


employed in the Petroleum Operations including plans for


environmental impact assessments as part of an


environmental management plan; and


Details of any Crude Oil sales contracts relating to


Production from the Development and Production Area





(c) In accordance with Sections 7.21a) and 7.2(b). LICENSEE will


submit to NPA a proposal for an Annual Program within the schedules


designed tor each year for the Petroleum Operations during the


Evaluation Period and the Development and Production Period and NPA


will inform LICENSEE of any amendment to be made to such proposal


and the reasons for it within thirty (30) days of its receipt. Proposed


amendments may only be made to the extent that the Annual Program


does not comply with the Evaluation Program or the Development Plan


as the case may be. If there is a disagreement about the proposed


amendments, then the dispute shall be submitted for determination to an


Expert which would be appointed according to the proceeding described


in Article 25.4. The Expert shall dispose of sixty (60) days as of his


nomination to come to a decision. Prior to the resolution of any such


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





dispute, Operator may continue with existing operations as previously


approved.


If NPA does not inform LICENSEE of any amendment within thirty (30)


days, such proposal shall be deemed to be approved. LICENSEE shall


take into consideration the amendments, if any, suggested by NPA and


will reflect those amendments it deems necessary. Thereafter,


LICENSEE will once again forward its proposal to NPA for approval,


which approval shall not be unreasonably withheld. If NPA does not


inform LICENSEE of any additional amendments within fifteen (15)


days following such resubmission, such revised proposal shall be deemed


to be approved.


(d) The Parties arc aware that the details of an approved Annual Program


may require modifications in light of the circumstances and nothing


herein will limit LICENSEE'S right to make such modifications (with the


prior approval of NPA, which shall not be unreasonably withheld or


delayed) it deems necessary with the condition that such modifications


should not change the general objective of the approved Annual Program


and Budget, but also providing that nothing herein may limit the right of


the LICENSEE to take actions it deems necessary in the event of


emergencies to protect the safety and welfare of individuals and the


economic viability of the Project. If: (i) Annual Program modifications


have been approved by NPA; or (ii) there are differences between


budgeted and actual revenues, costs and expenses in implementing the


Annual Program approved by the NPA, then NPA approval is not


required for any consequential modifications to the Budget.


7.3. Evaluation Period.


(a) Pursuant to ARTICLE 6, Sections 6.1(c)(i) and this ARTICLE 7, Section 7.1,


7.2 and 7.3(b), LICENSEE will conduct the Evaluation Operations


within or in respect with the Contract Area in compliance with the


generally accepted practices of the international petroleum industry.


(b) The Evaluation Period commences on the Effective Date and shall last


for a period of up to eighteen (18) months. However, upon written


request of the LICENSEE that a six-month extension is required to


complete the evaluation of results or activities conducted in the Contract


Area, NPA may approve, which approval will not be unreasonably


withheld or delayed, that the Evaluation Period be extended for an


additional six-month period. Such a written request must be delivered to


NPA at lea r five (45) days prior to the Evaluation Period


expiration.














26


 License Agreement for the Development and Production of Petroleum in the Paios-Marinza Oilfield





(c) During the Evaluation Period the LICENSEE shall carry out the


Evaluation Program as described and detailed in the Annex B, providing


however that if, at the expiration of eighteen months following the


Effective Date or upon termination of this License Agreement,


whichever first occurs, LICENSEE has failed to cany out in accordance


with this License Agreement, in whole or in part, the minimum capital


expenditure stated in Annex B then LICENSEE shall pay to NPA and


amount equal to the non fulfilled part of the minimum capital


expenditure stated in Annex B.


(d) If LICENSEE cancels and surrenders this License Agreement during a


Fiscal Year of the Development and Production Period to which an


approved Annual Program and Budget applies, LICENSEE shall pay to


NPA the amount of any unexpended capital expenditures contemplated


under the Annual Program and Budget for that Fiscal Year.


(e) Payments under the Article 7.3(c) shall only be due in respect of any


unfulfilled commitment related to the Evaluation Program. Payments


under the Article 7.3(d) shall only be due in respect of any unexpended


capital expenditures contemplated under the Annual Program and


Budget. In the event of delay in the payment of the indemnity to be paid


to NPA in application of Article 7.3(c) or Article 7.3(d), the amount


owing in this respect will bear interest calculated from the final date on


which the indemnities should have been paid, and up to the time on


which the payment is done by the LICENSEE, at the annual discount rate


of the London Inter Bank Offered Rate (LIBOR) plus one percent.


7.4. Petroleum Operations Following Evaluation Period,


Within sixty (60) days following the completion, of the Evaluation Period or any


extension thereof, the LICENSEE shall either:


(a) inform NPA that the Evaluation Operations were successful and provide


NPA with a proposed Development Plan, which may also be an


amendment to an existing Development Plan (which shall include therein


the lands within the Contract Area pertinent to such Development Plan,


the proposed Measurement Point as well as the proposed Delivery Point,


the respective Production costs, the Petroleum production levels and


other data as may be requested by NPA in compliance with the generally


accepted practices of the international petroleum industry) in connection


with IOR/EOR Methods selected for the development of the Contract


Area and meeting the requirements of article 8, Section 8.1. During the


period following the completion of the Evaluation Program and prior to


the approval of a Development Plan, LICENSEE may continue


Petroleum Operations which were being conducted during the Evaluati











27


 License Agreement (or the Development and Production of Petroleum in the Patos-Morinza Oilfield





Program, and this License Agreement shall continue to be in effect as


though the Evaluation Period had been extended; or


(b) inform NPA that the Evaluation Operations were not successful, but,


nevertheless, LICENSEE wishes to continue the evaluate the Contract


Area using new ideas, as may be stipulated in the Petroleum Agreement,


or LICENSEE may ask NPA for another extension, in addition to that set


forth in Section 7.3fbl. which in any case will not be longer than six (6)


months. At the end of such extension LICENSEE may proceed in


accordance with Section 7.4(al or 7.4(d); or


(c) inform NPA that the Evaluation Operations, concluded in conformity


with the terms and conditions of this License Agreement, did not yield


commercial and profitable results for a full scale implementation of


IOR/EOR Methods throughout the Contract Area and LICENSEE is of


the opinion that a change of fiscal system can make the Project


commercially viable, in which case LICENSEE and NPA (once the latter


is convinced of such a conclusion), shall endeavor to make the Project


commercially viable on the basis of Decree No. 782, dated 22 February


1994, Article 1(3), provided that, in the event a decision by the Council


of Ministers pursuant to such provision (and acceptable to LICENSEE)


is not issued within six (6) months following completion of the


Evaluation Period, LICENSEE shall have the right to relinquish the


Contract Area at any time thereafter, subject to article 5 and upon seven


(7) days notice to NPA, or


(d) Subject to the requirements of article 5* relinquish the Contract Area.


If LICENSEE so relinquishes the Contract Area, all wells, operations and


assets (moveable and immoveable) will be returned to NPA or its


nominee and LICENSEE shall be released from all liabilities associated


" ;d obligations accrued prior to


















































28


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 8 

PETROLEUM OPERATIONS AFTER APPROVAL OF THE


DEVELOPMENT PLAN





8.1. Development Plan.


(a) Subject to article 7, Section 7.4(a), LICENSEE will be entitled to


undertake the Development of the Contract Area and extract Petroleum


from a Reservoir pursuant to the Development Plan with the objective of


achieving extraction of Petroleum at Maximum Efficient Recovery. The


Development Plan shall be prepared on the basis of sound engineering


and economic principles in accordance with generally accepted


international petroleum industry practice.


The Development Plan shall contain but not limited to:





(i) details and the area extent of the proposed Development and


Production Area;





(ii) proposals relating to the spacing, drilling and completion of wells,


the production and storage installations, and transportation and


delivery facilities required for the production, storage and


transportation of Petroleum;


(iii) proposals relating to necessary infrastructure investments;





(iv) a production forecast and an estimate of the investment and


expenses involved;


(v) an estimate of the time required to complete each phase of the





Development Plan;


(vi) the proposed Delivery Point and Measurement Point.





(b) (i) NPA may, within forty-five (45) days following receipt of the


proposed Development Plan submitted by LICENSEE pursuant to


article 7, Section 7.4, request LICENSEE of any amendment it


deems necessary to the Development Plan and the reasons


therefore. If NPA fails to inform LICENSEE of any amendment


within such forty-five (45) days, the proposed Development Plan


shall be deemed to be approved. The LICENSEE shall consider


the amendments


amendments it di ;ems necessary.


w*











29


 License Agreement for (he Development and Production of Petroleum in the Patos-Marinza Oilfield








(ii) In the event NPA requests any amendment to the proposed


Development Plan then LICENSEE and NPA shall meet within


fifteen (15) days of receipt by LICENSEE of NPA’s written


notifications as to these requested changes to try in good faith to


reach an agreement on the Development Plan. Revision to the


Development Plan, if agreed, within a further period of sixty (60)


days, should be incorporated in a revised plan which shall then be


deemed approved by NPA.


