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 AN ACT TO RATIFY THE PRODUCTION SHARING


CONTRACT FOR BLOCK LB-10 SIGNED BETWEEN


HE NATIONAL OIL COMPANY OF LIBERIA (NOCOL)


ON BEHALF OF THE REPUBLIC OF LIBERIA AND


ANADARKO LIBERIA BLOCK 10 COMPANY

















APPROVED JULY 23, 2009











PUBLISHED BY AUTHORITY


MINISTRY OF FOREIGN AFFAIRS


MONROVIA, LIBERIA

















PRINTED JULY 29,2009


 PRODUCTION SHARING CONTRACT FOR


BLOCK LB-10 SIGNED BETWEEN

















THE NATIONAL OIL COMPANY OF


LIBERIA (NOCAL)


ON BEHALF OF


THE REPUBLIC OF LIBERIA

















AND














fADARKO LIBERIA BLOCK 10 COMPANY





E





: £ -.a : : ' .• V.c 'i.


 2009








“AN ACT TO RATIFY THE PRODUCTION SHARING CONTRACT FOR BLOCK LB-


10 SIGNED BETWEEN THE NATIONAL OIL COMPANY OF LIBERIA (NOCAL) ON


BEHALF OF THE REPUBLIC OF LIBERIA AND ANADARKO LIBERIA COMPANY”











IT IS ENACTED BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE


REPUBLIC OF LIBERIA IN LEGISLATURE ASSEMBLED:





Section I: That from and immediately after the passage of this Act “AN ACT TO RATIFY


THE PRODUCTION SHARING CONTRACT FOR BLOCK LB-10 SIGNED BETWEEN


THE NATIONAL OIL COMPANY OF LIBERIA (NOCAL) ON BEHALF OF THE


REPUBLIC OF LIBERIA AND ANADARKO LIBERIA COMPANY”, as herein recited


below word for word in the authentic English version be, and the same is hereby ratified to give


full force and effect to the provision as contained herein.





SECTION II: SHORT TITLE. This Act to ratify the PRODUCTION SHARING CONTRACT


FOR BLOCK LB-10 SIGNED BETWEEN THE NATIONAL OIL COMPANY OF


LIBERIA (NOCAL) ON BEHALF OF THE REPUBLIC OF LIBERIA AND ANADARKO


LIBERIA COMPANY” shall also be cited as the PRODUCTION SHARING CONTRACT


ACT OF LIBERIA AND ANADARKO LIBERIA COMPANY”











SECTION III: That any and all obligations, covenants, terms and conditions as contained in the


above mentioned PRODUCTION SHARING CONTRACT shall be carried to the full


completion unless otherwise modified, amended, or repealed.


SECTION IV: This Act shall take effect immediately upon the publication


into handbill.


»














ANY LAW TO THE CONTRARY NOTWITHSTANDING


 I


T of €<*btems








ARTICLE 1 DEFINITIONS..........................................................................................................2


ARTICLE 2 SCOPE OF THE CONTRACT..............................................................................................6


ARTICLE 3 DURATION OF EXPLORATION PERIODS AND SURRENDERS..........................................7


Article 4 exploration work commitments...........................................'..................................9


ARTICLE 5 ESTABLISHMENT AND APPROVAL OF ANNUAL WORK PROGRAMS AND BUDGETS.... 11


ARTICLE 6 CONTRACTORS OBLIGATIONS IN RESPECT OF THE EXPLORATION PERIODS AND


ENVIRONMENTAL MANAGEMENT.............................................................................................13


ARTICLE 7 CONTRACTORS RIGHTS IN RESPECT OF THE EXPLORATION PERIODS.....................15


ARTICLE 8 ACTIVITY REPORTS DURING THE EXPLORATION PERIODS AND SUPERVISION OF


PETROLEUM OPERATIONS................................. 16


ARTICLE 9 OCCUPATION OF LAND....................................................................................................18


ARTICLE 10 USE OF FACILITIES.........................................................................................................19


ARTICLE 11 APPRAISAL OF A PETROLEUM DISCOVERY. ........................................................20


ARTICLE 12 GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION IN RESPECT OF A


COMMERCIAL DISCOVERY...................................................... 23


ARTICLE 13 DURATION OF THE EXPLOITATION PERIOD.................................................................24


ARTICLE 14 EXPLOITATION OBLIGATION..........................................................................................25


ARTICLE 15 CONTRACTOR'S OBLIGATIONS AND RIGHTS IN RESPECT OF EXCLUSIVE


EXPLOITATION AUTHORIZATIONS......................................................................................................26


ARTICLE 16 RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING............................28


ARTICLE 17 TAXATION..............................................................;.........................................................30


ARTICLE 18 VALUATION OF PETROLEUM......................................... 36


ARTICLE 19 BONUSES AND HYDROCARBON DEVELOPMENT FUND...............................................39


ARTICLE 20 OWNERSHIP AND ABANDONMENT OF ASSETS............................................................41


ARTICLE 21 NATURAL GAS.................................................................... 42


ICLE22 FOREIGN EXCHANGE CONTROL...................................................................................46


ICLE 23 GOVERNING LAW...........................................................................................................47


ICLE24 MONETARY UNIT........................................................... 48


RTICLE 25 ACCOUNTING METHOD AND AUDITS............................................................................49


ARTICLE 26 IMPORT AND EXPORT....................................................................................................50


ARTICLE 27 DISPOSAL OF PRODUCTION..................................................................... 5^








Execution Draft 931909


ARTICLE 28 PROTECTION OF RIGHTS................................................................ !!


ARTICLE 29 PERSONNEL AND TRAINING........................................................... 54


ARTICLE 30 ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE EXPLOITATION 56


AUTHORIZATIONS................................................................................................


ARTICLE 31 ARBITRATION...............-............-................................................... 57


ARTICLE 32 TERMINATION............................................................................... 59


ARTICLE 33 FORCE MAJEURE......................................................................... 61


ARTICLE 34 JOINT AND SEVERAL OBLIGATIONS AND GUARANTEES.............. .62


ARTICLE 35 RIGHTS OF ASSIGNMENT................................................................ ,63


ARTICLE 36 STABILITY OF CONDITIONS............................................................ .64


ARTICLE 37 IMPLEMENTATION OF THE CONTRACT......................................... .65


ARTICLE 38 EFFECTIVE DATE............................................................................ .67


APPENDIX 1........................................................................................................... .69


APPENDIX 2.......................................................................................................... ■70^


&


I


 PRODUCTION SHARING CONTRACT





BETWEEN


The Republic of Liberia, (STATE) represented for the purposes of this Contract by the Nation^ Oil


Company of Liberia (NOCAL), a company incorporated under the laws of Liberia, the Minister of


Finance, the Minister of Lands, Mines & Energy and the Chairman of the National Investment


Commission





AND


Anadarko Liberia Block 10 Company, a company incorporated in the jurisdiction of the Cayman


Islands, hereinafter referred to as the Contractor*.


WHEREAS


• tho discovery and exploitation of Hydrocarbons are important for the interest and the economic


development of the State and its people;


• Contractor wishes to undertake Petroleum Operations of Hydrocart>ons;


• NOCAL has the rights in respect of Petroleum Exploration and Exploitation over the entirety of


ava l able areas In Liberia including foe Delimited Area defined hereinafter;


• NOCAL wishes to promote the development of the Delimited Area, and the Cool; act or wishes


to cooperate with NOCAL by assisting it'm the exploration tor and production of foe potential


resources within the Delimited Area, and thereby encouraging the economic growth of the


State;


The Contractor represents that it has the financial resources, the technical competence and the


organization capacity nocossary to carry out in the Delimited Area, the Petroleum Operations specified


hereinafter. NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS/^




















»























Execution Draft 031 S$9


 ARTICLE 1





DEFINITIONS


The following terms used in this contract shall have the following meaning:


1.1 AFFILIATED COMPANY means:


a company a any other entity which directly or indirectly controls or is controlled by any entity


constituting the Contractor; or


a company a any other entity which directly or indirectly controls or is controlled by a company


or entity which itself directly or irxfirectly controls any entity constituting the Contractor.


Such ‘control* means direct or indirect ownership by a company or any other entity of holding


(illy poroorit (50%) or more of the shares, conferring voting rights, forming the stock of another


company.


11 ANNUAL WORK PROGRAM means the document describing, item by item, the Petroleum


Operations to be carried out during a Calendar Year within the Delimited Area and in each


Exploration Perimeter, if any, established in accordance with the Contract.


1.3 APPRAISAL PERIMETER means any part of the Delimited Area where one or more


Hydrocarbon discoveries have been made, and in respect of which NOCAL has granted to the


Contractor an exclusive appraisal authorization for the purpose of appeasing the extent of said


discoveries. '


1.4 ARMS LENGTH SALES For the purpO&o of determining arms length sales, the price of Crude


Oil will generally be based in a per barrel basis of one or more Credo Oil blends which at the


time Of calculation are being freely and actively traded in the international oil market and have


similar characteristics and quality to the Crude Oil being marketed. The price for such Crude


Oil will be ascertained from Platt's Crude Oil Market Wire daily publication or the spot market


for the same Crude Oil ascertained in a simitar manner.


1.5 ASSOCIATED NATURAL GAS means Natural Gas, which exists in the reservoir with Crude


Oil, which is a could be produced in association with Crude Oil.


1.6 BARREL means U.S. barrel, i.e., 42 U.S. gallons measured at a temperature of 60° F and


undor ah atmospheric pressure.


1.7 BUDGET means tjie itemized cost estimates of the Petroleum Operations described in an


Annual Work Program.


1.8 CALENDAR QUARTER means a period of three (3) consecutive month# boginning on January


1, April 1, July 1 and October 1 and ending on the following March thirty-first (31*). June


thirtieth (30th) or September thirtieth (30*>) or Deoember Wrty-lrd (31**) reepodiyely, according


to the Gregorian calendar











2


1.9 CALENDAR YEAR means a period of twelve (12) consecutive months beginning on January


first (1*) and ending on the fallowing December thirty-first (31*0. accordng to the Gregorian


calendar.


1.10 CAPITAL GOODS means:


(a) Plant a equipment (but not motor vehicles of any kind), and spare parts for these


goods, fa use exclusively and drectly in manufacturing, agriculture, or forestry;


(b) The following goods for a producer's use exclusively and directly in a mining or


petroleum project or in miring or petroleum exploration or development;


(c) Plant or equipment (including four-wheel-drive motor vehicles but not motorcydes,


sedans a luxury vehicles as defined by regulation) and spare parts for these goods;


and,


(d) From the inception of exploration until the date commercial production begins,


intermediate inputs (Including but not limited to explosives, drilling mud, grinding balls,


tires for trucks used in eporations, and similar items specified in regulations).


1.11 COMMERCIAL PRODUCTION


(a) ’Commercial Production’ begins on foe dale of the first shipment of petroleum or


natural gas extracted from the area covered under this Contract as part of a regular


program of profit-seeking activity.


(b) Commercial Production ends on the last day of a tax period In which the number of


shipments is less than one-tenth of the average daily shipments diving the first three


years of Commercial Production.


1.12 CONTRACT moans this Production Sharing Contract and its appendices forming an integral


part hereof, together with any extension, renewal, replacement, addendum or modification


hereto, which may be mutually agreed between foe Parties.


1.13 CONTRACT YEAR means a period of twelve (12) consecutive months beginning on foe


Effective Date or on the anniversary thereof.


1.14 CONTRACTOR means Anadako Liberia Block 10 Company and any of Its successors and


permitted assigns that shall conduct Petroleum Operations.


1.15 CRUDE OIL moans etude mineral oil, asphalt, ozokerite, and all kinds of petroleum


Hydrocarbon aid fcitumen, either solid or liquid in their natural concfiticn or obtained from


Natural Gas by condensation a extraction, induing condensates and Natural Gas liquids.


1.16 DELIMITED AREA means the area in respect of which NOCAL under this Contract, grants to


the Contractor an exclusive exploration right. The areas surrendered by the Contractor in


accordance with the provisions of Articles 3.5 and 3.6 shall be deemed as axduded from foe


Delimited Area, which shall be reduced accordingly. Conversely, the Exploration Perimeter(s)


shall be an integral part of the Delimited Area during foe term of the relevant axdusive


exploration authorization





3


1.17 DELIVERY POINT means the F. 0. B. point connecting the loading facilities to the vessel when


loading Crude Oil in the Republic of Liberia or any other transfer point mutually agreed between


the Parties.


1.18 DOLLAR means dollar of the United States rrf America.


1.19 EFFECTIVE DATE means the date of ratification and publication of the handbill under Article


38.


1.20 EXPLOITATION PERIMETER means any part of the Delimited Area In respect of which


NOCAL has granted to the Contractor an exclusive exploitation authorization.


1.21 FIELD means a commercial accumdatioft of Hydrocarbons in one cr several overlaying


horizons, which has boon appraised in accordance with the provisions of Article 11.


1.22 FISCAL YEAR means, under this Contract, a period cf twelve (12) consecutive months


beginning on January first (1*) and ending on the following December thirty-first (31s1).


1.23 GOVERNMENT means the Government of Liberia from time to time and/or any and all


ministries, nattend directorates, departments, national 'wetitutos, provincial government,


provincial direct crates, commissions, agencies and corporations under the direct or 'mefirect


control of a government a owed thereby and shall indude any court, legislature, council a


other state government or national, regional, provincial, municipal or locd authorities.


1.24 HYDROCARBON means the definition under the Pelrdeum Law.


1.25 LAW(S) moans any constitution, ratified treaty obligation, law, statute, decree, nie, regulation,


judiad ad of decision, judgment, order, proclamation, directive, executive order cr other


sovereign ad of the State.


