This contract is originally executed in the Albanian language and, subject to the below, such Albanian language version shall govern in all matters relating to this contract.
If the licensee will be comprised of Albpetrol and a foreign partner, an English language translation of this contract shall be appended to the instrument of transfer. By execution of such instrument of transfer, the parties to such instrument of transfer (including the government acting in accordance with its authority under this contract to approve such transfer) shall agree that such English language version is an accurate translation of this Albanian language version, and that such English language version shall prevail over the Albanian language version in all matters related to this contract, including any amendments, notices and communications, for so long as Albpetrol includes such foreign partner. In such event, all information, notices and communications to be given or delivered under this contract shall be in both the Albanian and the English languages, or accompanied by an English translation.
Unless sooner terminated, this contract shall remain in effect during the evaluation period of up to 24 months and any extension subsequently made under this contract and any development and production period if entered into, which ends on the 25th anniversary of the effective date of the contract.
Subject to the petroleum law, at the end of any development and production period the government and Albpetrol may agree to further 5 year extensions in accordance with the procedures set forth in this contract.
Environmental impact assessment and management plan
Albpetrol shall as soon as reasonably possible after the effective date, submit for the approval from the environmental authority a report on the environmental baseline status of the project area as at the effective date. With each expansion of the project area, Albpetrol shall submit for the approval from the environmental authority a report on the environmental baseline status of the expanded portion of the project area as at the relevant date. Albpetrol shall not then be liable for any environmental damages incurred prior to the effective date of the approved environmental baseline study, and the national agency of natural resources shall indemnify and hold harmless Albpetrol from any third-party claims made under this article.
Albpetrol shall conduct petroleum operations in a safe and proper manner in accordance with Albanian law and generally accepted international petroleum industry practice. If the national agency of natural resources (AKBN) reasonably determines that any works or installations erected by Albpetrol or any petroleum operations conducted by Albpetrol endanger or may endanger persons or third party property or cause pollution or harm the environment to an unacceptable degree, the AKBN may require Albpetrol to take remedial measures within a reasonable period and to repair any damage to the environment.
The ministry of trade and energy and the national agency of natural resources shall ensure that Albpetrol has use of water and sanitary structures and other infrastructures in Albania property of the Albanian state, at commercially reasonable rates and on a non-discriminatory basis, so as to be able:
(i) to perform the petroleum operations in compliance with this contract; and
(ii) to produce, transport, export and sell petroleum in or from Albania as provided in this contract and the Law No.7746 dated 28.07.1993.
At the sole expense and cost of the National Agency of Natural Resources (AKBN), the AKBN shall have the right to inspect and audit books of account and accounting records with regard to the petroleum operations, but no more than once in a fiscal year, except as otherwise agreed with operator. Such audit right will cease 3 years after closure of such fiscal year. Any exception to Albpetrol's accounting records shall be communicated to Albpetrol in written form within 3 years from the date on which Albpetrol hands over its accounting records for such fiscal year, otherwise such accounting records shall be deemed to be correct and, thereafter, may not be subject to objection.
Albpetrol's foreign contractors will not be responsible for taxes and duties to the extent that they apply, directly or indirectly, to the petroleum operations. Albpetrol's Albanian sub-contractors will not be discriminated against with regard to taxes and duties to the extent that they apply, directly or indirectly to the petroleum operations.
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Albpetrol shall recover all petroleum costs under this contract out of 100% of the available petroleum after deducting the Albpetrol share (referred to as “cost recovery petroleum”).
To the extent that, in a fiscal year, costs and expenses recoverable exceed the value of the cost recovery petroleum for such fiscal year, the excess shall be carried forward for recovery in the succeeding fiscal year or fiscal year(s) until fully recovered, but will in no case be carried forward after the termination of this contract.
Restrictions on transactions with affiliated parties
The base price of petroleum used or otherwise possessed, besides sales to third parties, will be determined by national agency of natural resources (AKBN) and Albpetrol. AKBN and Albpetrol shall mutually select, as soon as possible, at least one reference petroleum with similar gravity and quality to the petroleum produced under this contract, after taking account of quality and freight differences. Every petroleum chosen as a petroleum reference, shall be one that is sold in considerable amounts in arm’s length transactions, if suitable and capable of delivery into markets into which petroleum produced under this contract is also suitable and capable of delivery and has a spot assessment published weekly in Platt’s Oilgram Price Report.