(ill) If no agreement is reached, pursuant to article 25, Section 25.4,


the dispute shall be submitted for determination to an Expert


which would be appointed according to the proceeding described


in Article 25.4. The Expert shall dispose of sixty (60) days as of


his nomination to come to a decision.





(c) If LICENSEE desires to materially amend the Development Plan as


approved by NPA, it will provide NPA with the proposed amendments


pursuant to the procedures set forth in Section 8.1(b).


8.2. Performance of Petroleum Operations.





During the Development and Production Period the Petroleum Operations will


be performed according to the Annual Programs in conformity with the


Development Plan as set forth in article 7, Section 7.2(a).


8.3. The Development and Production Period.





(a) Subject to article 4, Section 4.1 and Sections 8.3(b) and 8.3(c), the


Development and Production Period will commence upon approval by


NPA of the Development Plan and will end on the 25^ anniversary of the


Effective Date.


(b) (i) Subject to ARTICLE 5, by providing notification ninety (90) days in


advance, LICENSEE may relinquish all or part of the Contract


Area.


(ii) Following termination of the Development and Production Period





or relinquishing a part of the Contract Area, such portion of the


Contract Area will cease to exist as part of the Contract Area.


(iij) LICENSEE will not be bound to continue Petroleum Operations


with respect to any such portion of the Contract Area which has


ceased to exist as part of the Contract Area.





(c) So long as LICENSEE has not breached any material clause of this


License Agreement, upon the request of LICENSEE and approval of











30


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








NPA (which approval will not be unreasonably withheld or delayed) the


Development and Production Period will be extended for successive


periods of five (5) years each, for as long as any portion of the Contract


Area continues to produce Petroleum in commercial quantities. Every


request for extension should be made to NPA in writing no later than one


hundred and eighty (180) days prior to the termination of the


Development and Production Period (as it may have previously been


extended). Failure of NPA to respond to any such request for extension


within sixty (60) days following the date of receipt of such request shall


be deemed to be approval of the requested extension.





8.4 New Evaluation Area(s)


(a) During the implementation of the Development Plan, but no later than


five (5) years from the date of the Development Plan approval,


LICENSEE may further propose and design new evaluation areas within


the Contract Area but outside of any existing Development and


Production Area for a new Evaluation Period. Upon NPA approval,


which, approval will not be unreasonably withheld or delayed, such new


Evaluation Period will have ail initial term of twelve (12) months from


commencement, and shall involve a relevant evaluation program (the


"New Evaluation Program") involving a minimum work program and


capital expenditure commitments and an Evaluation area (the "New


Evaluation Area") at LICENSEE'S assessment. The New Evaluation


Program shall be appended to Annex B and the New Evaluation Area


shall be appended to Annex A. The New Evaluation Area may include


the lands within the Contract Area where the new Evaluation and


subsequent development and production activities may occur. After


completion of each new Evaluation Period, an addendum of the


Development Plan must be submitted or the New Evaluation Area


relinquished.


(b) During the new Evaluation Period the LICENSEE shall carry out the


minimum work program and capital expenditure commitments as


described and detailed in the New Evaluation Program and appended to


Annex B, providing however that if, at the expiration of the new


Evaluation Period, or any extension thereof, or upon termination of this


License Agreement, whichever first occurs, LICENSEE has failed to


carry out in accordance with this License Agreement, in whole or in part,


the minimum work program and capital expenditure commitments as


appended to Annex B, then LICENSEE shall pay to NPA and amount


eaual to the non fulfilled nart of the minimum capital expenditure























31


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 9


LICENSEE’S RIGHTS AND OBLIGATIONS





9.1. Conduct of Operations.


LICENSEE shall conduct Petroleum Operations diligently and in accordance


with generally accepted practices of the international petroleum industry.


LICENSEE shall ensure that all equipment and facilities used by LICENSEE


comply with generally accepted engineering rules and standards, arc of proper


and accepted construction, and are maintained in proper working order.


LICENSEE shall take all reasonable measures within its control according to


generally accepted standards in the international petroleum industry to prevent


the loss or waste of Petroleum above or under the ground during the


performance o f Petroleum Operations.


During the conduct of the Petroleum Operations, LICENSEE will undertake, in


particular, all reasonable measures in conformity with such standards in order to


prevent:


(a) loss or waste of Petroleum;


(b) damage to Petroleum and water-bearing formations close to or adjacent


to the Contract Area; and


(c) non-intentional introduction of water into Petroleum Reservoirs.


9.2. Environment and Safety.





(a) LICENSEE shall conduct Petroleum Operations in a safe and proper


manner in accordance with Albanian Law and generally accepted


international petroleum industry practice,


(b) In the event of an accident or other emergency, LICENSEE shall take all





immediate steps to bring the emergency situation under control and


protect against loss of life and loss of or damage to property and prevent


harm to natural resources and the general environment.





(c) In the event NPA reasonably determines that any works or installations


erected by LICENSEE or any Petroleum Operations conducted by


LICENSEE endanger or may endanger persons or third party property or


cause pollution or harm the environment to an unacceptable degree, NPA


may require LICENSEE to take remedial measures within a reasonable


period and to repair any damage to the environmen











32


 License Agreement for the Development and Production of Petroleum in the Patos-M&rirtta Oilfield











(d) In the event NPA deems it necessary, it may also require LICENSEE to


discontinue Petroleum Operations in whole or in part until LICENSEE


has taken such remedial measures or has repaired any damage,


(e) In the event that LICENSEE fails to take the remedial measures required


by NPA within the time period established therefore, NPA may carry out


such remedial measures for LICENSEE's account.


(I) LICENSEE shall as soon as reasonably possible after the Effective Date


submit for the approval from the Environmental Authority a report on


the environmental baseline status of the Project Area as at the Effective


Date. With each expansion of the Project Area, LICENSEE shall submit


for the approval from the Environmental Authority a report on the


environmental baseline status of the expanded portion of the Project


Area as at the relevant date, LICENSEE shall not then be liable for any


environmental damages incurred prior to the effective date of the


approved environmental baseline study, and NPA shall indemnify and


hold harmless LICENSEE from any third-party claims with respect


thereto.


9.3. Abandonment.





(a) At the election of NPA, any portion or all of the equipment and


immovable (including the wells) in the Contract Area, which are


possessed by the LICENSEE and are exclusively used to conduct the


Petroleum Operations, will become the properly of NPA on the


termination or relinquishment of the Petroleum Operations with respect


to the Contract Area or cancellation of this License Agreement in


accordance with ARTICLE 24, Section 24.1, The Ministry and NPA will be


held responsible for all obligations arising following the date of their


receipt of such property and will protect, indemnify and hold the


LICENSEE harmless against costs and claims based on such obligations.





(b) Subject to article 5, and notwithstanding Section 9.3(a), all equipment


and facilities (including wells) used exclusively in the Petroleum


Operations will be Abandoned, upon NPA instruction and approval, in


conformity with the generally accepted practices of the international


petroleum industry. However, nothing contained in this License


Agreement will oblige the LICENSEE to Abandon the unused equipment


or facilities in the Petroleum Operations, and NPA and the Ministry will


protect, indemnify and hold the LICENSEE harmless against costs and


claims based on such obligation^/ft ^




















33


 License Agreement for the Development and Production of Petroleum in the Patos-Mariraa Oilfield








(c) The Abandonment Costs will be included in the Petroleum Costs. In


order to enable the LICENSEE to recover the Abandonment Costs, five


years prior to the date set by the LICENSEE to Abandon all the


Petroleum Operations in the Contract Area (or at such earlier times as


may be reasonable to obtain such a recovery), the Abandonment Costs


estimated by the LICENSEE and the time of their recovery in


compliance with the following paragraph of this Section 9.3(c) shall be


included in an Abandonment Plan and shall be submitted to NPA for


approval. NPA will immediately consider the estimation of the


LICENSEE and will not unreasonably delay or withhold its approval. If,


after ninety (90) days of receipt of the LICENSEE'S estimate, NPA has


failed to forward comments to the LICENSEE in writing, the estimated


Abandonment Costs proposed by the LICENSEE will be deemed to have


been approved by NPA.


Upon approval of the estimate by NPA, the estimated Abandonment





Costs will be included in Petroleum Costs and recovered in accordance


with ARTICLE 10 and at the time provided in the estimate. However,


amounts equal to the estimated Abandonment Costs will be deposited in


an interest bearing escrow account in a mutually accepted international


financial institution in London, England, or in such other location as


NPA and LICENSEE may agree. Once the Abandonment Costs are


covered, LICENSEE will withdraw its Abandonment Costs from the


escrow account. Upon the termination of the Abandonment, any surplus


funds in the escrow account after payment of the Abandonment Costs


shall be released to LICENS E E and taxed under article 14.





