The delimited area, designated as Block LB-10, is formed by the area included inside the perimeter constituted by the points indicated on the attached map.
If Anadarko Liberia Block 10 Company (Anadarko Liberia) fulfills its work commitments the exclusive exploration authorization can be renewed for an additional 2 years. If the company continues to fulfill its work commitments a third extension of 2 years. If at the conclusion of the exploitation period, commercial exploitation remains possible National Oil Company of Liberia (NOCAL) may authorize an added 10 year period. If at the conclusion of that additional period commercial exploitation remains possible NOCAL may authorize the continued exploitation of the field for such period, upon terms and conditions agreed by the parties.
If the parties are not able to develop a market for a non-associated natural gas discovery, Anadarko Liberia may request a further 3 year extension of the exclusive appraisal authorization. A second extension of 3 years may also be requested.
Dr. Fodee Kromah, President/CEO, National Oil Company of Liberia; Hon. Clemenceau B. Urey, Chairman, Board of Directors, National Oil Company of Liberia; Hon. Dr. Eugene H. Shannon, Minister of Lands, Mines & Energy; Hon. Augustine K. Ngafuan, Minister of Finance; Hon. Richard V. Tolbert, Chairman, National Investment Commission
Anadarko Liberia Block 10 Company (Anadarko Liberia) is granted a 7 year exclusive exploration term. An exclusive exploitation authorization during which Anadarko Liberia can exploit a commercial field is 25 years.
Environmental impact assessment and management plan
Anadarko Liberia Block 10 Company (Anadarko Liberia) undertakes to carry out all petroleum operations in accordance with the Environmental Protection and Management Laws of Liberia and consistent with international petroleum industry practice. Anadarko Liberia shall submit to the government an environmental impact statement prior to the commencement of exploration and production.
Anadarko Liberia Block 10 Company (Anadarko Liberia) shall take all necessary precautions to prevent marine pollution in Liberian waters in support of petroleum operations. In order to prevent pollution, National Oil Company of Liberia (NOCAL) and Anadarko Liberia agree that Anadarko Liberia shall conduct its petroleum operations consistent with good international petroleum industry practice environmental as may be applicable to prevent pollution and preserve the environment. NOCAL, Anadarko Liberia and EPA shall meet and consider any measure, which may be necessary to preserve the environment. NOCAL and Anadarko Liberia shall commission periodic environmental audits as required to ensure compliance with the environmental impact statement required under Art. 6.5(a).
Anadarko Liberia shall take reasonable preventative, corrective and restorative measures to protect from pollution, contamination or damage resulting from petroleum operations of water bodies, land surfaces and the atmosphere, and that any pollution, contamination and damage of such water bodies, land surface and atmosphere be rectified.
Anadarko Liberia Block 10 Company may take or use the water necessary for petroleum operations, provided that existing irrigation or navigation are not impaired and that land, house or watering places for livestock are not deprived of a reasonable quality of water.
National Oil Company of Liberia shall have the right to cause the registers and accounting books relating to the petroleum operations to be inspected and audited by its own agents or by experts of its election, and shall have a period of 4 months following the end of each calendar year to carry out those audits.
Anadarko Liberia Block 10 Company shall pay to National Oil Company of Liberia the following production bonuses: (a) US$ 4 million when the total production of crude oil from the delimited area first reaches the average rate of 30,000 barrels per day during a period of 30 consecutive days; (b) US$ 5 million when the total production of crude oil from the delimited area first reaches the average rate of 50,000 barrels per day during a period of 30 consecutive days; (c) US$ 7 million when the total production of crude oil from the delimited area first reaches the average rate of 100,000 barrels per day during a period of 30 consecutive days.
Anadarko Liberia Block 10 Company is not exempt from customs user fees of 2.5% imposed under the Revenue Code, including fees for the inspection or pre-shipment inspection of goods.
For property placed in service before the start of commercial production, the period for depreciation of property described the regular income tax provisions of the Revenue Code shall begin in the first tax period in which commercial production begins. The cost of tangible moveable property shall be recovered over the period and by the method described in the regular income tax provisions of the Revenue Code. In place of the 15-year period set out in the regular income tax provisions of the Revenue Code for recovering the cost of tangible fixed property and intangible property, Anadarko Liberia Block 10 Company (Anadarko Liberia) shall be entitled to recover the cost of this properly on an asset-by-asset basis over a 5-year period at the rate of 20% per year. Anadarko Liberia's tangible fixed property outside the project's production area (beginning inside and extending outside) shall be depreciated over a 15-year period or the expected period of commercial production (whichever is shorter) using the straight-line method. If a project is terminated before the end of the cost recovery period, the remaining unrecovered cost is treated as an expense deduction in determining taxable income for the tax period in which the project is terminated.