1.26 MARINE POLLUTION means the introduction by the Contractor or sub-contractor, directly or


indirectly, of substances or energy, inducting toxic waste, oil spills or any other sdids, liquids or


gases into the marine environment (induding estuaries) irt such deleterious effects as harm to


living resources, hazard to human hedth, hindrance to marine activities induding fishing and


navigation, a impairment of quality fa use of sea-water, and reduction of amenities.


1.27 NATURAL GAS means methane, ethane, propane, butane and dry cr wet gaseous


hydrocarbons, whether or not assodated with Crude Oil, as well as gaseous products extracted


in association with petroleum, such as without limitation, nitrogen, hydrogen sulfide, carbon


dioxide, helium and water vapor.


1.28 NON-ASSOCIATED*NATURAL GAS means Naturd Gas other.than Assodated Naturd Gas.





1.29 OPERATOR shall mean Anadarko Liberia Block 10 Company and any subsequent Contractor


party approved as Operator.





1.30 PARTIES means NOCAL and the Contractor; and PARTY moans either NOCAL or the


Contractors^








4


1.31 PETROLEUM COSTS moans ail cost recoverable expenditures actually incurred and pad Vj


the Contractor for the purposes of the Petroieum Operations under this Contract, and


determined in accordance with the Accounting Procedure attached hereto as Appendix 2.


1.32 PETROLEUM OPERATIONS means all activifies undertaken by the Contractor, Including but


not limited to 0) exploration, gedogicd, geophysical, aerial surveying and interpretation thereof,


the drilling of shot holes, cere holes, stratigraphic tests, appraisal, prospecting, assessment,


marketing, abandonment, decommissioning, development, drilBng, production, exploitation,


processing, taking, venting, flaring, treating, dehydrating, compressing, liquefying, storage,


transport, distribution, sale, etc of Crude Oft and Natural Gas, and; pi) running, servicing,


maintaining, producing, operating and repairing weds and the equipment, pipelines, systems,


facilities and plants


1.33 PETROLEUM LAW means the Liberian Petroleum Law of 2D00.





1.34 REVENUE CODE means the Revenue Code of Liberia Act of 2000, as such may be amended


from time to time, or any succession code.


1.35 THIRD PARTY means a company or any other entity, other than the Contractor, which does


not come within the foregoing definition of Party.


1.36 TOTAL PRODUCTION means the total production of Crude Oil a the total production of





Natural Gas obtained from the whdo Delimited Area less the quantities used fa the


requirements of the Petr dean Operations and any Unavoidable Losses.





1.37 UNAVOIDABLE LOSS means any loss that is not faeseeable, which is solely caused by an


unintentional a accidents act or occurrence by a Party^-" ^



































*


























5


 ARTICLE 2





SCOPE OF THE CONTRACT


2.1 The Contract is a Production Sharing Contract as presided for under Article 7.1 of the


Petroleum Law and indudes all foe provisions agreed between NOCAL and foe Contractor.


2.2 NOCAL authorizes foo Contractor to be the Operator pursuant to the terms set forth herein and


to carry out foe useful and necessary Petroleum Operations in the Delimited Area, on an


exclusive basis.


2.3 The Contractor undertakes, for all foe work necessary for carrying out foe Petroleum


Operations provided for hereunder, to comply with good international petroleum industry


practice and to be subject to the Laws in foroo in Liberia unless otherwise provided under this


Contract.


2.4 The Contractor shall supply all financial and technical means necessary for foe proper


performance of the Petroleum Operations.


2.5 The Contractor shall bear alone foo finandal risk assodated with the performance of foe


Petroleum Operations. The Petroleum Costs related thereto shall be recoverable by foe


Contractor in accordance with the provisions of Article 16.2 and as otherwise applicable under


rdeyant provisions of this Contract.


2.6 During foe term hereof, in the event of production, the Total Production arising from foe


Petroleum Operations 6hall.be shared between foe Parties according to foe terms set forth in


Artides 16.2 and 16.3.


2.7 On the Effective Date, foe Delimited Area shall be foe area as defined in Appendix 1.


2.8 The Contractor shall furnish NOCAL with afl reports, information and data referred to


hereunder, inducing without limitation any agreement, for foe provision of goods and services


in respect of Petroleum Operations in excess of $250,000 binding on foe entities constituting


the Contractor ^






































6


 ARTICLE 3





DURATION OF EXPLORATION PERIODS AND SURRENDERS


3.1 Tha exclusive exploration authorization is hereby granted to the Contractor for a period of


seven (7) consecutive years defined by three consecutive periods (the 'Exploration Pedod(s)*)


as follows:


A first Exploration Period of three (3) Contract Years, a second Exploration Period of two (2)


Contract Years and the third Exploration Period of two (2) Contract Years in respect of toe


entire Delimited Area.


3.2 If during the first Exploration Period set forth above toe Contractor has fiifilled the exploration


work commitments defined in Article 4, as ascertained by the NOCAL, the exclusive exploration


authorization shaft, at the Contractor's request, be renewed for a second exploration period of


two (2) Contract Years.


3.3 If, at toe end of such second Exploration Period and provided that Contractor has fiifiBod its


work commitments as Bet forth above, and the Contractor so requests, a third exploration


period shall be authorized for two (2) Contractual Years.


3.4 The applications referred to in Articles 31 and 33 shall be made at least sixty (60) days prior to


the expiration of the current Exploration Period.


3.5 The Contractor shall surrender at loast the Mowing sorfaoes:





a. Twenty-five percent (25%) of toe initial surface of toe Delimited Area at the expiration


of the first Exploration Period.


b. Additional twenty-live percent (25%) of the initial surface of the Delimited Area at the


expiration of the second Exploration Period.


Such surrenders shall be constituted of one area or a limited number of areas of simple


geometrical shape delimited by north-south, east-west Knee or by natural boundaries of the


area concernod.


For toe purpose of computing toe surface to be surrendered, toe surface in respect to any


Exploration Perimeter shall be deducted from the initial surface of too Delimited Area.


c. At the eviration of the third Exploration Period set forth in Article 3.3, the Contractor





shall surrender the whole remaining surface of the Delimited Area except as to any


Appraisal Perimeters and Exploitation Perimeters which would have then been granted


or applied for.


Subject to its compliance with the above-mentioned requirements, the Contractor shall have


the right to determine the size, shape and location of areas to be surrendered, fay











7


The Contractor undertakes to famish NOCAL with a precise description and a map showing the


details of the surrendered areas arid those retained, together with a report specifying the work


carried ori in the surrendered areas from the Effeothu Date and thereeults obtained.


3.6 During any Exploration Period, the Contractor may, at any time, notify NOCAL that it


surrenders the whole or any part of the Delimited Area arid the rights granted to It by giving


sixty (60) day's notice to that effect


No surrender during or at the expiration r& arty Exploration Period shall reduce the work


commitments and the investment obligations set faith in Article 4 for the current Exploration


Period.


In the event of surrender, the Contractor shall have the exclusive right to retain, fa their


respective term, the surfaces in respect of Appraisal Perimeters and Exploitation Perimeters


which would have been granted and to Carryout the Petroleum Operations therein.


The surfaces previously surrendered pursuant to the provisions of Article 3.6 shall be deducted


froth the surfaces to be surrendered.


3.7 If at the expiration of all the Exploration Periods the Contractor has not obtained a Is riot


applying far an exclusive appraisal authorization a ah exclusive exploitation authorization, this


Contract shall terminata


If an exploratory welt is operating at the expiry of an Exploration Period, then NOCAL shall


grhnt Contractor an extension of the exclusive exploration authorization of 90 days (after the


exploration well is terminated and the rig released) in order to evaluate the results of the well


and at Contractor's dscretion apply far an exclusive appraisal authorization a an exclusive


exploitation authorization.'


3.8 The termination of this Contract, whatever the reason thereof, shall not relieve the Contractor of


any obligations under this Cor were inounred pria to, Or arising from, said termination


and which ehall be fulfilled.^


















































8


 ARTICLE 4





EXPLORATION WORK COMMITMENTS


4.1 The Contractor shall oommenoe tho geological and seismic work within three months from the


Effective Date.


4.2 The Contractor, during the first Exploration Period defined in Arfide 3.1, shall carry out a


minimum work programme at a cost of no less than 33 million Dollars which indudes the


following:


(a) 3D Seismic Survey of 1,600 sq. km.


(b) 2D Seismic Survey of 300 km.; and, Contingent on a successful 3D seismic acquisition


program and subsequent interpretation of the data, the Contractor undertakes to make


reasonable efforts to drBI 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 wefl


commitment


4.3 The Contractor, during the second Exploration Period defined in Artide 3.1, shall cany out a


minimum wcrk programme at a cod of no less than 50 million Dollars, induding a commitment


to drill a minimum of one (1) exploration well.


4.4 The Contractor, during the third Exploration Period defined in Artide 3.1, shall cany out a


minimum work programme at a cost no less than 66 million Dollars, induding acquisition of 600


sq, km. of 3D Seismic Data and commitment to drill a minimum of one (1) exploration well.


4.5 Each of the exploratory wdls shall be (killed to a minimum depth of two thousand (2,000)


meters, after deduction of the water depth, or 100 meters into the top of the Albian section,


whichever shall come first, or to a lesser depth if the continuation of drilling performed in


accordance with good international petroleum industry practice is prevented for any of the


following reasons:


(a) The basement is encountered at a lesser depth than the minimum contractual depth;


(b) Continuation of drilling presents an obvious danger due to the existence of abnormal


formation pressure;


(c) Rock formations are encountered the hardness of which prevents, in practice, the


continuation of (killing by the use of appropriate equipment;


(d) Petroleum formations are encountered the crossing of which requires, for tlieir


protection the laying of casing preventing the minimum contractual depth from being


reached.


4.6 In the event that any of the above reasons occus, the exploratory well shall be deemed to


have been drilled to the minimum contractual depth.


Notwithstandng any provision'm this Article to the contrary, NOCAL and the Contractor may, at


any time, agree to abandon the drilling of a weH at a lesser depth than the miniman contractual


depthTlL





9


4.7 In order to cany out the exploration driffng defined in Article 4.3 and 4.4 in the best technical


conditions m accordance with good totematicrwi petroleum industry practice, the Contractor


undertakes to make the expenditure required to meet the objectives of the well work


programme which wil include dnffing and as appropriate, testing.





4.8 If during the Exploration Period the Contractor has performed its work commitments for an


amount lesser than the amount specified above, it strati be deemed to have fulflled its


investment obligations relating to that period. Conversely, the Contractor shall perform the


entirety of ite work commitments set forth in respect of an Exploration Period even if it rosults in


excoedng the amount specified above far that period.


4.9 In the event where the number of exploration wells drilled by the Contractor and/or the amount


of seismic data acquired during arty Exploration Period exceed the number of wells and/or the


amount of seismic data provided far in toe work commitment for that period, as specified in this


Article 4, the number of additional exploration weds drilled and/or the amount of seismic data


acquired by the Contractor during such Exploration Period may bo carried forward and treated


as work undertaken In rtischarge of the Contractor's commitment to drill exploration wells


anchor seismic data acquired during the succeeding period.


4.10 If at the expiration of any of the three (3) Exploration Periods dofinod in Articles 3.1,3.2 and 3.3


or upon the date of sif render of the whole Delimited Area, or upon the date of termination of


this Contract, the Contractor has not Mfittod its applicable work commitments set forth in this


Article, it shall pay as compensation to NOCAL, wfffiin thirty (30) days after that date of


expiration, surrender or termination, the unspent bdance of exploration work commitments


abovedefined for the current Exploration Period.71---







































































10


 ARTICLES





ESTABLISHMENT AND APPROVAL OF ANNUAL WORK


PROGRAMS AND BUDGETS








At least three (3) months before the beginning of each Calendar Year, or for the first yea,


within two (2) months from the Effective Date, the Contractor shall prepare and submit fa


approval to NOCAL, an Annual Work Program together with the related Budget for the entire


Delimited Area, specifying the Petroleum Operations that the Contractor proposes to perform


during the Calendar Year and their cost


If NOCAL wishes to propose any revisions or modifications to the Petroleum Operations


specified in said Annual Work Program, it shall, within thirty (30) days alia receipt of the


program, so notify the Contractor, presenting all justifications deemed useful. In that event,


NOCAL and tho Contractor shall meet as soon as possible to consider the proposed revisions


or modifications and to mutually establish the Annual Work Program and die related Budget in


its final form, in accordance with good international petroleum industry practice. However,


during the Exploration Period, the Annual Wok Program and tho related Budget established by


the Contractor after the aboro mentioned meeting shall be deemed to be approved provided


that they comply with the obligations sat forth in Article 4.





Each part of the Annual Work Program and Budget in rospoct of which NOCAL has not


proposed any revision a modification within the period of thirty (30) days above^nentloned


shall be carried out by the Contractor within the staled time.


Should NOCAL fai to notify the Contractor of its wish for revision or modification within tho


period of thirty (30) days abovementioned, such Annual Work Program and the related Budget


submitted by the Contractor shall be doomed to be approved by NOCAL It is agreed by


NOCAL and the Contractor that the Contractor may acquire knowledge as and when the work


is implemented a certain events may justify changes to the details of tho Annual Work


Program. In that event, after notification to NOCAL the Contractor may mako such changes


provided that the basic objectives Of said AnnuA Wcrk Program are not modified.


Whenever NOCAL is required to exorcise its discretion or its approval is required under this


Contract, it shall exercise its discretion or grant its approval on the basis of the efficient and


economic conduct of Petroleum Operations in respect of the Delimited Area and in accordance


with good international oil industry practice.


At the commencement of the first Exploration Period NOCAL and the Contractor shall form a


Joint Operations Committee (JOC) consisting of not more than throe (3) members appointed by


NOCAL and not ifore than three (3) members appointed by the Contractor. Each Party shall


have the right to change its representative by giving thirty (30) days notice to such effect to the


other Parties. The purpose of this JOC will be to review present and future Petroleum


Operations and report jointly to NOCAL and the Contractor .T__


5.6 The JQC ehdl meet hvice every calendar year or as otherwise agreed by the members. fJo


meeting of the JOC shaft be held unless two (2) members each appointed by the Contractor


and NOCAL are present


5.7 The Contractor shall appoint the first Chairman of the JOC who shall hold office until Ihe


second anniversary following the Effective Dde. Thereafter, NOCAL and the Contractor shall


have the alternating right to nominate a Chairman of the JOC who shall hold office for a period


of two (2) years.