(d) In the event LICENSEE is comprised of more than one party, such


parlies may provide in the Petroleum Agreement for an allocation


between or among them, by way of indemnity or otherwise, of


LICENSEE’S responsibility or liability for Abandonment Costs or claims


and losses related to abandonment activities, including without limitation


with respect to rehabilitation of the land in the immediate vicinity of an


abandoned well. In the event of such allocation, each of such parties will


be individually and jointly responsible for such obligations of


.LICENSEE only to the extent set forth in the Petroleum Agreement.





(e) Notwithstanding Section 9.3(c), in any other unpredictable case of


voluntary or obligatory relinquishment or cancellation in accordance


with article 5 or ARTICLE 24 of this License Agreement and if there is


not any or enough such funds as predicted under Section 9.31c)


LICENSEE shall afford all the necessary expenditures from its own


sources and be held responsible in order to abandon Petroleum


Operations in accordance with Sections 9.3(a) and














34


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








ARTICLE 10


ALLOCATION OF AVAILABLE PETROLEUM





10.1. Available Petroleum.


All Petroleum produced and saved, after deducting Deemed Production, and not


used in Petroleum Operations or flared or injected (“Available Petroleum”) will


be delivered by LICENSEE at the Delivery Point.


LICENSEE shall have the right to use free of charge Petroleum produced from


the Contract Area to the extent it considers necessary for Petroleum Operations


under this license Agreement.


Subject to Section IQ.SfbVi). all Available Petroleum may be taken by


LICENSEE, and the title shall pass to LICENSEE and allocated as set forth in


the Petroleum Agreement, at the Delivery Point.


10.2. Cost Recovery. Non recoverable Costs


(a) LICENSEE shall recover all Petroleum Costs under this License


Agreement out of one hundred (100) per cent of the Available Petroleum


after deducting the Aibpetrol Share (hereinafter referred to as “Cost


Recovery Petroleum”).


(b) To the extent that, in a Fiscal Year, costs and expenses recoverable


exceed the value of the Cost Recovery Petroleum for such Fiscal Year,


the excess shall be carried forward for recovery in the succeeding Fiscal


Year or Fiscal Years until fully recovered, but will in no case be carried


forward after the termination of this License Agreement.


(c) Costs and expenditures which are incurred as a result of Willful Default


of LICENSEE or Operator shall not be considered as Petroleum Costs


and shall not be recoverable pursuant to this Section 10.2.


(d) The following costs and expenses shall not be recoverable under this


License Agreement:


* cost incurred prior to the Effective Date and related to the





performance of the minimum work commitment, unless approved by


NPA; and


- costs incurred beyond the Delivery Point; and


- donations and contributions, unless approved by NPA; an











35


 License Agreement for the Development and Production of Petroleum in the Patos-Mafinza Oilfield








- fines or penalties duly levied by an agency of the government of


Albania and paid by LICENSEE.


- interest expenses.





10.3. Profit.





(a) The difference, if any, in any Fiscal Year between (i) the Available


Petroleum after deducting the Albpetrol Share, and (ii) the Cost


Recovery Petroleum taken by LICENSEE pursuant to Section 10.2(a),


shall be the “Profit?* and LICENSEE shall be liable to taxation, as


mentioned in ARTICLE 14, Section 14.1.


(b) (i) The portion of Available Petroleum allocated to the Petroleum





Profit Tax in conformity with article 14 shall be delivered to


NPA by LICENSEE at the Delivery Point. However, NPA may


require to LICENSEE, by written notice at least ninety (90) days


prior to the commencement of each Fiscal Year or at any other


time in accordance with ARTICLE 14, Section I4.2fbL the portion


of the Petroleum Profit Tax to be paid in cash during such year. In


such a case the balance of the entitlements not delivered in kind to


NPA shall be paid in cash by LICENSEE at the value as per


Section 10.5.





(ii) All costs, risk and obligations incurred in respect of the portion of


Available Petroleum allocated to the Petroleum Profit Tax and


delivered to NPA will pass to NPA at the Delivery Point and NPA


and the Ministry will protect, indemnify and hold LICENSEE


harmless against all such costs, risk and obligation. Prior to such


delivery, all costs, risk and obligations regarding such portion of


the Available Petroleum will be borne by the LICENSEE.


(iii) The portion of Available Petroleum to be allocated to the





Petroleum Profit Tax shall be estimated for each Calendar Quarter


and delivered in accordance with such estimates. Development


Plans established under this License Agreement, and the


LICENSEE’S proposals thereof, shall include detailed delivery


procedures appropriate to the circumstances, including the


consequences of NPA’s failure to accept delivery.








10.4, Export,





Subject to Section 10.3fb)fih LICENSEE may freely use, sell, export, realize or


otherwise dispose of all Available Petroleum and keep the income accrued


therefrom.














36


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








10.5. Valuation of Petroleum.





(a) Petroleum from the Contract Area will be valued in USD at the


weighted average of the sale prices pursuant to Section 10.5fbl (where


sales are made to a third party) and/or base prices determined pursuant to


Section 10.5(c) (for non-third party sales).








(b) (i) The value of Petroleum for sales to third parties by a Party


constituting LICENSEE will be determined at the price realized


from F.O.B. point of sales by that Party for such Petroleum.





(ii) Sales to third parties referred to in Section 10.5fb)(i) will mean:





(aa) in respect of sales by a Party concerned other than


Albpetrol, sales to buyers who at the time of the sale are


not Affiliates of the Party concerned or persons with whom


the seller is not related in any manner which affects or is


likely to affect the price paid, and the price of sale


converted into money is the only consideration for the said


sale;


(bb) regarding sales by Albpetrol, sales to buyers who at the





time of the sale are not Affiliates of Albpetrol or persons


with whom the seller is not related in any manner which


affects or is likely to affect the price paid, and the price of


sale converted into money is the only consideration for the


said sale.





(c) (i) The base price of Petroleum used or otherwise possessed, besides


sales to third parties, will be determined by NPA and LICENSEE.


NPA and LICENSEE shall mutually select, as soon as possible, at


least one reference Petroleum with similar gravity and quality to


the Petroleum produced under this License Agreement, after


taking account of quality and freight differences. Every petroleum





chosen as a petroleum reference, shall be one that is sold in


considerable amounts in arm’s length transactions, if suitable and


capable of delivery into markets into which Petroleum produced


under this License Agreement is also suitable and capable of


delivery and has a spot assessment published weekly in Platt’s


Oilgram Price Report.





00 The base price for each sale of Petroleum from the Contract Area


shall be determined as the arithmetic average of the market


estimation published in Platt’s Oilgram Price Report for each


petroleum reference for the week prior to and for the week after?





w








37


 License Agreement for the Development and Production of Petroleum In the Patos-Marinza Oilfield








the date on the voucher of quantity of Petroleum sold, plus or


minus the respective quality and freight differentials between the


reference Petroleum and Petroleum produced under this License


Agreement.


(iii) In the event NPA and LICENSEE are unable to establish a base


price in accordance with the procedures of Sections 10.5fcVi) and


10.5(cW). the base price shall be an average of all of the weekly


Spot F.O.B. prices for OPEC crude oil contained in the Feeder


Crude Table published on page 9 of Platt’s Oilgram Price Report


every Monday. If Platt’s Oilgram Price Report is not published in


a week when market estimation is required, f market


estimation of the next succeeding issue will be appliet f\











































































































38


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 11


ASSOCIATED GAS





11.1. Reinjection and Use of Associated Gas.


LICENSEE may freely reinject Associated Gas into the subsurface structure of


the Contract Area or use it for other Petroleum Operations under this License


Agreement.


11.2. Flaring.


The LICENSEE may flare the Associated Gas which is not required for use in


Petroleum Operations under Section 11.2 (i) if, in LICENSEE’S opinion, such


Associated Gas production is not economical and commercially viable or (ii)


when it is in accordance with good Oilfield practice. However, if NPA believes


that such Associated Gas should be utilized, NPA may take this Associated Gas


free of charge and use it if the costs, risk and expenses for the installation of


equipment, as required in order to deliver Associated Gas to NPA, are borne by


NPA, and such delivery causes neither an interruption of Petroleum Operations


nor a negative effect on LICENSEE’S economic benefit







































































39


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








ARTICLE 12


CUSTOMS EXEMPTION








The LICENSEE and its subcontractors engaged in carrying out Petroleum


Operations under this License Agreement shall be permitted to import, and shall


be exempt (with the exception of normal port and warehouse charges of general


application in Albania for actual services rendered to LICENSEE) from Custom


Duties as for the equipments, machineries, materials, etc, to be used in carrying


out Petroleum Operations under this License Agreement.


