This contract is made and entered into in both the English language and the Albanian language. If there is a conflict between the English language version and the Albanian language version, the English version will prevail.
Stream Oil & Gas shall conduct petroleum operations in a safe and proper manner in accordance with generally accepted international petroleum industry practice and shall cause as little damage as reasonably practicable to the general environment, including, among other things, the surface, air, lakes, rivers, sea, animal life, plant life, crops, other natural resources and property.
Stream Oil & Gas shall endeavour to achieve the efficient use and safe development for and production of petroleum and optimise the ultimate economic recovery of petroleum from the project area. Stream Oil & Gas shall carry out petroleum operations in compliance with petroleum law, the legal provisions in effect on environment protection and in compliance with the regulations made under this contract and in accordance with good practices of oil industry.
If there is a blow-out, accident or other emergency, Stream Oil & Gas shall take all immediate steps to bring the emergency situation under control and protect against loss of life and loss of or damage to property and prevent harm to natural resources and the general environment.
If Albpetrol reasonably determines that any work or installations erected by Stream Oil & Gas (but not those works or installations which were in place prior to the day the contract is approved or are transferred to Stream Oil & Gas after the day the contract is approved) endanger or may endanger persons or third party property or cause pollution or harm the environment to an unacceptable degree, Albpetrol may require Stream Oil & Gas to take remedial measures within a reasonable period and to repair any damage to the environment.
If Stream Oil & Gas fails to take the remedial measures required by Albpetrol within the time period established under this contract, Albpetrol may carry out such remedial measures for Stream Oil & Gas's account. Any remedial measures required to be undertaken by environmental authorities of the Government of Albania with regards to those works or installations in the contract area which were in place prior to the day the contract is approved or were transferred to Stream Oil & Gas after the day the contract is approved, shall be for Albpetrol's account.
Albpetrol shall have 12 months from receipt of each cost account statement pursuant to the accounting procedure in which to audit and raise objections as to that cost account statement, provided that Albpetrol shall not be entitled to conduct more than two audits of Stream Oil & Gas books, records and accounts in any fiscal year.
Albpetrol and Stream Oil & Gas shall agree on any required adjustments. Supporting documents and accounts will be available to Albpetrol during that 12 months. If within the time limit of the 3 months following the lapse of the above 12 months and Albpetrol has not advised Stream Oil & Gas of its exception to the statement, the statement shall be considered as approved.
Stream Oil & Gas shall within 30 days after the contract is approved pay Albpetrol as a signature bonus the amount of US$1 million. The signature bonus shall not be cost recoverable.
Stream Oil & Gas shall be liable to tax on profit in conformity with Law No.7811, date 12.04.1994 “On approval of decree No.782, date 22.2.1994 “On the fiscal system in the hydrocarbons sector (Exploration-Production)”, and amended by Law No.8297, date 04.03.1998, and in conformity with the license agreement.
Partage de production - Eléments de "Profit Oil" (critères pour la modification du partage, - TRI, facteur "r", niveau de production, etc.)
Available petroleum shall be measured at the measurement point and allocated as set fort in this contract and it shall be allocated between Albpetrol (the "Albpetrol share") and Stream Oil & Gas ("cost recovery petroleum") based on the R factor as defined below, as set forth:
Where R Factor 0.0 < R < 1.0000, Albpetrol share is 2%, cost recovery petroleum is 98%
Where R Factor 1.0000 ≤ R < 1.5000, Albpetrol share is 2.5%, cost recovery petroleum is 97.5%
Where R factor 1.5000 ≤ R < 2.0000, Albpetrol share is 4%, cost recovery petroleum is 96%
Where R factor 2.0000 ≤ R, Albpetrol share is 6%, cost recovery petroleum is 94%
The Albpetrol share shall be lifted in oil and delivered in kind and/or cash to Albpetrol in the contract area. The R factor is calculated as follows:
RN =AK/BK
where RN means the R factor for calendar quarter N.
AK means the sum of Stream Oil & Gas's revenues minus profit petroleum tax accrued in calendar quarter N and all preceding calendar quarters following the day the contract is approved.
BK means the sum of petroleum costs in calendar quarter N and all preceding calendar quarters following the date the contract is approved.
After Stream Oil & Gas has recovered all of its petroleum costs from the cost recovery petroleum, the remaining cost recovery petroleum shall be profit petroleum. The profit petroleum will be split between Albpetrol and Stream Oil & Gas as follows:
-Albpetrol: 1/5 of the corresponding calculated Albpetrol % share based on calendar quarter R, as described in Art. 9.2.