5.8 All costs of the meeting of the JOC shall be bcfne by the Contractor and these costs will be


regarded as recoverable costs. Members of the JOC shall be entitled to sitting fees fa


attendance at the JOC (payable by the Contractor directly to NOCAL) in the annual amounts as


follows: $4,000 per annum fa the Chairman/cochairman and $3,500 per annum for each of


two Other members. Prior to making arty such payment Contractor shall verify such bank


accounts and NOCAL agrees to cooperate, assist and provide Contractor any information it


requires to conduct such verification. _____































































































12


 ARTICLE 6





CONTRACTOR’S OBLIGATIONS IN RESPECT OF THE


EXPLORATION PERIODS AND ENVIRONMENTAL MANAGEMENT


6.1 The Contractor shall provide ail the necessary funds and purchase or hire all the equipment,


facilities and materials required to carry oti the Petroleum Operations.





6.2 The Contractor shall provide all technical assistance, including the personnel required to carry


out the Petroleum Operations.


6.3 The Contractor shall be responsible for the preparation and performance of the Annual Work


Programs which shall be earned out in the most appropriate manner in observance of good


international petroleum industry practice.


6.4 The Contractor undertakes to take all the reasonable and practical steps to:


(a) Ensure the protection from contamination of strata containing potable or treatable


water encounterod during its work;


(b) Provide an effective and safe method for the dscharge or disposal of driS cuttings and


drilling muds generated during drilling operations;


(c) Carry out the tests reasonably necessary for determining the value of any potentially


commercially viable shew encountered during drilling and the exploit ability of any


possible Hydrocarbon discoveries and;


(d) Provide an effective and safe method for the disposal of produced water and waste


lubricating oils generated by its operations;


(e) Control the flow of petroleum so as to prevent avoidable waste and escape to the


environment


6.5 The Contractor further undertakes to carry out all Petroleum Operations in accordance with the


Environmental Protection and Management Laws of Liberia and consistent with good


international petroleum industry practice. In this respect, the Contractor shall:


(a) Submit to the Government and Environmental Impact Statement (EIS) prior to the


commencement of exploration and production.


(b) 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 bodes, land surface and atmosphere hereunder be rectified.


Subject to the foregoing, and at the conclusion of Petroleum Operations in the


Delimited Area, the Contractor will undertake reasonable efforts to restore the


Delimited Area to a state in which H was before the Petroleum Operations. However,


the Contractor shall have no liability for any environmental damages caused after the


transfer of such assets as per Article 20.1^_-











13


6.6 All works and facilities erected by the Contractor hereunder shall, according to their nature and


to the circumstances, be built, placed, signaled, marked, fitted and preserved so as to allow at


any time and in safety free passage to navigation within the Delimited Area, and without


prejudice to the forgoing, the Contractor shall, In order to facilitate navigation, install the sound


and optical devices approved or required by the competent authorities and maintain them in a


manner satisfactory to said authorities.


6.7 In the exercise of its right to build, carry out work and maintain all facilities necessary for the


purposes hereof, the Contractor shall not disturb any existing graveyard or building used for


religious purposes, nor cause a nuisance to any government or public building, except with the


prior consent of NOCAL, and shall make good the damage caused by it in that event.


6.8 In its conduct of Petroleum Operations, the Contractor undertakes to take all necessary


precautions to prevent Marine Pollution in Liberian waters in support of Petroleum Operations.


6.9 In order to prevent pollution, NOCAL and Contractor agree that Contractor 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, the Contractor and EPA shall meet and consider any measure, which may be


necessary to preserve the environment.


6.10 NOCAL and the Contractor shall commission periodic environmental audits as required to


ensure compliance with EIS.


6.11 The Contractor and its subcontractors 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 the Contractor


commits itself to award to only Liberians, supply, construction or service contracts, the


estimated value of which is under Two Hundred Thousand United States Dollars


(US$200,000.00). In the event that the contract for supply, construction or service is above


Two Hundred Thousand United States Dollars (US$200,000.00), and is awarded to a Non-


Liberian contractor, then and in that event, such Non-Liberian contractor, shall agree to


consider entering into a partnership arrangement with a Liberian company(ies).


Notwithstanding anything mentioned herein to the contrary, prior to awarding any contracts,


the Contractor shall have the right to conduct due diligence of each prospective contractor, if


the Contractor 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 Contractor shall not be obligated 10 award the contract to such a


candidate/contractor. The decision to reject such contractor by Contractor shall be final.



































M


 ARTICLE 7





CONTRACTOR’S RIGHTS IN RESPECT OF THE EXPLORATION


PERIODS


7.1 Without prejucSoe to the provisions hereof, the Contractor 6hall have the right to carry out the


Petroleum Operations within the Delimited area. Such rights includes, inter alia;


(a) full responsibflfty for, management of and control over all the Petroleum Operations;


(b) authority to axerdse any rights conferred hereby through agents and independent


contractors, and to pay acccrdngty any of their expenses and costs in the place and in


the currency chosen by the Contractor.


7.2 The Contractor shall have the right to dear the ground, dig, perforate, drill, build, erect, place,


supply, operate, manage and maintain dldws, pods, wefts, tenches, excavations, dams,


canals, water conduits, plants, tanks, basins, maritime and cither storage fad Sties, primary


distillation units, first extraction gasoline separator units, sulfur plants, and other facilities for


Petroleum production, together with the pipelines,, pumping stations, generator units, power


plants, high voltage linee, telephone, telegraph, radio and other communication facilities,


factories, warehouses, offices, employee^ housing, hospitals, premises, ports, docks, harbors,


dikes, jetties, dredges, sea wails, under water piers and other fadGties, ships, vehicles,


railways, warehouses, workshops, foundries, repair shops and aft the auxiliary services which


are necessary far or useful to the Petroleum Operations or in connection therewith; and all


additional fadlities which are or may become necessary for a reasonably subsidiary to the


carrying out of the Petroleum Operations.


7.3 The agents, employees and representatives of the Con trader or its subcontractors shall have


the right, for the purposes of the Petroleum Operations to enter into or leave the Delimited Area


and shall have free access to alt the fadlities set up by the Contractor.


7.4 The Contractor shall have the right, subject to the payment of foes applicable in Liberia, to


remove and use the surface soli, mature timber, day, sand, Bmestone, gypsum, stones and


other similar materials, which may be necessary for the performance of the Petroleum


Operations.


With the consent of the competent administrative services which shall not be unreasonably


withheld, the Contractor may make reasonable use of such materials for the performance of the


Petroleum Operations, subject to payment of fees applioabio in Liberia, when they are located


on land owned by the STATE and placed in the vidnity of the land where said Operations are


taking place. NOCAL jjhail assist toe Contractor in obtaining any such consent from any


Liberian administrative bodies.


The Contractor may take or use the water necessary fix the Petroleum Operations, provided


that existing irrigation or navigation are not impaired aid thqtlpnd, house a watering places fer


livestock are not deprived of a reasonable quantity of watarjL---

















15


 ARTICLE 8





ACTIVITY REPORTS DURING THE EXPLORATION PERIODS AND


SUPERVISION OF PETROLEUM OPERATIONS


8.1 Subject to the terms of Articles 8.5 and 8.8, NOCAL shall own and may freely use all the


original data and documents relating to the Petroleum Operations such as, but without


limitation, records, samples, geological, geophysical, petrophysical, drilling and operating


reports.


8.2 The Contractor undertakes to furnish NOCAL with the following periodic reports:


(a) daily reports on drflHng operations:


(b) weekly reports on seismic operations;


(c) within thirty (30) days after each Calendar Quarter, a report on the Petroleum


Operations carried out together with a detailed statement of Petroleum Costs In


reepedt Of the preceding quarter;




Operations carried out together with a delated statement of Pefroleum Costs in


reepoct of the preceding Calendar Year.


8.3 In addition, the following reports or documents shall be furnished to NOCAL as soon as they


are prepared or obtained:


(a) a copy of all geological surveys and syntheses together with the related maps;


(b) a copy of til geophysical surveys, measurement and interpretation reports, map


profiles, sections or other documents related thereto, as well as, at NOCAL's request,


the originals of all recorded seismic magnetic tapes;


(c) a copy of the drilling location and completion report for each well together with a


complete set of retarded logs;


(d) a copy of all drill teds or production tests together with any study related to tho flew or


production of a well;


(e) a copy of all reports relating to core analyses.


All maps, sections, profiles, logs arid alt other geological a geophysical documents shall be


supplied oh an appropriate transparent supper! in view of subsequent reproduction.


A representative portion of the cores and cuttings removed from each well, as well as samples


of fluids produced diring drill tests or production tests shall also be supplied to NOCAL within a











16


 Upon expiration or in ho event of eurondar or termination of this Contract, the original


documents and samples relating to the Petroleum Operations shad be provided to NOCAL


8.4 The Contractor shall keep NOCAL Informed of its activities throutfi the duly designated


representative of the latter. In particular, the Contractor shall notify NOCAL as soon as


possible and In any event at least fifteen (15) days in advance of all projected Petroleum


Operations, such as any geological survey, seismic surveys, and commencement of drilling


and installation of a platform. In the event the Contractor decides to abandon drilling it shad


notify NOCAL thereof within at least seventy-two (72) hours pda to such abandonment, unless


operational safety demands a faster response.


8.5 All data, information, documents, reports and statistics including interpretation and analysis


supplied by the Contractor pursuant to this Contract shaft 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 tie exploration, appraisal, development, production or exploration


authorization period.


8.6 The provision of Article 8.5 shall not prevent dsdosure:


8.6.1 By NOCAL a the State


(a) To any agency of the State or to any advisor or consultant to NOCAL


* (b) For the purpose of complying with the Slate’6 international obligations for the


submission of statistic and related data.


8.6.2 By the Contractor •


(a) To its affiliates, advisors or consultants


(b) To a bona fide potential assignoo or all or part of the Contractor's interest


hereunder


(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 sorvicos for the Petroleum Operations,


including subcontractors, vendors, and other service contractors, whore 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 disdoelng Information a providing data to a Third Party under the,terms of this


Article shall require such persons to undertake tie confidentiality of such data^^"














17


 ARTICLE 9





OCCUPATION OF LAND





The STATE shall mate aval able to the Contractor, ted only far the purpoeoe of the Petroleum


Operation, any land, which It owns and which is neoeuay for said operations. The Contractor shall


have the right to build and foe obligation to maintain, above and below the ground, the facilities


necessary for the Petroleum Operations.


The Contractor shall Indemnify the STATE for any damage oausod to the land solely in connection with


the construction, use and maintenance of its fadtftes on sudi land


The STATE shall authorize the Contractor to build, use and maintain telephone, telegraph and piping


systems above and below the ground and along the land hot belonging to the STATE, provided that the


Contractor pays to the land-owners, a reasonable compensation mutually agreed upon. The rights on


land owned by private persons, which would be necessary for (he carrying out of the Petroleum


Operations, shall be acquired by direct agreement between the Contractor and the private person


concerned.


In event an agreement cannot be reached between the Contractor and private persons concerned, the


Contractor shall request the State to facilitate the process of negotiation between the private owner and


the Contractor for the acquisition of the land at the fair market value. If, after such intervention by the


State, an agreement stl cannot be reached between the Contractor arid private persons concerned,


the State shall upon written notification from the Contractor begin the expropriation process pursuant to


Article 9.4 of the Petroleum Law.


Notwithstanding anything mentioned herein to the contrary, any and all cods expended by Contractor


pursuant to this Article 9 shall be considered cost recoverable and shah therefore be treated as


Petroleum Cost



























































18


 ARTICLE 10





USE OF FACILITIES


10.1 For the purpoee of tho Poirotoum Operations, the Contractor shad have the right to use, In


accordance with the applicable Laws, any railroad, tramway, road, airport, landing strip, canal,


river, bridge, waterway and any telephone a telegraph network in Liberia whether owned by


the STATE or by any private enterprise, subject to the payment of fees then in effect or


mutually agreed upon which will not be in excess of tee prices and tariffs charged to Third


Parties for simitar services.


The Contractor shall have the right to use for the purposes of the Petroleum Operations any


land, sea or air transportation means far the teansportaBon of Its employees or equipment,


subject to compliance with the Laws which generally govern the use of such means of


transportation.


10.2 The STATE shall have the right to use for exigent circumstances any transportation and


communication facility installed by the Contractor, subject to a fair compensation mutually


agreed upon which wiB not be in excess of the prices and tariffs charged to Third Parties for


similar services provided that euch use does not interfere with Petroleum Operations. In the


event of any requisition of such facilities, the State shal indemnify the Contractor for ait loss,


damages, dams, penalties and cause d actions sustained for the period of such requisition of


such facilities.


10.3 Nothing in this Contract shall limit tee STATES right to build, operate and maintain on, under


and along the land made avail able to fee Contractor for fee purposes of the Petroleum


Operators, roads, railroads, airports, landing strips, canals, bridges, pipelines, useful telephone


and telegraph lines, provided that such rights is not exercised in a manner which restricts or


hinders the Contractor's rights hereunder, or the Petroleum Operations^-


 ARTICLE 11





APPRAISAL OP A PETROLEUM DISCOVERY


11.1 In the event the Contractor discovers Hydrocarbons, it shall, as promptly as possible, notify


NOCAL (hereof and submit to it, within thirty (30) days after the date of the temporary plugging


or abandonment of the discovery wed, a report including ail available information relating to


sad discovery.