The same exemption is valid even for the articles of personal use of the foreign


employees of the contractor and its subcontractors, having relations with the


Petroleum Operations.


Nevertheless the LICENSEE and its sub-contractors shall give priority to the


goods and materials produced in Albania if these goods and materials are being


offered under equally favorable conditions regarding the quality, price and


availability, and in the quantities requirec
















































































40


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza OS field








ARTICLE 13


SUB-CONTRACTORS








13.1. The right to employ Sub-Contractors.


LICENSEE may perform the Petroleum Operations itself or by employing sub¬


contractors. LICENSEE shall not be relieved of any obligation under this


License Agreement and Albanian Law by reason of employing sub-contractors.


13.2. Priority to Local Sub-Contractors.


In order to ensure the services required in the Petroleum Operations LICENSEE


can employ sub-contractors, but the LICENSEE shall give priority to services


performed by Albanian sub-contractors if such services are offered under


equally favorable conditions regarding die quality, price and availability they


may be offered by foreign sub-contractor's.


133. Taxes and Duties.


LICENSEE’S foreign contractors will not be responsible for Taxes and Duties to


the extent that they apply, directly or indirectly, to the Petroleum Operations.


LICENSEE'S Albanian sub-contractors will not be discriminated against with


’^ 1 jxtent that they apply, directly or indirectly, to






























































41


 License Agreement for the Development and Production of Petroleum in the Patos-Mahnza Oilfield














ARTICLE 14


TAX ON PROFIT





14.1. Obligation to Pay Tax.


LICENSEE shall be liable to tax on Profit in conformity with Law No.7811,


date 12.04,1994 “On approval of decree No.782, date 22.2.1994 “On the fiscal


system in the hydrocarbons sector (Exploration-Production)”.





14,2. Payment.





(a) Pursuant to article io, Section lQ.3(b)(0 and Section 14.2(b)


LICENSEE shall pay the Petroleum Profit Tax in cash or in kind. NPA


shall annually notify LICENSEE in writing, no later than October 1st of


each Fiscal Year, whether LICENSEE shall pay Albanian tax on profit


for the immediately following Fiscal Year in cash or in kind. Should


NPA fail to notify LICENSEE as required by, and within the term


specified in this Section 14.2. LICENSEE will make the payments for


the relevant period in cash.





(b) LICENSEE shall pay tax on Profit for each Fiscal Year, whether in cash


or in kind, as determined under Section 14.2(a), in accordance with the


procedure set forth in Section 10.3(b)(iii).





(c) When required to make payments in kind, and when LICENSEE is


comprised of more than one party, the aforesaid parties will each pay its


tax on Profit in kind to NPA at the Measurement Point, and NPA will


transfer this payment to the appropriate Albanian authorities. NPA will


provide LICENSEE with official vouchers for the full payment of the tax


on Profit LICENSEE has paid on the basis of the Law mentioned by


Section 14.1.





(d) At the beginning of each Calendar Quarter, the LICENSEE shall prepare


and furnish to NPA a production forecast setting out the total quantity of


Available Petroleum that is estimated can be produced from the Contract


Area in each of the next four (4) Calendar Quarters based on the


production rate designed to maximize the ultimate recovery of Petroleum


(Maximum Efficient Recovery) from the Contract Area in accordance


with practices generally accepted in the international Petroleum industry.


LICENSEE shall give due consideration to any comments or


recommendations made by NPA representatives in respect of such


forecast. LICENSEE shall endeavor to produce each Calendar Quarter


the forecasted quantity^











42


 License Agreement for the Development and Production of Petrol sum n the Patos-Manriza Oilfield











(e) For purposes of calculating the monetary value of the amount of


Petroleum delivered to NPA for payment of CONTRACTORS’ tax on


Profit and the amount of tax on Profit payments in cash, as the case may


be, for any Calendar Quarter, the value of Crude Oil shall be the


weighted average price for said Calendar Quarter determined in


accordance with Article 10.5.


(d) If LICENSEE is comprised of more than one party, the preceding clauses


of this ARTICLE 14 and the clauses of article 10 will apply separately


with respect to each such party and its share of Available Petroleum as


agreed between them and as made known to NPA, and despite anything


contained elsewhere in this License Agreement, according to this License


Agreement each of such parties will not be individually responsible for


LICENSEE'S entire obligations under this ARTICLE i4a but will be


responsible for such obligations only to the extent agreed between such


parties and made known to NPA. NPA shall be entitled to rely upon the


most recent notification of any allocation of such responsibility between


parties comprising LICENSEE, notwithstanding any dispute between


such parties with respect to such allocation. Any dispute between parties


comprising LICENSEE with respect to any such allocation of


responsibility shall not relieve LICENSEE or the parties of which it is


comprised of the obligation to comply with the requirements of this


ARTICLE 14, nor shall the existence of any such dispute defer


*' "-.r-1'’-----’ *'Ration to make any payments required under this










































































43


 License Agreement fix the Devefopment and Production of Petroleum in the Palos-Afarinza Oilfield











ARTICLE 15


BOOKS OF ACCOUNT, ACCOUNTING, AUDIT


15.1. Accounting Procedure.


(a) At the Effective Date Parties mast have determined in good faith and


agreed on an accounting procedure which will be in conformity with


Albanian Law, this License Agreement and the standards of the


international petroleum industry (the “Accounting Procedure”), and in


conformity with Section it will become a constituent part of


(and will be appended to) the Petroleum Agreement,


(b) LICENSEE shall maintain at its business offices in Albania books of


account in accordance with the Accounting Procedure, accounting


practices required under Albanian law and accounting practices


generally used in the international petroleum industry and such other


books and records as may be necessaiy to show the work performed


under this License Agreement, including the amount of all Available


Petroleum. Petroleum Operations in the Contract Area will be calculated


in conformity with the Accounting Procedure. The clauses of this


License Agreement will nevertheless predominate in case of a conflict or


inconsistency with the Accounting Procedure.


(c) For all purposes of this License Agreement, the calculating operations


will be translated into both the U.S. Dollar and the Albanian Leke.


LICENSEE will be obliged to keep in Albania all of the accounting


records which reflect all Petroleum Costs as well as the income arising


from the sale or other disposition of Petroleum, in conformity with the


practice of the international petroleum industry. If necessary,


LICENSEE will keep separate accounting records in conformity with


Albanian Law. Every disagreement oil accounting submitted to


arbitration pursuant to article 25 will be considered in conformity with


the practices of the international petroleum industry.


15.2. Records Provided to NPA.





No less than forty five (45) days following the end of each Six Month Period,


LICENSEE will provide to NPA copies of the accounting records reflecting


Petroleum Costs that LICENSEE incurred in the course of such Six Month


Period. The accounting records provided by LICENSEE will be sufficiently


detailed so as to permit NPA to define the regularity of Petroleum Costs


incurred. In addition to the foregoing, LICENSEE will provide to NPA copies


of records of main Petroleum Costs as they are incurred.


 License Agreement for the Development and Production of Petroleum In the Patos-Marinza Oilfield











15.3, NPA Audit Right.


At the sole expense and cost of NPA, NPA shall have the right to inspect and


audit the LICENSEE’S books of account and accounting records with regard to


the Petroleum Operations, but no more than once in a Fiscal Year, except as


otherwise agreed with Operator. Such audit right will cease three (3) years after


closure of such Fiscal Year. Any exception to the LICENSEE'S accounting


records shall be communicated to LICENSEE in written form within three (3)


years from the date on which LICENSEE hands over his accounting records for


such Fiscal Year, otherwise such accounting records shall be deemed to be


correct and, thereafter, may not be subject to objection.


15.4. Declaration of Income and Losses.


LICENSEE will provide NPA with a declaration on income and losses in a


Fiscal Year no later than ninety (90) days following the end of such Fiscal Year


in order to reveal its net Profit or loss with respect to Petroleum Operations for













































































45


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








ARTICLE 16


RECORDS, REPORTS, INSPECTION AND CONFIDENTIALITY


16.1. Records and Reports.


(a) LICENSEE will keep in Albania accurate books and records in order to


reflect Petroleum Operations in a way and in conformity with the


practice of the international petroleum industry.


(b) LICENSEE shall record data on the quantities of Petroleum, water and


sand produced every month from the Contract Area. Such data will be


sent to NPA, both in hard copy and electronic format, no later than thirty


(30) days after the end of the month concerned. Daily and weekly


statistics and reports on the production and extraction from the Contract


Area shall be available at any reasonable time for examination by NPA.


(d) LICENSEE will provide NPA with, data and information on Petroleum


Operations in a way that is in conformity with the practice of the


international petroleum industry, and any other data and information as


reasonably requested by NPA.


