NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here PRODUCTION SHARING
EXPLORATION, DEVELOPMENT AND PRODUCTION
OF PETROLEUM IN ONSHORE ALBANIA
MINISTRY OF ECONOMY, TRADE AND
ENERGY OF ALBANIA
(Acting by and through the National Agency of Natural
DWM Petroleum AG
Tirana, on _ . 3( . 2007
TABLE OF CONTENTS
I DEFINITIONS.............................................................................................. 2
II ANNEXES TO THE CONTRACT.............................................................. 11
III TERM, GRANT OF RIGHT AND PAYMENT OF COSTS....................... 11
IV EXPLORATION PERIOD, WORK PROGRAM AND ESTIMATED
V RELINQUISHMENT................................................................................. 18
VI OPERATIONS AFTER DISCOVERY........................................................ 19
VII RECOVERY OF COSTS AND EXPENSES, PRODUCTION SHARING
AND PROFIT PETROLEUM AND NON-RECOVERABLE COSTS..... 233
VIII GAS............................................................................................................. 30
IX ALBANIAN TAXES.................................................................................. 321
X OFFICE AND SERVICE OF NOTICE.................................................... 343
XI SAVING OF PETROLEUM AND PREVENTION OF LOSS................... 33
XII CUSTOMS EXEMPTIONS........................................................................ 34
XIII BOOKS OF ACCOUNT ACCOUNTING AND PAYMENT...................... 35
XIV RESPONSIBILITY FOR DAMAGES........................................................ 36
XV RECORDS, REPORTS AND INSPECTION............................................. 37
XVI EMPLOYMENT RIGHTS AND TRAINING OF ALBANIAN
XVII LOCAL CONTRACTOR AND LOCALLY MANUFACTURED
XVIII LAWS AND REGULATIONS.................................................................. 410
XIX ASSIGNMENT........................................................................................... 41
XX FORCE MAJEURE......................................... 42
XXI DISPUTES AND ARBITRATION............................................................. 42
XXII PIPELINES AND OTHER FACILITIES................................................. 454
iXXIII TITLE TO ASSETS AND ABANDONMENT.......................................... 454
XXIV TERMINATION........................................................................................ 486
XXV ENVIRONMENTAL PROTECTION....................................................... 498
XXVI ENGLISH AND ALBANIAN TEXT........................................................... 48
XXVII BONUS PAYMENTS.................................................................................. 49
XXVIII GOVERNMENT APPROVAL, THE EFFECTIVE DATE........................ 49
XXIX MISCELLANEOUS.................................................................................... 49
Annex “A” Description of Contract Area............................................................A-l
Annex “B” Map of the Contract Area.................................................................B-l
Annex “C” Accounting Procedure.......................................................................C-l
Annex “D” Procedure for Determining the
BOE of Gas and for Pricing Gas and LPG...................................... D-l
Annex “E” Bank Guarantee................................. E-l
PRODUCTION SHARING CONTRACT
EXPLORATION, DEVELOPMENT AND PRODUCTION OF
PETROLEUM IN ALBANIA ONSHORE
MINISTRY OF ECONOMY, TRADE AND ENERGY OF ALBANIA
(Acting by and through the National Agency of Natural Resources)
DWM Petroleum AG
This Contract signed as of the ?)l day of I y 2007, by the MINISTRY
OF ECONOMY, TRADE AND ENERGY OF ALBANIA acting by and through the
National Agency of Natural Resources, pursuant to the Petroleum law No. 7746
dated 28.07.1993, of the Government of the Republic of Albania (hereinafter
referred to as “AKBN”), represented by_, as one Party, and
DWM Petroleum AG, a company organized and existing under the laws of
Switzerland represented by ti J. .x i .( i>_, as the other Party,
(hereinafter referred to as “CONTRACTOR”).
WHEREAS, all natural resources, including minerals and hydrocarbons in the
Republic of Albania are the property of Albania;
WHEREAS, petroleum operations in the Republic of Albania are generally
governed by the Laws of the Republic of Albania, and if not mentioned elsewhere
in this Contract, mainly by the following laws and regulations:
Law No. 7746 dated 28 July 1993 “Petroleum Law (Exploration and
Production)”, as amended by Law No. 7853 dated 29 July 1994 “For Some
Additions to Law No.7746, Dated 28 July 1993 "Petroleum Law
(Exploration and Production)”; and as further amended by Law No. 8297,
dated 4 March 1998 “For a Change to Law No.7746, Dated 28 July 1993
"Petroleum Law (Exploration and Production)” (collectively the “Petroleum
Law No. 7811 dated 12 April 1994 “On the Approval with Amendments of
the Decree No. 782 dated 22.2.1994 “On the Fiscal System in the
Petroleum Sector (Exploration-Production)”, as amended by Law No. 8345
dated 13 May 1998 “For a Change to Law No.7811, dated 12.04.94 ‘On the
Approval with Amendments of the Decree No. 782 dated 22.02.94 “On the
Fiscal System in the Petroleum Sector (Exploration-Production)”, and
Law No. 7928 “On Value Added Tax”, as amended by: Law No. 8070 dated
15 February 1996; Law No. 8126 dated 09 July 1996; Law No. 8130 dated
22 July 1996; Law No. 8149 dated 11 September 1996; Law No. 8186 dated
23 January 1997; Law No. 8240 dated 16 September 1997; Law No. 8445
dated 21 November 1999; Law No. 8505 dated 07 July 1999; Law No. 8714
dated 15 December 2000; Law No. 8779 dated 26 April 2001; Law No. 8845
dated 11 December 2001; Law No. 8963 dated 24 October 2002; Law No.
9162 dated 18 December 2003; and Law. No. 9332 dated December 6, 2004
(collectively, the “VAT Law”), and
Law No. 8976 dated 12 December 2002 “On Excises”, as amended by the
Law No. 9163 dated 18 December 2003 “On Some Additions and Changes
to Law No. 8976 dated 12.12.02 ‘On Excises’”; Law No. 9041 dated 27
March 2003; and Law No. 9328 dated December 6, 2004 “On Some
Additions and Changes to Law No. 8976 dated 12.12.2002” (collectively,
the “Excise Tax Law”), and
Decision of Council of Ministers No. 547 dated 9 August 2006 “On Setting
Up the National Agency of Natural Resources”; and
WHEREAS, AKBN is authorized by the Government of Albania to carry out all
Petroleum Operations in Albania, including Exploration, Development and
WHEREAS, CONTRACTOR desires to undertake all operations for the
Exploration, Development and Production of Petroleum in and throughout the
Contract Area described in Annexes “A” and “B” of this Contract and to fulfill the
obligations and enjoy the rights provided for in this Contract as a contractor to
AKBN in accordance with the terms and conditions contained in this Contract;
WHEREAS, the Government of the Republic of Albania has authorized AKBN to
enter into this Contract with CONTRACTOR for carrying out all Petroleum
operations described in this Contract.
NOW, THEREFORE, the Parties agree as follows:
1-01 “Accounting Procedure” means the procedure set out as Annex “C” to this
Contract and which forms an integral and indivisible part hereof.
1.02 “Affiliated Company” 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 definition:
1.02.1 A subsidiary company is a company controlled by a Party or an
entity comprising a Party;
1.02.2 A parent company is a company that controls a Party or an
entity comprising a Party;
1.02.3 A sister company is a company that is controlled by the same
company as a Party or an entity comprising a Party.
for which purpose “Control” means that a company owns share capital,
either directly or through other companies, which confers upon it a
majority of the votes at the stockholders' meetings of the company which is
1.03 “Albania” means the Republic of Albania.
1.04 “Appraisal” means those works performed by CONTRACTOR, which in
CONTRACTOR’S opinion are required as a follow-up to a Discovery to
establish if such Discovery is commercial and/or to establish the limits of a
possible Commercial Discovery.
1.05 “Available Petroleum” means the amount of daily production of Petroleum
(less any amount lost, used in operations, flared or re-injected) produced,
saved and metered from the Contract Area at the Metering Point.
Available Petroleum may be available Crude Oil or available Gas, as
1.06 “Average Daily Production” means the average production of Available
Petroleum for each Day during a Calendar Month, calculated by dividing
the total amount of Available Petroleum metered from the Contract Area
at the Metering Point during that Calendar Month, by the number of Days
in that Calendar Month. For the Calendar Month in which the Date of
Initial Commercial Production occurs, said Available Petroleum shall be
divided by the number of Days in that Calendar Month following and
inclusive of the Date of Initial Commercial Production.
1.07 “Barrel” means forty-two (42) United States gallons (equivalent to w
approximately 158.984 liters), liquid measure, corrected to a temperature
of sixty (60) degrees Fahrenheit, with pressure at sea level of 1.01325 bars.
1.08 “BOE” means Barrels of Crude Oil Equivalent.
1.09 “BOPD” means Barrels of Crude Oil per Day.
1.10 BPD” means Barrels per Day and shall include BOPD, as well as BOE.
1.11 “BTU” means one thousand fifty-five and fifty-six one thousandths
1.12 “Budget” means an estimate of costs required to carry out Petroleum
Operations pursuant to an approved Work Program.
1.13 “Calendar Month” means any of the twelve (12) months of the Calendar
1.14 “Calendar Quarter” or “Quarter” means a period of three (3) consecutive
Months commencing on the first day of January, April, July or October of
each Calendar Year.
1.15 “Calendar Year” means a period of twelve (12) consecutive Calendar
Months according to the Gregorian calendar commencing on January 1
and ending on following December 31, both dates inclusive.
1.16 “Commercial Discovery” means a Petroleum accumulation Discovery,
which in Contractor’s opinion, can be exploited economically in accordance
with this Contract.
1.17 “Contract” means this Contract including its Annexes as may be amended
from time to time by mutual agreement of the Parties.
1.18 “CONTRACTOR” means DWM Petroleum AG or its respective successors
and any assigns of any Participating Interest pursuant to Article XIX.
1.19 “Contract Area” means on the Effective Date the area described in Annex
“A” and delineated on the map attached as Annex “B” to this Contract, as
it may be changed by relinquishments CONTRACTOR shall make
pursuant to this Contract.
1.20 “Cost Recovery Petroleum” means the portion of Available Petroleum
determined in accordance with Paragraph 7.1 of this Contract.
1.21 “Crude Oil” means any hydrocarbons produced from the Contract Area and
which, at the well-head or separator, are in a liquid state including but not
limited to crude oil, natural gas liquids and condensates which are stable
or have been established and if necessary otherwise treated to render them
suitable for transportation.
1.22 “Customs Duties”, as used herein, shall include all tributes, duties, taxes,
fees, rights or any other financial imposts, which may be due as a result of
the importation of the item or items referred to in Article XII of this
1.23 “Date of Commercial Discovery1' means the date on which CONTRACTOR
notifies AKBN in writing of a Commercial Discovery pursuant to
Paragraph 6.4.1 of this Contract.
1.24 “Date of Discovery” of an oil/gas field is the date on which a well at which
there has been a Discovery is completed and tested.
1.25 “Date of Initial Commercial Production” means the date on which the first
regular shipment of Petroleum is made from a Commercial Discovery to
the Metering Point pursuant to a Development Plan, and shall not include
shipment of test or extended test production.
1.26 “Day” or “dav” means a period of twenty-four (24) hours commencing at
00:00 hours and ending at 24:00 (twenty-four) hours, Albanian time.
1.27 “Discovery” means any Petroleum accumulations discovery arising from
drilling activity on any geological feature which, after testing in
accordance with sound and accepted international petroleum industry
practices, is found by CONTRACTOR to be capable of producing
1.28 “Discovery Area” means an area or areas which CONTRACTOR may
establish at any time prior to the expiration of the Exploration Period by
notifying AKBN that CONTRACTOR has made a Discovery and by
supplying AKBN with a map showing an outline of the boundaries of any
part of the Contract Area which CONTRACTOR believes to contain a
Discovery. Once designated pursuant to Article VI, a Discovery Area shall
extend to all depths within its lateral boundaries.
1.29 “Delivery Point” means any point, within Republic of Albania as agreed by
the Parties where each Party takes its respective shares of Cost Recovery
Petroleum and Profit Petroleum. A Delivery Point may or may not be the
same as the Metering Point.
1.30 “Development” means and shall include, but not be limited to, all the
operations and activities pursuant to approved Work Programs and
Budgets under this Contract with respect to:
1.30.1 The drifting, plugging, side tracking, deepening, and completing
and equipping of wells for the purpose of Production and the «
changing of the status of any such well, and
1.30.2 The design, construction, installation and operation (within or
outside the Contract Area) of equipment! platforms! pipelines!
water, electrical and other systems! facilities (including storage
port and loading facilities); and plants, as needed to produce from
wells, to take, save, treat, handle, store, flare, transport and
deliver Petroleum for export and for local market; and to
undertake injection or re-injection and other enhanced recovery
projects. Use of the term Development in this Contract shall
include Production as defined in this Contract, when appropriate
to the context and circumstances.
The verb “Develop” means conducting Development.
1.31 “Development and Production Area” means the area determined by the
CONTRACTOR, in accordance with Article 1.33, at any time prior to the
expiration of the Exploration Period by notifying AKBN that
CONTRACTOR has made a Commercial Discovery and supplying AKBN
with a map describing an area comprised of all or a part of the Discovery
Area. A Development and Production Area may consist of more than one
1.32 “Development Expenditures” means all direct and indirect costs and
expenses for Development and Production, with the exception of Operating
1.33 “Development Plan” means a plan submitted by the CONTRACTOR and
approved by the AKBN for the development of a Discovery after any
Appraisal of the Discovery the contents of which shall include but shall not
be limited to the following:
(a) details of all exploration activities carried out in respect of the
relevant Discovery and all information used for Appraisal, details of
geological structure and hydrocarbon occurrence and Stratigraphy
and details of any further Appraisal as may be required by
(b) estimated volumes of oil and/or gas initially in-place and the
quantity estimated to be recoverable, expected drive mechanism and
recovery efficiency, drainage spacing, intended reservoir operating
policy and the scope for secondary recovery;
(c) full details of the facilities or structures and any other works which
CONTRACTOR proposes to construct or carry out during the
Development and Production period for the'relevant Discovery for
the purpose of producing oil and/or gas from such Discovery, and for
minimizing flaring of gas and preventing environment pollution;
(d) the location of and the purposes for which the facilities, structures or
other works are to be used and the times at which each facility,
structure or other work is to be commenced and completed;
(e) CONTRACTOR’S assessment of marketability of Petroleum, the
maximum and minimum quantities of Petroleum which
CONTRACTOR expects to recover from the relevant Discovery in
each year of the Production period relating thereto, the rate of
recovery expected and details of any problems expected to be
encountered in relation to Production and marketing;
(f) details of yearly forecast expenditure and cash flow of both capital
and Operating Expenses; and
(g) contingencies for minimizing gas wastage, pressure maintenance
program to optimize Petroleum recoveries and additional
(h) a reasonable estimate of the time necessary to undertake the
(i) Prospective Metering Points and Delivery Points;
(j) Development and Production Area details and the extent of the
proposed Development and Production Area relating to the
Commercial Discovery which area should correspond to the surface
projection of the geological extension of the Commercial Discovery
over reasonably related areas and to be designated as the
Development and Production Area for the Commercial Discovery
1.34 “Dollars” or the symbol means United States of America Dollars.
1.35 “Effective Date” means, for this Contract, the date on which a decision of
the Council of Ministers of the Government of Albania approving this
1.36 Contract is published in the “Gazeta Zyrtare”.
“Profit Petroleum” means the quantity of Available Petroleum determined
pursuant to the Paragraph 7.6 of this Contract.