11.2 If the Contractor wishes to undertake appraisal work relating to the abovementioned


Hydrocartxms discovery, it shaft submit for approval to NOCAL, within six (6) months after the


date of notification of said discovery, the appraisal work program and the estimate of the


related Budget.


The Provisions of Article 5 shall be applicable, mutates mutandis, to said program as regards


its approval and performance, H being understood that toe submitted program shall comply with


good International petroleum industry practice.


11.3 If the Contractor meets the conditions referred to in Article 112 and on request to NOCAL,


the letter shall grant to it ah exclusive appraisal authorization for a duration of two (2) years


from the date of approval of the appraisal work program and the related Budget, in respect of


the Appraisal Perimeter specified in said program. Except otherwise provided by this Article,


the Contractor shall, during the term of said exclusive appraisal authorization, be subject to the


same regime as that applicable to the exclusive exploration authorization.


113.1 The Contractor shall then diligently carry out the appraisal work program fa the


discovery in question; in particdar it shall (kill the appraisal wells and carry out the


production tests specified in said program.


At the Contractor's request at least thirty (30) days prior to the expiration of the


appraisal period above-defined, toe duration of said period may be extended by a


maximum of six (6) months, provided that such extension is justified by toe


continuation of the driBing and production tests spodfied in the appraisal program.


Further extensions of the appraisal period may be requested by the Contractor and


granted by NOCAL in the event that farther geotopcai, geophysical, subsurface,


facilities a commercial work is considered justified by the Contractor in order to


establish whether the field corresponding to the Hydrocarbon discovery is commercial.


1132 Wtoin three (3) months after the completion of appraisal work, and no later than thirty


(30) days prior to the expiration of toe appraisal period, the Contractor shall provide


NOCAL with a detailed report giving all the information relating to toe discovery and the


appraisal thereof.


11.3.3 If, after having carried out the appraisal work, the Contractor considers that the Reid


corresponding to the Hydrocarbon dsoovery Is commercial, it shall submit to NOCAL,


together with the previous report, an application for m exclusive exploitation


authorization accompanied by a detailed development and production plan for said


Reid, specifying inter afia;3£-








20


 (a) the planned delimitation of the Exploitation Perimeter applied far by the


Contractor, go that it covers the areas defined by the eeisrnic closure of the


field concerned, togelharwith aH the technical justifications with respect to the,


extent of said Field;


(b) an estimate of the reserves in place; the proven and probable recoverable





reserves and the oorrespondng annual productions, together with a study, on


the methods of recovery and t» posable valorization of the products


associated with Crude Oil, such as any Associated Natural Gas;


(c) item by item, the description of equipment and work necessary far production,





such as the number of development wells, the number platforms, pipelines,


production, processing, storage and loading facilities together with their


specifications;


(d) the estimated schedule far its implementation and the projected date of


production start-up;





(e) the estimates of investments and exploitation costs together with an economic


evaluation demonstrating tie commercial nature of the discovery in question.


11.3.4 The commercial nature of one or more Fields shall be determined by the Contractor,


provided that it shall, at the end of apprasai work, submit to NOCAL (he economic


. study referred to in Artido 11.3.3 (a) demonstrating the commercial nature of said Raid


a Fields.


A Reid may be declared commercial by the Contractor tf, after taking into account the


provisions of this Contract and the submitted development and production plan, the


projected incomes and expenses determined In accordance with good international


petroleum industry practice confirm the commercial nature of said Retd.


11.3.5 For the purpoces of evaluating the commercial nature of said Retd or Reids, NOCAL





and the Contractor shall moot within thirty (X) days attar the submission of the


development and production plan accompanied by the economic evaluation.





11.3.6 The development and production plan submitted by the Contractor shall be subject to


the approval of NOCAL Within nine (90) days after the submission of said plan,


NOCAL may propose revisions or modifications horoto by notifying the Contractor


thereof with all the useful justifications. In that event, the Parties shall meet as soon as


possible in order to consider the proposed revisions or modifications and establish by


mutual agreement the plan In Us final form; the plan shall be deemed to be approved


by NOCAL upon the date of such agreement


»


Should NOCAL fail to notify the Contractor of its wish for revision or modification within


the above-mentioned nine (90) day period, the plan submitted by the Contractor shall


be deemed to be approved by NOCAL at the expiration of said period.


11.4 If for reasons not technically justified, tho Contractor, within twelve (12) months after notification


to NOCAL of a Hydrocarbon rfscovory, has not appfiod for an exclusive appraisal authorization


or if, after Its granting, it has not commenced the apprasai work in respect of sad discovery, or


if the Contractor, within eighteen (18) months after completion of the apprasai work, does not^e-





21


-





dodare the discovery as commercial, n6cAL may require that the Contractor surtenders afl its


rights in respect of tho am deerhed id ertocfnpaGS uid discovery without any compensation


to the Contractor, to the event of a diflerenob of opHoh between the Contractor aid NOCAL,


either F^arty may roquost a dotortninatioh by a Sole Expert as provided to Articles 31.4 and 31.5


if, within sixty (60) days after Sola Experts decision, the Contractor has rvot notified its dectsi


to apply to an exclusive appraisal authorization, It shall surrender said aroa and wil forfeit 8&S


its lights oh Petrototoi which could be produced from said cEscovety, and am area


surrendered shall be deducted fftxn tho surfaces nbe surrendered under Article 3.53a-


 ARTICLE 12





GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION IN


RESPECT OF A COMMERCIAL DISCOVERY


12.1 A commercial Hydrocarfjon discovery shall enflfie (he Contractor to an exclusive right, If it so


requests pursuant to the conditions set fcrthln Article 1133, to obtain, In respect of the Held


concerned, an exclusive exploitation authorization covering the related Exploitation Perimeters


within the Delimited Area.


12.2 . If the Contractor makes several oommerdd dscovoriee in the Delimited Area, each such


discovery shall, in accordance with provisions of Article 12.1 give rise to an exclusive


exploitation authorization each corresponding to an Exploitation Perimeter. The number of


exclusive exploitation authorizations and related Exploitation Perimeters within the Delimited


Area shall not be Kmited.


12.3 If in the course of work carried out after Ihe grant of an ewAisive exploitation authorization, it


appears that the area defined by too seismic closure of the Raid concerned Is larger than


originally estimated pursuant to Article 113.3, NOCAL shall grant to the Contractor, as part of


the exclusive exploitation authorization already granted, an addtional area so that the entirely


of said field is Included in the Exploitation Perimotor, providod, however, that the Contractor


supplies NOCAL, together with its application with the technical evidence of the extension so


required and provided, father, that the above mentioned extension is an integral part of the


Delimited Area as defined at toe time of said application


12.4 Where a field extends beyond the boundaries cf toe Delimited Area, NOCAL may require the


Contractor to exploit said Retd in association with toe right holder of the adjacent area under


tho provisions of a unitization agrooment


Within six (6) months after NOCAL has notified too Contractor of its request, the Contractor


shall submit to NOCAL fa its approval the development and production plan of the Reid


conoomod which shall be prepared in agreement with toe right holder of the adjacent areay^_





















































23


 ARTICLE 13





DURATION OF THE EXPLOITATION PERIOD


13.1 The duration of an exclusive exploitation authorization during which the Contractor is


authorized to carry out toe cocptoitation of a Field declared commercial is sot at twenty-live (25)


years (too "Exploitation Period*) from He dale of issue.


If upon expiration of the Exploitation Period of twenty-five years abovrxiefinod, a commercial


exploitation of a Field remains possible NOCAL may authorize the Contractor, at the latter’s


request submitted at least twelve (12) months prior to said expiration, to continue under this


Contract the exploitation of sad Reid during an addlionaf period of no more than ten (10 years,


provided that tire Contractor has fulfilled ad its obligations during the current Exploitation


Period.


If, upon expiration of that additional Exploitation Period, a commercial exploitation of said Feld


remains possible, the Contractor may request NOCAL at toast twolve (12) months prior to said


expiration that it be authorized to oontinue the exploitation of said Field under this Contract, for


such period, upon terms and condlions agreed by If to Partioa


13.2 The Contractor may, at any time, fully or partially surrender any exclusive exploitation


authorization by giving at least twelve (12) mentis' prior notices which may be reduced with


NOCAL’s consent That notice shall bo accompanied by the list of steps which toe


surrendering Contractor undertakes to take, in accordance with good international petroleum


industry practices arising out of its surrender,


13.3 Interruption of development work Or production of a Field declared commercial, for a


consecutive period of at toast six (6) months, (untoss extended by periods of Force Majouro)


decided by the Contractor without NOCAL’s consent, or abandonment of the exploitation erf


Reid, may give rise to the withdrawal of the exclusive exploitation authorization concerned. In


the event of any disagreement between NOCAL and the Contractor regarding the


circumstances of the interruption then the JOC shall meet to resolve the disagreement.


13.4 Upon expiration surrender or withdrawal of the last exclusive exploitation authorization granted


to the Contractor, ttis Contract shaft tormkvrfe.


13.5 The termination of this Contract, whatever toe reason thereof, shall not relieve the Contractor of


any obligations incurred prior to, or arising from, said expiration or termination and which shall


be fulfilled.^





























24


I











ARTICLE 14





EXPLOITATION OBLIGATION





14.1 For any Sold in rocpoct of which an exclusive exploitation authorization has been granted, the


Contractor undortakos to perform, at its solo coct and its own financial risk, alt the Petroleum


Operations useful and necessary far tho exploitation of said Reid.


14.2 However, if the Contractor can provide commercial, technical or, accounting evidence, during





either the development period or the production period, ttvd too exploitation of a fiold cannot be


commercially profitable notwitlistartfng that an exclusive exploitation authorization has been


granted in accordance with the provisions of Article 121, NOCAL agrees not to force the


Contractor to continue the exploitation of such Field.


In that event, NOCAL, in its (Rscretion, may withdraw the exclusive exploitation authorization





concerned from the Contractor without any compensation far the latter, by giving a sixty (60)


days'




























































































25


 ARTICLE 15





CONTRACTOR’S OBLIGATIONS AND RIGHTS IN RESPECT OF


EXCLUSIVE EXPLOITATION AUTHORIZATIONS


15.1 The Contractor shall commence development work not later than (6) months after approval of


the development and production plan rotated to in Article 11.3.6 and shall continue it with the


maximum diligence.


15.2 The provisions of Articles 5,6,7,8,9 and 10 are also applicable, mutatls mutandis, in respect


of any exclusive exploitation authorization.


15.3 the Contractor 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 produced, pursuant to the conditions spodfiod in this Contract.


The Contractor may determine the route and location of any pipeline inside Liberia which is on


the surface land of Liberia a under the waters that lie within the jurisdiction of the State which


is necessary for the Petroleum Operations, provided that it shall submil plans to NOCAL fa


approval prior to the commencement of work; any pipeline crossing or running alongside roads


or passageways (other than those used exchisivoly by the Contractor) shall be built so as not to


hinder the passage on those roads or passageways.


15.4 The Contractor may, to the extent and for the duration of the excess capacity of a pipeline a


processing, transportation or storage facility built fa Ihe puses rf the Petroleum Operations,


be obligated to accept the How of Hydrocarbons coming from exploitations other than that of


the Contractor, provided that such flew shall not cause prejucSco to the Petroleum Operations,


and provided, further, that a reasonable tariff covoring a normal remuneration for capital


invostod in rospect of the pipeline or facility concerned shall be paid by the user.


15.5 Folkwing the grant of an exclusive exploitation authorization, the Contractor undertakes to


proceed diligently with the carrying out of development wells, spacing them in a manner eo as


to onsure, in accordance with good international petroleum industry practice, the maximum


economic recovery of the Hydrocartwns contained in the Field in question.


15.6 The Contractor shall, in the conduct of development and production operations, comply with all


good Internationa! petroleum industry practice which In partfaiar ensures Ihe good


conservation of f elds and maximum economic recovery of Hydrocarbons.


The Contractor shall, inter alia, cany out enhanced recovery studies and use such recovery


processes if they may lead lo an increase in Hydrocarbon recovery rate under economic


conditions. *


15.7 The Contractor Shall provido NOCAL with all the reports, studies, measurement results, tests


and documents enabling Ihe monitoring of the proper exploitation of each Fidd.


The Contractor shall, in particular, carry out tie following measurer, on oach producing well:


(a) monthly testing of production and gac/oi I ratio; J








2(,


 (b) half-yoarfy measurement of thefatd reservoirs pfessure.





15.8 The Contractor undertakes to produce every year from each Field quantities of Hydrocarbons


in accordanoe with the provisions of Article 15.6.


The annual production rates of each field shaH be submitted by the Contractor together with the


Annual Work Programs for the approvd of NOCAL which shall not be withheld provided that


the Contractor gives proper technical and economic grounds.


15.9 The Contractor shall measure, at the Defivary Point, aII Hydrocarbons produced and not used


for the requirements of the Petroleum Operations, and excluding Unavoidable Losses, after


extraction of water and sediments, by using the measurement appliances and procedures


customarily used in the international petroleum industry.


The authorized NOCAL’s representatives shaft have the right to examine those measurements


and inspect or cause to be inspected the appliances or procedures used. If the Contractor


wishes to change said measurement appliances or procedures, it shall obtain prior approval


from NOCAL Whore the appliances and procedures used therefore have caused an


overstatement or understatement of measured quantities, the error shall be deemed to have


existed since the date of the last calibration of file appliances, unless the contrary can be


justified, and the proper a^ustment shall be made far the period of existence of such erro
















































































27


 ARTICLE 16





RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING


16.1 From the commencement of regular production c< Crude Oil, the Contractor shall market all the


production of Crude Oil oMa'ned from the Ddimitod Area, in accordance with the provisions


hereinafter defined.


16.2 For the purposes of recovery of the Petroleum Costs, the Contractor m3y freely take each


Calendar Year a portion of the production in no ovont greater than sixty-five percent (65%) of


the Total Production of Crude Oil cr gas from the Ddimitod Area, or only any lesser percentage


which would be necessary and sufficient to recover remaning cost.