16.2. Samples.


LICENSEE win reserve and retain every sample and sludge obtained from the


drilling of a well in the manner, place and time determined by NPA with special


regulations. All samples obtained by LICENSEE for its own purposes will be


considered subject to inspection by NPA at any time that NPA requests, within


the official working time.


16.3. Sub-contractors.


LICENSEE will inform NPA of the name and address of eveiy sub-contractor


and the identity of its authorized representative, and will provide NPA with a


copy of the contract within thirty (30) days after this sub-contractor has been


employ©! by LICENSEE. In its reports on the basis of this Article 16


LICENSEE will include reports on the work of all sub-contractors. In


conformity with Section 16.7 below, NPA will keep die confidentiality of all


contracts and information related to them, which the LICENSEE will provide


according to this Section 16.3.


16.4. Export of Data.


~ , • ’ -ai data can be exported only with the prior














46


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








16.5. Access lo the Contract Area.


LICENSEE will enable NPA to be fully present in the Contract Area at any


time with the right to observe the Petroleum Operations under way, and to


inspect all the assets, records and data to be retained by the LICENSEE. The


representatives and the employees of NPA should abide by the regulations on


the LICENSEE'S safety standards when visiting the Petroleum Operations, and


they will reasonably schedule such visits with LICENSEE so as not to hinder or


interfere with the Petroleum Operations. LICENSEE will place at the disposal


of such representatives of NPA all the equipment, facilities, computers and


instruments which are already installed and are necessary in order to accomplish


their task of inspection and technical, economic and financial control.


16.6. Copy of the Data.


LICENSEE will provide NPA with a copy, both in hard and electronic format,


of all the data (including, but not limited to, the geological and geophysical


reports, seismic recording tapes, record books and documents of wells, reports


of development and production, any other and all information and interpretation


of such data and all the other information or other work products belonging to


LICENSEE or in possession of the LICENSEE’S Affiliates). LICENSEE will


provide NPA with extra copies of the above data and information when


requested by NPA at the latter's expenses.


16.7. Confidentiality,


The terms and conditions in this License Agreement are strictly confidential.


During the term of this License Agreement and for five (5) years thereafter, the


LICENSEE will never and in no circumstance render public the terms and


conditions of this License Agreement or any data or information obtained in


compliance with this License Agreement to a third party without the prior


written approval of the NPA, which approval will not be unreasonably


withheld. The above will not be applied:


(a) to the extent that a Party that constitutes the LICENSEE is required by


the laws, rules and regulations of a government or a government


department or agency or stock market which has jurisdiction over this


Party or its Affiliates, to disclose this information or data;


(b) to disclose to an Affiliate of a Party that constitutes the LICENSEE,


provided that such Affiliate shall agree that tf ’ es of this Section


16.7 are binding before such disclosure is made

















47


 License Agreement for the (Development and Production of Petroleum in the Patos-Marinza Oiifiek!





(c) in case of a Party that constitutes the LICENSEE, concerning disclosure


to a financial institution, bank, audit, auditing company, legal adviser,


consultant or sub-contractor in the ordinary course of business of the


Patties, including financing purposes, as long as the said financial


institution, bank, audit, auditing company, legal adviser, consultant or


sub-contractor submits, in writing, in a similar way, to maintain such


information and data as confidential;





(d) to a bona fide prospective assignee of LICENSEE, on the condition that


the prospective assignee similarly undertakes in writing to keep


confidential the information and data disclosed;


(e) for purposes of enforcement of any provision of this License Agreement;





or





(f) in the case of NPA, to disclosure of the data related only to parts of the


Contract Area which the LICENSEE has relinquished before such


disclosure.


A Party may require that any damage resulting from the violation of this


Section 16.7 be determined by arbitration,


16.8. Inspection of Measuring Instruments.


During the Petroleum Operations, authorised representatives of NPA will be


entitled to inspect the devices, machinery and instruments used for


measurement of the Petroleum. This inspection will be perfoimcd in a


reasonable way so as not to hinder the safety and efficiency of Petroleum


Operations. LICENSEE will offer the authorized representatives of NPA


reasonable assistance for the purpose of conducting this inspection. These


representatives should abide by the LICENSEE'S safety rules and standards


when visiting the Petroleum Operations, and will reasonably schedule such


visits with LICENSEE so as not to hinder the operations. LICENSEE will offer


such representatives all privileges and facilities, within reason, accorded to its


own employees in the field and will provide them, free of charge, the use of


reasonable office space and of adequately furnished housing while they are in


the field for the purpose of facilitating the objectives of this Section 16.8.


16.9. Title to Data.


With the termination of this License Agreement, LICENSEE will hand over to


NPA all original data. All such original data {including but not limited to


seismic, geophysics, geologic, gravimetric, magnetometric, logging, drilling,


production, construction, design, etc.) will be the property of the Albanian














48


 License Agreement for the Development and Production of Petroleum in the Patos-Marinze Oilfield














All intangible property possession of NPA shall be provided to


LICENSEE free of charge.


































































































































































































49


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








ARTICLE 17


TITLE TO AND SALE OF ASSETS


17.1 Reporting of Asset Acquisition.


The accounting book value of the assets acquired or created during each Fiscal


Year shall be communicated by LICENSEE to NPA within ninety (90) days


after the end of such year,


17.2. Title to Assets.


Title to assets in possession of LICENSEE in connection with the Petroleum


Operations shall, by virtue of this License Agreement, be transferred to NPA at


the time the costs of such fixed and movable assets have been fully recovered as


Petroleum Costs in accordance with ARTICLE 10, Section 10.2, or at the time of


termination or relinquishment of Petroleum Operations in accordance with


ARTICLE 9, Section 9.3(a). whichever first occurs, all such assets being in good


working order, normal wear and tear excepted, in any event, LICENSEE retains


the right to full and free use of the aforementioned assets during the term of this


License Agreement, including those installed before the Effective Date.


Notwithstanding the preceding paragraph, it is expressly agreed that any assets


belonging to a third party or rented by LICENSEE for the purpose of Petroleum


Operations, and any assets owned by LICENSEE'S subcontractors or their


Affiliates, will not become the property of NPA.


17.3. Sale of Assets .


Any movable asset may be sold to a third party with the prior approval of NPA,


which approval shall not be unreasonably withheld. The proceeds from the sale


of any asset shall be used by LICENSEE as a recovery of Petroleum Costs.


Income to LICENSEE resulting from the use by third parties of assets which are


charged as Petroleum Costs which become the property of NPA shall be


credited to Petroleum Costs during the term of this License Agreement.



































50


 License Agreement for the Development end Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 18


FINANCIAL RIGHTS


18.1. Payment and Bank Accounts.


LICENSEE will supply all the funds necessary for the Petroleum Operations in


Albania under this License Agreement, in freely convertible currency from


abroad or as generated from Petroleum Operations. LICENSEE shall have the


right to buy local currency whenever required at the then best rate available


from the National Bank or any other lawful bank for any purehaser of local


currency m Albania. LICENSEE shall have the right to make payments directly


abroad in foreign currencies for goods and services obtained abroad for


Petroleum Operations under this License Agreement and to charge such


payments in accordance with the provisions of this License Agreement without


having first to transfer the funds for such payments to Albania. LICENSEE


shall have the right to open in Albania bank accounts in freely convertible


currency for LICENSEE’S use in making payments under this License


Agreement.





18.2, Buying of Foreign Currency.


For the purposes of the ARTICLE 15 LICENSEE shall be entitled to convert,


through lawful banks, local currency (Leke) and any other convertible currency


into USD at the then best rate available from the National Bank or any other


lawful bank, and to freely remit such funds abroad. If such currency is not


available, LICENSEE shall have the right to take the equivalent amount of


Petroleum at the value as determined pursuant to ARTICLE 10. LICENSEE’S right


to convert local currency under this Section 18.2 is limited to currency


conversions related to LICENSEE’S activities under this License Agreement.


18.3. Payment of Contractors.


LICENSEE shall pay local contractors and local suppliers of materials,


equipment, machinery, and consumables in Leke and in compliance with


Albanian regulations. LICENSEE shall have the right to pay foreign experts


and the staff it employs for the Petroleum Operations in USD or other foreign


currencies.





18.4. Retention of Foreign Currency Abroad.





LICENSEE shall have the right to retain and freely transfer abroad all funds


received for and as a result of Petroleum Operations, inclining the proceeds


from the sale of Petroleum produced in the Contract Area.











51


 License Agreement for the Development and Production of Petroleum in the Patos-Mahnza Oilfield











18.5. Payments by NPA.








NPA, or its designated purchaser in Albania, shall pay LICENSEE abroad in


LSD for any portion of the Available Petroleum purchased from LICENSEE


for local consumption, at the prices as calculated pursuant to article io.



























































































































































52


 License Agreement for the Development end Production of Petroleum in the Patos-Marinza Oilfield














ARTICLE 19


EMPLOYMENT AND TRAINING OF PERSONNEL








LICENSEE will select its management and employees according to its discretion, and


shall determine the conditions of employment and the number of employees to be used


for Petroleum Operations. However LICENSEE and its sub-contractors will, to the


extent available, employ qualified Albanians to carry out the Petroleum Operations.