1.37 “Expert” means an individual who is not a resident or citizen of Albania
nor who has been employed by CONTRACTOR or AKBN and who by
training and extensive experience has highly-developed knowledge in the
technical area wherein lies the dispute or disagreement which the said
1.38 individual is to address, and who is appointed pursuant to the relevant •»
provisions of this Contract.
“Exploration” means Petroleum Operations which are conducted under
this Contract during the Exploration Period for or in connection with the
exploration for Petroleum including, without limitation, geological,
geophysical and other surveys and studies, the review, processing and
analysis of data, the drilling of exploratory wells, associated planning,
design, administrative, engineering, construction and maintenance
operations and all other related operations and activities referred to in
Annex "C" or otherwise contemplated under the provisions of this
The verb “Explore” means conducting Exploration.
1.39 “Exploration Expenditures” means all direct and indirect costs and
expenses for Exploration.
1.40 “Exploration Period” means the First Exploration Period, the Second
Exploration Period and the Third Exploration Period, as respectively
determined in the Paragraphs 4.1.1, 4.1.2 and 4.1.3
1.41 “Exploration Well” means either a Wildcat Well or an Appraisal Well
drilled to at least a minimum depth and/or financial obligation specified in
the Work Program.
“Wildcat Well” means a well located on a geological feature from which
commercial Petroleum has not been discovered.
“Appraisal Well” means any well whose purpose at the time of
commencement of drilling is the determination of the extent or the volume
of Petroleum reserves contained in a Discovery.
1.42 “Financial Year” means the financial year starting on January 1 and
ending on following December 31, both dates inclusive.
1.43 “Forge Majeure” means a delay in performance or any non-performance by
a Party of its obligations under this Contract caused by circumstances
beyond the control and without the fault or negligence of the said Party,
including but not limited to, acts of God or the public enemy, extreme
weather conditions, mechanical failure, perils of navigations, fire,
hostilities, war (declared or undeclared), blockage, labor disturbances,
strikes, riots, insurrections, quarantine restrictions, epidemics,
earthquakes, or accidents but excluding shortage of funds.
1.44 “Gas” means natural gas, both associated and non-associated, and all of its
constituent elements produced from any well in the Contract Area, and all
non-hydrocarbon substances therein. Gas includes liquified petroleum gas
(“LPG”), which is a mixture of principally butane and propane liquified by
pressure and temperature.
1-45 "Good International Petroleum Industry Practices” means those practices,
methods, standards, and procedures generally accepted and followed
internationally by prudent, diligent, skilled, and experienced operators in
Petroleum exploration, development, and production operations and which,
at a particular time in question, in the exercise of reasonable judgment and
in light of facts then known at the time a decision was made, would be
expected to accomplish the desired results and goals established in respect
of which the practices, methods, standards, procedures and safety
regulations, as the case may be, were followed; provided, however, that
“Good International Petroleum Industry Practices” is not intended to be
limited to the optimum practices or method to the exclusion of all others,
but rather to be a spectrum of reasonable and prudent practices, methods,
standards, procedures and safety regulations.
1.46 “Line Fill” means that Petroleum determined pursuant to Paragraph 7.9 of
1.47 “MCF” means one thousand (1,000) standard cubic feet (“SCF”). One (1)
SCF is the amount of Gas necessary to fill one cubic foot of space at
atmospheric pressure of 14.65 pounds of pressure per square inch absolute
at a base temperature of sixty (60) degrees Fahrenheit.
1.48 “Metering Point” means the place or places, mutually agreed by AKBN and
CONTRACTOR, 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 Contract, the volumes of
Available Petroleum. All said measurements and determinations will be
acknowledged in writing by AKBN and CONTRACTOR’S representatives
at the Metering Point. The Metering Point may or may not be the same as
the Delivery Point.
1-49 “MMBTU” means one million (1,000,000) BTUs.
1.50 “Month” means a period counted as from any Day of a Calendar Month
ending on the same Day of the following Calendar Month or, if it does not
exist, on the last Day of such Calendar Month.
1.51 “Operating Expenses” means all direct and indirect costs, expenses and
expenditures made after the Date of Initial Commercial Production, which
costs, expenses and expenditures are not normally depreciable, including
operation, maintenance and servicing of all types of facilities required for
Petroleum Operations, including, without limitation, human health, safety ~
and environmental protection costs and compliance. Operating Expenses
shall include workover, repair and maintenance of assets, but shall not
include any of the following: side tracking; re-drilling and changing the
status of a well; replacement of assets or part of an asset; additions,
improvements, or renewals that extend the life of the asset.
1.52 “Operator” means an entity appointed by the CONTRACTOR and
approved by AKBN to be responsible for carrying out Petroleum
Operations in the Contract Area or in any part thereof under the terms of
this Contract. The nomination of a successor Operator shall be subject to
the prior AKBN approval, provided that no such approval is required and
only written notification has to be given if the successor Operator is an
1.53 “Participating Interest” means the respective undivided interest held by
each of the entities that may comprise the CONTRACTOR at any
1.54 “Parties” means AKBN and CONTRACTOR, and “Party” means any one of
the Parties, including their respective successors and assigns.
1.55 “Petroleum” means collectively or individually, as the context requires,
Crude Oil and Gas as well as those substances produced therewith or
1.56 “Petroleum Operations” means all or any of the operations related to the
Exploration for, Development, extraction, Production, separation and
treatment, storage and transportation and sale or disposal of Petroleum up
to the Delivery Point in Albania.
1.57 “Production” means every type of operation to produce Petroleum and
operate Development wells after the commencement of Production, and the
taking, saving, treating, handling, storing, transporting, metering, and
delivering of Petroleum, injection or reinjection, and every other type of
operation 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.
1.58 “Rejected Costs” means those costs determined pursuant to the second
paragraph of Paragraph 4.10 of this Contract.
1-59 “Reservoir” means a porous or fractured and permeable stratum capable of
producing Petroleum and which must be considered, because of the
character of the 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.
1.60 “Statement of Cost Recovery” means the statement referred to in
Paragraph 1 of Article III of the Accounting Procedure.
1.61 “Suspended Costs” means those costs determined pursuant to the first
paragraph of Paragraph 4.10 of this Contract.
1-62 “Tax Year” means the period of twelve (12) Months according to the
Gregorian calendar starting January 1 and ending December 31, both
dates inclusive, for which tax returns or reports are required according to
any applicable income, profits or other tax law or regulations of Albania.
1.63 "Termination” means the end of this Contract by expiration of the
applicable contractual term, by operation of the provisions of Article XXIV
or by mutual written agreement of the Parties.
1.64 “Work Program” means a program as contemplated by Article IV and other
provisions of this Contract, and, unless the context otherwise indicates,
shall refer to the same as amended or supplemented.
1.65 “Contract Year” means a period of twelve (12) consecutive Months
commencing with the Effective Date.
1.66 “Government Allocation” means that share of production determined
pursuant to Paragraph 7.7 of this contract.
ANNEXES TO THE CONTRACT
2.1 Annex “A” is a description of the Contract Area at the Effective Date.
2.2 Annex “B” is a map indicating the Contract Area at the Effective Date.
2.3 Annex “C” is the Accounting Procedure.
2.4 Annex “D” is the procedure for pricing Gas.
2.5 Annex “E” is the Bank Guarantee
2.6 The Annexes “A”, “B”, “C”, “D” and “E” to this Contract are hereby made a
part of this Contract, and they shall be considered as having equal force
and effect with the provisions of this Contract. However, in the event of
any conflict between the Annexes and the body of this Contract, the body «
of this Contract shall prevail.
TERM. GRANT OF RIGHT AND PAYMENT OF COSTS
3.1 Unless sooner terminated in accordance with the terms hereof, this
Contract shall remain in effect during the Exploration Period, any
Appraisal Period and any Development and Production Period.
3.2 AKBN hereby grants CONTRACTOR the exclusive right for Exploration,
Development and Production of Petroleum in the Contract Area, subject to
the terms and conditions of this Contract.
3.3 The Participating Interest of each of the entities that comprise the
CONTRACTOR, subject to Article XIX, is as follows:
DWM Petroleum AG 100%
3.4 CONTRACTOR shall pay one hundred percent (100%) of all costs and
expenses associated with Exploring, Developing and Producing Petroleum
from the Contract Area, subject to the cost recovery provisions of this
EXPLORATION PERIOD. WORK PROGRAM AND ESTIMATED
4.1 Within three (3) months after the Effective Date, CONTRACTOR shall
take all necessary steps to commence performance of the following Work
Program covering that period of time collectively referred to as the
4.1.1 First Exploration Period (3 Years from Effective Date)
CONTRACTOR shall perform the following Work Program during
the initial three (3) Years of the Exploration Period (“First
Work Program Minimum Expenditure in USD:
1 G8.G 400.000
2 Seismic Re-prosessing 200 km 150.000
3 Seismic acquisition am km (2D) 2.503 000
3 1 Exploration well 3000 m 6.000.000
|Total Commitment 3.050.000 / 6.550.000 |
G&G: Acquisition of technical data, reprocessing of selected seismic lines,
interpretation of geological, geophysical and well data. Regional geological and
structural studies (mapping, balanced cross sections)
One well in a minimum vertical depth of 3000 m, or until it reaches the
Carbonates of the Eocene or Cretaceous, whichever first occursri.e. at its choice
CONTRACTOR shall decide for the acquisition of the seismic or drilling the well.
4.1.2 Second Exploration Period (2 Years)
Provided it has completed the Work Program for the First
Exploration Period or it has paid to AKBN the amount of
U.S.Dollars pursuant to Paragraph 4.1.4 of this Contract,
CONTRACTOR shall have the option of extending the Exploration
Period for an additional period of two (2) Years (“Second Exploration
Period”). Such option may be exercised by CONTRACTOR giving to
AKBN, not less than thirty (30) Days prior to the end of the First
Exploration Period, written notice of: (i) its election to enter the
Second Exploration Period and (ii) its commitment to perform the
following Work Program during the Second Exploration Period:
Work Program Minimum Expenditure in USD:
1 exploration well 30(11 m 6.000.000
iTotai Commitment 6.300HOP ~|
One well in a minimum vertical depth of 3000 m, or until it reaches the
Carbonates of the Eocene or Cretaceous, whichever first occurs.
4.1.3 Third Exploration Period (2 Years)
Provided it has completed the Work Program for the Second
Exploration Period or it has paid to AKBN the amount of
U.S.Dollars pursuant to Paragraph 4.1.4 of this Contract,
CONTRACTOR shall have the option of extending the Exploration
Period for an additional period of two (2) Years (“Third Exploration
Period”) if, as approved by the AKBN, there are special
circumstances which require more time for the CONTRACTOR to
perform adequate Exploration activity. Such option may be
exercised by CONTRACTOR giving to AKBN, not less than thirty *
(30) Days prior to the end of the Second Exploration Period, a
written notice of: (i) its election to enter the Third Exploration
Period and (ii) its commitment to perform the following Work
Program during the Third Exploration Period:
Work Program Minimum Expenditure in USD:
1 exploration well 3000m 6,000.000
[Total Commitment 6.300.000
_ One well in a minimum vertical depth of 3000 m, or until it reaches the
Carbonates of the Eocene or Cretaceous, whichever first occurs.
4.1.4 If CONTRACTOR fails to timely complete a firm obligation for
acquisition and processing of the requisite amount of 2D seismic
data and/or for re-processing the existing seismic data,
CONTRACTOR shall pay to AKBN a sum of U.S. Dollars 3333 for
every line kilometer of new quality 2D seismic data not acquired
and processed and U.S. Dollars 600 for every line kilometer of
existing 2D seismic data not processed and shall thereby be relieved
of the obligation to acquire and re-process the said seismic data;
provided however, CONTRACTOR may, with AKBN approval, be
relieved of the said monetary obligations for not acquiring and
processing said data, and the corresponding seismic obligation, if
such relief is considered by AKBN as justified on the technical
If CONTRACTOR fails to timely commence drilling of an obligatory
Exploration Well, or after commencing the drilling of an obligatory
Exploration Well abandons the well without having completed the well or
without having met the Minimum Expenditure for that well,
CONTRACTOR shall pay to AKBN the Minimum Expenditure in the case
where the commencement of drilling did not occur, or the balance of the
Minimum Expenditure in the case where the well was abandoned.
4.2 CONTRACTOR shall be entitled to recover any expenditure fulfilling its
Work Program as Exploration Expenditures in the manner provided in
4.3 Notwithstanding any other provision of this Contract, the First
Exploration Period, the Second Exploration Period or the Third
Exploration Period shall be automatically extended for the period of time
necessary to allow for 1) completion of drilling or testing of a well and/or 2)
evaluation of results from the drilling or testing of a well, provided,
however, that such evaluation period may not exceed six (6) Months from
and after the date the drilling or any testing ceases (by which date
CONTRACTOR may continue to hold the relevant area by submitting a
notice under Paragraph 6.4.1, Paragraph 6.4.2, or Paragraph 6.4.3 except
for reasons of Force Majeure.
If CONTRACTOR, in compliance with Paragraphs 4.1.2 or 4.1.3 provisions
does not decide to enter into any of Second Exploration Period or Third
Exploration Period, CONTRACTOR shall be relieved of any work and
expenditure obligations with respect to any such period not entered into,
but CONTRACTOR shall have the right to proceed with the Appraisal of
any potential Commercial Discovery resulting from any well drilled during
the Exploration Period and the Exploration Period shall be automatically
4.4 All wells committed by CONTRACTOR under this Article IV will be
programmed to a bona fide objective and drilled in a workmanlike manner
in accordance with Good International Petroleum Industry Practices.
4.5 At least three (3) Months prior to the beginning of each Calendar Year, or
at such times as otherwise mutually agreed to by AKBN and
CONTRACTOR, CONTRACTOR shall prepare an Exploration Work
Program and Budget for the Contract Area setting forth the Exploration
operations which CONTRACTOR plans to carry out during the ensuing
During the Exploration Period, each such Work Program and Budget shall
be at least sufficient to satisfy CONTRACTOR'S minimum work
obligations for the period it covers.
4.6 The Exploration Work Program and Budget, any Appraisal Plan and any
Development Plan shall be reviewed by a joint committee to be established
by AKBN and CONTRACTOR after the Effective Date of this Contract.
This committee, hereinafter referred as the “Exploration Advisory
Committee” shall consist of six (6) members, three (3) of whom shall be
appointed by AKBN and three (3) by CONTRACTOR. The Chairman of
the Exploration Advisory Committee shall be designated by AKBN from
among the members appointed by it. The Exploration Advisory Committee
will be installed within thirty (30) Days from the Effective Date and shall
prepare and approve its own operating regulations in writing within thirty
(30) Days from its installation. The Exploration Advisory Committee shall
meet at least twice in each Calendar Year unless agreed upon by Operator
and AKBN, and shall have the following functions and responsibilities
under this Contract :a) to provide opportunity for and to encourage the
exchange of information, views, ideas, and suggestions regarding the
proposed Exploration Work Program and Budget(s) and results of
Exploration Operations; (b) in case of a Discovery, to review «
CONTRACTOR’S proposals for the Appraisal and possible Development of
such Discovery; and (c) to foster cooperation between AKBN and
CONTRACTOR towards implementation of this Contract in accordance
with its terms.