Tie value of such portion of Total Production allocated to the recovery of the Petroleum Costs


by the Contractor, as defined in the preceding paagraph, shdt bo calculated in accordance


with the provisions of Artide 18.


tf Axing a Calendar Year the Petroleum Costs not yet recovered by the Contractor under the


provisions of this Artide 16.2 exceed the equivalent in value of sixty-five porcent (65%) of the


Total Production of Crude Oil or Total Production of Gas from the Oelimitod Area, as calculated


above, the balance of the Petroleum Costs which cannot be recovered In thd Calendar Year


shall be carried forward in the fettering Calendar Year or Years until full recovery of the


Petrdeum Costs or until the expiration of this Contract





16.3 The quantity cf Crude Oft from the Delimited Area remaning during each Calendar Year after


the Contractor has taken from the Tdd Production the portion necessary for the recovery of


the Petroleum Costs, hereinafter referred to as “Remaining Oil Production,' shall be shared


between NOCAL and the Contractor, on a field by field baas, as follows:


The Remaining Oil Production shall be shared according to the daily Total Produdion from the





Delimited Area:








Increments of daily oil Total NOCAL's Share Contractor’s Share


Production (In Barrels per day)


From 0 to 100,000 .40% 60%


From 100,000 to 150,000 50% 50%


Over 150,000 G0% 40%





16.4 In case of natural gas, the fdlowing production sharing shall apply:


Increments of daily Gas NOCAL's Share Contractor’s Share


Total Production 40% 60%


For the purpose of this Artide, the daily total Production shall bo tho average rate of Total


Production during the calendar quarter in question.^'..

















2X


I








16.5 NOCAL may receive itc chare cf production defined in Arfide 16.3 and 16.4 either in kind or In


cash.








16.6 If NOCAL wishes to receive in kind aft or part of its share of production defined In Article 16.3 or


16.4 it chail so notify in writing the Contractor at least ninety (90) days prior to the beginning ot


the Calendar Quarter concerned specifying the precise quantity that it wishes to receive in kind


during said quarter.








16.7 If NOCAL wishos to receive in cash all a part of its share of production defined in Article 16.3


or 16.4 or if NOCAL has not notified the Contractor of its decision to receive its share of


production'm kind pursuant to Artide 16.7, the Contractor shall market NOCAL's share, of


production to be taken in cash for the quartor conoomed, lift said share during such quarter and


pay to NOCAL within thirty (30) days following the dote ot each fitting, an amount equal to the


quantity corresponding to NOCAL’s share of production multiplied by the sale price defined in


Mide 18.





NOCAL may require payment, for sales of its share of production sold by tho Contractor, in


Dollsvs or in the foreign currency in which the sale has boon mada^








































































































29


 ARTICLE 17


TAXATION





17.1 Unless otherwise provided for in this Contract the Contractor shall, in respect of its Petroleum


Operations, be subject to the laws generally applicable and the regulations in force in Liberia


concerning taxes which are or may be levied on incomes, or determined thereto.





17.2 Surface Rent





(a) Annual surface rentals shall be payable to the Government of Liberia consolidated


account per square kilometer of the area remaining of the Delimited Area, in the


amounts as set out below:





Phase of Operation Surface Rentals Per Annum





First Exploration Period $40 persq. km.


Second Exploration Period $ 75 per sq. km.





Third Exploration Period $ 100 per sq. km.





Development & Exploitation Area $150 persq. km





(b) The first payment shall be made within thirty (30) days of the Effective Date and


subsequent payments within thirty (30) days of subsequent anniversaries of the


Effective Date.





(c) Surface rent amounts stated in this section shall be subject to inflationary adjustment in


accordance with the GDP Implicit Price Deflator as published and revised from time to


time by the U.S. Department of Commerce, Bureau of Economic Analysis ("the


deflator") and the Central Bank of Liberia (CBL). The inflation-adjusted rent shall be


effective January 1 of each Calendar Year based on the ratio of the value of the


revised deflator for the second Calendar Quarter of the immediately preceding


Calendar Year to the value of the revised deflator for the second Calendar Quarter of


2008.





17.3 Income Tax


(a) Rate. The rate of tax on taxable income shall be thirty (30) percent. The Contractor





shall be liable to pay its income tax directly to the State.


(b) It is specifically*acknowledged that the provisions of this Article shall apply individually


to any entity comprising the Contractor under this Contract and the Contractor is legally


responsible for paying tax with respect to income of the project.





(c) Regardless of the legal form of organization adopted by the Contractor, the


Contractor's taxable income shall be determined separately for each Production


Sharing Contract or other project engaged in by the Contractor In Liberia, and the


Contractor shall not be permitted to consolidate Income or loss oI this Production


Sharing Contract or other project with that of any other.








30


(d) The fifing and advance payment rules far the regular income tax under the Revenue


Code apply to Contractor.





17.4 Determination of Taxable Income





(a) For purposes of determining income tax, income derived under this contract is


considered to be income of a resident tegs* person or of a permanent establishment


taxable according to rties applicable to a resident legs* person under the Revenue


Code. Taxable income and income tax fiatxfity are determined under provisions of the


regliar income tax provisions of the Revenue Code subject to special rules under this


Article.


(b) The Contractor's gross income includes:





(1) The Contractor's cost share and profit share of income from a petroleum


project as specified in Article 16 hereinabove;


(2) Any other Income that the Contractor receives from business activity cr


investment accruing in, derived from, brought into or received in Liberia,


including currency gains when realized, less the deductions set forth in this


Artide 17.


(cj Deductions Allowed from Gross Incoma In accordance with the regular income tax


provisions of the Revenue Code, di expenditures incurred during the tax period wholly,


exdusively and necessarily in connection with project operations (induding non-capital


operating costs but excluding capital costs except to the extent of the annual allowance


for depreciation), are allowed as deductions, including but not limited to the following


items:


(1) An allowance for depredation of plant and equipment in accordance with the


depredation rules of the regular income tax provisions of the Revenue Code,


subject to the spedd rule of Artide 17.5.


(2) A carry forward of net operating loss from a prior year to the extent permitted


undor the regular income tax provisions of the Revenue Code as modified by


Artide 17.6.


(3) Interest on any indebtedness of the project, and other finandng costs incurred


in connection with operations and paid to an affiliate or to a third party, for the


tax period incurred, subject to the special rule of Artide 17.7.


(4) Exploration expenditures incurred that are attributable to the project, to the


extent allowed by Artide 17.8


(5) Payments to a State-approved trust fund for redamation and


decommissioning, subject to the sped6c limitations set out in Artide 17.9.





(6) Subject to the regular income tax provisions of the Revenue Code,


management fees paid, whether to an affSate or to a third party, but not the;





31


amount m excess of two percent (2%) of ether operating expenses incurred for


the tax period.


(7) Subject to the regular Income tax provisions of the Revenue Code, the amount


of bad debt incurred, so long as that amount was subject to income taxation in


a prior tax period.


(8) Charitable contributions made in Liberia to a qualifying organization within the





meaning of the regular income tax provisions of the Revenue Code for


educational or community development projects, social welfare, or medical


purposes or for the provision of other social services.


(9) Expenses related directly to the project's ’other inoome* under subsection (b)


(2), to the extent otherwise allowable as a deduction the regular income tax


provisions of the Revenue Cods and this Article.


(c) The following expenses are not allowed as a deefoefion from gross income:


(1) A payment to an expatriate employee as reimbursement for taxes and duties


paid by the employee to the Government.


(2) A loss from a hedging transaction.





(3) Any incentive deduction allowed under the Revenue Coda


17.5 Special Rule for Depreciation





(a) For property placed in servioe before the start ct 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.


(b) 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.


(c) In place of the 15-year period set out in the regular income tax provisions of the


Revenue Code for recovering the xo6t of tangible fixed property and intangible


property, Contractor shall be entitled to recover the cost of this properly on an asset-


by-asset basis over a live-year period at the rate of twenty percent (20%) per year.





(d) Contractor's tangible fixed property outside the project's production area (a beginning


inside and extending outside) shall be depredated over a 15-year period or the


expected period of oommerdal production (whichever is shorter) using the straight-line


method.


(e) If a project is terminated before toe end of (he 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.





17.6 Special Rule for Net Operating Loss Cany Forward. For toe purposes of determining -


Contractor's taxable income, the for carry forward of net operating loss under the regular rf-








32


income lax provisions ol ttto Rovonue Code shall begin with the fret lax period in which


commordai prodoclion Logins and shall be seven years rather than Eve.





Special Rule foe Interest Deduction


(a) Interest incurrod in a lax period and subject to Ihe limitations of the regular income tax





provisions of tho Rovonuo Codo may bo carried forward to the next tax period.


(b) Tho amount of tho carry forward is treated as interest incurred in the subsequent


poriod, and is dodudiblo to the extent permitted under the regular income tax


provisions of tho Rovonue Code.


(c) The interest cany forward allowed by this section does not expire.





Special Rule for Exploration Costs. Exploration costs are deductible in the first tax period in


which commercial production bogins.


Special Rule for Decommissioning Expenses





(a) Payment for decommissioning oxponsos is deductible from gross income under Art'do


17.4{c) only in tho amount paid dising the tax period:


(1) To dofray rodamation a decommissioning expenses upon cessation of


commordai production, and remedying damage caused to land used by the


project or environmental damage the project may have caused (inducing


dam ago that exton ds beyond the contract area), but not if drawn from a trust


fund described in paragraph (2).


(2) To a trust fund established to defray future expenses of the type spedfied in


paragraph (1), but only if the fund has been approved by tho Minister in


regulations and subject to any Sanitations or requirements provided in


regulations.





(b) An amount taken as a deduction under subsection (a) but not used for the specified


purpose:





(1) If remaining after tho tax period in which commerda! production ends, diall be


included in income fa the following lax period; a


(2) If used fa anotha purpose, shall bo induded in income In tho tax period within


which the amount is so used





Attribution of Expenditures. Exploration, development, and capital goods expenditures incurred


pria to a project's first tax poriod are attributable to it fa income tax purposes as follows---





(a) Exploration expenditures incurred pria to the identification of a site fry development


are attributable to the first development ate established under this Contract and


leading to commercial production.''^'











33














i&r


(b) Subsequent exploration expenditures wttlin tho Dolimitod Area are attributed in the


same fashion to any subsequent development cite loading to commercial production.


(c) Exploration, development, and capita goods oxpondituros not attributable to a project


as described in this paragraph are not dodudiblo in determining taxable income.


17.11 Treatment of Property Transfers


(a) Unless an exception applies under this Article, Contractor's gain or loss on the transfer


of depreciable property used by the project is tredod in accordance with the Revenue


Code. Transfer of nondepreciable property used in tho business, or transfer of


property other than property oonnectod with petrdoum, is determined in accordance


with the property transfer rules of the Revenue Codo.


(b) Special Cases


(1) Hedging. Hedging transactions are taxablo as a separata business activity,


and hedging gains and losses incurred are not includible or deductible in


determining taxable Income of the prqect.


(2) Investment Gain. Gain on property the Contractor holds for investment is


determined under the Revenue Code and is indudiWa in income of a project,


except to the extent reduced by any deductions permitted undor the Revenue


Code for loss incurred on the disposition of property other than property used


in a business if the property is held for investment.


17.12 Successor Agreement. If this Contract is terminated and a new agreement is entered into with


Contractor for the same contract area, the projects loss carry forward existing at the


termination date of the development agreement is deductible in the first tax period of the


successor project under the successor agreement, provided:


(a) Tho whole of the geographic area covered by the contract area of the successor


agreement is within the contract area of the origins! agreement; and


(b) The successor agreement entered into force within one month following the termination


of the original agreement.


17.13 Assignment of Rights and Interest. If Contract assigns its rights and interest pursuant to Artide


35:


(a) The taxable income of the project shaR continue to be determined using the tax cost


and other tax attributes applicable at the date of the interest transfer; and


(b) Contractor shall determine gain or loss under the rogiiar income tax provisions of the


Revenue Code, which also applies to determine the trancforoo’c tax cod in the





34


17.14 Transactions Between Related Persons


(a) General Rule. A project's gain. Iocs, and other lax consequences in transactions with


related persons are subject to in Arid® 1.30 and regular income tax provision of the


Revenue Code concerning related persons.


(b) Transfer Pricing. A transaction with respect to production between Contrador 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.


(c) Disclosure. Contractor must;


(1) Disclose related-party transactions and contemporaneously document the


manner in which prices are sol in transfers to related persons.


(2) Notarize an agreement gamming a related-party transaction in accordance


with the law of the related person's country of reddonce.


(d) Guidelines. The Wristor shall follow OECD transfer pricing guidelines In evaluating the


validity of the price setln a related party transfer.


17.15. Partnerships and Joint Ventures


(a) Pass-Through of Tax Attributes. If Contractor is organized as a partnership or similar


form of unincorporated joint venture, the project's Income, expenses, loss, credits, and


character of income a loss shall be attributed to the partners in accordance with their


interests (inducting the items specified in Artide 17.4, for the purpose of determining


taxable income, loss, credits, and tax lidftty separately for each partner.


(b) Application of Other Rules. If subsection (a) applies:


(1) the provisions of this Article shall apply separately to each partner;


(2) Each partner shad be considered a taxpayer and a producer and shall be liable


for income tax as determined under this Article.


17.16 Withholding Taxes. Contractor shaft wifohdd taxes in accordance with the general provisions


of the Revenue Code, except that it shaft withheld tax on payments made to nonresidents at


the following rates:


(a) Dividends, five percent (5%).


(b) Interest, tep percent (10).


(c) Payments for services, six percent (6).