Albpetrol will select its management and employees according to its discretion, and shall determine the conditions of employment and the number of employees to be used for petroleum operations. However, Albpetrol and its sub-contractors will, to the extent available, employ qualified Albanians to carry out the petroleum operations.
Albpetrol can employ sub-contractors, but Albpetrol shall give priority to services performed by Albanian sub-contractors if such services are offered under equally favorable conditions regarding the quality, price and availability they may be offered by foreign sub-contractors.
Albpetrol and its sub-contractors shall give priority to the goods and materials produced in Albania if these goods and materials are being offered under equally favorable conditions regarding the quality, price and availability, and in the quantities required.
Albpetrol shall be entitled to use free of charge and for the performance of the petroleum operations, all other assets, equipment, means and infrastructure (including roads, electricity power lines and water, oil and gas pipelines) existing on the signing of this contract in the contract area or elsewhere as described in the petroleum agreement, on an "as is" basis and available for delivery, but (unless otherwise agreed with the supplier) subject to payment, as applicable, on a non-discriminatory basis, at reasonable cost for electricity, water, oil and gas used.
Albetrol shall also be entitled to use, under commercially reasonable terms and conditions, the pipelines that transport the petroleum produced in the contract area to the ports and refineries in Albania.
The ministry of trade and energy and the national agency of natural resources shall ensure that Albpetrol has use of the railways, roads, highways, water, land surface, timber, electricity, sanitary structures and other infrastructures in Albania property of the Albanian state, at commercially reasonable rates and on a non- discriminatory basis, so as to be able:
(i) to perform the petroleum operations in compliance with this contract; and
(ii) to produce, transport, export and sell petroleum in or from Albania as provided in this contract and the Law No.7746 dated 28.07.1993 “Petroleum Law (Exploration and Production).”
Albpetrol may flare the associated gas which is not required for use in petroleum operations under this contract:
(i) if, in Albpetrol's opinion, such associated gas production is not economical and commercially viable or
(ii) when it is in accordance with good oilfield practice. However, if the National Agency of Natural Resources (AKBN) believes that such associated gas should be utilized, the AKBN may take this associated gas free of charge and use it if the costs, risk and expenses for the installation of equipment, as required in order to deliver associated gas to the AKBN, are borne by the AKBN, and such delivery causes neither an interruption of petroleum operations nor a negative effect on Albpetrol's economic benefit.
1. The evaluation period will last 24 months from the date the contract is signed with the option for 6 months extension upon written request of contractor and Albpetrol to the national agency of natural resources (AKBN).
2. Re-activation or re-completion of 10 wells in the Kucova oilfield. The contractor will re-enter and clean out the existing well bores and replace or refurbish the production tubing as necessary. It is contemplated that new pumps of the progressive cavity type will be placed in the well bore appropriately sized as per the productive capability of the well. The pumps will be connected to small generator sets which will activate if the electrical power supplied to the pump is interrupted for any reason, thus ensuring 24 hour operation of the pump. The work to be done on each well shall be at the sole discretion of the contractor.
3. Equip and tie-in 10 wells that are currently not producing but are capable of production. In addition to the work contemplated above these wells will be reactivated after all the available information for each well has been evaluated and the well judged to be a suitable candidate for reactivation. Reactivation of the well may include the shutting off of perforated zones that are no longer producing oil and the re-perforating of existing producing zones and/or the perforating of new zones judged capable of producing oil. The work to be done on each well shall be at the sole discretion of the contractor.
4. Evaluate the production, reserves and reservoir performance of the Kucova oilfield and provide a further engineering report.
5. Review and report on the application of sand control technology.
6. Review gas conservation and utilization within the plan of development.
7. Production and/or pressure test selected wells.
8. Carry out an update of the existing reserves certification.
9. Increase water disposal capacity by adding an additional water disposal well, if necessary.
10. Evaluation of existing and future infrastructure for development and commercialization of production from the Kucova oilfield for internal and possible export markets.