CONTRACTOR shall be responsible for making necessary arrangements
for the conduct of the Exploration Advisory Committee meetings. The
reasonable and necessary cost of conducting Exploration Advisory
Committee meetings (including, without limitation, the reasonable and
necessary costs of the authorized representatives of AKBN and
CONTRACTOR attending such meetings) shall be bom and paid by
CONTRACTOR on behalf of the AKBN as part of CONTRACTOR’S cost
- recoverable Exploration Expenditures under this Contract.
Following review by the Exploration Advisory Committee, CONTRACTOR
may make the appropriate revisions and submit the Exploration Work
Program and Budget to AKBN , as it may have been revised.
Also the Exploration Advisory Committee shall monitor all Petroleum
4.7 It is further agreed that:
4.7.1 CONTRACTOR may revise or modify said Work Program and
Budget as may be required for operational reasons or as a result
of Exploration activities. These revised or modified Work
Programs and Budgets will be subject to the procedure
established in Paragraph 4.6.
4.7.2 In the event of emergencies involving danger or loss of lives or
property or environmental damage CONTRACTOR may expend
such additional unbudgeted amounts as may be required to
alleviate such danger and shall inform AKBN of the
circumstances. Such expenditures, subject to AKBN approval,
shall be considered as Exploration Expenditures and shall be
recovered pursuant to Article VII hereof.
4.8 CONTRACTOR shall supply AKBN, as soon as possible but not later than
sixty (60) Days from the end of each Calendar Quarter, a statement of
Exploration Activity, showing Exploration Expenditures made and
incurred by CONTRACTOR during such Calendar Quarter.
CONTRACTOR’S records and supporting documents shall be available for
inspection by AKBN at any time during regular working hours for three (3)
Months from the date of receiving each statement.
Within three (3) Months from the date of receiving such statement, AKBN
shall advise CONTRACTOR, in writing, with necessary supporting
reasons, if it considers that:
4.8.1 Record of costs is not correct;
4.8.2 Costs of goods or services supplied are not in line with the
international market prices for goods or services of similar quality
supplied on similar terms prevailing at the time such goods or
services were ordered;
4.8.3 Condition of the materials furnished by CONTRACTOR does not
tally with their prices.
4.9 CONTRACTOR shall confer with AKBN in connection with objections
made under Paragraph 4.8, and the Parties shall attempt to reach a
settlement, which is mutually satisfactory. If, within the three (3) Month
period, specified in Paragraph 4.8 above, AKBN has not objected to any
item on a statement, such statement shall be deemed approved. Any
items, which are not objected to within said three (3) Months shall be
4.10 Those costs to which AKBN has taken exception as provided in Paragraph
4.8 (“Suspended Costs”) shall be included in the Statement of Cost
Recovery and shall be cost recoverable, pending settlement or until the
matter has been resolved according to the arbitration provisions of Article
XXI of this Contract.
Suspended Costs that are subsequently agreed by AKBN and
CONTRACTOR (or are determined by arbitration under Article XXI
hereof) to be properly excluded from cost recovery under this Contract
(“Rejected Costs”) shall be borne and paid entirely by CONTRACTOR and
shall not be cost recoverable.
Any reimbursement due to AKBN out of Cost Recovery Petroleum, as a
result of a decision by arbitrators or by settlement after audit, shall be
made in cash to AKBN within thirty (30) Days from the date of the
decision or settlement.
4.11 On or as soon as possible after the Effective Date, AKBN shall make
available for CONTRACTOR’S use, copies of all seismic and other
exploration data in AKBN's possession with respect to the Contract Area
without cost to CONTRACTOR, excluding nominal gathering, preparation
and reproduction costs, and thereafter shall timely provide to
CONTRACTOR any such other data as and when obtained by AKBN.
These data will be subject to restrictions on CONTRACTOR'S disclosure of
same as described in Paragraph 15.5.
4.12.1 The CONTRACTOR shall select one of the entities comprising
CONTRACTOR to act as Operator, which shall conduct the
Petroleum Operations in the Contract Area in accordance with
the terms and conditions of this Contract and with good
international petroleum practice.
4.12.2 DWM Petroleum AG is hereby appointed as Operator, as from the
4.12.3 The nomination of a successor Operator shall be subject to prior
approval of AKBN, provided that such approval is required and
only written notification has to be given if the successor Operator
is an Affiliated Company.
5.1 Mandatory Relinquishment:
5.1.1 If CONTRACTOR enters the Second Exploration Period or the
Third Exploration Period, within one hundred eighty (180) days
after the end of the previous Exploration Period CONTRACTOR
will relinquish to AKBN twenty-five percent (25%) of the Contract
Area less any portion of the Contract Area relinquished
previously, subject to Paragraph 5.1.3 of this Contract.
5.1.2 At termination of the Exploration Period, CONTRACTOR shall
relinquish to AKBN all of the remaining acreage of the Contract
Area not then subject to a Discovery Area or a Development and
5.1.3 Notwithstanding any other provision of this Contract,
CONTRACTOR will not be required to relinquish areas included
in a Discovery Area or in a Development and Production Area.
5.2 CONTRACTOR may voluntarily, at any time, relinquish all or part of the
Contract Area; provided that, at the time of such voluntary
relinquishment, its Exploration obligations for the then current period
have been satisfied.
Any such voluntary relinquishments shall, at Contractor’s discretion, be
credited against future mandatory relinquishments.
5.3 Areas relinquished by CONTRACTOR under this Article V will revert
automatically to AKBN and may be freely used or disposed of by AKBN.
However, CONTRACTOR may continue using those operating facilities
and installations it has constructed or it is constructing in those areas for
the purpose of this Contract.
5.4 Areas relinquished by CONTRACTOR under this Article V will be in
dimensions and shapes reasonably sufficient to enable the performance of
hydrocarbon operations on them by AKBN or third parties, provided this
does not interfere with CONTRACTOR'S operations under this Contract.
5.5 Any relinquishment under this Article V shall be free of any income,
transfer or related taxes, charges or fees.
5.6 Prior to relinquishing any portion of the Contract Area upon which
Petroleum Operations have been conducted, CONTRACTOR shall take all
reasonable steps to remedy any significant negative environmental impact
directly caused by the Petroleum Operations, all to the extent required by
legal requirements in effect on the Effective Date and abandon the
Contract Area in conformity with an Abandonment Plan submitted to and
duly approved by AKBN, which approval will not be unreasonably
withheld or delayed.
5.7 Upon the date on which any relinquishment is due or is to take effect or
upon the termination of this Contract, the CONTRACTOR shall have no
further rights or obligations in regard to the relinquished area;
nevertheless any liability hereunder imposed on the CONTRACTOR prior
to said date shall continue to subsist from the date of termination of the
Contract until AKBN has released CONTRACTOR in writing, which
release shall not be unreasonably delayed or withheld.
5.8 No relinquishment shall relieve CONTRACTOR from its unfulfilled
minimum commitments under Article IV and/or any other obligation
accrued prior to such relinquishment.
OPERATIONS AFTER DISCOVERY
6.1 Within fifteen (15) Days after a Date of Discovery is determined by
CONTRACTOR, CONTRACTOR shall notify AKBN, in writing, of the
Discovery and will provide AKBN with the results of the testing.
Following a Discovery, CONTRACTOR may produce, transport and sell
Petroleum on test, as permitted by AKBN. Such production shall be
subject to Article VII.
6.2 Within sixty (60) days after the notice of Discovery under Paragraph 6.1, m
CONTRACTOR will notify AKBN in writing whether CONTRACTOR *
considers the Discovery to be worthy of Appraisal as a potential
6.3 In case CONTRACTOR notifies AKBN under Paragraph 6.2 that it
considers a Discovery to be worthy of Appraisal as a potential Commercial
Discovery, CONTRACTOR shall promptly thereafter inform AKBN of its
Appraisal plans for the concerned Discovery and will undertake, as part of
its Exploration program, the Appraisal of the Discovery by performing
such works that, in the CONTRACTOR’S opinion, may be necessary to
determine whether such Discovery is worthy of being Developed
commercially, taking into consideration all relevant technical and
6.4 Within six (6) months after completion of the Appraisal, CONTRACTOR
6.4.1 Submit to AKBN a Development Plan for the purpose of declaring
a Commercial Discovery; or
6.4.2 Notify AKBN that the Discovery could be commercial if other
Discoveries are made and jointly Developed and exploited with it,
or that CONTRACTOR proposes to do additional work in the
Contract Area for that purpose; or
6.4.3 Notify AKBN that CONTRACTOR does not consider the
Discovery to be potentially commercial.
6.5 A Development Plan submitted pursuant to Paragraph 6.4.1 above and as
presented to the Exploration Advisory Committee, will be subject to the
approval of AKBN, which approval shall not be unreasonably withheld and
will be given within ninety (90) Days from receipt of the Development Plan
or else shall be deemed to have been approved. CONTRACTOR shall then
proceed to Develop the Discovery in accordance with the approved
6.6 In case of a notice by CONTRACTOR under Paragraph 6.4.2 above,
CONTRACTOR shaft present to Exploration Advisory Committee and
submit in writing for AKBN approval, which approval shall not be
unreasonably delayed or withheld, a plan containing a description of the
additional works that CONTRACTOR considers necessary and the
estimated schedule for said works, in accordance with Good International
Petroleum Industry Practices. CONTRACTOR shall undertake, as part of
its Exploration program, the performance of said additional works in
accordance with the plan and schedule submitted to AKBN.
6.7 In case of a notice by CONTRACTOR under Paragraph 6.4.3 above, AKBN
shall have the right to Develop and exploit the Discovery for its sole benefit
and at its sole cost and risk, and CONTRACTOR will have no rights in
such Discovery and will relinquish, in accordance with Good International
Petroleum Industry Practices, the Discovery Area,' however,
CONTRACTOR’S rights in the remainder of the Contract Area shaft not be
6.8 Any Commercial Discovery may consist of one (l) Reservoir or a group of
Reservoirs which, after Appraisal, is considered by CONTRACTOR worthy
of being Developed commercially.
6.9 Within three (3) Months following a submission under Paragraph 6.4.1 of
this Contract, CONTRACTOR shall provide AKBN with a report on the
technical and economic factors considered in determining that the
Discovery is worth being Developed commercially.
6.10 The Production period shall be twenty (20) Years for each field from its
Date of Initial Commercial Production and based on the Petroleum Law
may be extended, at CONTRACTOR'S option, by five (5) additional Years,
subject to approval by AKBN, which approval shall not be unreasonably
6.11 CONTRACTOR shall prepare a Development Work Program and Budget
for the remainder of the Calendar Year in which the CONTRACTOR
makes a submission pursuant to Paragraph 6.4.1 of this Contract, and
shall submit it to AKBN for approval not later than ninety (90) Days after
the date of such submission. On or before the fifteenth (15th) Day of
October of each Calendar Year thereafter, CONTRACTOR shall prepare
and submit to AKBN for approval a Development Work Program and
Budget for the succeeding Calendar Year. Approval by AKBN shall not be
unreasonably withheld and will be given within thirty (30) Days from
receipt of each Development Work Program and Budget, absent which,
approval shall be deemed to have been given. CONTRACTOR shall also
submit to AKBN an annual Production schedule based on the provisions of
6.12 CONTRACTOR shall record the data relating to the quantities of
Available Petroleum, water and other materials produced each Calendar
Month under this Contract, showing the share of Profit Petroleum
corresponding to each Party according to this Contract. These data will be
submitted to AKBN and the relevant Albanian tax authorities on a
Monthly basis. Daily or weekly statistics regarding the Production from
the Contract Area shall be available at all reasonable times for
examination by authorized representatives of AKBN.
6.13 CONTRACTOR shall render to AKBN, within sixty (60) Days from the end
of each Calendar Quarter, a Statement of Development Activity, reflecting
all charges and credits related to Development and Production for that •»
Calendar Quarter (“Development Expenditures and Operating Expenses”)
summarized by appropriate classifications indicative of the nature thereof.
This Statement shall be subject to audit by AKBN, as provided for in
Paragraph 4.2 of Article I of the Accounting Procedure.
6,14 If it appears reasonable from reviews of technical data that a Discovery
Area or a Development and Production Area could extend outside the
Contract Area, the Parties shall meet to discuss cooperation among
themselves and/or with any third party which may be involved in
extending Exploration, Development or Production outside the Contract
Area, but such discussions shall not interfere with CONTRACTOR
continuing with the Appraisal, Development and Production of Petroleum
from the portion of the Reservoir located in the Contract Area.
6.14.1 If it is proven by drilling outside the Contract Area that the
Petroleum bearing strata in the Contract Area extends into
another area or areas in respect of which another contract or
license is in force or has been granted by AKBN, and recognized
petroleum industry standards and practices necessitate that the
entire field should be worked and developed as a unit,
CONTRACTOR shall endeavour to co-operate with license holders
in adjacent blocks in order to achieve the optimum technical and
economical solution for the development of the entire field. If
CONTRACTOR and the other license holders in the respective
adjacent blocks cannot agree on a joint Development scheme or on
the operatorship, or if AKBN considers that the proposed joint
Development scheme is not in the national interest, AKBN may
direct that all operations shall be conducted in accordance with a
joint Development scheme.
6.14.2 The joint Development scheme shall be agreed to between
CONTRACTOR and the third party license holding granted by
AKBN who shall jointly submit the scheme for approval of AKBN.
Failing agreement on a unit Development scheme between
CONTRACTOR and the third party, or failing approval of AKBN,
the unit Development scheme shall be the scheme prepared by an
Expert. If CONTRACTOR finds the scheme prepared by the
Expert unacceptable, CONTRACTOR shall have the right to
request modification thereof or relinquish the Discovery Area.
6.14.3 If the Petroleum bearing strata in the Contract Area, considered
by CONTRACTOR as a single Discovery Area or Development
and Production Area, extends into another area or areas over
which the Albanian Government has the jurisdiction and in
respect of which no contract or license is in force nor is subject to
a grant of rights by AKBN, then AKBN and CONTRACTOR shall
use their respective best efforts to negotiate an agreement to
enlarge the Contract Area accordingly and to provide for the
proper Appraisal and Development of the Discovery. Such
agreement shall include provisions that this Contract shall apply
to the enlarged area. CONTRACTOR shall be allowed to carry
out such Appraisal in the area concerned, as may be required to
delineate the area for enlargement. Before commencement of
discussions on such agreement, CONTRACTOR shall be allowed
to review any technical data relating to the area which is
available to any agency of the Albanian Government.
6.14.4 In the event that the Petroleum-bearing strata referred to in
Paragraph 6.14 extend into an area not forming part of the
Contract Area and over which the Republic of Albania has no
jurisdiction, the CONTRACTOR'S Petroleum Operations shall be
conducted in accordance with such of Albania's international
obligations as may be applicable and AKBN shall undertake to
negotiate with the competent agency of the foreign government
having jurisdiction to agree upon a Unit Development Scheme,
bearing in mind the interests of the CONTRACTOR. This
Contract shall be amended to reflect the agreement reached
between the two countries. If such amendment is unacceptable to
CONTRACTOR, then CONTRACTOR shall have the right to
request modification thereof or relinquish the Discovery Area in
which the Petroleum-bearing strata are located.
6.15 CONTRACTOR may freely use for the Petroleum Operations hereunder
Petroleum produced from the Contract Area, in accordance with Good
International Petroleum Industry Practices.