17.17 Goods Tax. Contractor is exempt from the payment of Goods Tax on:


(a) ran materials or other inputs for use directly in manufacturing, or raw materials for use


directly in agriculture or forestry, or in a mining or petroleum prejed or in natural


resource exploration and development;


(b) capital goodaTr








35


 ARTICLE 18





VALUATION OF PETROLEUM


18.1 Fa the purposes of this Contract, the Crude 01 prioeshaB bethe F.O.B. *Market Price* at the


Delivery Point, expressed in DoBars pa barrel and payable within thirty (30) days after the date


of the bit of lading, as determined hereinafter fa each Calendar Quarter.


A market Price shad be determined for each type of Crude Oil a Crude Oil mix.


18.2 The Market Price applicable to lifting of Crude Oil made during a Calendar Quarter shell be


calculated at the end of said quarter and shall be equal to the weighted average of the process


obtainod fa Crude 03 from the Deiim&ed Area during said quarter by the Contiada and by


NOCAL from independent purchasers, as adjusted to take into account the differences in


quality and gravity as wolf as in F.O.B. delivery terms and payment conditions.


18.3 In the event such sales are not made, the Market Price shall be determined on the basis of the


prices obtained on the Wematknsi market during said quarter between independent buyers


and sellers for sales of crude ofls of quality similar to foe Crude 03 from toe Delimited Area In


the same markets as those in wtich the Liberian Crude 03 would normally be sold, as adjusted


to take into account the differences in quality, gravity, transportation as well as in sales and


payment conditions. Fa the avoidance of doubt, oil sales into the Liberian market shall be


valued accoding to the terms of this Article 1&3.


18.4 The fdkwtng transactions shall, inter afia, be excluded from toe calculation of the market Price


of Crude Oil;


(a) sales in which the buyer is an Affiliated Company cfflhe sella as well as sales between


entities constituting the Contractor,





(b) sales in exchange for other than payment in freely convertible currencies and sales


fully a partially made fa reasons otoa then toe usual economic incentives involved in


Crude Oil sales on the international market (such as exchange contracts, sales from


government to government or to government agencies).


18.5 Within ton (10) days folkwing the end of each quarter, the Parties shall advise each other of





the prices obtained for their share of production of Crude 03 from the Delimited Area sold to


independent purchasers during toe quarter in question, indicating for each sale the identity of


the purchasa, the quantifies sold, toe delivery aid payment terms.


Within twenty (20) days foil owing toe end of each quarter, the Conlracta shall determine in


accadance with the provisions of Article 18.2 or Article 18.3, as the case may be, the Market


Price applicable fa the Calendar Quarter concerned, and shall notify NOCAL of that Market


Price, indicating the method of calculation and alt data used in the calculation of that Market


Price. .


With in thirty (30) days following receipt of the node© referred to to the prececfng paragraph,


NOCAL shall verify that toe calculation of Market Price complies with the provisions hereof anci


shall notify tho Conlracta of its acceptance or objections. Failing notification from NOCACp








36














U


 within that thirty (30) day period the Market Price provided far in the Contractor’s notice referred


to in the preoedng paragraph shall be deemed to have been accepted by NOCAL





In the event that NOCAL has notified objections to the Market Price, the parties shall meet


within fifteen (15) days fattening NOCAL’s notification to mutually agree on the Market Price. If


the parties fail to agree on the Market Price applicable to a given Calendar Quarter within


seventy-five (75) days after the end of that quarter, NOCAL or the Contractor may immediately


submit to an expert, appointed in accordance with the fallowing paragraph, the determination of


the Market Price (including the determination of reference crude oils M the parties have not


determined them).


The expert shaft determine the price within thirty (X) days after his appointment and Ns


conclusions shall be final and binding on the Parties. The expert shall decide in accordance


with the provisions of this Article.


The expert shall be selected by agreement between the parties qr, if no agreement is reached,


by the International Center of Expertise of the International Chamber of Commerce in


accordance with its rules on Technical Expertise, at the request of the most diligent party. The


expertise costs shall be charged to the Contractor and included in the Petroleum Costs.


18.6 In the event it would be necessary to calculate on a provisional basts during a quarter the


Crude Oil price applicable to the lifting made during said quarter, faat price shall be established


as follows'.


(a) For any sale to independent buyers, the price applicable to that sale shall be the price


obtained far the Crude Oil far said sale, 36 adjusted to take into account the F.O.B.


delivery terms and thirty (30) days payment terms.


(b) For any lifting cither than those which are the subject of a sate to independent buyers,


the price applicable to that lifting shall be the Martlet Price determined fa the


precetfng Calendar Quarter or, if that Market Price has not been determined a price


set up by agreement between the Parties a, failing apeement, the last known Market


Price.


Once the Market Price fa a quarter has been determined cn a final basis, arjustments, if


required, shall be made within thirty (30) days.


18.7 PAYMENT OF ROYALTY


The Government of Liberia, through NOCAL, hereby agrees te expressly exdude Section 3.7-


(Royalty as Tax) of the Petroleum Law from being applied to or having any effect on this


Contract. The Government of Liberia, through NOCAL, hereby farther expressly waives any


and all rights it has a will have under the Petroleum Law, or cthor Laws, which requires any


royalty payment by the Contractor ^ the Told Production of Squid and gaseous Hydrocarbons


from Petroleum Operations.^---

















37





%


 ARTICLE 19





BONUSES AND HYDROCARBON DEVELOPMENT FUND


19.1 The Contractor shall pay tfractly to NOCAL the following production bonuses:


(a) Four million dollars ($4mm) when the Total Production of Crude Oil from the Delimited


Area first reaches the average rate of thirty thousand (30,000) barrels per day during a


period of thirty (30) consecutive days.


(b) Five milfion ddtars ($5mm) when the Total Production of Crude Oil from the Delimited


Area first reaches the average rate of fifty thousand (50,000) barrels per day during a


period of thirty (30) consecutive days.


(c) Seven million dollars ($7mm) when the Total Production of Crude Oil form the


Delimited Area first reaches the average rate of one hundred thousand (100,000)


barrels per day during a period of thirty (30) consecutive days.


Etch of the amounts referred to in (a), (b), and (c) above shall be paid within thirty (30) days


following the expiration of the reference period of thirty (30) consecutive days.


19.2 These production bonuses mentioned herein shall not be cost recoverable and shall therefore


not be treated as Petroleum Costs.


193 HYDROCARBON DEVELOPMENT FUND


19.3.1 To stimulate research in the field of hydrocarbons, mod especially in continental areas,


and to assist the Government in Is overall god of achieving energy sustainability, a


Hydrocarbon Development Fund, to be managed by NOCAL, has been established.


The Contractor shall make an annual contribution of two hundred fifty thousand doll era


($250,000.00) during exploration and production to this Fund rfirectly to NOCAL. The


first payment shall be made within thirty (30) (fays of the Effective Date of this Contract


and thirty days after each subsequent anniversary. Such contributions shall be paid


directly Into bank accounts held and controlled by NOCAL Prior to making any such


payment the Contractor shall verify such bank accounts and NOCAL agrees to


cooperate, assist and provide Contractor any information it requires to conduct such


verification.


19.32 The contribution to the Hydrocarbon Development Fund referred to in Article 19.3.1 will


be cost recoverable and therefore, shall be considered as Petroleum Costs.


»


19.4 RURAL ENERGY FUND


19.4.1 In accordance with the National Energy Policy, a Rural Energy Fund (REFUND) has


boon 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 r











39


 in order to ensure energy security end sustainability upon cossadon oi pelroleum


production.





The Contractor shall therefore make an annual contribution of two hundred thousand


dollars ($200,000.00) during exploration and production directly to NOCAL for


subsequent payment to the REFUND. The first payment shall be made within thirty


(30) days of the Effective Date of this Contract and thirty (30) days after each


subsequent anniversary. Such contributions shaft be paid through NOCAL into bank


accounts held and controlled by the NOCAL Prior to making any such payment


Contractor shad verify such bank accounts and NOCAL agrees to cooperate, assist


and provide Contractor any information it requires to conduct such verification.





19.5 The Parties agree that all payments made under this Contract shall be made in accordance


with protocols laid down by the Extractive Industries Transparency Initiative (EITI). T0-


 ARTICLE 2a





OWNERSHIP AND ABANDONMENT OF ASSETS


20.1 Upon expiration, surrender or termination of this Contract, whatever the reason thereof, in


respect of all or part of the Delimited Area, a at the end of exploitation of a Field, the


Contractor shall transfer at no cost to NOCAL the ownership of assets, movables and


immovables, used for the requirements ol the Petrdeum Operations carded out h the area so


surrendered, located whether inside a outside the Delimited Area, such as wells and their


equipment, bulking, warehouses, docks, lands, offices, plants, machinery and equipment,


bases, harbors, wharfs, jetties, storage tanks, buoys, platforms, pipelines, roads, bridges,


railroads and other facilities.


Such transfer of ownership shall cause tee automatic cancellation of any security or surety


concerning those assets, or which thoee assets constitute





However, the Contractor may oontfnue to use thoee assets beyond the date referred to in the


first paragraph, for the requirements of its Petroleum Operations in Libera governed by other


contracts.


20.2 if NOCAL decides not to aocopt, all or part of the assets, tee transfer of ownership provided for


in Article 20.1, it may, not later than ninety (90) days following the date specified in said Article,


require the Contractor in accordance with good international petrdeum industry practice, to


perform abandonment operations and to remove, at the oost of the Contractor, the (the accrued


costs of which shall be cost recover able) fadJBos relating to the surrendered areay



























































I








41














I*


 I





; ARTICLE 21


NATURAL GAS





‘i.


21.1 Non-AModatad Natural Gm





21.1.1 In the event d a NovAssodated Natural Gas discovery, the Contractor shall engage in


dscucekns with NOCAL with a view to determining whether the appraisal and •


exploitation of said decovary have a potentially commercial natura


21.12 If the Contractor, after the abovamentionod dscusskrta, considers that the appraisal





of such Non-Assodated Natural Gas rfscovery is Justded, I ehafl undertake the


appraisal work program far sad discovery.


¥


> The Contractor shall have the right, far the puposes of evaluating the commardality of


the Noe-Associated Natural Gas discovery, if it so requests at least thirty (30) days


prior “to the expiation of the third Exploration Period sftt forth in Article 3.3 to be


granted an exclusive appraisal authorization concerning the Appraisal Perimeter of the


abovementioned discovery, for a term of two (2) years.





in addition, the Parties shall jointly evaluate the possible outlets for the Natural Gas,


both on the local market and for export, together with the necessary means for its


. marketing, and they shall conadW the possibility of a joint marketing of their shares of


production in the went the Natural Gas discovery would not otherwise be commercially


exploitable. For that purpose, a Consultative Committee for Natural Gas shall be


established by the Parties to ensure the coordination of foe upstream and downstream •


components of the Natural Gas project and facriitaterte evaluation and implementation.


21.1.3 If, despite their reasonable endeavours, the Parties are not able to develop a market





for a Non-Assodated Natural Gas discovery, foe Contractor may, prior to the expiry of


the term of the exclusive appraisal authorization, request a further three (3) yea-


extension of the exclusive appraisal authorization for the Appraisal Perimeter of the


discovery and NOCAL writ not unreasonably withhold its approval for sad extension. A


second extension, of foe exclusive appraisal authorization of three (3) years may be


requested by the Contractor prior to foe expiry of foe then current authorization and


NOCAL will not unreasonably withhold ita appioyal for the extension. _



































l. ,














42


21.1.4 Following completion of appraisal work, in the event the Parties should jointly


decide that the exploitation of that discovery is justified to supply the local


market, or in the event the Contractor should undertake to develop and produce


that Natural Gas for export, the Contractor shall submit prior to the expiration of


the appraisal period an application for and exclusive exploitation authorization


which NOCAL will grant under the terms provided by Article 12.1.


The Contractor shall then have the right and obligation to proceed with the


development and production of that Natural Gas in accordance with the


approved development plan referred to in Article 11.3 and the provisions of this


Contract applicable to Crude Oil shall apply, mutatis mutandis, to Natural Gas,


unless otherwise specifically provided under Article 21.3.


21.1.5 If the Contractor considers that the appraisal of the Non-Associated natural Gas


discovery concerned is not justified, NOCAL may, by giving twelve (12)


months prior notice which may be reduced either with NOCAL’s consent or


automatically in the event the exclusive exploration authorization expires


earlier, require the Contractor to surrender its rights in respect of the area


encompassing said discovery.


In the same manner, if the Contractor, after completion of appraisal works,


considers that the Non-Associated Natural Gas discovery is not commercial,


NOCAL may, by giving three (3) months prior notice, unless the exclusive


exploration authorization expires earlier, require the Contractor to surrender its


rights on the area encompassing said discovery.


In both cases, the Contractor shall forfeit its rights to all Non-Associated natural


Gas which could be produced from said discovery, and NOCAL may then carry


out, or cause to be carried out, all the appraisal, development, production,


processing, transportation and marketing work relating to that discovery,


without any compensation for the Contractor.


21.1.6 Notwithstanding the terms of Article 21.1.4, if the Operator is of the view that


the Non-Associated Gas discovery in question is non-economic as a standalone


development but can demonstrate that there is sufficient prospectivity in the


region to support a combined development of current discovered reserves and


future exploration prospects as a combined economic development, then


NOCAL will provide the Contractor a period of thirty-six (36) months before


exercising its rights pursuant to Article 21.1.4.


11.2 ASSOCIATED NATURAL GAS


21.2.1 In the event of a commercial discovery of Crude Oil, the Contractor shall state if


it considers that the production of Associated Natural Gas is likely to exceed the


quantities necessary for the requirements of the Petroleum Operations related to


the production of Crude Oil (including re-injection operations), and if it


considers that such excess is capable of being produced in commercial


quantities. In the event the Contractor shall have informed NOCAL of such an


excess, the Parties shall jointly evaluate the possible outlets for that excess of


Natural Gas, both on the local market








43


and for export (inducing the possfctBly of Joint marinating of their shares of production


of that access of Natural Gas in the event such excess wrxid not other wise be


commercially exploitable), together with the means necessary for its marketing.


in the event the Parties should decide that the development of the excess of Natural


Gas is justified, or In the event the Contractor would wish to develop and produce that


excees for export, the Contractor shall indicate in the development and production


program referred to in Article 11.33 the addtiond facilities necessary for the


development and exploitation of that excess and its estimate of the costs related


thereto.