11. Complete a plan of development for the Kucova oilfield for the production and development period.
All disputes arising in connection with this contract between the national agency of natural resources (AKBN) alone shall be finally settled by binding arbitration taking place in Tirana in accordance with Albanian legislation. Notwithstanding the foregoing, if Albpetrol consists of Albpetrol and a foreign partner and such foreign partner gives notice in writing to the AKBN and to Albpetrol that, in its reasonable judgment, a dispute between Albpetrol and the AKBN affects such foreign partner’s interests under this contract, any such dispute, whether having just arisen or already the subject of pending arbitration under this provision, shall be resolved in accordance with Art. 25.3. In such event, at the request of either Albpetrol or the AKBN the arbitration under Art. 25.3 shall include a determination of whether the foreign partner was reasonable in its assertion that the dispute affected its interests. If it is determined that such assertion was not reasonable, the arbitrage award shall include a determination of the costs of the arbitration which are in excess of those which would have been incurred by Albpetrol and the AKBN had such arbitration taken place or been concluded under Art. 25.2, and the foreign partner shall be responsible for the payment of all such excess costs.
All disputes arising in connection with this contract between the AKBN, Albpetrol and foreign partner(s) shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC). The arbitration shall be carried out by, in the case of mere technical matters, 1 arbitrator and, in the case of all other disputes, 3 arbitrators, appointed by the ICC court of Arbitration in accordance with said rules and their interpretation by the court. In that regard, the parties under this contract waive the right each to nominate an arbitrator and as of now accept the appointment made by the ICC court as it deems best.
The arbitration proceeding shall take place in Zurich, Switzerland and shall be conducted in the English language. All documents submitted and the award of the arbitral panel shall also be in English.
The ministry of economy, trade and energy (for itself and the Albanian government) and AKBN irrevocably waive any right of immunity or any right to object to this arbitration agreement, any arbitration award, any judgment regarding the enforcement of an arbitration award of the execution of any arbitration.
The party that loses an arbitration decision shall pay all expenses incurred in connection with such arbitration, including, but not limited to, the fees and expenses of the arbitrators. All such costs and expenditures shall not be considered petroleum costs and shall not be recoverable under this contract.
The terms and conditions in this contract are strictly confidential. During the term of this contract and for 5 years thereafter, Albpetrol will never and in no circumstance render public the terms and conditions of this contract or any data or information obtained in compliance with this contract to a third party without the prior written approval of the national agency of natural resources (AKBN), which approval will not be unreasonably withheld. The above will not be applied:
(a) to the extent that a party that constitutes Albpetrol is required by the laws, rules and regulations of a government or a government department or agency or stock market which has jurisdiction over this party or its affiliates, to disclose this information or data;
(b) to disclose to an affiliate of a party that constitutes Albpetrol, provided that such affiliate shall agree that this confidentiality clause is binding before such disclosure is made;
(c) in case of a party that constitutes Albpetrol, concerning disclosure to a financial institution, bank, audit, auditing company, legal adviser, consultant or sub-contractor in the ordinary course of business of the parties, including financing purposes, as long as the said financial institution, bank, audit, auditing company, legal adviser, consultant or sub-contractor submits, in writing, in a similar way, to maintain such information and data as confidential;
(d) to a bona fide prospective assignee of Albpetrol, on the condition that the prospective assignee similarly undertakes in writing to keep confidential the information and data disclosed;
(e) for purposes of enforcement of any provision of this contract; or
(f) in the case of the AKBN, to disclosure of the data related only to parts of the contract area which Albpetrol has relinquished before such disclosure.
The activities of Albpetrol in performing the petroleum operations shall be governed by and conducted in accordance with the requirements of the Albanian law.
All questions with respect to the interpretation or enforcement of, or the rights and obligations of the parties under, this contract and which are the subject of arbitration in accordance with Art. 25:
(i) shall be governed by the laws of the Republic of Albania if the relate to arbitration between Albpetrol and the National Agency of Natural Resources (AKBN) alone; or
(ii) shall be governed by the laws of England if they relate to arbitration between Albpetrol, the AKBN, and foreign partners.
To the extent that any provision of Albanian law conflicts or is inconsistent with a provision of this contract, the provision of the Albanian law shall prevail. If any right or benefit granted (or which is intended to be granted) to Albpetrol under this contract is infringed in some way, a greater obligation or responsibility shall be imposed onto Albpetrol or, in whatever other way the economic benefits accruing to Albpetrol from this contract are negatively influenced, and such an event is not provided for under this contract, the parties will immediately amend this contract, or the ministry of economy, trade and energy and the national agency of natural resources will immediately undertake other necessary actions to eliminate the negative economic effect on Albpetrol.