6.16 Associated natural Gas from the Contract Area not used by
CONTRACTOR for the Petroleum Operations and not subject to Article
VIII of this Contract may be flared or re-injected at CONTRACTOR'S
option, unless AKBN requests CONTRACTOR, in writing, to deliver said
associated natural Gas to AKBN at the field separators. This delivery to
AKBN shall not interfere with CONTRACTOR'S normal Petroleum
Operations and schedule for Development. Any cost relating to
CONTRACTOR’S compliance with AKBN's request will be borne by
RECOVERY OF COSTS AND EXPENSES. PRODUCTION SHARING
AND PROFIT PETROLEUM AND NON-RECOVERABLE COSTS
Cost Recovery Petroleum
7.1 The Contractor shall recover all costs and expenses under this Contract
out of a portion of Available Petroleum, which is sometimes called as
applicable “Cost Recovery Petroleum, Cost Recovery Crude Oil or Cost
Recovery Gas”. The portion of Available Petroleum that is Cost Recovery
Petroleum is one hundred percent (100 %) after the Government
Allocation, as described below in paragraph 7.7. CONTRACTOR shall be
entitled to take the Cost Recovery Petroleum in kind, freely export it, and
dispose of it.
Recoverable costs and expenses in each Calendar Month shall be recovered
first from Cost Recovery Crude oil, if any, and second from Cost recovery
Gas, if any.
“7.2 Costs and expenses under this Contract shall be recovered from Cost
Recovery Petroleum in the following maimer:
7.2.1 Exploration Expenditures, including the total of those accumulated
prior to the Date of Initial Commercial Production, shall be
recoverable in full, without amortization, commencing in: (i) the
Calendar Month in which such Expenditures are incurred or (ii) the
Calendar Month in which the Date of Initial Commercial Production
or test or extended Production occurs, whichever Month comes later.
7.2.2 Development Expenditures, those accumulated prior to the Date of
Initial Commercial Production shall be recoverable in full, without
amortization, commencing in: (i) the Calendar Month in which such
expenditures are incurred or (ii) the Calendar Month in which the
Date of Initial Commercial Production occurs, whichever Month
comes later. Development Expenditures must be reasonable, that is,
in accordance with international Petroleum industry practices and
market prices for services, equipment and materials of the same
kind and quality, available at the time they are required under this
7.2.3 All Operating Expenses incurred after the Date of Commercial
Discovery shall be recoverable in full, without amortization,
commencing in: (i) the Calendar Month in which they are incurred,
or (ii) the Calendar Month in which the Date of Initial Commercial
Production occurs, whichever Month comes later. Operating
Expenses must be reasonable, that is, in accordance with
international Petroleum industry practices and market prices for
services, equipment and materials of the same kind and quality,
available at the time they are required under this Contract.
7.3 To the extent that, for any Calendar Quarter, the Statement of Cost
Recovery shows unrecovered costs and expenses, such unrecovered
amounts shall be carried forward in the said Statements for recovery in the
next succeeding Calendar Quarter or Quarters until fully recovered.
7.4 Simultaneously with the approval of a Development Plan, AKBN and
CONTRACTOR shall agree whether the AKBN's share of Profit Petroleum
and Government Allocation will be lifted in Petroleum by AKBN or will be
lifted and sold by Contractor on behalf of the AKBN and subsequently,
after having collected the proceeds from such sales, paid in cash to AKBN
based on the valuation of Petroleum as per Article VII.
In case the Parties agree that the AKBN's share of Profit Petroleum shall
be lifted in kind by AKBN, the agreement shall inter alias also contain
provisions in respect of the allocation of different qualities of Petroleum
and procedures for the lifting including under-and over lifting of AKBN's
7.5 Each Calendar Month CONTRACTOR shall take in kind at the Metering
Point and dispose of all Cost Recovery Petroleum, plus its share of Profit
Petroleum pursuant to Paragraph 7.6. Upon submission to AKBN of each
Quarterly Statement of Cost Recovery, the Parties will make the
appropriate adjustments pursuant to Paragraphs 7.3 and 7.4.
Profit Sharing - R Factor
7.6 With respect to each Calendar Month, all Available Petroleum remaining
after deducting the Government Allocation and all recoverable costs and
expenses under this Contract for that Calendar Month shall be Profit
Petroleum and pursuant to Paragraph 7.5 herein above shall be taken in
kind at the Metering Point and freely and separately disposed of by export
or otherwise, and at their respective risk, cost, and expense by the AKBN
and by CONTRACTOR, as applicable. The respective share, or percentage,
of Profit Petroleum to which each of the AKBN and CONTRACTOR is
entitled during a Calendar Month is determined as provided in this
7.6.1 The “R” Factor shall be used for purposes of determining the
Parties' respective entitlement to Profit Petroleum and
Government Allocation in each Calendar Month. “R” Factor shall
mean and be calculated as the ratio of CONTRACTOR’S
cumulative receipts from the Effective Date until the end of the
preceding Calendar Year to the CONTRACTOR’S cumulative
expenditures incurred from the Effective Date until the end of the
preceding Calendar Year.
The cumulative receipts shall be the aggregate value, determined
pursuant to Article VII and Annex D, of: (a) CONTRACTOR’S
share of Profit Petroleum plus (b) the Cost Recovery Petroleum,
less all of CONTRACTOR’S Albanian taxes as paid.
Said cumulative receipts shall be adjusted by an inflation factor
based on the Consumer Price Index as published by the United
States Department of Labor and calculated on an annual basis.
The cumulative expenditures shall be the aggregate amount of all
costs, expenses, and expenditures previously incurred by
CONTRACTOR under the Contract, whether as Development
Expenditures, Exploration Expenditures, or Operating Expenses,
or as a payment made under Article XXVII.
Said cumulative expenditures shall be adjusted by an inflation
factor based on the Consumer Price Index as published by the
United States Department of Labor and calculated on a monthly
7.6.2 Subject to other provisions of this Contract, the percentage of
Profit Petroleum that constitutes the respective shares of
CONTRACTOR and AKBN is determined for each Calendar
Month using the “R” Factor applicable to that Calendar Year
(calculated as provided in Paragraph 7.6.1). CONTRACTOR'S and
AKBN’s share of the Profit Petroleum, is shown in the following
R FACTOR CONTRACTOR’S SHARE AKBN’s SHARE
0 < R< 1.5 100% 0%
1.5 < R < 2 95% 5%
2 < R < 2.5 90% 10%
2.5 < R 85% 15%
It is acknowledged that CONTRACTOR’S share of Profit Petroleum will be
subject, during the term of this Contract, to a fifty percent (50%) Albanian
profit tax rate to be paid in accordance with Article IX of this Contract. In
the event the Development of a Discovery is determined to be economically
marginal or has become marginal due to its exploitation, and additional
tax incentives are required by CONTRACTOR in order to proceed with the
Development, CONTRACTOR and AKBN will use their best efforts to
obtain tax relief as needed by CONTRACTOR to develop the field as per
Law No. 7811 dated April 12, 1994.
7.7 AKBN shall be entitled to a Government Allocation on production, which
shall be equal to:
R FACTOR GOVERNMENT ALLOCATION
0 < R < 1.5 10%
1.5 < R < 2.0 12.5%
7.8 The percentages of Profit Petroleum to which the AKBN and
CONTRACTOR are entitled apply to profit sharing Crude Oil and to profit
7.9 Notwithstanding any provision of this Contract to the contrary, Average
Daily Production shall not be determined until all pipelines, or parts
thereof, required for the disposition of Petroleum either upstream or
downstream of the Metering Point are filled and pressurized by the
necessary amount of Petroleum (“Line Fill”). AKBN and CONTRACTOR
shall agree in writing as to the time that the Line Fill may be disposed of
and may be included in Average Daily Production.
7.10 Under this Contract, the following expenses shall not be recoverable:
a) costs incurred before the Effective Date as related to performance
of a work obligation, unless approved by AKBN;
b) costs incurred beyond the Delivery Point;
c) donations or contributions unless approved by the AKBN;
d) any production bonuses paid to the AKBN pursuant to Article
e) fines or penalties duly levied by an agency of the Albanian
Government and paid by CONTRACTOR; and
f) interest expenses incurred by the Contractor with respect to bank
loans in order to finance the Petroleum Operations.
7.11 Crude Oil Pricing
The value of Crude Oil taken in kind and disposed of by CONTRACTOR
under this Contract during each Calendar Month, for all purposes of this
Contract, will be the weighted average price actually received in freely
convertible currency on F.O.B. point of export sales of Crude Oil from
Albania under this Contract undertaken by CONTRACTOR. For this
purpose, all Crude Oil sales contracts then currently in effect with
non-Affiliated companies will be taken into account, but excluding barter
agreements, and any spot sales not reasonably consistent with prevailing
market prices for the Crude Oil. It is understood that, in the case of C.I.F.
sales, appropriate deductions shall be made for transportation and
insurance charges, actual or declared, whichever are lower, in order to
calculate the F.O.B. price at the point of export. In no event shall any
commission or marketing fee be deducted.
7.12 For the case in which, during any Calendar Month, there are no export
sales by CONTRACTOR under Crude Oil sales contracts then currently in
effect, AKBN and CONTRACTOR shall, prior to the Date of Initial
Commercial Production, agree upon a basket of at least two (2) but no
more than four (4) crude oils, quoted for pricing purposes and available for
export at Mediterranean ports, that are comparable to the Available Crude
Oil and that are freely traded in international markets (the “Basket”). The
value of the Cost Recovery Crude Oil shall be the average price of the
Basket for any Calendar Month in which such export sales are not made as
determined from the prices of the crude oil in the Basket as published by
Platt’s Oilgram Price Report for World Crude Oil Prices, “Short Term
ContracfrSpot” column for transactions concluded in such Calendar Month.
It is understood that the following principles will apply with respect to the
7.12.1 The crude oils to be included in the Basket as comparable to the
Available Crude Oil shall be those which shall differ no more than
four (4) degrees API greater or less than such Crude Oil, and the
sulfur content thereof shall be no greater than one percent (1%)
more than that of such Crude Oil.
7.12.2 The price of the Basket shall be adjusted as follows: (i) by one and
one-half United States Cents (U.S.$0.015) per Barrel for each full
one-tenth (l/10th) of API degree by which the Crude Oil is above
or below the arithmetic average of the API gravity of the Basket;
(ii) by five United States Cents (U.S.$0.05) per Barrel for each full
one-tenth of one percent (0.1%) by which the sulfur content of the
Crude Oil is above or below the arithmetic average of the sulfur
content of the Basket; and (iii) by the difference between the
freight rate for the transport of the Crude Oil from the point of
export to Lavera, France, and the arithmetic average of the
freight rate for the Basket for the transport of the crude oils in the
Basket from their usual F.O.B. point of origin to Lavera, France.
If the arithmetic average freight rate of the Basket is higher, this
difference will be added to the price of the Basket. If the
arithmetic average freight rate of the Basket is lower, this
difference will be subtracted from the price of the Basket. For
this purpose, the “freight rate” shall be defined as the “Average
Freight Rate Assessment” (AFRA) rate quotation for LR2 size
vessels as published for such Calendar Month multiplied by: (a)
the then applicable WORLDSCALE flat rate for Crude Oil
transportation from the point of export to Lavera, France and (b)
the arithmetic average of the then applicable WORLDSCALE flat
rate for the crude oils in the Basket from their usual F.O.B port of
export to Lavera, France.
7.12.3 Should said publication or any adequate succeeding publication
cease to be published, AKBN and CONTRACTOR must agree in
writing on a substitute publication. In case there is no
publication which may be used as a basis, the Parties will agree in
writing on the procedure to be followed to fix the Basket.
7.12.4 In the event that, in the future, the price of one or more of the
crude oils which make up the Basket is quoted in a currency other
than Dollars, said price will be converted into Dollars at the
average buying rate of exchange rates for that currency quoted by
Citibank, London, at the close of business on each relevant day.
7.12.5 The Basket may be revised periodically, if required, by written
agreement between AKBN and CONTRACTOR to reflect any
change in the quality of the Crude Oil produced from the Contract
7.12.6 In the absence of a quotation of one (1) or more of the agreed
crude oils in the Basket, AKBN and CONTRACTOR shall meet to
agree on the replacement crude oil.
7.13 In the event AKBN and CONTRACTOR have been unable to determine
the Basket for the purposes of Paragraph 7.12 within thirty (30) Days after
the end of the relevant Calendar Month, each shall, within thirty (30) Days
thereafter, nominate an Expert in crude oil pricing. These two (2) Experts
shall, within a further thirty (30) Days, agree upon a third Expert in crude t
oil pricing, whereupon these three (3) Experts shall, as soon as possible,
attempt to determine the Basket in accordance with the general principles
set out in Paragraph 7.12 above. If either AKBN or CONTRACTOR
defaults in appointing its Expert as aforesaid, the other Party shall have
the right to apply to the International Chamber of Commerce in Paris,
France, to appoint an Expert to act for the defaulting Party.
Should these two (2) Experts be unable to agree upon a third, a neutral
Expert shall also be appointed by the International Chamber of Commerce
in Paris, France. The determination on the Basket shall be made no later
than sixty (60) Days after the appointment of the third Expert. The
determination by the three (3) appointed Experts shall be taken by their
majority vote and shall be binding and final for AKBN and
CONTRACTOR. The costs and expenditures of the experts shall be
charged equally to AKBN and CONTRACTOR.
7.14 Pending mutual agreement under Paragraph 7.12, or Expert
determination under Paragraph 7.13, the Basket used shall be the last
Basket determined pursuant to Paragraphs 7.12 or 7.13, whichever is the
latest, and once an agreement has been reached under Paragraph 7.12, or
a determination by Experts has been made under Paragraph 7.13,
appropriate adjustments will be made (and any appropriate payments
pursuant to the determination will be made) within thirty (30) Days after
the date of said agreement or Expert determination to place the Parties in
the same position they would have teen in had they agreed on the Basket,
or had the Experts' Basket teen in effect during the period in question.
7.15 No later than sixty (60) Days prior to the Date of Initial Commercial
Production and thereafter at the beginning of each Calendar Quarter, the
CONTRACTOR shall prepare and furnish to AKBN 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 Rate) from the Contract Area in
accordance with practices generally accepted in the international
Petroleum industry. CONTRACTOR shall give due consideration to any
comments or recommendations made by AKBN representatives in respect
of such forecast. CONTRACTOR shall endeavor to produce each Calendar
Quarter the forecasted quantity.
7.16 CONTRACTOR shall have the right to separately take in kind and export
all Cost Recovery Petroleum and Profit Petroleum to which it is entitled
under this Contract. CONTRACTOR shall have the right to freely transmit
or retain outside Albania all proceeds acquired by it, including the
proceeds from the sale of its share of Cost Recovery and Profit Petroleum,
whether such sales are in Albania or of Petroleum exported by
7.17 At a reasonable time, prior to the Date of Initial Commercial Production,
and from time to time as required thereafter, AKBN and CONTRACTOR
shall meet and agree upon a procedure for scheduling liftings of Petroleum
at the Metering Point. No Party shall either gain or lose as a result of any
liftings under such schedule. Liftings by CONTRACTOR are deemed to
consist firstly of CONTRACTOR'S full entitlement of Cost Recovery
Petroleum, in order that cost recovery may proceed in accordance with this
Contract, and the remainder of such liftings is deemed to consist of Profit
8.1 If Gas (as defined in Paragraph 1.43 ) is Produced or becomes producible
for sale from the Contract Area, AKBN and CONTRACTOR shall consider
all possible economic alternatives for its use and decide jointly on the best
alternative for AKBN and CONTRACTOR. In this case, the provisions of
this Article VIII and Annex “D” will apply.