Expatriate employees of LICENSEE and its sub-contractors will not be subject to


Taxes and Duties on any income or profit realized by them, directly or indirectly, from


their work in the Petroleum Operations, nor on the import or re-export of their


persona] or household belongings, which items may be freely imported and


subsequently exported. \


































































































53


 License Agreement for the Development and Production of Petroleum in the Palos-Marinza Oilfield








ARTICLE 20


OFFICE AND SERVICE OF NOTICE


20.L Representatives.


(a) LICENSEE shall notify the NPA of its address and of the name of its


General Manager and alternative representative, all of whom should be


technically and administratively competent individuals. The General


Manager, or in his absence, the alternative representative, shall be


entrusted with sufficient powers to represent and bind LICENSEE in all


dealings with NPA or third parties in Albania, to receive all legal notices


to LICENSEE, and to comply with all lawful written directions given by


NPA or its representative under the terms of this License Agreement or


under any existing or future laws or regulations not in conflict with this


License Agreement.


(b) Any change in the address of LICENSEE'S office or its authorized


representatives shall be notified to NPA at least ten (10) days prior to the


effective date of the change.





20,2. Notices.





Any notice or other communication required or permitted to be given pursuant


to this License Agreement shall be in writing and may be given by delivering


the same by hand, at, or by sending the same by telex or facsimile to the relevant


address, telex number o:r facsimile number set out below or such other address,


telex number or facsimile number as any Party may, from time to time, notify


for each of the other Parties in accordance with this Section 20.2. Any such


notice, given as aforesaid, shall be deemed to have been given or received at the


time of delivery if delivered by hand, at the time at which “answerback” is


received if sent by telex, or at the time of confirmation if sent by facsimile.


Copy of any notice sent by facsimile shall also be sent by post as soon as


practicable.


AKH: (Name)


Drejtori Ekzekutiv


(Address) AKH, Faknltetl Gjeologji-Miniera, TIRANE


Tel & Fax: +355 4 375235; +355 4 375 234


LICENSEE: (Name) Drejtorit Ekzekutiv





(Address) Aibpetrol, Lagja 29 Marsi, Patos, FIER *


Tel & P ax: + 355 381 3662; +355 34 220 52 Att


(EC














54


 License Agreementfor the Development and Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 21


NATIONAL EMERGENCY OR OTHER TAKINGS








21X National Emergency.


(a) In case of national emergency due to war or imminent expectation of war


or internal causes, the Albanian Government may requisition all or a part


of the Available Petroleum from the Contract Area and require


LICENSEE to increase such production to the utmost possible level


which will not result in damage to a Reservoir or otherwise reduce


Petroleum recovery from the Contract Area.


(b) In all cases, such requisition shall not be effected except after inviting


LICENSEE, by registered letter, return receipt requested, to express its


views with respect to such requisition.


(c) The requisition of production shall be effected by Government Decree.


Any requisition of a Field itself or any related facilities shall be effected


in the way and form stipulated by laws in force.


(d) in the event of any requisition as provided above or in the event of any


taking of LICENSEE’S Petroleum and/or the related facilities, NPA shall


indemnify LICENSEE in full for the period during which such taking is


maintained, including:


(i) all damages which result from such requisition or taking; and


(ii) full payment each month for ail Petroleum extracted and saved at


the amounts and prices as calculated pursuant to ARTICLE 10,


Section 10.5, which Petroleum would otherwise be allocated to


LICENSEE.


21.2. Payment.


Payment pursuant to this Article 21 shall be made to LICENSEE in USD


remittable abroad.





21.3. Dispute Resolution.





The Ministry confirms that, through the execution of this License Agreement by


NPA on its behalf, the Albanian Government agrees that any dispute as to the


amount of payments or other remedial measures owing from NPA to














55


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





LICENSEE due to any requisition or other taking as discussed in this ARTICLE


23 shall be resolved in accordance with ARTICLE 25.


21.4. No Prejudice of Other Rights.


The above clauses are without any prejudice as to each right or other indemnity


that any Person constituting LICENSEE m have under this License


Agreement, Albanian Law or in ^national law. N

















































































































56


 License Agreement tor me Development and Production of Petroleum in the Patos-Marinza Oilfield





ARTICLE 22


ASSIGNMENT AND OBLIGATIONS





22.1. Assignment


If, as a result of the application of the following paragraphs or some other form,


Albpetrol will have less than forty (40) per cent of the interests under this


License Agreement, then the clauses of Decree No. 782 on tax on income, will


be affected.


(a) LICENSEE will not transfer to any Person, hilly or partly, any of its


rights, privileges, duties and obligations under this License Agreement


without the prior written approval by NPA, which approval shall not be


unreasonably withheld or delayed. Any Person to whom such rights,


privileges, duties and obligations are transferred shall be competent


technically and financially, and such transfer shall otherwise comply


with the requirements of Section 22.2.


(b) Notwithstanding Section 22.1(a). but subject to the requirements of


Section 22.2. LICENSEE will be free to transfer its rights, privileges,


duties and obligations under this License Agreement to an Affiliate


following the expiration of sixty (60) days’ prior written notification to


NPA of such transfer, provided that LICENSEE provides a written


guarantee of the full performance by such Affiliate of all duties and


obligations under this License Agreement which are to be transferred. At


any time subsequent to such transfer, the former LICENSEE which has


made the transfer may request that NPA no longer require the foregoing


guarantee, and such request shall not be unreasonably refused by NPA


upon a showing that the Affiliate to which the transfer has been made


independently possesses the technical and financial competence to fully


perform the duties and obligations which have been transferred to it. Any


transfer by LICENSEE to an Affiliate without the foregoing written


guarantee from LICENSEE shall be subject to the requirements of


Section 22.1(a).


22.2. Assignment Conditions.


With respect to the transfer of .LICENSEE’S rights, privileges, duties and


obligations under this License Agreement, the following conditions shall be


met:





(a) LICENSEE’S duties and obligations shall be properly fulfilled until the


date when the request for approval is made, or LICENSEE shall


guarantee, jointly or independently, the accomplishment of any


obligation of which has not been fulfilled as of such date;


 License Agreement for the Development and Production of Petroleum in the Patos-Marmza Oilfield











(b) the Person to whom the transfer is to be made shall provide to NPA


reasonable evidence of its financial and/or technical competence; and


(c) the instrument of transfer should include provisions which clearly state


that the LICENSEE is held responsible for all the commitments


contained in this License Agreement and every written modification or


amendment that may be effected until the date of transfer, and should


further declare that LICENSEE does not have any claims for change of


the terms of this License Agreement as a condition for the transfer. The


instrument of transfer shall be subject to review and approval by NPA,


and NPA shall not unreasonably withhold or delay such approval.


22.3. Taxes and Duties.


Any applicable Taxes and Duties will be payable by LICENSEE or by the


Person to whom the transfer is made in connection with each transfer effected


under this Article 22.


22.4. Encumbrances.


LICENSEE may encumber its rights under this License Agreement for the


purpose of increasing of the financing of the Petroleum Operations, with the


prior written consent by die NPA (which consent shall not be unreasonably


withheld or delayed).


22.5. Separate Application.


The provisions of this Article 22 will be applied separately in connection with


each Party that comprises the LICENSEE.


22.6. Multiple Parties.


In the event that, subsequent to any transfer made pursuant to this Article 22,


die LICENSEE is comprised of more than one party, each such party shall be


jointly and severally responsible for LICENSEE’S obligations in accordance


with Section 3.3(cV


22.7. Cease of Rights and Interest.


Upon transfer of all of its rights, privileges, duties and obligations to another


Person in accordance with this Article 22. the LICENSEE making the transfer


... ^gjjjg under or interest in this License Agreement as a

















58


 Uc&rtse Agreement for tho Development and Production of Petroleum "m the Patos-Marinza Oilfield








ARTICLE 23


FORCE MAJEURE





23.1. Acts of Force Majeure.


The failure of any Party to perform any obligation under this License


Agreement, if occasioned by act of God or the public enemy, fire, explosion,


perils of the sea, Hood, drought, war, riot, hostilities not amounting to war,


sabotage, accident, embargo, government priority, requisition or allocation, or


other action of any government authority, or by interruption of or delay in


transportation, shortage or failure of supply of materials or equipment from


normal sources, labor strikes, or by compliance with any order or request of any


governmental authority or any officer, department, agency, or committee


thereof, or any other circumstance of like character beyond the reasonable


control of a Party (herein, “Force Majeure”), shall not subject such Party to any


liability to the other Party, In such event, the Party subject to die event of Force


Majeure shall use its reasonable efforts to minimize the effects of such event


and to overcome such event as soon as practicable.