For the purposes of determining Anadarko Liberia's taxable income, the for carry forward of net operating loss under the regular income tax provisions the Revenue Code shall begin with the first tax period in which commercial production begins and shall be 7 years rather than 5.
To stimulate research in the field of hydrocarbons and to assist the government in its overall god of achieving energy sustainability, a Hydrocarbon Development Fund, to be managed by the National Oil Company of Liberia (NOCAL), has been established. Anadarko Liberia Block 10 Company (Anadarko Liberia) shall make an annual contribution of US$ 250,000.00 during exploration and production to this fund.
In accordance with the National Energy Policy, a Rural Energy Fund (REFUND) has been established, inter alia, to integrate renewable energy technologies into rural development. Considering that oil is a finite resource, it is the policy of the Government that oil resources be used to support the development of renewable energy in order to ensure energy security and sustainability upon cessation of petroleum production. Anadarko Liberia shall therefore make an annual contribution of US$ 200,000.00 during exploration and production directly to NOCAL for subsequent payment to the REFUND.
Production Share - "Profit Oil features (triggers for variations in split - IRR, factor, production, etc .)
The quantity of crude oil remaining during each calendar year after Anadarko Liberia Block 10 Company (Anadarko Liberia) has taken from the total production the portion necessary for the recovery of the petroleum costs shall be shared between National Oil Company of Liberia (NOCAL) and Anadarko Liberia, on a field by field basis as follows:
From 0 to 100,000 barrels per day: Nocal 40%; Anadarko Liberia 60%
From 100,000 to 150,000 barrels per day: NOCAL 50%; Anadarko Liberia 50%
Over 150,000 barrels per day: NOCAL 60%; 40%
In case of natural gas NOCAL’s share shall be 40% and Anadarko Liberia’s 60%.
The daily total production shall be the average rate of total production during the calendar quarter in question.
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Each calendar year, Anadarko Liberia Block 10 Company (Anadarko Liberia) may freely take a portion of the production in no event greater than 65% of the total production of crude oil or gas from the delimited area, or only any lesser percentage which would be necessary and sufficient to recover remaining cost.
If during a calendar year the petroleum costs not yet recovered by Anadarko Liberia exceed the equivalent in value of 65% of the total production of crude oil or total production of gas from the delimited area the balance of the petroleum costs which cannot be recovered in the calendar year shall be carried forward in the following calendar year or years until full recovery of the petroleum costs or until the expiration of this contract.
Restrictions on transactions with affiliated parties
A project's gain, loss and other lax consequences in transactions with related persons are subject to in Art. 1.30 and regular income tax provision of the Revenue Code concerning related persons. A transaction with respect to production between Anadarko Liberia Block 10 Company (Anadarko Liberia) and a related person shall be on the basis of competitive international prices and such other terms and conditions as would be fair and reasonable had the transaction taken place between unrelated parties dealing at arms length.
Anadarko Liberia must: (1) disclose related-party transactions and contemporaneously document the manner in which prices are set in transfers to related persons; (2) notarize an agreement governing a related-party transaction in accordance with the law of the related person's country of residence.
The Minister of Finance shall follow OECD transfer pricing guidelines in evaluating the validity of the price set in a related party transfer.
The government will exclude Section 3.7- (Royalty as Tax) of the Petroleum Law from being applied to or having any effect on this contract. The government expressly waives any and all rights it has or will have under the Petroleum Law, or other laws, which requires any royalty payment by Anadarko Liberia Block 10 Company on the total production of liquid and gaseous hydrocarbons.
Anadarko Liberia Block 10 Company shall withhold taxes in accordance with the general provisions
of the Revenue Code, except that it shall withhold tax on payments made to nonresidents at the following rates: dividends: 5%; interest: 10%; payments for services: 6%.
Upon commencement of the petroleum operations, Anadarko Liberia Block 10 Company shall provide funding for social and welfare programs in Liberia and for that purpose it shall make an annual social and welfare budget payment of: (a) US$ 250,000.00 during each year of the exploration period; (b) US$ 1,000,000.00 during each year of the exploitation period.
Anadarko Liberia Block 10 Company (Anadarko Liberia) shall give preference in employment to Liberian nationals provided that they are suitably qualified and available, which shall be determined by the sole opinion of Anadarko Liberia, provided however, Anadarko Liberia shall have the right to employ its own key personnel in appropriate positions, and provided also that such conditions are in conformity with the labor practices law of Liberia.