8.2 If CONTRACTOR makes a Discovery of Gas, the procedures of Article VI
shall apply and be followed, subject to the following. If there is any
Discovery of Gas which CONTRACTOR considers could be a Commercial
Discovery, and there is a lack of or inadequacy of an available
commercially viable market for the Gas reserves thereof, this Contract
shall be suspended as to such Gas Discovery during the period of time in
which Development of the Gas reserves has not commenced, provided that
this period cannot exceed five (5) Years from the date of the pertinent
Discovery of Gas (“Gas Suspension Period”). During the Gas Suspension
Period for such Discovery, the Parties shall use their reasonable, good faith
efforts to investigate and consider the markets which could be Developed
commercially for such Gas reserves and also consider whether mutually
agreeable modifications or actions could be taken to result in it being a
Commercial Discovery. During any Gas Suspension Period under this
Paragraph 8.2, the portion of the Contract Area comprising the geological
feature that contains the Gas reserves of the Discovery (“Gas Suspended
Area”) shall be determined by CONTRACTOR, subject to AKBN approval,
and shall not be subject to mandatory relinquishment pursuant to Article
V hereof, nor any other provision of this Contract, including without
limitation, expiration of the Exploration Period. As soon as Development
of the Gas Suspended Area has commenced, the Gas Suspension Period
will terminate and the pertinent provisions of Article VI will apply. It is
understood that, in case Development of the Gas Suspended Area has not
commenced during the Gas Suspension Period, CONTRACTOR shall
relinquish the Gas Suspended Area.
Should the price publications referred to in Article VII and Annex “D” fail
to publish or fail to reflect the actual market conditions and/or prices,
Crude Oil and product quotations will be taken from those tables
published in another publication that continues to be published, adjusted
as the Parties agree, so as to most nearly approximate the results which
would have been used if such failure had not occurred. If such publications
cease publication, the Parties will agree on other price reference sources.
8.4 Should any price reference source referred to either in Article VII or in
Annex “D” publish a retroactive change, either upwards or downwards, for
any Crude Oil or product price that is referred to either in Article VII or in
Annex “D”, the effect of such change in calculating prices for any Calendar
‘ Month will be limited to the Month prior to the Month of publication of
such retroactive change.
9.1 Each of the entities comprising CONTRACTOR, as may result during the
term of this Contract, is subject to the payment of profit tax in Albania, in
accordance with Albanian law and the provisions of this Article IX, at the
rate of fifty percent (50%) applicable on its share of Profit Petroleum. Cost
Recovery Petroleum, or the proceeds from the sale or disposition thereof,
shall not be subject to taxation in Albania.
During the term of this Contract each entity comprising CONTRACTOR
separately shall be subject to the profit tax in accordance with Law No
7811 dated 12/04/94 “On the Fiscal System in the Petroleum Sector
(Exploration and Production)” and shall comply with the requirements
9.2 The profit sharing percentages agreed upon under Paragraph 7.6 of this
Contract have been established, taking into consideration that the entities
comprising CONTRACTOR shall be subject to an Albanian profit tax of
fifty percent (50%). Therefore, the Parties agree that the profit tax rate of
fifty percent (50%) will be fixed for the entire term of this Contract, unless
such rate is decreased pursuant to Article 1, subsection (3), of Law No
7811 dated 12/04/94 “On the Fiscal System in the Petroleum Sector
(Exploration and Production)” or other Albanian law or regulation.
9.3 In the unlikely event that the profit tax rate referred to in Paragraph 9.2 is
increased in spite of Law No 7811 dated 12/04/94 “On the Fiscal System in
the Petroleum Sector (Exploration and Production)”, and the provisions
hereof, the profit sharing percentages established under Paragraph 7.6
will be deemed to be automatically modified accordingly in order to
maintain the economic equilibrium of this Contract so that CONTRACTOR
shall receive the same share of Profit Petroleum as if the profit tax rate
had remained at fifty percent (50%) (as the same may be reduced pursuant
to Paragraph 9.2 above).
9.4 If during execution of this Contract CONTRACTOR may be comprised of
more than one entity, the Albanian profit tax of each of the entities
comprising CONTRACTOR will be paid in kind or in cash to the relevant
Albanian Government authority, as advised by AKBN, in accordance with
the applicable Albanian laws and regulations and the following procedure:
9.4.1 At least one hundred and twenty (120) Days before the Date of
Initial Commercial Production, AKBN will notify CONTRACTOR
in writing -whether the entities comprising CONTRACTOR shall
pay Albanian profit tax in kind or in cash for the remainder of the
then current Calendar Year. Thereafter, AKBN shall annually
notify CONTRACTOR in writing, no later than October 1st, of
each Calendar Year, whether the entities comprising
CONTRACTOR shall pay Albanian profit tax for the immediately
following Calendar Year in kind or in cash. Should AKBN fail to
notify CONTRACTOR as required by, and, within the term
specified in, this Paragraph 9.4.1, the entities comprising
CONTRACTOR will make the payments for the relevant period
9.4.2 Each of the entities comprising CONTRACTOR shall pay
Albanian profit tax for each Calendar Year, whether in cash or in
kind (as determined under Paragraph 9.4.1) within sixty (60)
Days from the presentation to AKBN of the Statement of Cost
Recovery for the relevant Calendar Year, as required by Article
III of the Accounting Procedure.
9.4.3 When required to make payments in kind, the aforesaid entities
will each pay its Albanian profit tax in kind to AKBN at the
Metering Point, and AKBN will transfer this payment to the
appropriate authorities in Albania. AKBN shall obtain and
furnish each of the entities comprising CONTRACTOR with
official tax receipts from the appropriate Albanian authorities
showing that Albanian profit tax has been paid by them in a
9.4.4 For purposes of calculating the monetary value of the amount of
Petroleum delivered to AKBN by the CONTRACTOR for payment
of the Albanian profit tax and the amount of profit tax payments
in cash, as the case may be, for any Calendar Year, the value of
Crude Oil shall be the weighted average price for said Calendar •»
Year determined in accordance with Paragraph 7.11 or Paragraph
7.12, as the case may be, and the value of Gas shall be the
weighted average price for said Calendar Quarter determined in
accordance with Sections 2 or 3, as the case may be, of Annex “D”.
9.4.5 If both Crude oil and Gas are Produced from the Contract Area,
Albanian profit tax payments in kind will be made from both
Crude oil and Gas in the same proportion as their Average Daily
Production rates In BPD.
9.5 Other than the Albanian profit tax as described above, each entity
comprising CONTRACTOR, their respective Affiliated Companies,
* subcontractors and expatriate personnel shall be exempt from Albanian
taxes, duties, fees, charges and levies of any nature whatsoever, including
without limitation, value added taxes in accordance with the VAT Law and
excise taxes in accordance with the Excise Tax Law, payable to Albania,
with respect to all activities relating to the Petroleum Operations. This
exemption does not include normal port, warehouse and postal charges
and other similar customary charges of general application for actual
9.6 CONTRACTOR shall comply with the requirements of Albanian laws with
respect to the filing of returns, the assessment of taxes and the keeping for
review by authorized persons of books of accounts and records.
OFFICE AND SERVICE OF NOTICE
10.1 CONTRACTOR shall maintain an office in Albania at which notices shall
be validly served.
10.2 All matters and notices which are left in writing at the office of the Party
concerned or which are received by such Party when delivered personally
or sent by facsimile transmission at its main office in Albania shall be
deemed to be validly served.
SAVING OF PETROLEUM AND PREVENTION OF LOSS
11.1 CONTRACTOR shall take all proper measures, according to generally
accepted methods in use in the international petroleum industry, to
prevent loss or waste of Petroleum above or under the ground during
drilling, Producing, gathering and distributing or storage operations.
11.2 Upon completion of the drilling of a productive well, CONTRACTOR shall
inform AKBN of the time when the well will be tested and the Production
rate, when results are determined.
12.1 CONTRACTOR and its subcontractors engaged in carrying out operations
under this Contract shall be permitted to import, and shall be exempt from
Customs Duties, import license and other permits and fees (with the
exception of normal port and warehouse charges of general application in
Albania for actual services rendered to CONTRACTOR) with respect to the
importation of equipment, machinery, materials, including, but not limited
to, consumable items, moveable property, and spare parts for any of the
above, to be used in carrying out operations under this Contract. For this
purpose, CONTRACTOR and its subcontractors shall be exempt from any
prohibition, limitation and restriction of import, and country of origin.
CONTRACTOR shall follow procedural steps lawfully prescribed by the
Albanian General Customs Directorate that are necessary for the purpose
of implementing the import permissions and Custom Duties exemptions
granted to CONTRACTOR under this Paragraph 12.1.
12.2 Each expatriate employee of CONTRACTOR and its subcontractors shall
be permitted to import and shall be exempted from all customs duties,
import license and other permits and fees (with the exception of normal
port and warehouse charges of general application in Albania for actual
services rendered to them) with respect to the reasonable importation of
articles of personal use, provided, however, that such properties are
imported for the sole use of the employee and his family.
12.3 The exemption provided in Paragraph 12.1 shall not apply to any imported
items when items of the same or substantially the same kind and quality
are manufactured locally and are available for purchase and timely
delivery in Albania at a price not higher than the cost of the imported
items before Customs Duties, but after transportation and insurance costs
have been added.
12.4 Subject to AKBN approval as to any items for which there has been cost
recovery, any of the items imported into Albania, either exempt or
nonexempt from customs duties under this Article, which have not been
sold to third parties in Albania in accordance with Paragraph 12.5, may be
exported by the importing party, at any time after notification to the
Customs Office, without the payment of any tax, export duty, right or
12.5 Subject to AKBN approval as to any items for which there has been cost
recovery, new or used, but serviceable, material, equipment and goods
used in operations hereunder by CONTRACTOR and household goods,
items and personal effects which belong to the personnel of
CONTRACTOR and its subcontractors may be sold within Albania;
provided that the purchasers shall pay the applicable customs duties, if
any, to the Customs Office, except if sold to AKBN or any other entity
which is enjoying similar exemption as CONTRACTOR.
12.6 Subject to AKBN approval as to any items for which there has been cost
recovery, material, equipment and goods damaged or used as to be
unserviceable and which are classified by CONTRACTOR as scrap or as
junk may be sold as scrap or junked without payment of customs duties by
CONTRACTOR and its subcontractors.
12.7 In the event of such sale under Paragraphs 12.5 (except household goods,
items and personal effects owned by the employees of CONTRACTOR and
its subcontractors) and 12.6 above, the proceeds from such sales shall be
divided in the following manner: CONTRACTOR shall be entitled to
receive the proceeds, which proceeds (Net of customs duties), when
received, shall reduce the unrecovered cost, if any, which CONTRACTOR
is entitled to recover pursuant to Article VII hereof. If no costs remain to
be recovered by CONTRACTOR, then the entire proceeds (net of Customs
Duties) of such sale, if any, shall be paid to AKBN.
12.8 CONTRACTOR shall require no license and shall be exempted from any
duty, tax, fee or any other financial impost in respect of the export of
Petroleum from Albania.
12.9 AKBN will cooperate with CONTRACTOR in order to facilitate the import
and export operations, including the pertinent clearance procedures, under
BOOKS OF ACCOUNT. ACCOUNTING AND PAYMENT
13.1 CONTRACTOR shall maintain at its business offices in Albania books of
account in accordance with accounting practices required under Albanian
Law, the Accounting Procedure and accounting practices generally used in
the international petroleum industry and such other books and records as
may be necessary to show the work performed under this Contract,
including the amount of all Available Petroleum. CONTRACTOR shall
keep its books of account and accounting records in Dollars and Albanian
In the event of any arbitration proceedings under Article XXI of this
Contract, which involve CONTRACTOR'S Albanian books of account, those
books of account maintained in accordance with the accounting procedure
and international petroleum industry practices shall prevail over
inconsistent portions of the books of account maintained in accordance
with Albanian law.
13.2 All Dollar expenditures shall be recorded in CONTRACTOR’S books in the
amount expended. All Albanian currency expenditures shall be translated
into Dollars at the official buying rate of exchange quoted by the Bank of
Albania on the Day the relevant expenditure is paid. All other non-Dollar
expenditures shall be translated into Dollars at the rate for buying Dollars
with such currency as quoted by the Citibank, London, England, at 12:00
noon, London time, on the Day the relevant expenditure is made, and if
this is not a banking Day in London, on the next succeeding banking Day.
A record shall be kept of the exchange rates used in translating Albanian
currency or other non-Dollar expenditures to Dollars. CONTRACTOR shall
also be permitted to maintain and freely use Dollar bank accounts outside
Albania and in Albania for purposes of its operations under this Contract.
13.3 The aforesaid books of account and other books and records referred to
above shall be kept in English and Albanian Language and be available at
all reasonable times for inspection by duly authorized representatives of
AKBN and Albanian tax authorities.
RESPONSIBILITY FOR DAMAGES
14.1 CONTRACTOR shall exercise reasonable skill, care and diligence in the
discharge of its obligations under this Contract, but its liability to AKBN
arising out of the performance or non-performance by CONTRACTOR
shall be limited to cases of any demonstrated negligence on the part of
14.2 In case of any damage for which CONTRACTOR is responsible under this
Article XIV, CONTRACTOR shall endeavor to promptly and diligently
take the necessary measures, in accordance with Good International
Petroleum Industry Practices, to mitigate the damage and to restore
normal operations. CONTRACTOR will pay the appropriate compensatory
damages for which it is finally declared responsible.
14.3 CONTRACTOR shall in no event be liable for consequential damages, that
is, damages which are not a direct and immediate result of
CONTRACTOR'S acts or failure to act, including loss of Production or loss
14.4 CONTRACTOR shall, as part of Petroleum Operations, maintain *
insurance which a reasonable and prudent operator in the Petroleum
industry would maintain in connection with its operations, including
insurance of assets to which ownership has passed to AKBN under Article
XXIII of this Contract. However, CONTRACTOR shall be under no
obligation to maintain insurance in respect of assets to which ownership
has passed to AKBN as aforesaid where such assets have ceased to be used
by CONTRACTOR in Petroleum Operations.
RECORDS. REPORTS AND INSPECTION
il5.1 CONTRACTOR shall prepare and, at all times while this Contract is in
force, maintain accurate and current records of its Petroleum Operations
hereunder. CONTRACTOR shall furnish AKBN or its representatives
information and data concerning its Petroleum Operations in Albania
under this Contract.
Unless otherwise agreed to by AKBN, in case of exporting any rock
samples outside Albania for analysis abroad, samples equivalent in size
and quality, shall be kept by CONTRACTOR in Albania.
15.3 Originals of technical data records can be exported by CONTRACTOR for
analysis abroad; provided, however, that magnetic tapes and any other
data which must be processed or analyzed outside Albania may be
exported if a monitor or a comparable record is maintained in Albania by
CONTRACTOR shall permit AKBN, through its duly authorized
representatives or employees, to have full and complete access to the
Contract Area, at all reasonable times, with the right to observe the
operations being conducted and to inspect all records and data kept by
CONTRACTOR. AKBN's representatives in exercising this right under
the preceding sentence of this Paragraph 15.4 shall take care that the
Petroleum Operations are not hindered or delayed.