-Stream Oil & Gas: 100% minus above profit share of Albpetrol.
Partage de production - Eléments de "Cost Oil" (base de calcul, limites sur le recouvrement des coûts, e.g. comme % des revenues ou de la production, crédit d'investissement, etc.)
Stream Oil & Gas shall be entitled to the cost recovery petroleum to recover all petroleum costs borne by it inside or related to the project area ( "cost recovery"). Petroleum costs shall be as described in Annex B. To the extent that in a given calendar year the outstanding petroleum operations costs recoverable exceed the value of cost recovery petroleum for such calendar year, the excess shall be carried forward for recovery in the next succeeding calendar year and in each succeeding calendar year thereafter until fully recovered.
Stream Oil & Gas 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 Stream Oil & Gas and its sub-contractors will, to the extent available, employ qualified Albanians to carry out the petroleum operations, giving priority to Albpetrol personnel, if their professional skills, knowledge and expertise fit with operational requirements. Otherwise, Stream Oil & Gas shall be free to employ such expatriate professionals as it deems necessary.
Stream Oil & Gas, its contractors and subcontractors shall give priority to goods and materials produced in Albania if these goods and materials are being offered under equally favourable conditions regarding the quality, price and availability, and in the quantities required. Stream Oil & Gas shall give priority to services performed by Albanian sub-contractors if such services are offered under equally favourable conditions regarding the quality, price and availability they may be offered by foreign sub-contractors. For the above purposes, prices for locally manufactured materials, equipment, machinery and consumables and for services of local contractors shall be compared with the prices of goods and services in the international market after transportation and insurance costs have been added.
Stream Oil & Gas shall solicit competitive bids for any services performed pursuant to items included in an annual program and budget, if such services are expected to exceed US$ 1 million. Albpetrol may attend the opening of bids for all such tenders.
Stream Oil & Gas will spend a minimum of US$20,000 per each contractual year for Albpetrol employees in respect of the annual training bonus starting from the date the contract is approved by the Council of Ministers.
As of the date the contract is approved, Stream Oil & Gas will 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 in the contract area or located at the region around or close to the contract area on the date the contract is approved but (unless otherwise agreed with the supplier) subject to payment, on a non-discriminatory basis, at reasonable cost for electricity, water, oil and gas.
Stream Oil & Gas shall use the above under commercially reasonable terms and conditions, the pipelines that transport the petroleum produced in the contract area to the ports and refineries in Albania and shall have the right to construct, lay and operate pipelines within Albania subject to the requirement to provide access to excess capacity, if available, to third parties on commercial terms.
Albpetrol and the National Agency for Natural Resources shall ensure that Stream Oil & Gas has use of the railways, roads, highways, water, land surface, timber, electricity, sanitary structures and other infrastructures in Albania, at commercially reasonable rates and on a non-discriminatory basis, in conformity with Albanian legislation, so as to be able:
- to perform the petroleum operations in compliance with this contract; and
- to produce, transport, export and sell Petroleum in or from Albania as
provided in this contract and the petroleum law.
During the new evaluation period Stream Oil & Gas shall carry out the minimum work program and capital expenditure commitments as described and detailed in Annex D, providing however that if, at the expiration of the new evaluation period, or any extension, or upon termination of this contract, whichever first occurs, Stream Oil & Gas has failed to carry out in accordance with this contract, in whole or in part, the minimum work program and capital expenditure commitments as appended to Annex D, then Stream Oil & Gas shall pay to Albpetrol an amount equal to the non fulfilled part of the minimum capital expenditure commitment as appended to Annex D.
1. Stream Oil & Gas will:
(i) select at least two wells from the contract area for reactivation or recompletion in the Cakran-Mollaj reservoir; and
(ii) maintain the right for take over from the remaining existing producing or non producing wells in the Contract Area, according the procedures in Annex F.
2. Evaluation program shall be conducted on the evaluation wells and the evaluation area during the evaluation period:
(i) conduct reactivation or re-completion activity according to a program of Stream Oil & Gas' choosing that could include the following possible tasks: fracturing, acidization, and side track or horizontal drilling based on fracture orientation microseismic studies;
(ii) maintain existing operational and HSE standards in the contract area;
(iii) evaluate performance of the evaluation wells, from an engineering and economic basis;
(iv) evaluate requirements for additional water disposal capacity and increase capacity as required;
(v) prepare a production, reserves and reservoir performance report.