Anadarko Liberia Block 10 Company (Anadarko Liberia) shall use commercially reasonable efforts to give preference to enterprises and goods from Liberia, provided that conditions of proven experience, price, quality, delivery time and terms of payment are similar to those from other countries or from non-Liberian sources. If the above conditions are met Anadarko Liberia commits itself to award to only Liberians, supply, construction or service contracts, the estimated value of which is under US$ 200,000.00. In the event that the contract for supply, construction or service is above
US$ 200,000.00, and is awarded to a Non-Liberian contractor, the Non-Liberian contractor, shall agree to consider entering into a partnership arrangement with a Liberian company(ies).
Prior to awarding any contracts, Anadarko Liberia shall have the right to conduct due diligence of each prospective contractor, if Anadarko Liberia in good faith determines that the Non-Liberian or Liberian contractor is (i) not commercially, technically, and financially qualified; and/or (ii) is not in compliance with any applicable anti-bribery Laws of Liberia and/or any applicable laws of the United States of America then Anadarko Liberia shall not be obligated to award the contract to such a candidate/contractor. Anadarko Liberia's decision to reject such a contractor shall be final.
Anadarko Liberia Block 10 Company shall provide an annual contribution for training programs of: (a) US$ 250,000 during each year of the exploration period; (b) US$ 500,000 during each year of the exploitation period. Additionally, Anadarko Liberia Block 10 Company shall make an annual contribution of US$ 150,000 to the University of Liberia for the enhancement of programs in geology, mining, engineering and environmental studies.
Anadarko Liberia Block 10 Company (Anadarko Liberia) shall have the right to build, use, operate and maintain all the hydrocarbon storage and transportation facilities which are necessary for the production, transportation and sale of hydrocarbons. Anadarko Liberia may determine the route and location of any pipeline inside Liberia which is on the surface land of Liberia or under the waters that lie within the jurisdiction of the state which is necessary for the petroleum operations, provided that it shall submit plans to National Oil Company of Liberia for approval prior to the commencement of work; any pipeline crossing or running alongside roads or passageways (other than those used exclusively by Anadarko Liberia) shall be built so as not to hinder the passage on those roads or passageways.
The government shall authorize Anadarko Liberia to build, use and maintain telephone, telegraph and piping systems above the ground and along the land not belonging to the government, provided that Anadarko Liberia pays reasonable compensation to the land-owners.
To the extent and for the duration of the excess capacity of a pipeline or processing, transportation or storage facility built for the purposes of the petroleum operations, Anadarko Liberia Block 10 Company (Anadarko Liberia) may be obligated to accept the flow of hydrocarbons coming from other exploitations, provided that such flow shall not cause prejudice to the Anadarko Liberia’s petroleum operations, and that a reasonable tariff covering a normal remuneration for capital invested in respect of the pipeline or facility concerned shall be paid by the user.
Anadarko Liberia Block 10 Company (Anadarko Liberia), during the first exploration period, shall carry out a minimum work program at a cost of no less than US$ 33 million which includes the following:
(a) 3D seismic survey of 1,600 square kilometers;
(b) 2D seismic survey of 300 kilometers; and, contingent on a successful 3D seismic acquisition program and subsequent interpretation of the data, Anadarko Liberia undertakes to make reasonable efforts to drill in the first period. In the event that such a well is drilled in the first exploration period it would satisfy the second exploration period minimum well commitment.
Anadarko Liberia, during the second exploration period, shall carry out a minimum work program at a cost of no less than US$ 50 million, including a commitment to drill a minimum of 1 exploration well.
Anadarko Liberia, during the third exploration period, shall carry out a minimum work program at a cost no less than US$ 66 million, including acquisition of 600 square kilometers of 3D seismic data and commitment to drill a minimum of 1 exploration well.
In the event of a dispute between National Oil Company of Liberia and Anadarko Liberia Block 10 Company relating to or arising out of this contract, and the parties cannot settle it amicably, it can be referred for arbitration in the International Chamber of Commerce. The arbitration shall be held in the United States of America and the language used shall be English. The arbitration shall be determined by 3 arbitrators and its award shall be final.
During the exploration and exploitation periods, Anadarko Liberia Block 10 Company (Anadarko Liberia) may surrender, by not less than 60 days notice to the National Oil Company of Liberia (NOCAL), all of its rights and obligations in respect of all or any part of the delimited area, and Anadarko Liberia shall be relieved of all obligations to NOCAL in respect of the area so surrendered except those obligations arising out of a related to the surrender.