15.5 CONTRACTOR shall supply AKBN on a current basis with copies of all
technical data records (including, but not limited to, seismic field tapes,
geological and geophysical reports, logs and well surveys, information and
interpretation thereof), which are available to CONTRACTOR, including
sample tests, related to Petroleum Operations under this Contract. All
such data shall be deemed to be strictly confidential and shall not be
divulged by AKBN, except to other government authorities, without the
consent of CONTRACTOR nor by CONTRACTOR, except to Affiliated
Companies, professional consultants, banks or financial institutions from
whom the CONTRACTOR or any entity comprising Contractor is seeking
or obtaining finance and third parties who may be interested in acquiring
an interest in this Contract (provided always that such Affiliated
Companies, consultants, banks, financial institutions and third parties are
bound by a strict undertaking of confidentiality), or to the extent required
by any stock exchange on which the shares of the CONTRACTOR or any
entity comprising Contractor or an Affiliated Company of CONTRACTOR
or any entity comprising Contractor are quoted, with prior notification to
AKBN, while this Contract remains in force. Should this Contract be
terminated in the First Exploration Period or any subsequent Exploration
Period, CONTRACTOR shall be bound not to divulge, except to Affiliated
Companies, the data and information obtained by it and not to relinquish
them in any manner whatsoever during at least five (5) years from the
Termination of this Contract. The confidentiality undertaking by AKBN
does not include data on areas relinquished by CONTRACTOR, data which
can be delivered to'third parties provided that the recipients of such data
agree to use them only to determine the possibility of entering into a
contract for that area with AKBN and to maintain the data confidential.
EMPLOYMENT RIGHTS AND TRAINING OF ALBANIAN PERSONNEL
16.1 It is the desire of the Parties that Petroleum Operations hereunder be
conducted in a businesslike and efficient manner; therefore, AKBN agrees
16.1.1 The expatriate administrative, professional and technical
personnel employed by CONTRACTOR, and the personnel of its
subcontractors for the conduct of the Petroleum Operations
hereunder, shall be granted residency and permission to work in
16.1.2 Expatriate administrative, professional and technical personnel
employed by CONTRACTOR shall be paid for their services in
accordance with CONTRACTOR'S policies applicable to said
personnel, which will be consistent with international petroleum
16.2 CONTRACTOR shall be free to select its employees and determine the
number thereof to be used for Petroleum Operations hereunder in
accordance with international petroleum industry practices. Without
prejudice to the foregoing, it is agreed that:
16.2.1 Taking into account CONTRACTOR'S operational requirements
under this Contract, CONTRACTOR shall employ Albanian
personnel if their professional skills, knowledge and experience
are adequate to CONTRACTOR'S requirements. CONTRACTOR
shall reasonably cause its subcontractors to follow this procedure.
16.2.2 During Production, CONTRACTOR will gradually replace its non¬
executive expatriate personnel by qualified Albanian personnel,
16.2.3 If, pursuant to applicable Albanian law, CONTRACTOR is
required to withhold any taxes, social security payments and/or
health insurance payments from wages paid to its Albanian
employees or subcontractors or to perform all or some of social
security and health insurance payments for its Albanian
employees, CONTRACTOR will comply with such requirements
and, where applicable, remit such taxes and payments to the
appropriate authorities of the Albanian Government.
16.3 CONTRACTOR will prepare and carry out training programs for its
Albanian employees engaged in Petroleum Operations hereunder with
respect to applicable aspects of the Petroleum industry.
16.4 CONTRACTOR shall cooperate with AKBN's training programs as follows:
16.4.1 Within thirty (30) Days from the commencement of each Contract
Year CONTRACTOR shall pay to AKBN One hundred thousand
US Dollars (US$100,000) per Contractual year during the
Exploration Period, to be used for:
a) the purchase for the AKBN of advanced technical
literature, data, software, hardware and scientific
b) the sending of AKBN employees to selected courses in the
fields of petroleum science, engineering and management;
c) the coverage by the AKBN of certain administrative
expenditures related to this Contract implementation.
In the event these periods do not start at the beginning or
terminate at the end of a full Contract Year, such amount will be
16.5 All costs and expenses incurred by CONTRACTOR related to training
programs for Albanian employees, shall be recovered by CONTRACTOR
under Article VII hereof as Exploration Expenditures.
LOCAL CONTRACTOR AND LOCALLY MANUFACTURED MATERIAL
CONTRACTOR and its subcontractors shall:
17.1 Give priority to local contractors as long as their prices and the quality and
availability of their performance are comparable with international prices
17.2 Give preference to locally manufactured materials, equipment, machinery
and consumables, so long as their price, quality and time of delivery are
comparable to internationally available materials, equipment, machinery
and consumables. For purposes of price comparison, the cost of imported
items will exclude* custom duties, but will include transportation and
17.3 Submit for competitive bidding in accordance with Operator's policy, any
contract with an estimated value in excess of two million dollars
LAWS AND REGULATIONS
18.1 This Contract shall be governed and interpreted in accordance with the
laws of Albania to the extent they are applicable with due recognition of
internationally accepted laws. CONTRACTOR shall be subject to all laws
and regulations of local application in force in Albania, as specified in this
18.2 The rights and obligations of AKBN and CONTRACTOR under and for the
effective term of this Contract shall be governed by and in accordance with
the provisions of this Contract and can only be altered or amended by the
mutual written agreement of the Parties.
18.3 The subcontractors of CONTRACTOR shall be subject to the provisions of
this Contract applicable to them, and they shall also be subject to all laws
and regulations of local application and their amendments.
18.4 In the event that any new provisions or changes or amendments to
Albanian laws or regulations, or any changes in the interpretation thereof,
impose on CONTRACTOR or its subcontractors new or higher tributes,
taxes, duties, rights, payments or any other obligations, with respect to
those expressly considered applicable to CONTRACTOR or its
subcontractors under the terms of this Contract, Parties agree to amend
the Contract that the profit sharing percentages established under «
Paragraph 7.6 be adjusted accordingly to maintain the economic
equilibrium of this Contract, by allowing CONTRACTOR to receive the
same net share of profit sharing Petroleum as if no changes or
amendments had occurred.
18.5 Should the nature of the new provisions, changes, amendments or
interpretation referred to above make it impracticable to modify the profit
sharing percentages referred to in Paragraph 7.6, AKBN and
CONTRACTOR may agree on a different method to compensate
CONTRACTOR for the additional burden imposed on CONTRACTOR
provided this alternate method maintains the economic equilibrium of this
Contract as if no changes or amendments had occurred.
18.6 In order to determine the profit sharing percentage adjustment or the
alternate method to compensate CONTRACTOR referred to above, AKBN
and CONTRACTOR will meet within thirty (30) Days from the date on
which the changes or amendments have occurred and any adjustment to
the profit sharing percentages established under Paragraph 7.6 or the
alternate method of compensation to CONTRACTOR will be effective
retroactively as from the date of the event that motivated the adjustment.
19.1 CONTRACTOR, or the entities comprising CONTRACTOR, may not sell,
assign, nor otherwise transfer to any person, firm or corporation not a
Party hereto, in whole or in part, any of its Participating Interest nor any
other rights, privileges, duties or obligations under this Contract without
the written consent of the AKBN, except to an Affiliated Company.
Any such permitted sale, assignment or other transfer without necessary
consent shall require the transferring party to utilize its best efforts to
protect the interests of the other Parties.
CONTRACTOR or any entity comprising CONTRACTOR shall be free to
sell, assign, or otherwise transfer all or any part of its interest under this
Contract to an Affiliated Company and shall notify the AKBN thereof.
19.2 In the event that CONTRACTOR or any entity comprising Contractor
wishes to sell, assign, or otherwise transfer in whole or in part, any of its
interest hereunder other than as permitted above without consent, the
written consent thereto of the other Party shall not be unreasonably
withheld. Any purported sale, assignment or other transfer without such
consent shall be void.
19.3 Any assignment made pursuant to the provisions of this Article shall be
free of any income, transfer or related taxes, charges or fees. The
instrument of assignment must contain provisions stating precisely that
the assignee is bound by all covenants contained in this Contract and any
modifications or additions that up to such time may have been made.
Where AKBN’s consent is required, a draft of such instruments of
assignment shall be submitted to AKBN for review and approval before
being formally executed.
20.1 The nonperformance or delay in performance by AKBN and
CONTRACTOR, or' either of them, of any obligation under this Contract
shall be excused if and to the extent that such nonperformance or delay is
caused by Force Majeure. The period of such nonperformance or delay,
together with such period as may be necessary for the restoration of any
damage done during such delay, shall be added to the time given in this
Contract for the performance of such obligations dependent thereon and to
the term of this Contract.
Any Party claiming Force Majeure hereunder shall notify the other Party
as soon as possible after occurrence of the event with reasonable
20.2 If the Force Majeure event occurs during the First Exploration Period, or
any subsequent Exploration Period thereof, and continues in effect for a
period of two (2) years, CONTRACTOR shall have the option, upon ninety
(90) days’ prior written notice to AKBN, to terminate this Contract without
further liabilities of any kind.
DISPUTES AND ARBITRATION
21.1 Any dispute, controversy, claim or difference of opinion, arising out of or
relating to this Contract or the breach, termination or validity thereof, or
to the Petroleum Operations carried out hereunder, shall be finally and
conclusively settled by arbitration in accordance with the UNCITRAL
Arbitration Rules ("Rules").
21.2 With respect to the foregoing, the appointing authority under the Rules
shall be the President of the Court of International Arbitration of the
International Chamber of Commerce in Paris, France.
21.3 The number of arbitrators shall be three. The Party instituting the «
arbitration shall appoint one arbitrator and the Party responding shall
appoint another arbitrator, and upon failure of such responding Party to so
appoint an arbitrator within thirty (30) days the Party instituting the
arbitration may request the appointing authority to appoint such second
arbitrator in accordance with the Rules. The two (2) arbitrators thus
appointed shall choose the third arbitrator who will act as the presiding
arbitrator of the tribunal.
21.4 If, within thirty (30) days of appointment of the second arbitrator to be
appointed, the two (2) appointed arbitrators cannot agree upon the third
arbitrator, either Party may request the appointing authority to appoint
the third arbitrator.
21.5 The arbitration shall take place in Zurich, Switzerland. The language to be
“■ used in the arbitration proceedings shall be English. The Parties expressly
waive any right to appeal an arbitral award to any court whatsoever, and
the arbitral award shall be final and binding upon the Parties.
21.6 The arbitral award shall contain the reasons upon which the award is
based and an award of costs.
21.7 The right to arbitrate under this Article XXI shall survive the termination
of this Contract.
21.8 AKBN expressly waives any right to claim sovereign immunity in
connection with any proceeding instituted pursuant to this Article XXI,
any proceeding to compel enforcement of this Article XXI, or any
proceeding to enforce any award made by arbitration under this
21.9 Judgment on the award rendered may be entered in any Court having
jurisdiction or application may be made to such Court for a judicial
acceptance of the award and an order of enforcement, as the case may be.
21.10 Except as provided in Paragraph 7.13, any matter in dispute between
AKBN and CONTRACTOR which in terms of this Contract is to be
referred to an Expert, shall be referred for determination by a sole expert.
The Expert shall be given terms of reference, which shall be mutually
agreed between the Parties. The Expert shall be appointed by agreement
between AKBN and CONTRACTOR. If AKBN and CONTRACTOR 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
AKBN and CONTRACTOR shall have the right to consult with the Expert
and furnish him with data and information, provided the Expert may
impose reasonable limitations on this 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 AKBN and CONTRACTOR.
The Expert's determination shall be final and binding upon the Parties,
subject to any manifest error in his determination.
PIPELINES AND OTHER FACILITIES
22.1 During the term of this Contract and any extension thereof,
CONTRACTOR is entitled to the full use in the Contract Area, and any
other area approved by AKBN, of all fixed and moveable assets acquired or
obtained by the CONTRACTOR for the Petroleum Operations.
22.2 During the term of this Contract and any extension thereof,
CONTRACTOR shall be entitled, for the purpose of transporting
Petroleum within or from the Contract Area to the point of export or any
other delivery point agreed upon by AKBN and CONTRACTOR, to
construct, and operate any Pipelines and related facilities, as well as other
transportation and/or terminal facilities within or outside the Contract
Area, in accordance with an approved Development Work Program and
Budget. The construction of any facility outside the Contract Area shall
not unreasonably interfere with AKBN's or third parties' operations and
shall be done in coordination with AKBN.
22.3 If CONTRACTOR wishes to make use of any pipeline, transportation and
terminal facilities, which are at the disposal of AKBN and are not then
needed for other Petroleum operations, AKBN and CONTRACTOR shall
meet and agree on mutually satisfactory conditions for the use thereof
based on a reasonable economic tariff.
22.4 Any payment made by CONTRACTOR for such use shall be recoverable as
Operating Expenses under Article VII.
TITLE TO ASSETS AND ABANDONMENT
23.1 Title to fixed and moveable assets shall be transferred automatically and
gradually from CONTRACTOR to AKBN as their cost becomes subject to
recovery in accordance with the provisions of Article VTI and the
Accounting Procedure. However, the full title to fixed and moveable assets »
shall be transferred automatically from CONTRACTOR to AKBN when
their total cost has been recovered by CONTRACTOR in accordance with
the provisions of Article VII or at the time of the termination of this
Contract whichever first occurs.
23.2 Title to assets not subject to cost recovery by CONTRACTOR or imported
into Albania by CONTRACTOR’S expatriate personnel or by
CONTRACTOR'S subcontractors will not be transferred to AKBN, and said
items can be, at their owner's option, either sold in Albania subject to
Paragraph 12.5, or freely exported.
23.3 During the entire term of this Contract and any extension period thereof
CONTRACTOR is entitled to the foil free use in Albania of all fixed and
moveable assets acquired or obtained for the Petroleum Operations,
regardless of whether or not their cost has been recovered by
23.4 CONTRACTOR shall, upon request of the AKBN, remove any installations
or structures constructed by CONTRACTOR for the purposes of this
Contract and which are abandoned or disused, and for which there is no
prospect for future use, during the term or upon termination of this
23.5 In accordance with its term, the aforesaid removal and other abandonment
obligations shall be subject to and determined in accordance with the
(i) CONTRACTOR shall, in consultation with AKBN, timely prepare
and submit for AKBN approval an abandonment plan (hereinafter
referred to as the “Abandonment Plan”) including a detailed
technical and engineering description of the removal and
abandonment measures, consistent with the aforesaid obligations,
which it wishes to carry out upon completion of testing, Appraisal
or production from the Development and Production Area.
(ii) Not later than 180 days prior to the date referred to in (iii) below
CONTRACTOR shall submit to AKBN for its approval a detailed
budget (hereinafter referred to as the “Abandonment Budget”)
detailing the estimated cost for the Abandonment Plan.
(iii) Ten (10) years prior to the estimated date of termination of
production operations or at the end of the Quarter in which
cumulative production reaches seventy-five percent (75%) of
expected recovery of Petroleum, whichever occurs first, an amount
equal to the Abandonment Budget shall be" accrued on the books
of account (hereinafter referred to as the “Abandonment Cost
Account”) to be utilized to meet the costs of abandonment. This
amount shall be recoverable by CONTRACTOR in accordance
with Article VII, for the purpose of which the amount shall be
prorated on a unit of production basis over the expected
remaining recovery of Petroleum from the Development and
(iv) On the first anniversary of the date referred to in (iii)
hereinabove, and on an annual basis thereafter, the Parties will
meet to reassess the estimated Abandonment Budget and, if
necessary, will revise such Abandonment Budget, in which event
the Parties will also agree on any consequential adjustment to be
made to the amount to be placed in the Abandonment Cost
(v) Not later than one hundred and eighty (180) days prior to the
estimated date of termination of the Petroleum Operations in
respect of all or part of the Development and Production Areas,
CONTRACTOR shall prepare and submit to the AKBN a final
Abandonment Plan with such revisions, consistent with the
CONTRACTOR’ aforesaid obligations. Within sixty (60) days from
the approval of the said Abandonment Plan, CONTRACTOR shall
prepare and submit to AKBN a final Abandonment Budget. If the
balance in the Abandonment Cost Account (hereinafter referred to
as the “Cost Balance”) is insufficient to meet the aforesaid
Abandonment Budget, an amount necessary to meet the
Abandonment Budget shall be recorded in the Abandonment Cost
Account and shall be recoverable by the CONTRACTOR in
accordance with Article VII.