23.2. Force Majeure Notice, Suspension of Obligations.


Except as otherwise provided herein, in the event that by Force Majeure a Party


is rendered unable to carry out its obligations under this License Agreement, the


Party shall give notice and all particulars of such event of Force Majeure in


writing to the other Party within ten (10) days after the occurrence of the cause


relied upon, and the obligations of each Party, so far as the same are affected by


such Force Majeure, shall be suspended during the continuance of such e vent of


Force Majeure.


23.3. Termination of Agreement in the Event of Extended Force Majeure.


In the event that, for an uninterrupted period of two (2) years following, and as


a result of, an event of Force Majeure, any Party is unable to perform its


obligations under this License Agreement, as a result of such event of Force


Majeure and not of a breach of its obligations hereunder that is unaffected by


such event of Force Majeure, this License Agreement may be terminated on the


second anniversary of such event of Force Majeure by either LICENSEE or























59


 License Agreement for the Development and Production of Petroleum in the Palos-Marinza Oilfield











ARTICLE 24


BREACH OF LICENSE AGREEMENT


24. L NPA Right to Cancel.


NPA will have the right to cancel this License Agreement in the event of the


following;


(a) if LICENSEE knowingly submitted any false statements to NPA where


such statements were a material consideration for the conclusion and/or


execution of this License Agreement;


(b) if LICENSEE transfers any right, privilege, duty or obligation to a


Person contraiy to the provisions of Article 22 hereof;


(c) if LICENSEE is adjudicated bankrupt by a court of competent


jurisdiction;


(d) if LICENSEE does not comply with any final arbitrage decision;


(e) if LICENSEE intentionally extracts any mineral other than Petroleum or


sulfur, in whatever form, produced in association with Natural Gas, not


authorized by this License Agreement or without the authority of NPA


except such extractions as may be unavoidable using accepted petroleum


industry practices, and which shall be notified to NPA or its


representatives as soon as possible;


(f) if LICENSEE commits and material breach of this License Agreement;


and


(g) if LICENSEE repeatedly employs illegal means of applying pressure


upon NPA in order to hinder it from the regular performance of its


duties.


(h) if LICENSEE unreasonably and repeatedly makes an intentional and


conscious violation of Albanian Law, NPA instruction or this License


Agreement provisions.


If tiiere is more than one entity constituting LICENSEE, and the action leading


to termination as described above occurs or has been committed by only one


such entity, this License Agreement shall not be terminated if the other entities


or entity take appropriate action to remedy the situation with regard to this


License Agreement. /V,1\











60


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








24.2. Removal of Equipment





In the event NPA exercises its right to cancel this License Agreement under the


provisions of this article 24 because of a breach on the part of LICENSEE as


mentioned in Section 24.1 above, such cancellation shall take place without


prejudice to any rights which NPA may have acquired from LICENSEE in


accordance with the provisions of this License Agreement; and in the event of


such cancellation, LICENSEE shall be allowed, subject to ARTICLE 9, Sections


9.2 and 9.3 and article 17, Section 17.2. to remove its equipment from the


Contract Area after settling all claims d.ue to NPA.


24.3. Notification to Repair.








If NPA deems that one of the aforesaid clauses (other than article 23) exists to


cancel this License Agreement, NPA shall give LICENSEE written notice


personally served to LICENSEE informing LICENSEE that LICENSEE is in


breach of one or more of the provisions of this License Agreement, and


specifying the precise cause and nature of the breach. LICENSEE shall attempt


to repair such breach within ninety (90) days. If such breach is not cured within


the ninety (90) days, this License Agreement shall be terminated in conformity


with terms and provisions herein.


W







































































61


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 25


DISPUTES AND ARBITRATION





25.1. Negotiation.


Parties establish their relations in connection with this License Agreement on


the principles of good will and good faith. All disputes arising out of or relating


to this License Agreement shall be settled, if possibly, by friendly negotiation of


the Parties. If settlement cannot be amicably reached within a period of thirty


(30) days, or such other period as may be mutually agreed upon by the Parties,


the dispute shall be decided by arbitration pursuant to Section 25.2 or Section


25.3. as applicable. With respect to a dispute involving a technical matter, the


Parties may, pursuant to Section 25.4. mutually agree upon a sole technical


expert to assist the Parties resolve such dispute.


25.2. Arbitration Between NPA and Albpetrol Alone.


All disputes arising in connection with this License Agreement between NPA and


Albpetrol alone shall be finally settled by binding arbitration taking place in Tirana in


accordance with Albanian legislation. Notwithstanding the foregoing, in the event


LICENSEE consists of Albpetrol and a foreign partner and such foreign partner gives


notice in writing to NPA and to Albpetrol that, in its reasonable judgment, a dispute


between Albpetrol and NPA affects such foreign partner’s interests under this License


Agreement, any such dispute, whether having just arisen or already the subject of pending


arbitration under this Section 25.2. shall be resolved in accordance with Section 25.3. In


such event, at the request of either Albpetrol or NPA the arbitration under Section 25.3


shall include a determination of whether the foreign partner was reasonable in its assertion


that the dispute affected its interests. If it is determined that such assertion was not


reasonable, the arbitrage award shall include a determination of die costs of the arbitration


which are in excess of those which would have been incurred by Albpetrol and NPA had


such arbitration taken place or been concluded under Section 25.2. and the foreign partner


shall be responsi ble for the payment of all such excess costs.


25.3. Arbitration Between NPA, Albpetrol and Foreign Partncr(s).


(a) AH disputes arising in connection with this License Agreement between


NPA, Albpetrol and foreign partner(s) shall be finally settled under the


Rules of Conciliation and Arbitration of the International Chamber of


Commerce (“ICC”). Said arbitration shall be carried out by, in the case


of mere technical matters, one (1) arbitrator and, in the case of all other


disputes, three (3) arbitrators, appointed by the ICC Court of Arbitration


in accordance with said Rules and their interpretation by said Court. In


that regard, the Parties hereto waive the right each to nominate











62


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





arbitrator and as of now accept the appointment made by the ICC Court


as it deems best. Consistent with the Parties desire to have an expedited


arbitration proceeding the appointment of the arbitrator(s) shall occur


within ten (10) days from the date in which a Party hereof delivers to the


other a written notice requesting that the dispute be submitted to


arbitration, which written notice shall clearly state the issue in dispute,


and any other relevant fact. Notwithstanding the foregoing, no arbitrator


shall be Albanian or a national of the country of LICENSEE, nor shall


any arbitrator be related to, employed by or have (or had) a substantial or


ongoing business relationship with any Party hereto or any of their


respective Affiliates. Shortened time limits for the procedural aspects of


the proceeding, including but not limited to discovery and submission of


prehearing briefs, shall be imposed, in consultation with the Parties, by


the arbitrator(s).





0>) The arbitration proceeding shall take place in Zurich, Switzerland and


shall be conducted in the English language. All documents submitted


(c) therein and the award of the arbitral panel shall also be in English.


Clauses of tins License Agreement related to arbitration will continue to


be in force despite the termination of this License Agreement.





(d) The Ministry (for itself and the Albanian Government) and NPA


irrevocably waive any right of immunity or any right to object to this


arbitration agreement, any arbitration award, any judgment regarding the


en forcement of an arbitration award of the execution of any arbitration


(e) award against or in respect of any of its property whatsoever it now has


or may acquire in the future in any jurisdiction.





The Parly that loses an arbitration decision shall pay all expenses


incurred in connection with such arbitration, including, but not limited


to, the fees and expenses of the arbitrators). All such costs and


(f) expenditures shall not be considered as Petroleum. Costs and shall not be


recoverable under this License Agreement.


Each Party hereto agrees that any arbitral award rendered against it


pursuant to this Section 25.3 may be enforced against its assets wherever


they may be found and that a judgment upon the arbitral award may be


entered in any court having jurisdiction thereof.


























63


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oifietd











25.4 Expert


(a) Any matter in dispute between NPA and LICENSEE which in terms of


this License Agreement is to be referred to an Expert, shall be referred


for determination by a sole expert.