If for reasons not technically justified, Anadarko Liberia, within 12 months after notifying the NOCAL of a hydrocarbon discovery, has not applied for an exclusive appraisal authorization or has not commenced appraisal work of said discovery, or if Anadarko Liberia does not within 18 months after completion of the appraisal work declare the discovery as commercial, NOCAL may require Anadarko Liberia to surrender all its rights in respect of the area deemed to cover the hydrocarbon discovery without any compensation. Interruption of development work or production for a consecutive period of at least 6 months (unless extended by force majeure) by Anadarko Liberia without NOCAL's consent, or abandonment of the exploitation of the field, may give rise to the withdrawal of the exclusive exploitation authorization.
NOCAL has the right to terminate this contract if any of the following events occur:
(a) Anadarko Liberia fails to make any of the payments described in this contract on the due date, and does not rectify this failure within 45 days after notice by NOCAL;
(b) Anadarko Liberia materially fails to comply with its work commitments and other conditions in this contract and does not rectify this failure within 90 days after notice by NOCAL;
(c)(i) Anadarko Liberia voluntarily dissolves, liquidates or winds up its affairs, or makes an assignment of all or substantially all of its assets for the benefit of creditors other than an assignment made to secure indebtedness incurred in the ordinary course of business;
(c)(ii) Anadarko Liberia files a petition or application to any tribunal for the appointment of a trustee or receiver for all or any substantial part of its assets;
(c)(iii) Anadarko Liberia commences any proceedings for its bankruptcy, reorganization, arrangement, insolvency or readjustment of debt, or indicates its approval, consent to or acquiescence to any such petition or application filed, or any such proceedings commenced against it; or
(c)(iv) an order is entered appointing any such trustee or receiver, or adjudicating Anadarko Liberia bankrupt or insolvent, or approving the petition in any such proceedings, and Anadarko Liberia fails to take corrective measure(s) to have the order removed or lifted within 60 days;
(d) Anadarko Liberia fails to carry out exploration or cease exploration for a period of 12 consecutive months or cease production with respect to all production areas for a period of 24 consecutive months, unless such failure or cessation is consented to by NOCAL or is caused by a state of force majeure.
All data, information, documents, reports and statistics including interpretation and analysis supplied by Anadarko Liberia Block 10 Company pursuant to this contract shall be treated as confidential and shall not be disclosed by any party to any other person without the express written consent of the other parties within the life of the exploration, appraisal, development, production or exploration authorization period.
Despite this confidentiality requirement, the National Oil Company of Liberia (NOCAL) is not prevented from disclosing information to any agency of the state or to any of NOCAL’s advisors or consultants, or for the purpose of complying with the state’s international obligations for the submission of statistic and related data. Similarly, Anadarko Liberia Block 10 Company is not prevented from disclosing information: (a) to its affiliates, advisors or consultants; (b) to a bona fide potential assigner or all or part of Anadarko Liberia Block 10 Company’s interest; (c) to banks or other tending institutions for the purpose of seeking external financing of costs of the petroleum operations; (d) to non-affiliates who shall provide services for the petroleum operations, including subcontractors, vendors, and other service contractors, where this is essential for their provision of services; (e) to government agencies for obtaining necessary rulings, permits, licenses and approvals, or as may be required by applicable law or financial stock exchange, accounting or reporting practices. Any party disclosing information or providing data to a third party shall require such persons to undertake the confidentiality of such data.
All payments made under this contract shall be made in accordance with protocols laid down by the Extractive Industries Transparency Initiative.
No delay or default of a party in performing any of the obligations resulting from this contract shall be considered a breach of this contract if such delay or default is caused by a case of force majeure. If in the event of force majeure the performance of any of the obligations under this contract is delayed, that delay extended by the period of time required to repair the damage caused during such delay and to resume the petroleum operations shall be added to the period provided by this contract for the performance of sad obligation, and the exclusive exploration or exploitation authorizations shall be extended by that period as regards the area concerned by force majeure.
This contract is executed and binding between the parties in accordance with the laws of Liberia in force as of the date of signing and on the basis of the provisions of all said laws and regulations, as it regards, to, inducing but not limited to the economic, petroleum, fiscal aid financial provisions of this contract. This contract may not be amended, cancelled or modified by virtue of the adoption or amendment of any law by the state of Liberia after the effective date of this contract. This contract may only be amended or modified by written agreement of the parties to this contract.