(vi) CONTRACTOR shall diligently carry out the removal and
abandonment operations specified in the Abandonment Plan and
such expenditures shall reduce the Abandonment Cost Account.
Any balance in the Abandonment Cost Account remaining on the
completion of operations and recovered in accordance with Article
VII shall be paid to the AKBN within thirty (30) days from the
completion of the said operations.
23.6 Without prejudice to the provisions of the Paragraphs 23.4 and 23.5
CONTRACTOR may, if in the opinion of the CONTRACTOR there are
circumstances that do not warrant continuation of the Petroleum
Operations and in consultation with AKBN, at any time give ninety (90)
days’ written notice to AKBN of its intention to relinquish its rights and
obligations pursuant to this Contract, except such rights and obligations as
have accrued in the period prior to such relinquishment as well as other
continuing rights and obligations as may be contemplated under this
Contract, and abandon the Contract Area in conformity with an
Abandonment Plan submitted to and duly approved by AKBN, which
approval will not be unreasonably withheld or delayed.
24.1 This Contract may be terminated by CONTRACTOR by giving not less
than thirty (30) days’ written notice to AKBN, provided that no
termination shall relieve CONTRACTOR from any unfulfilled commitment
or other obligation accrued prior to such termination. If one of the Parties
*• does not comply with any of the obligations stipulated in this Contract due
to reasons other than Force Majeure (including, but not limited to,
knowingly and intentionally providing false information to the other
Party), the other Party may give notice in writing to such non-complying
Party, informing it of the noncompliance and of its intention to terminate
the Contract at the end of the term of six (6) Months, unless said
noncompliance is rectified within said term. However, the Party
responsible for the noncompliance may submit the issue to arbitration
according to the provisions of Article XXI of this Contract within said
period of six (6) Months, and the Contract will continue to be in force
during the time the final resolution by the arbitrators has not been issued
24.2 Except in the case of Force Majeure, this Contract may be terminated by
AKBN by giving not less than one hundred and twenty (120) days’ written
notice to CONTRACTOR in the following events:
a) If CONTRACTOR has repeatedly committed a material breach of
its fundamental duties or obligations under this Contract and has
been advised by AKBN of AKBN's intent to terminate the
Contract pursuant to this provision and CONTRACTOR has
failed to remedy such breach within a reasonable period of time;
b) If CONTRACTOR does not substantially comply with any final
decision resulting from an arbitration procedure under Article
XXI hereof; or
c) If CONTRACTOR is adjudged bankrupt by a competent court or,
if there is more than one entity constituting CONTRACTOR, any
of them has been declared bankrupt by a competent court without
the other entities or entity taking appropriate action to remedy
24.3 Upon the Termination of this Contract, all the rights and obligations of the
Parties specified in this Contract will fully cease, subject to the following
24.3.1 That the rights and obligations of the Parties arising out of this
Contract before such Termination shall be honored.
24.3.2 That in the case of noncompliance and responsibility incurred
prior to the Termination by any of the Parties with respect to any
of the obligations stipulated in the Contract, these must be
rectified by the Party in default.
24.4 Subject to earlier termination pursuant to Paragraphs 24.1 or 24.2, this
Contract shall automatically terminate in its entirety if all of the Contract
Area has been relinquished or the Development and Production Period or
any subsequent extension has lapsed pursuant to this Contract provisions.
25.1 Without prejudice to Paragraph 5.6, CONTRACTOR shall comply with
Albanian Law No.7664, dated 21.01.1993, “On Environmental Protection,”
as amended by Law No.8364, dated 02.07.1998, “For Some Additions and
Changes at Law No.7664, dated 21.01.1993, “On Environmental
Protection” and by Law No.8225, dated 05.11.2001, “For Some Changes to
Law No.7664 dated 21.01.1993 “On Environmental Protection”; Law
No.8905 dated 06.06.2002 “On Protection of Marine Environmental from
Pollution and Damage”; Law No.8990 dated 23.01.2003 “On Impact
Assessment on Environment”; Law No.9115 dated 24.07.2003 “On
environmental Treatment of Waste Waters”; Law No.9010 dated
13.02.2003 “On Environmental Administration of Solid Waste” and Law
No. 9108, dated 17.07.2003, “On Chemical Substances and Preparations”
and other environmental regulations which may be issued; provided that
any new environmental laws and regulations issued, or any change in the
interpretation or application of existing environmental laws and
regulations occurring, after the Effective Date shall be subject to
Paragraph 18.4. CONTRACTOR will adopt internationally accepted
measures to avoid or minimize environmental contamination so that such
contamination will not cause degradation to the quality of life or health of
human beings, animals and vegetative resources.
25.2 CONTRACTOR is exclusively responsible to employ internationally
accepted programs to try to eliminate or minimize environmental
contamination. Wherever CONTRACTOR has been unable to avoid
contamination of the environment, it will be responsible for taking
reasonable steps to return the affected media or medium, as much as is
practicable, to its condition on the Effective Date, and to remedy any *
significant negative environmental impact directly caused by the
operations to the extent required by Albanian laws and regulations
applicable to oil and gas industry and in accordance with Good
International Petroleum Industry Practices.
25.3 AKBN may inspect CONTRACTOR’S records concerning compliance with
this Article XXV at all reasonable times after the Effective Date and until
six (6) months after Termination.
ENGLISH AND ALBANIAN TEXT
The English and Albanian versions of this Contract shall both have equal value
and be referred to in construing or interpreting this Contract; in case, however, of
any conflict in such construction or interpretation, the English version shall
27.1 CONTRACTOR shall pay to the AKBN one-time only a signature bonus in
cash of One hundred thousand US Dollars (US$100,000) within sixty (60)
days after the Effective Date.
27.2 CONTRACTOR shall pay a production bonus of One hundred thousand US
Dollars (US $ 100,000) on the start up of production and a production
bonus of Five hundred thousand US Dollars (US $500,000) to AKBN when
average daily Crude Oil production from the Contract Area over any
consecutive ninety-day (90) period reaches fifteen thousand (15,000)
Barrels oil per day and a further production bonus of One million US
Dollars (US $ 1.000,000) to AKBN when average daily Crude Oil
production from the Contract Area over any consecutive ninety-day (90)
period reaches thirty thousand (30,000) Barrels oil per day.
AHfTTfTT F YYVTTT
GOVERNMENT APPROVAL. THE EFFECTIVE DATE
This Contract shall be binding upon the Parties as from the Effective Date.
AKBN shall provide CONTRACTOR with a copy of the document evidencing
approval of this Contract by the Council of Ministers of the Government of the
Republic of Albania, within ten (10) working days the said Decision has been
published in the “Gazeta Zvrtare”.
29.1 Except as provided for in Article IX, the liabilities and obligations under
this Contract of the entities comprising the CONTRACTOR are joint and
29.2 The failure of any Party to exercise or enforce any right under this
Contract shall not be deemed a waiver of any such right.
29.3 CONTRACTOR shall indemnify the Albanian Government, the Ministry
and AKBN and their respective employees, officials, officers, directors and
agents from all claims by third parties for personal injury or property
damage resulting from the conduct of Petroleum Operations, whether
conducted by or on behalf of CONTRACTOR, including without limitation,
reasonable attorney's fees and direct costs of defense, provided however,
that CONTRACTOR shall not be liable under this Paragraph 29.3 for any
loss, claims, damage or injured caused by or resulting from any negligent
action of the Albanian Government, AKBN and their employees, officials,
directors and respective agents.
29.4 Within sixty (60) days after the Effective Date, CONTRACTOR shall cause
to be executed and shall deliver to the AKBN a Performance Guarantee
substantially in the form of that attached to and made a part of this
Contract as Annex “E”.
Should the CONTRACTOR decide to enter any of the subsequent
Exploration Periods, CONTRACTOR shall execute and deliver to the
AKBN, not later than sixty (60) days after such decision, a Performance
Guarantee substantially in the form of that attached to and made a part of
this Contract as Annex “E”.
29.5 In connection with the Performance Guarantee referred to in Paragraph
29.4 above, AKBN shall, commencing three months after the Effective
Date and at three-monthly intervals thereafter, deliver to CONTRACTOR
a written statement of the expenditure incurred by CONTRACTOR during
the three-month period covered by the said statement and accepted by
AKBN as counting towards fulfillment by CONTRACTOR of its Work
Program obligations for the First Exploration Period and, as the case may
be, the Second Exploration Period and the Third Exploration Period.
IN WITNESS HEREOF, this Contract has been duly signed by the respective
Parties hereto as of the date first set out above.
^ MINISTRY OF ECONOMY, TRADE AND ENERGY OF ALBANIA
DESCRIPTION OF THE CONTRACT AREA
The Contract Area covered and affected by this Contract comprises, on the
Effective Date, the area enclosed by the following lines, also shown on the map
comprising ANNEX “B”:
ALBANIA ONSHORE BLOCK D E BOUNDARIES
1 41° 20’ 00” N
19° 45’ 00” E
2 41° 40’ 00” N
19° 45’ 00” E
3 41° 40’ 00” N
20° 00’ 00” E
4 41° 20’ 00” N
20° 00’ 00” E
5 41° 05’ 00” N
20° 00’ 00”E
6 41° 05’ 00”N
19° 48’ 00”E
7 41° 00’ 00”N
19° 48’ 00”E
8 41° 00”N
19° 45’ 00”E
MAP OF THE CONTRACT AREA
ARTICLE!, GENERAL PROVISIONS
The definitions contained in Article I of the Contract shall apply to this
Accounting Procedure and have the same meaning.
2. Accounting Records
2.1 CONTRACTOR shall maintain accounting records in accordance
with Article XIII of the Contract and with generally accepted
accounting practices used in the international petroleum
2.2 CONTRACTOR shall open and maintain such separately
identifiable accounting records as may be necessary to record, in a
full and proper manner, all costs in respect of the Contract and all
credits obtained by CONTRACTOR in connection with Petroleum
2.3 Accounting books shall be expressed in Dollars and Albanian
Leke in accordance with Paragraph 13.2 of the Contract. Any loss
or gain resulting from the exchange of currency required for
CONTRACTOR'S Petroleum Operations or from related
translations from one currency to another shall be charged or
credited to recoverable costs.
3. Statement of Activities
3.1 CONTRACTOR shall render to AKBN, as soon as possible, but no
later than sixty (60) Days from the end of each Calendar Quarter,
a Statement of Exploration Activity as per Paragraph 4.8 of the
Contract. Such Statement will reflect all charges and credits
related to Exploration Expenditures for that Calendar Quarter
summarized by the classification specified in Article II of the
3.2 CONTRACTOR shall render to AKBN, as soon as possible, but no
later than sixty (60) Days from the end of each Calendar Quarter,
a Statement of Development Activity as per Paragraph 6.13 of the
Contract, reflecting all charges and credits related to
Development and Production for that Calendar Quarter
(“Development Expenditures and Operating Expenses”)
summarized by appropriate classifications indicative of the
4. Audits and Adjustments
4.1 Each cost item in a Statement of Exploration Activity shall be
conclusively deemed to be an Approved Cost after three (3)
Months following the receipt of that Statement by AKBN, unless
within the said three (3) Months AKBN takes written audit
exception thereto in accordance with Paragraph 4.8 of the
Contract. In that event, AKBN and CONTRACTOR shall confer
in a timely manner and attempt to reach a settlement, in the
course of which said Parties shall identify Rejected Costs and
Suspended Costs that result from such audit.
4.2 Each cost item in a Statement of Development Activity shall be
conclusively deemed to be an Approved Cost after twelve (12)
Months following the receipt of that Statement by AKBN, unless
within the said twelve (12) Months period AKBN takes written
audit exception thereto. In the event AKBN takes such written
exception, AKBN and CONTRACTOR shall confer in a timely
manner and attempt to reach a settlement, in the course of which
said Parties shall identify Rejected Costs and Suspended Costs
that result from such audit.
4.3 AKBN shall make every reasonable effort to conduct audits in a
manner which will result in a minimum of inconvenience to
CONTRACTOR and CONTRACTOR'S Petroleum Operations.
CONTRACTOR shall make every reasonable effort to cooperate
with AKBN and, as appropriate, will provide reasonable facilities
4.4 All adjustments resulting from an audit agreed between
CONTRACTOR and AKBN shall be rectified promptly in the
subsequent Statement of Activities by CONTRACTOR and
reported to AKBN. If any dispute shall arise in connection with
an audit, it shall be discussed by the Finance Management of
AKBN and CONTRACTOR and, if not solved, the item or items in
dispute shall be settled by arbitration as provided in Article XXI
of the Contract.
5. If a Party fails to make any payment due under the provisions of this
Contract within the time that is specified for such payment, then such
Party shall add to such overdue payment interest at a rate per annum of
two and one-half percent (2.5%) higher than the London Interbank
Borrowing Offered Rate (“LIBOR”) for three (3) Month deposits of
United States Dollars as quoted by the London Office of Citibank (or
such other Bank as the Parties may agree) at approximately 11:00 AM
London Time for the day or days that the rate will apply.
ARTICLE II, COSTS. EXPENSES AND EXPENDITURES
Subject to the provisions of the Contract, CONTRACTOR shall alone bear and,
directly or through its Affiliated Companies, pay the following costs and
expenses, which costs and expenses shall be treated and recovered by
CONTRACTOR in accordance with Article VII of the Contract provided that they
are not incurred prior to the Effective Date except as to those expenditures
related to an Exploration Period Work Program, as agreed by AKBN.
1. Governmental Payments
All governmental fees, rentals, assessments, renewal and extension fees
and other payments of every kind or nature paid by CONTRACTOR
under the terms of the Contract, except for production bonuses paid
pursuant to Article XXVIII of the Contract.
2. Personnel Costs
2.1 Salaries and wages of CONTRACTOR'S employees directly
engaged in Petroleum Operations, including salaries or wages
paid to CONTRACTOR'S expatriate employees who are
temporarily assigned to and employed on such operations. Under
this subparagraph 2.1, CONTRACTOR is entitled to charge, on a
monthly basis, the costs of all staff who are engaged in Petroleum
2.2 CONTRACTOR'S costs for employees' holidays, vacations, living
and housing allowances, traveling, bonuses, and other customary
allowances applicable to the salaries and wages chargeable under
subparagraph 2.1 and Paragraphs 11 and 12 of this Article II.
2.3 Expenditures or contributions made pursuant to law or
assessments imposed by governmental authority which are
applicable to CONTRACTOR'S labor costs or salaries and wages
as provided under subparagraphs 2.1 and 2.2 and Paragraphs 11
and 12 of this Article II.
3- Employee Benefits
CONTRACTOR'S cost of established plans for employees group life
insurance, medical, disability, hospitalization, pension, retirement,
stock purchase, thrift, and other benefits of a like nature for expatriate
employees and for national employees, all are chargeable under
subparagraphs 2.1 and 2.2 and Paragraphs 11 and 12 of this Article II.
Severance pay will be charged at a fixed rate applied to payrolls, which
will equal an amount equivalent to the maximum liability for severance
payments, as required by the obligations of CONTRACTOR under
Albanian Labor Law.