The Contractor shall then have the right to proceed with the development and


exploitation of that excess in accordance with the development and production


program approved by NOCAl under the terms provided by Article 11.3.6, and the


provisions of the Contract applicable to Crude Oil shall apply, mutatis mutandis, to the


excess of Natural Gas, irless otherwise specifically provided by Article 21.3.


A similar procedure shad be applicable if the sale of marketing of Associated Natural


Gas Is decided during the exploitation of a Reid.


21.2.2 In event the Contractor should not consider the exploitation of the excess of Natural


Gas as justified and if NOCAL, at any time, would wish to utifize it, NOCAL shall notify


the Contractor thereof, In which event


(a) the Contractor shall make available to NOCAL free of charge at the Crude Oil


and Natural Gas separation facilities all or part of the excess that NOCAL


wishes to lift;


(b) NOCAL shall be responsible for the gathering, processing, compressing and


transporting of that excess from the abovementioned separation facilities, and


shall bear any addition^ costs related thereto;'


(c) the construction of toe facilities necessary for toe operations referred to in


paragraph (b) above, together with toe lifting of that excess by NOCAL, shall


be carried out in accordance with good international petroleum industry


practice and in such a manner as not to tinder the production, lifting and


transportation of Crude Oil by the Contractor.


21.2.3 Any excess of Associated Natural Gas which would not be utilized under Articles


21.2.1 and 21.2.2, shad be reinjected by the Contractor. However, the Contractor


shall have the right to fare said gas in accordance with good international petroleum


industry practice, provided that the Contractor furnishes NOCAL with a report


demonstrating that said gas cannot be economically utilized to improve the rate cf


recovery of Crude Oil by moans of reinjection pursuant to the provisions of Arfide


15.6, and provided, firthertoat NOCAL approves said taring, which approval shall not


be unreasonably withheld jC---














*





44


Provision* common to Associated and Kon-Assodatod Ga*





21.3.1 In order to encourage the exploitation of Natural Gas, NOCAL may grant to the


Contractor specific benefits when they are duty justified concerning, inter alia, the


recovery of the Petroleum Costs relating to Natural Gas.


21.3.2 The Contractor shall have the right to dispose d its share of production of Natural Gas,


in accordance with the provisions of this Contract It shall also have the right to


proceed with the separation of liquids from all Natural Gas Produced, and to transport,


store 88 well as sell on the local market or for export He chare of liquid petroleum so


separated which will be considered as Crude Oil for the purposes of their sharing


between the Parties under Article 16.


21.3.3 Fa the purposes of this Contract, the Natural Gas price, expressed in Dollars pa


mlDlon BTU, shall be equal to:


(a) with respect to Natural Gas export sales to Third Parties, the price obtained


from purchasers;


(b) with respect to sales on the local market of Natural Gas as a fuel, such price


as NOCAL and the Contractor shaft mutually agree upon^p


















































»


























45


 ARTICLE 22





FOREIGN EXCHANGE CONTROL


22.1 The Contractor shall comply with the foreign exchange control regulations, subject to the


provisions of this Article.


22.2 The Contractor shall have the right to retain abroad afi the foreign currencies arising from





export sales of ail Hydrocarbons to whichiti&entitied under tills Contract, or from assignments,


as wed as eqiity, incomes from loan and more generally, sri assets acquired abroad by it, and


to freely depose of such foreign currencies a assets to the extent that they may exceed its


requirements for its operations in Liberia


22.3 No restriction shad be exercised on importation by the Contractor of funds intended for the


performance of the Petroleum Operations.


22.4 The Contractor shall have the right to purchase currencies of Liberia with foreign currencies,


and freely exchange into foreign currencies of its election any funds held by it in Liberia in


excess of its local requirements at exchange rates which shall not be loss favorable than those


generally applicable to any other buyer or eoHor erf foreign curroncie^TL-















































»



































h


 ARTICLE 23





GOVERNING LAW








23.1 Applicability of Liberian Law Subject to Article 36 the Contractor, its subcontractors and





assignees in accordance with the laws of Liberia as in effect from the date of signing this


Contract (induding with respect to labor, environmental, health and safety, customs and tax


matters) shall conduct itself in a manner consistent with international treaties to which Liberia is


a party In so far as those that have effect of the Law of Liberia.





23.2 Construction and Interpretation Sriject to Artide 36, this Contract and the rights, obligations


and duties of the Parties under the Contract shaft be construed and interpreted in accordance


with the Laws of Liberia and by such rules and principles of international law as may be


applicable particularly with regard to an investment by nationals of one country in another


country. However, in the event of a oonflict between the previsions of this Contract and any


Law, except for the Constitution in effect as of the Effective Date, the provisions (induding the


rights, obligations and duties of the Partes) under this Contract 6hait prevail^p-











































































































47


 ARTICLE 24





MONETARY UNIT


24.1 The registers and accounting books relating to this Contract ehafl be maintained and recorded


in Dollars. Said registers and accounting books shall be used to determine the Petroleum


Costs, gross income, exploitation costs and net profits for toe purpose of toe preparation of the


Contractor's tax return; they shall contain, inter stia, Contractor's accounts shewing the sales of


ail Hydrocarbons and Natural Gas under this Contract


24.2 Whenever it is necessary to convert into Dotiare capon cos and incomes expressed in another


currency, the exchange rates to be used shall be equal to toe arithmetic average of the daily


closing rates for the puchase and sale, as published in the Central Bank of Liberia website


(htlpi/www.cbl.org1r0 for the Liberian Dollar and toe Wafi Street Journal for purchase of other


currencies during the month when toe expenses were paid and the income received.


24.3 The originals of the registers and accounting bocks referred to In. Article 24.1 shall be kept in


Liberia or as otherwise determined by Contractor after giving the Government due notice


thereof in writing. The registers and accounting books shall be supported by detailed


Documents with respect to receipts and Petroleum Co6tshfL_





















































»


























48


 ARTICLE 25





ACCOUNTING METHOD AND AUDITS


25.1 The Contractor shall maintain Its aooounts In aooordanoe with the regulations In force and with


the provisions of the Accounting Procedure set out in Appendix 2 attached hereto faming an


integral part cf this Contract


25.2 Alter giving the Contractor notice thereof In writing, NOCAL shall have the right to cause the


registers and accounting books rotating to the Petroleum Operations to be inspected and


audited by its own agents a by experts of its election, and shaft have a period of four (4)


months following the end of each Calendar Year to carry out those inspections a audits


relating to said year and may submit its objections to the Contractor for any contradictions a


errors found during such Inspection a audits.


Should NOCAL fail to make any claim within the abovemenfioned period of four (4) months, no


further objection a daim shall be made by the Liberian administration for the Calendar Year


concerned.)^'


 ARTICLE 26





IMPORT AND EXPORT





26.1 (a) The Contractor shall have the right lo import Wo Uberia,m its own name or on behalf


of its contractors and subcontractors, a8 the technical equipment, materials, machinery


and tools, goods and supplies necessary in the Contractor's opinion for the proper


conduct and achievements of the Petroleum Operations; such imports include but are


not limited to, chilling, exploration, development, production, transportation, sales and


marketing, equipment, pipelines, tanks, geological and geophysical tools, boats, ships,


launches, drilling barges, ships md platfcxms, production platforms, emergency oil


spill equipment, civil engineering and bbconmunicaUon equipment, power plants and


all related equipment aircraft, automotive equipment and other vehicles, instruments,


tools, spare parts, alloys and additives, camping equipment, protective clothing and


equipment, medical, surgical and sanitary equipment, supplies and instruments


necessary for the installation and operation of hospitals and dispensaries,


documentation equipment, construction materials of ail typos, lumbor, office furniture


and equipment, automobiles, explosives, chemicals, fuels, ship supplies,


pharmaceutical products, medicines, computer software and hardware, which shall be


free of ail duties and taxes.


(b) The Contractor shall have the right to import into Liberia, in its own name or on behalf


. of its contractors or subcontractors, the furniture, clothing, household appliances and


all personal effects for all toe foreign employees and their families assigned to work in


Liberia for the Contractor or its contractors or subcontractors.


(c) However, the Contractor, its agents, contractors and subcontractors undertake not to


proceed with the imports mentioned in Article 26.1 (a) insofar as such items are


available In Liberia under equivalent conditions of quantity, quality, price, delivery and


terms of payment unless specific requirements or technical emergencies are presented


by toe Contractor.


(d) The Contractor, its agents, contractors and subcontractors shall have the right to re¬


export from Liberia, free of afl duties and taxes and at any time, all toe items imported


under Article 26.1 (a) and (b) which are no longer necessay for toe Petroleum


Operations except the items which have become the property of the State under the


provisions of Article 20.


26.2 During the period from the Inception of exploration until the date commercial production begins,


the following goods in addition to Article 26.1 are exempt from import duties;


(a) Plant or ecppment (including four-wheel-drive motor vehicles but not motorcycles,


sedans a luxury vehicles as defined by regulation) and spare parts for these goods;


(b) Intermediate inputs fmduting but not limited to explosives, drilling mud, grinding balls,


liras for trucks used in operations, and similar items apooified in regulations); and


(c) Raw materials.


26.3 The Contractor, its agents, contractors and subcontractors shall provided that they inform


STATE in advance of their intent to sell tod subject to tho provisions of Article 20, have





50


right to eeU in Liberia, al equipment, materials, machinery and tods, goods and supplies


they have imported when they are considered as surplus and no longer necessary for tht


Petrdeum Operations. In that event, the seder shad be responsible for paying ail duties and





taxes applicable on the date of the transaction and for filing all the formalities prescribed by the


regiiations in force.


During the term of this Contract, the Contractor, its customers and their carriers shail have the





right to export freely at the export point selected far that pvpose, free of ad dudes and taxes


and at any time, the portion of any Hydrocarbons to which the Contractor is entitled in


accordance with the provisions of this Contract, after deduction of aH deliveries made to the


STATE, provided however firat fees far unprocessed exportables shall be paid.





Contractor is not exempt from customs user fees of two and half percent (2.5%) imposed under


the Revenue Code, induing fees for the inspection or pre-shipment inspection of goodjj2__











































































































51


 ARTICLE 27


DISPOSAL OF PRODUCTION








27.1 Each Calendar Year, up to a total of ten peroent (10%) of the chare of Crude Oil Production to


which the Contractor is entiBed, shell be told to NOCAL by the Contractor for the purpose of


satisfying the needs of the domeedo market of Liberia Such contribution of the Contractor


shall be in proportion b its share of production, in (he total Crude 0(1 Production in Liberia.


The quantity of Crude Oil the Contractor shaft be obftgated to ceil to NOCAL shall be notified to


it by NOCAL at least three (3) months prior to the beginning of each Calendar Quarter.


27.2 The price of the Crude Oil sold to NOCAL under Article 27.1 far the needs of the domestic


market shall be the Market Price defined in Article 18.


Thai Crude Oil price shall be payable to the Contractor in Dollara within 45 days after receipt


of the invoice unless otherwise agreed between the Parties.


I


27.3 The transfer of title to, and risk of, the share of Hydrocarbon production to which each party is


entitled shall be made at the Deli wary Point, or at any other transfer point agreed between the


Parties.


27.4 Each of the Parties shall have the right and obligation, to dispose of and lift the share of


Hydrocarbons to which it is ertitted under this Contract Such share shall be lifted onyas


regular a basis as possible, it being understood that each of the Parties, within reasonable


limits, wiH be authorized to lift more (overiift) or less (underiift) that its share of Hydrocarbons


produced and unlilted by the lifting day to the extort that such rwertift or underiift does not


infringe on the rights of the other Party and is compatible with the production rate and the


storage capacity.


in the establishment of the sequence of liftings, priority will be given to the Party with toe


largest share of produced and unlifted quantity of Hydrocarbons at a given time. The Parties


shall periodically meet to establish a provisional tiffing program on the basis of the principles


above-described and taking into account the wishes of toe Parlies as rogards too dqtes and


quantities of their fillings, provided that those wishes are compatible with said principles J__














p





























52


 ARTICLE 28





PROTECTION OF RIGHTS


28.1 The Contractor shall taka aft necessary steps to achieve the objectives of this Contract in its


conduct of Petroleum Operations.


28.2 NOCAL shall take aft necessary steps to facilitate the tmpfementatlon by the Contractor of the


objectives of this Contract, and the STATE shall protect the property and operations of the


Contractor, its employees and agents in the temiory of Liberia.


28.3 At the request of the Contractor, the STATE shaft prohibit the construction of dwelfing or


business buildings in the vicinity of installation which the Contractor may declare dangerous as


a result of its operations. It shad take aft necessary precautions to proh&it anchoring in the


vidrity of submerged pipelines at river passages, and to prohibit any hindrance to the use of


any other installation necessary for the Petroleum Operations whether on land or offshore.


28.4 The Contractor shall take out and cause to be taken out by Its contractors and subcontractors,


In respect of the Petroleum Operations aH insurances of the type and for such amounts


customarily used in the international petroleum industry, inducing without lirritafion, third party


liability insurance and insurances to cover damage to property, facilities, equipment and


materids, without prejudice to such insurances which would be required under Uberian


legidation.^fj




































































53


 ARTICLE 29





PERSONNEL AND TRAINING





29.1 The Contractor shaH give preference in employment Vo Liberian Nationals provided that they


are suitably qualified and available, which shaft be determined by the sole opinion of the


Contractor, provided however, the Contractor shall have the right to employ its own key


personnel in appropriate positions, and provided also ffiat such conditions are in conformity


with the Labour Practices Law of Liberia.