3. Stream Oil & Gas commits to spend at least US$1 million in capital expenditures during the first 18 months after the effective date in conducting the evaluation program and adding the water disposal well. If the cost of the capital expenditures for the evaluation program and the water disposal well are less than US$1 million Stream Oil & Gas may elect to expand the activities of the evaluation program by selecting additional wells for reactivation or re-completion.
4. Stream Oil & Gas shall also conduct the following activities during the evaluation period:
(i) carry out an update of the reserves evaluation of the contract area to a level of detail determined by Stream Oil & Gas;
(ii) evaluate existing and future infrastructure for development and commercialisation of product for internal and export markets;
(iii)review gas conservation and utilisation within the evaluation area; and
(iv) develop truck offloading options at either Fier or Ballsh refineries for crude oil sales delivery of production.
Any dispute or claim including any purported termination under Art. 22, arising out of or relating to this contract or the breach, termination or validity of this contract, or to the petroleum operations carried out under this contract, shall be finally and conclusively settled by arbitration in accordance with the United Nations Commission on International Trade Law Arbitration Rules. 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.
The arbitration shall take place in Zurich, Switzerland. The language to be used in the arbitration proceedings shall be English. Stream Oil & Gas and Albpetrol expressly waive any right to appeal an arbitral award to any court whatsoever, and the arbitral award shall be final and binding upon them.
The right to arbitrate under Art. 19 shall survive the termination of this contract.
Albpetrol expressly waives any right to claim sovereign immunity in connection will any proceeding instituted pursuant to Art. 19, any proceeding to compel enforcement of this Art. 19, or any proceeding to enforce any award made by arbitration under Art. 19.
Except as otherwise specified under this contract, all information acquired or received under this contract shall be maintained by the Albpetrol & Stream Oil & Gas as strictly confidential and shall not be divulged without the prior written consent of the other party while this contract remains in force.
Albpetrol & Stream Oil & Gas are not bound to the above obligations to the extent required to comply with laws, rules or regulations of any stock exchange to which Stream Oil & Gas may be subject unless such information becomes part of the public domain through sources other than Stream Oil & Gas.
Furthermore, Stream Oil & Gas shall be bound by these obligations of confidentiality for a period of 5 years following termination of this contract.
Albpetrol and Stream Oil & Gas may disclose that information to its employees, affiliates, consultants or subcontractors to the extent required for the efficient conduct of petroleum operations provided that in the case of disclosure to employees and affiliates it ensures adequately the protection of the confidential nature of the information concerned in the case of disclosure to consultants or subcontractors provided that the intended recipients have first entered into a confidentiality undertaking.
For purposes of obtaining new offers on relinquished portions of the contract area or on areas adjacent to the contract area, Albpetrol may show any other entity data on such relinquished portions in uninterpreted and basic form during the term of this contract.
Subject to obtaining confidentiality undertakings as provided in Art. 23.2, either party may disclose the information obtained pursuant to this contract as required by financing institutions from which the disclosing party is seeking finance for the purposes of carrying out its obligations under this contract.
Subject to obtaining a confidentiality agreement, Stream Oil & Gas may show any such information to bona fide potential assignees who have an interest in the petroleum rights granted to Stream Oil & Gas under this contract.
Subject to Art. 18.1(b), the activities of Stream Oil & Gas in performing the petroleum operations under this contract 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 Stream Oil & Gas and Albpetrol under this contract and which are the subject of arbitration in accordance with Art. 19 shall be governed by the laws of England.
If, as a result of any change in the laws, rules and regulations of Albania:
(i) any right or benefit granted (or which is intended to be granted) to Stream Oil & Gas under this contract or the license agreement (license agreement dated 08/06/2007 granted by the ministry in charge of petroleum activity in Albania and the national agency for natural resources to Albpetrol that governs petroleum operations under this contract, and to which Stream Oil & Gas will become a party upon execution and registration of the instrument of transfer as described in Annex E) is infringed in some way;
(ii) a greater obligation or responsibility shall be imposed onto Stream Oil & Gas; or
(iii) in whatever other way the economic benefits accruing to the company, from this contract or the license agreement are negatively influenced by any change in the laws, rules and regulations of Albania, and such an event is not provided for in this contract, the Stream Oil & Gas and Albpetrol will immediately amend this contract and license agreement, and Albpetrol, national agency for national resources and the ministry in charge of petroleum activity in Albania will immediately undertake other necessary actions to eliminate the negative economic effect on Stream Oil & Gas.