. 4. Materials
Materials, equipment and supplies purchased or furnished by
CONTRACTOR for use in Petroleum Operations.
Material and equipment purchased shall be charged at the price
paid by CONTRACTOR after deduction of all discounts actually
received by CONTRACTOR or its Affiliated Companies. Price
shall include, but not be limited to, such costs as third party
procurement fees, inspection and expediting charges, export
broker's fees, transportation charges, insurance charges, loading
and unloading fees, import duties and license fees, and all other
items customarily associated with the procurement of material
and equipment and applicable taxes.
4.2 Materials Furnished bv CONTRACTOR
Material required for Petroleum Operations shall be purchased
directly whenever practicable, except that CONTRACTOR may
import such material from CONTRACTOR'S or CONTRACTOR'S
Affiliated Companies' stocks outside Albania under the following
4.2.1 New Material (Condition “A”)
New Material transferred from CONTRACTOR’S Affiliated
Companies' warehouse or other properties shall be priced
at cost, net of all discounts taken, provided that the cost of
material supplies is not higher than international prices for
material of similar quality supplied on similar terms
prevailing at the time such material was ordered.
4.2.2 Used Material (Condition “B” and “C”), which will be used
with approval of AKBN.
126.96.36.199 Material, which is in sound and serviceable
condition for reuse without reconditioning shall
be classified as Condition “B” and priced at
seventy-five percent (75%) of the price of new
material. This category shall include, but not be
confined to, material, which has undergone a
reconditioning process and has been restored to
fully serviceable condition.
188.8.131.52 Material, which cannot be classified as Condition
“B”, but which is serviceable for its original
function, but substantially not suitable for
reconditioning, shall be classified as Condition
“C” and priced at fifty percent (50%) of the price
of new material.
184.108.40.206 Material, which cannot be classified as condition
“B” or “C” shall be priced at a value
commensurate with its use.
4.3 Premium Prices
Whenever material is not readily obtainable at the customary
supply points and at prices specified in subparagraphs 4.1 and 4.2
of this Paragraph 4 because of national emergencies, strikes or
other unusual causes, CONTRACTOR may charge for the
required material on the basis of CONTRACTOR'S direct costs
and expense incurred in procuring such material, in making it
suitable for use, and in moving it to the location.
4.4 Warranty of Material Purchased or Furnished bv CONTRACTOR
CONTRACTOR does not warrant the material. The only guaranty
for material purchased or furnished by the CONTRACTOR is the
dealer's or manufacturer's guaranty; in case of defective material,
credit shall be passed as obtained from or pursuant to supplier's
or manufacturer's guarantees, when adjustment has been
received by CONTRACTOR from the supplier or manufacturer.
Transportation of employees, equipment, material and supplies
necessary for the conduct of the Petroleum Operations. This includes all
employees' transportation and relocation costs, but only to the extent
covered by the established policy of CONTRACTOR, including travel •»
expenses for employees and their families at the time of employment, at
the time of separation and for vacations, and as a result of transfer from
one location to another. Such costs shall also include transportation of
personal and household effects and all other relocation costs.
6.1 The cost of consultants, contracted services and utilities procured
from third parties.
6.2 The cost of technical, professional and other services furnished by
CONTRACTOR'S Affiliated Companies performed in any other
country outside Albania shall consist of salaries, wages and
payroll burden of such employees of CONTRACTOR'S Affiliated
Companies who are performing services in respect of Petroleum
Operations. These costs, together with associated overheads, will
be charged in accordance with the following rates:
Charges and Credits Rate Chargeable
$0 - $5 MM 5%
$5 MM - $10MM 3%
Greater than $10 MM 2%
Such rates shall be applied on an annual basis to the cumulative
charges and credits as reported in the Statements of Activities as
referred to in Article I, paragraph 3. Such charges will cover, but
will not be limited to, the following types of services:
Engineering, Geological, Geophysical, Health, Environmental and
Safety, Accounting, Finance, Treasury, Tax, Legal, Employee
Relations, Administration, Executive Management, Data
Processing and Purchasing and Drafting.
6.3 For services rendered by equipment or facilities owned or leased
exclusively by CONTRACTOR’S Affiliated Companies, the cost to
be charged shall be at rates commensurate with the cost of
ownership and operation or, in respect of major items such as
drilling rigs or vessels, at rates not higher than those prevailing
in the international petroleum industry.
Damages and Losses
All costs and expenses necessary to replace or repair damages or losses
incurred by fire, flood, storm, theft, accidents or any other cause not
controllable by CONTRACTOR. CONTRACTOR shall furnish AKBN
with a written notice of damages or losses incurred as soon as
practicable after report of the same has been received by
8.1 All costs and expenses of litigation, or legal services otherwise
necessary or expedient for the protection of CONTRACTOR'S
interest in the Contract Area or under and pursuant to the
Contract, including attorney's fees and expenses as hereinafter
provided, together with all judgments obtained against
CONTRACTOR or on account of the Petroleum Operations and
actual expenses incurred by CONTRACTOR in securing evidence
for the purpose of defending against any action or claim
prosecuted or urged against the Petroleum Operations or the
subject matter of the Contract, provided these expenses are not
related to unsuccessful disputes of CONTRACTOR with AKBN.
8.2 In the event actions or claims are handled by CONTRACTOR'S
legal staff, appropriate charges shall be borne for rendering such
All taxes, duties, dues or imposts of every kind and nature assessed or
levied upon or in connection with the operations hereunder, other than
those covered by Article IX of the Contract.
Insurances and Claims
10.1 Premiums paid for any public liability, property damage and
other insurance carried by CONTRACTOR, together with all
expenditures incurred and paid in settlement of any and all
losses, claims, damages, judgments and other expenses, including
legal services, not recovered from insurance carrier.
10.2 If the item or event is not covered by insurance, the actual
expenditures incurred and paid by CONTRACTOR in settlement
of any and all losses, claims, damages, judgments and any other
expenses, including legal services.
10.3 All settlements arising from insurance claims made by
CONTRACTOR against insurers in respect of insurance carried
for the benefit of the Petroleum Operations shall be credited to
recoverable costs in the month in which they are received.
11. Local Administration/Field Offices
The salaries and expenses of CONTRACTOR'S management and other
employees, located in Albania, serving the Petroleum Operations, whose
time is not allocated directly to the Petroleum Operations, and the cost
of maintaining and operating Exploration and/or Production offices and
necessary sub-offices (including housing facilities for employees, if
required) used in the conduct of such Petroleum Operations. Such
charges shall be apportioned to all Contract Areas served on an
equitable basis, if applicable.
12. Warehouse Handling Charges
In the event that warehouse facilities are required to carry out the
Petroleum Operations, all costs required to establish and maintain the
warehouse and all costs incurred in handling material in the warehouse.
13. Other Expenditures
Any other costs and expenses necessary and proper, including, without
limitation, acquisition of real property rights for Petroleum Operations,
and abandonment expenses, incurred by CONTRACTOR under Work
Programs and Budgets or to solve Emergency Situations.
In addition to other credits made to the accounts in accordance with the
Contract and this Accounting Procedure, the net proceeds, when
received, arising from the following, shall be credited to recoverable
costs to the extent that costs were originally debited to the recoverable
14.1 Income received from third parties for use of CONTRACTOR'S
property exclusively used in the Petroleum Operations; and
14.2 Rentals, refunds and other credits received by the
CONTRACTOR applicable to any charge that has been made to
14.3 Any adjustment received by CONTRACTOR for the
suppliers/manufacturers or their agents in connection with
defective equipment or material the cost of which was previously
charged by CONTRACTOR under the Contract.
14.4 Costs recovered on time exported pursuant to article 12.4 of this
14.5 Proceeds from all sales of surplus material charged to the amount
under the Contract in accordance with the Article 12,7.
14.6 Insurance proceeds.
15- No duplication of charges and credits
Notwithstanding any provision to the contrary in this Accounting
Procedure, it is- the intention that there shall be no duplication of
changes or credits in the accounts under this Contract.
ARTICLE III, COST RECOVERY
1. Statement of Cost Recovery
CONTRACTOR shall render to AKBN, as promptly as practicable, but
not later than sixty (60) Days after each Calendar Quarter, a Statement
of Cost Recovery for that Quarter.
Pending completion of each audit and any settlement or arbitration
pursuant thereto under the Contract, CONTRACTOR shall prepare
directly from each Statement of Exploration Activity and Development
Activity, for each Calendar Quarter, the Statement of Cost Recovery for
that Quarter. All necessary adjustments that are consequent upon
completion of audits and settlements (by whatever means) of audit
exceptions shall be accounted for as they arise, and in accordance with
the Contract, by their inclusion as debit or credit (as appropriate) in the
next Statement of Cost Recovery then to be prepared; however, no
Rejected Cost may be included in any such Statement.
The Statements of Cost Recovery will show the following:
1.1 Section 1 - Total Costs
1.1.1 Total costs brought forward from prior Calendar Quarters.
1.1.2 New revisions (Rejected Costs and Approved Costs) to prior
Statements of Exploration and Development Activity, to be
effected in this Statement.
1.1.3 New Exploration and Development Expenditures and
Operating Expenses for the Calendar Quarter (subject to
audit) from Statements of Exploration and Development
1.1.4 Total costs, including those subject to audit.
1.2 Section 2 - Value of Cost Recovery Petroleum
(taking into consideration any prior underliftings against
1.2.1 Value of Cost Recovery Crude Oil taken in kind and
disposed of by CONTRACTOR for the Calendar Quarter.
1.2.2 Value of Cost Recovery Gas taken in kind and disposed of
by CONTRACTOR for the Calendar Quarter.
1.2.3 Total value of Cost Recovery Petroleum (1.2.1 plus 1.2.2).
1.3 Section 3 - Cost Recovery
1.3.1 Costs from Section 1 recovered from value of Cost Recovery
1.3.2 Carry forward of unrecovered costs, if any.
1.4 Section 4 - Profit Petroleum
1.4.1 Value of Profit Crude Oil, if any.
1.4.2 Value of Profit Gas, if any.
1.5 Section 5 - Suspended Costs Account
1.5.1 Total Suspended Costs brought forward from prior
1.5.2 Net Suspended Costs newly settled, or newly identified by
audit, during the Calendar Quarter.
1.5.3 Total Suspended Costs carried forward to the next
Calendar Quarter (1.5.1 plus 1.5.2).
If a Statement of Cost Recovery shows an amount due to AKBN,
payment of that due amount shall be made in Dollars within thirty (30)
Days after presentation of that Statement.
AKBN shall have a period of twelve (12) Months from receipt of each
Statement of Cost Recovery in which to audit and raise objection to such
Statement. AKBN and CONTRACTOR shall agree on any appropriate
adjustments as a result of such audit. Supporting documents and
accounts will be available to AKBN during said twelve (12) Month
4. Cost Recovery Control Account
CONTRACTOR shall establish a Cost Recovery Control Account and an
off-setting contra-account to control therein the amount of cost
remaining to be recovered, if any, the amount of costs recovered and the
value of Profit Petroleum, if any. Such accounts shall be prepared on
the basis of (and be consistent with) the Calendar Quarterly Statements
of Cost Recovery.
ARTICLE IV. REVISION OF THE ACCOI IKMMI SG PROCEDURE
The provisions of this Accounting Procedure may be amended by unanimous
written agreement of the Parties. Any Party may request a review of possible
modifications. If agreement is reached, an instrument of amendment, which shall
state the effective date of such amendment, shall be prepared and executed by
PROCEDURE FOR DETERMINING THE BOE OF GAS AND
FOR PRICING GAS AND LPG
1. The definitions contained in Article I of the Contract are hereby adopted
for use in this ANNEX and incorporated herein by reference.
*2. In case AKBN and CONTRACTOR enter into Gas sales contracts for the
use of Gas produced under the Contract for sales to customers outside
Albania, said Gas sales contracts shall contain provisions generally used
in the international Petroleum industry. The prices which AKBN and
CONTRACTOR shall receive for such Gas shall be specified in the Gas
3. In case AKBN and CONTRACTOR enter into a Gas sales contract for
use in Albania of CONTRACTOR'S share of Gas produced under the
Contract, said Gas sales contract shall contain provisions generally used
in the international Petroleum industry, including a long-term purchase
commitment by AKBN and the delivery by CONTRACTOR of the
minimum agreed daily volume in accordance with technical constraints.
The Parties shall negotiate and endeavor to enter into a gas sales
contract covering the Gas (as defined herein) for sale in the Albanian
domestic market. The Parties shall agree on the proportion of Gas that
is available for immediate sale to the Albanian domestic market
provided, however, that all Gas to be sold in the Albanian domestic
market under such gas sales contract shall be sold on terms and
conditions no less favorable than those available to CONTRACTOR in
the international market, including the following terms and conditions:
(a) a term which requires the initial delivery date for the Gas to be
sold in the Albanian domestic market to be coincident with or
within fifteen (15) days of the initial delivery date anticipated for
the delivery of the Gas in the international market;
(b) a provision setting a price which is not less than the price
CONTRACTOR could obtain in the international market
(calculated on an equivalent BTU basis); and
(c) a term which requires the buyer(s) of the Gas to be responsible for
all costs, expenses and liabilities associated with the design,
construction, installation and operation of a natural gas pipeline
and related facilities necessary to make the Gas available for
delivery into the Albanian domestic market.
In no event, however, shall the entering into a gas sales contract for the
sale or the use of the Gas in the Albanian domestic market jeopardize or
impede CONTRACTOR' ability to enter into a Gas sales contract for any
of CONTRACTOR'S share of Gas in the international market. In the
event the proposed or offered gas sales contract for the Albanian
domestic market does not meet or satisfy all of the above terms and
conditions, CONTRACTOR’S shall have the unfettered right to enter
into a gas sales contract covering its full share of Gas in the
3.1 The initial Gas price which the AKBN shall pay to
CONTRACTOR shall be the average of prices paid for Gas
delivered to Italy for the six (6) Calendar Month period prior to
the date of the Initial Commercial Production of Gas, as quoted in
the table listed as “European Border Prices” in the well known
and internationally quoted publication WORLD GAS
INTELLIGENCE, which is published by Petroleum & Energy
Intelligence Weekly, Inc. with reference to the gross calorific
3.2 The initial Gas price shall be effective for the first Calendar
Month of production after the Date of the Initial Commercial
Production and for the partial Month preceding this first
Calendar Month if the Date of Initial Commercial Production is
not on the first day of a Calendar Month.
3.3 The price that the AKBN or its designated purchaser shall pay to
CONTRACTOR for its share of such Gas for any Month of
delivery after the first Calendar Month of production after the
Date of the Initial Commercial Production shall be the average of
prices paid for Gas delivered to Italy for the six (6) Calendar
Months' period prior to the Month of delivery, as quoted in the
table listed as “European Border Prices” in the well known and
internationally quoted publication WORLD GAS
INTELLIGENCE, which is published by Petroleum & Energy
Intelligence Weekly, Inc., with reference to the gross calorific
3.4 The price that the AKBN or its designated purchaser shall pay to
CONTRACTOR for its share of such Gas shall be paid in Dollars
within thirty (30) days after the end of a Calendar Month for Gas
delivered by CONTRACTOR in the preceding Calendar Month.
4. The Commercial Discovery of Gas under the Contract by
CONTRACTOR and the execution of a Gas sales contract with AKBN
may lead, should market conditions necessitate, to the commencement
of discussions concerning the implementation of an LPG project. Any
such discussions and resulting plan shall meet the terms of the
Form of Bank Guarantee
NATIONAL AGENCY OF NATURAL RESOURCES