(b) The Expert shall be given terms of reference which shall be mutually


agreed between the Parties, The Expert shall be appointed by agreement


between NPA and LICENSEE. If NPA and LICENSEE fail to appoint


the expert within thirty (30) days after agreement on the terms of


reference has been reached, either Party may apply to the International


Chamber of Commerce Centre for Technical Expertise, Paris, France, for


appointment of an expert in accordance with its Rules, The Expert shall


make his determination in accordance with the provisions contained


herein based on the best evidence available to him. Representatives of


NPA and LICENSEE shall have the right to consult with the Expert and


furnish him with data and information, provided the Expert may impose


reasonable limitations on tills right. Any such data and information has


to be submitted to the other Party to the dispute at the same time. The


Expert shall be free to evaluate the extent to which any data, information


or other evidence is substantiated or pertinent. The Expert's fees and


expenses, and the costs associated with an appointment, if any, made by


the International Chamber of Commerce Centre for Technical Expertise,


shall be borne equally by NPA and LICENSEE. The Expert's


determination shall be final and binding upon the Parties, subject to


manifest error in his determination.






























































64


 License Agreement for the Development end Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 26


GOVERNING LAW





26.1. Governing Law.


(a) Subject to Section 26. Ub). the activities of LICENSEE in performing the


Petroleum Operations shall be governed by and conducted in accordance


with the requirements of the Albanian Law.


(b) All questions with respect to the interpretation or enforcement of, or the


rights and obligations of the Parties under, this License Agreement and


which are the subject of arbitration in accordance with ARTICLE 25:





(i) shall be governed by the laws of the Republic of Albania in the


case of a dispute subject to resolution under ARTICLE 25, Section


25.2: or


(ii) shall be governed by the laws of England in the case of a dispute


subject to resolution under article 25, Section 25.3.







































































65


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield











ARTICLE 27


APPROVAL OF THE LICENSE AGREEMENT





27.1. Approval.


This License Agreement shall be binding upon each of the Parties hereto from





the date when the Council of Ministers issues a decision approving the


Petroleum Agreement, reached on the basis of this License Agreement, between


LICENSEE and a foreign company selected in accordance with the Petroleum.


Law. The date the decision approving the Petroleum Agreement carries shall be


the “Effective Date”. ^





I: U































































































66


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield





ARTICLE 28


MISCELLANEOUS





28.1. Further Assurances.


Each of the Parties agrees to do and perform all such acts* matters and things as


are appropriate or as may be necessary to give full effect to the provisions and


intention of this License Agreement.


28.2. Non-Waiver.


None of the provisions of this License Agreement shall be considered as waived


by any Party unless such waiver is given in writing by such Party. No such


waiver shall be a waiver of any past or future default or breach of any of the


provisions of this License Agreement, unless expressly set forth in such waiver.


28.3. Severability.


If any of the provisions of this License Agreement is found to be void or


unenforceable, such provision shall be deemed to be deleted from this License


Agreement and the remaining provisions of this License Agreement shall


continue in full force and effect provided that the Parties shall, in such event,


then meet to negotiate in good faith and seek to agree a mutually satisfactory


valid and enforceable provision to be substituted for the provision so found to


be void or unenforceable.


28.4. Complete Agreement; Amendment.


This License Agreement, including the Annexes hereto, constitutes the entire


agreement among the Parties and supersedes all agreements, representations,


warranties, statements, promises and understandings, whether oral or written,


with respect to, but only to the extent of, the subject matter hereof, and no Paity


hereto shall be bound by nor charged with any oral or written agreements,


representations, warranties, statements, promises or understandings not


specifically set forth in this License Agreement, including the Annexes hereto.


This License Agreement may not be amended, altered or modified except by a


writing signed by each Party.


28.5. No Agency.


Except as expressly provided herein, no provision of this License Agreement


shall be construed as authorizing one Party to act as an agent of another Party


and no Party shall represent, through words or conduct, that it is an agent of any


other Party. Each of the Parties is, in all of their capability 1 der, acting


under this License Agreement as an independent contractor.











<57


 License Agreement for the Development and Production of Petroleum in the Patos-Marlnza Oilfield








28.6. Prevailing Language.


(a) This License Agreement is originally executed in the Albanian language


and, subject to Section 28.6(b), such Albanian language version shall


govern in all matters relating to this License Agreement.


(b) In the event that, pursuant to an assignment made in accordance with


ARTICLE 22, LICENSEE will be comprised of Albpetrol and a foreign


partner, an English language translation of this License Agreement shall


be appended to the instrument of transfer. By execution of such


instrument of transfer, the parties to such instrument of transfer


(including NPA acting in accordance with its authority under this


License Agreement to approve such transfer) shall agree that such


English language version is an accurate translation of this Albanian


language version, and that such English language version shall prevail


over the Albanian language version in all matters related to this License


Agreement, including any amendments, notices and communications, for


so long as LICENSEE includes such foreign partner. In such event, all


information, notices and communications to be given or delivered


hereunder shall be in both the Albanian and the English languages, or


accompanied by an English translation.


28.7. Counterparts.


This License Agreement has been executed in three (3) counterparts, each of


which is an original and all of which shall constitute one and the same


agreement.


28.8. Insurance.


LICENSEE shall maintain a reasonable level of insurance coverage relative to


the risks inherent in Petroleum Operations under this License Agreement, if


such insurance is required by NPA in accordance with Albanian Law. Such


insurance may be acquired by LICENSEE from Albanian or international


insurance institutes. Once LICENSEE enters into such insurance contracts to


cover all or any portion of the aforementioned insurance requirements, if any,


LICENSEE shall provide NPA with sufficient information describing the


insurer's financial capabilities to provide the relevant coverage.


























68


 License Agreement for the Development and Production of Petroleum in the Patos-Marinza Oilfield








IN WITNESS WHEREOF, this License Agreement has been executed by the duly


authorized representatives of the Parties on the dale first written at the beginning of


this License Agreement.








THE MINISTRY OF PUBLIC ECONOMY AND PRIVATIZATION,


as represented by


THE NATIONAL PETROLEUM AGENCY











By; 




Name; .....__





Title: _ ________








Sh. A. “ALBPETROL”






















































































V/


69


 ANNEX A








CONTRACT AREA


( down to 2500 m )























41*00'





41*00'





























40*50' 40*50'





























40*40'


40*40'























COORDINATES





40*30' 40° 50' 00.000" N 19° 35’ 20.018"


40fl 50' 00.012" N 19° 37T 00.012"


40° 61' 37.323' 19° 40' 07.259"


40° 51' 37.91V 19° 40‘ 58.483”


40° 41 ’ 07.559' 19° 41’ 10.916"


19.6G7r 19° 42’ 15.720”


47.299' 19° 42' 17.507"


53.410' 19° 37' 00.919"


41.992' 19‘ 37’ oo.oor


42.014" N 19° 35' 20.015"


 License Agreement for the Development and Production of PeJroieum in thePatos-Marinza Oilfield











ANNEX B





EVALUATION PERIOD MINIMUM WORK PROGRAM


1. Evaluation Wells.


LICENSEE will:


(i) select eight wells from the Contract Area for reactivation or re¬


completion in the Driza reservoir;


(ii) select two wells from the Contract Area for reactivation or re-compJction


in the Marinza reservoir;


(iii.) select two wells from the Contract Area for reactivation or re-completion


in the Southern Area Patos Marinza (Driza); and


(jv) maintain the following existing 28 producing wells and disposal well: all


Pad D and Pad H wells and pre-existing wells 989, 1317, 2250, 2471,


AAP-1,976, 3013, 876 and disposal well 1842.


The above wells are the “Evaluation Weils”. The square area 142.25 m North,


East, South and West centred on each Evaluation Well shall comprise the


“Evaluation. Area”.


2. Evaluation Program.


The following program of work (the “Evaluation Program”) shall be conducted


on the Evaluation Wells and the Evaluation Area during the Evaluation Period;


(i) conduct reactivation or re-completion activity according to a program of


LICENSEES choosing;


(ii) maintain existing operational and HSE standards in the Contract Area;


(iii) evaluate performance of the Evaluation Wells, from an engineering and


economic basis;


(iv) evaluate requirements for additional water disposal capacity and increase


capacity as required;


(v) prepare a production, reserves and reservoir performance re





3. Expenditure Commitment











7!


 license Agreement for the Development and Production of Petroleum in the Patos-Mariftza QllfekJ








LICENSEE commits to expend at least US$ 2,000,000 (two million) in capital


expenditures conducting the Evaluation Program and adding the water disposal


well contemplated in clause 4(iv). If the cost of the capital expenditures for the


Evaluation Program and the water disposal well arc less than USS 2,000,000


(two million) LICENSEE may elect to expand the activities of the Evaluation


Program by selecting additional wells for reactivation or re-completion.


4. Other Activities During Evaluation Period,


LICENSEE shall also conduct the following activities during the Evaluation


Period:


(i) carry out an update of the reserves evaluation of the Contract Area to a


level of detail determined by LICENSEE;


(ii) evaluate existing and future infrastructure for development and


commercialisation of product for internal and export markets;


(iii) review gas conservation and utilisation within the Evaluation Area; and


(iv) increase water disposal capacity in the Evaluation Area by adding an


additional disposal well;


(v) develop truck offloading options at either Ficr or Ballsh refineries for


crude oil sales delivery of production; and





(vi) review and report on Continuous Sand Extract Technology.


IF





















































72