29.2 Upon commencement of the Petroleum Operations, the Contractor shall provide an annual


contribution for Training Programmes and the Contractor shall make dkect payment to NOCAL


of an annual Training Budget of:


(a) Two Hundred Fifty Thousand Ddlare ($250,000) during each year of the exploration


period;





(b) Five Hundred Thousand Dollars ($500,000) during each year of the exploitation period.


Additionally, the Contractor shaft make an annual contribution of One Hunfred Fifty Thousand


Dollars ($150,000) to the University of Liberia, paid directly to NOCAL for subsequent payment


to the Univarsity of Lfoeria, for the enhancement of programmes in Geology, Mining


Engineering and Environmental Studies.


29.3 Upon commencement of the petroleum Operations, the Contractor shall provide funding for


Social and Welfare programmes in Lfteria and for that purpose the Contractor shall make an


annual Social and Welfare Budget payment directly to NOCAL


(a) Two Hundred Fifty Thousand Dollars ($250,000.00) during each year of the exploration





period;





(b) One Million Dollars ($1,000,000.00) during each year of the exploitation period.


The Training and Social and Welfare and University expenses borne by the Contractor shall be


included In recoverable Petroleum Costs. Funding for the Training, Contribution to the


University of Liberia and Social and Welfare Programmes shall be paid within thirty (30) days of


the Effective Date. Thereafter, payments shall be made within thirty days of each subsequent


anniversary of the agreement


Such contributions for the Training and Social and Welfare and University of Liberia shall be


paid directly into bank accounts hold and oorrtroftod by NOCAL or the University of Liberia.


Prior to making arty such payment, the Contractor shad verity such bank accounts and NOCAL


agrees to cooperate, assist and provide Contractor any information it requires to conduct such


verification.


As provided in Article 19.3.3, all payments made under this Contract shall be made in


accordance with protocols laid down by the Extractive Industries Transparency Initiative (EITI).


29.4 The Entry into Liberia of aU foreign personnel shall be authorized and the STATE shall issue


the documents necessary fa that entry to ail members of the foreign personnel, such as








34


 visas, waking permits and exit visas, In compliance with the immigration regulations in force in


Liberia.





At the request of the Contractor, the STATE shsfl facilitate any Immigration formalities with the


Immigration Bureau, at the points of entry into and exit from Liberia, in respect of the


Contractor's employees, contractors, subcontractors and agents, and their families, all without


undue delays.





29.5 All the employees required for the conduct of the Petroleum Operations shall be under the


Contractor's authority or that of Its contractors, subcontractors and agents, in their capacity as


employers. Their work, number of working hours, salaries and any ether matters relating to


their employment conditions shall be determined by the Contractor a its contractors,


subcontractors and agents, and shall conform to the Labour Practices Law of Liberia.





29.6 The STATE and/a NOCAL shall assist Contractor in obtaining ail Liberian governmental


permissions, registrations, licenses, and ail other approvals or rights that are needed for


carrying out Petroleum Operations under this Contract, provided however, thatContractor shall


be responsible for applicable fees required by Law to the relevant authorities, f-

















































































































55


 ARTICLE 30





ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE EXPLOITATION


AUTHORIZATIONS





30.1 The provision of Art do 12 sfaafl apply, mutatia mutands, lo any exclusive exploitation .


authorizations. In addition, the foticwlng peckxflc activity reports shaft, inter alia, be furnished in


respect of each Reid:


(a) daily production reports.





(b) monthly reports staling the quantities of Hydrocarbons produced and those sold during


the previous month together with information on such safes.


Unless the Contractor gives its written consent, the information relating to a Reid under


exploitation, except statistical data about activity, shall be considered as confidential by the


Parties during the term of this Contract


30.2 The Contractor shall forthwith notify the STATE of any material damage whatsoever caused to


the Hydrocarbon fields of facilities, and shaft take aft necessary steps lo terminate tt and carry


out the necessay repairs.


30.3 From the year of granting an exclusive exploitation authorization, the annual report referred to


in Article 8.2 shall also include the fcltowfng:


(a) information on alt development and production operations canled out during the


previous Calendar Year, inducing the quantities of Hydrocarbons produced and those


sold, if any;


(b) information on all transportation and sales operations together with the location of the


main facilities built by the Contractor, if any,


(c) a statement specifying the number of employees and workers, their qualification and


their nationality, together with a report on the medical care and training provided to


them;


(d) report on environmental management;


(e) financial reports induding exploration costs and pelrdeum costs. ^ '





























56


 ARTICLE 31





'.;#'|6RBITRA'nON





In the event of any (Capote between NOCAL and tf>a Contractor relating to, or arising out of, the


Interpretation or execution ofljhe provisions of this Contract, the parties shall make their best


efforts to settle cuoh depute rimicabi]^


If within three (3) months from'the date of notice of such dispute by either Party to the other,


the Parties have not reaofiodfoeWoment, the dispute shall, at the request of the mo6t diligent


Party, be referred far ■rbHratorttothe International Chamber of Commerce in accordance with


itanieaandreflti4lloiW,-;‘'1f^:-'' v .


The arbitration shad be held th the United States of America The language used during the


procedure shall be thoEngtfsh language. The Arbitration shad be determined by three (3)


arbitrators. The arbitrators shad hot have the same nationality as the Parties.


The arbitration tribunal1* award shad be €nd; it dull be birxfing on the Parties and shall be


ywSRS* enforceable In any oourt of appropriate Jurisdfcficn.


The expenses of any afailraUortshall be borne equally by the Parties, that is to say, each party





shall pay the expenses of It* Own arbitrator and the expenses of the third arbitrator in equal


shares, and any expense* imposed fay the International Chamber of Commerce shall be


shared equally by the Parties.


The performance by the Parties of heir obligations under this Contract dull not be suspended





during the oourse of the ariaitrticn.


A sole expert shall be an Independent and impartial person of international starving with


relevant qualifications and experience appointed pursuant to the mutual agreement of the


Parties (“Sole Export*). Any Sole Expert appointed shad act as an expert and not as an


arbitrator or mediator and shaft be instructed to endeavors to resolve the rfispute referred to


him within thirty (30) days of his appointment, but in any event within sixty (60) days of the


appointment. Upon the selection pf the Sole Expert the Party receiving the notice of referral


above shall submit Its own statement containing all Information it considers relevant with


respect to the matter in dispute. The derision of tho Sole Expert shall be final and binding and


not subject to any appeal, save for fraud, corruption or manifest disregard of applicable


procedure of this Contract If the Parties are unable to agree on the appointment of a Sole


Export within twenty (20) days after a Party has received a notice of referral under this Article


the Sole Expert shall be selected by the ICC Centre for Expertise, and the person so selected


shall be appointed py the Parties.


The Sole Expert dial] dodde the manner in which any determination is made, including





whether the Parties shall make orst a written submissions and arguments, and the Parties


shall co-operate with the Sole Expert and provide such documentation and information as the


Soie Expert may request. Al correspondence, documentation and information provided by a


Party to the Sde Expert shall be copied to the ether Party, and any oral submissions to the


Sde Expert shad be made in the presence of all Parties and each Party shall have a right of


response. The Sde Expert may obtain any independent professional or technical advice as the ^





57














1 >


 'm











Sdo Expert oonskfare necessary. The fees and expirees of a Soto Expert appointed under the


provisions of Articte 314 shaft be borne equally by the Parties.


31.6 Sovereign Immunity


Any Party that now or hereafter has a right to claim aoverelgn Immunity far Itself or any of ita


assets hereby waives any such immunity to the fullest extent permitted by the laws of any


applicable jurisdiction. This waiver includes immunity tom (I) any expert determination,


mediation, or arbitration proceeding commenced pursuant to this Contract; (S) any judicial,


administrative or other proceedings to aid the expert determination, mediation, or arbitration


commenced pursuant to this Contact; and (Si) any effort to confirm, enforce, or execute any


decision, settlement, sward, judgment, service of process, execution order or attachment


(including pre-judgment attachment) that results from an expert determination, mediation,


arbitration or any judicial or administadve ptoceedngs commenced pursuant to this Contract


Each Party acknawiedgeg4hatlts rights and obligations hereunder are of a commercial and not


a governmental nature.







































































»





























. 58


 ARTICLE 32





TERMINATION


32.1 Termination by the Contractor. During the Exploration and Exploitation Periods, the


Contractor may surrender, by not less than sixty (60) days notice to NOCAL, ail of its rights aid


obligations hereunder in respect of sU or any part of the Delimited Area, and the Operator shall


be relieved of all obligations to NOCAL in respect rt the area so surrendered except those


obligations arising out of a related to the sun-ender.


32.2 Termination by NOCAL Subject to the provisions of Article31, NOCAL shrtil have the right to


terminate this Contract if any of the following events (hereinafter called 'Events of Default*)


shall occur and be continuing:


(a) Where the Contractor shall fail to make any of the payments described in this Contract


on the due payment date, and such default is not cured within forty-five (45) days after


notice by NOCAL or within such longer periods as may be specified in said notice;





(b) Where the Contractor shall materially fat to comply with its work commitments and


other conditions in this Contract and such failure is not cured within ninety (90) days


after notice by NOCAL or within such longer period as may be specified in the notice;


(c) , Where the Contractor shall fi) voluntarily dissolve, liquidate a wind up its affairs, or


make an assignment of ail or substantial afl of its assets for the benefit of crodtors


other than an assignment made to secure Indebtedness incurred in the ordinary course


of business; (ii) file a petition or appBcation to any tribunal for the appointment of a


trustee or receiver far aU or any substantial part of the Contractor's assets; (Hi)


commence any proceedings for its bankruptcy, reorganization, arrangement,


insolvency or readjustment of debt under the laws of any jurisdiction, whether new or


hereafter in effect, or if any such petition a application is filed, or any such


proceedings are commenced against it, shall indicate its approval thereof, consent


thereto or acquiescence therein, or (iv) if any order is entered appointing any such


trustee or receiver, or adjudicating the Contractor bankrupt or insolvent, or approving


the petition in any such proceedings, and provided that the Contractor shall fail to take


corrective rrvoasuro(s) to have such order removed or lifted within sixty (60) days;





(d) Where the Contractor shall fail to carry out exploration as required by Article 4, or


cease exploration for a period of twelve (12) consecutive months or cease production


with rospoct to all production areas for a period of twenty-four (24) consecutive


months, unless such failure or cessation is consented to by NOCAL or is caused by a


state of force tpajoura





32.3 Opportunity to cure. In the case of an alleged Event of Default described above, NOCAL,


before taking any further action, shall provide Notice to the Contractor of the alleged


occurrence of such Event of Default and of NOCAL’s views in that regard and shall offer the


Contractor a fair opportunity to consult with NOCAL to resolve the matter. If, alter a reasonable


period of time of consultation, NOCAL is of the reasonable opinion that the matter cannot be


resdvod by further consultation, NOCAL may then send to the Contractor Notice of NOCAL1 s


intention to terminate this Contract If the Evert of Default is not cured within 6ixty (60) days








59


 after said Notice, or within such longer period as may be neceseay to allow a reasonable


period of time to effect such cure, then this Contract shad be terminated, subject to Article 31.








32.4 Dispute* Regarding Events of Default Notwithstanding the provision of Article 32.2 if the


Contractor deputes whether there has been an Bent of Default described above and, within





sixty (60) days after reoeipt by the Contractor of NOCAL's Notice of its intention to terminate


this Contract, refers such dispute to arbitration in accordance with Article 31, then termination


of this Contract shad not take effect unfi the finality of, and in accordance with, an arbitration


award^














































































































 ARTICLE 33


•r* ---


FORCE MAJEURE


33.1 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 a 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.


33.2 Force Majeure means any event unforeseeable and beyond the control of a Party, such as:


earthquake, flood, accident, strike, lockout, riot, delay in obtaining the rights-of-way,


insurrection, civil disturbances, sabotages, change of any Lews, acts of war or conditions


attributable to war, a any other cause beyond its control, simitar to or different from those


already mentioned.


33.3 Where a Party considers it is prevented from performing any of its obligations by the


occurrence of Face Majeure, it shall forthwith notify the other party thereof by specifying the


grounds for establishing Face Majeure, and take all necessary and useful steps to ensure the


normal resumption of the performance of the concerned obligations upon termination of the


event constituting the Force Majeure.


Obligations other than those affected by Foro^jMajeure shall continue to be performed in


accordance with the provision of this Contract. JP , >•


 ARTICLE 34





JOINT AND SEVERAL OBLIGATIONS AND GUARANTEES


34.1 All the clauses, condtions and provisions of this Contract shall bo binding on the Parties and


their respective successors and assignees. This Contract constitutes the only agreement


between the. Parties and no previous communication, promise or agreement, whether oral or


written, between the Parties, related to the purpose of this Contract may be assorted to amend


the clauses hereof.


The STATE certifies and guarantees that there is no other applicable agreement with respect to


the petroleum rights within the Delimited Area, that it wifi perform its obligation In fairness and


good faith and that this Contract will not be cancelled, amended or modified except by


agreement between the Parties.


34.2 Where the Contractor is constituted by several entity the obligations and liabilities of those


entities under this Contract shall be joint and several.^--'



















































































62


 ARTICLE 35





RIGHTS OF ASSIGNMENT


35.1 All or part of the rights and obligations arising from this Contract may be assigned by any of the


entities constituting the Contractor to Third Parties whose technical and financial reputation is


well established; the assignees with the other entities constituting the Contractor shall


thereafter be Jointly and severally liable for the obligations arising from this Contract


The terms of any assignment shall be subject to the prior written approval of State, through


NOCAL, which approval shall not be unreasonably withheld.


If within sixty (60) days following notification to NOCAL of a projected assignment accompanied


by all the related Information and the draft assignment deed, NOCAL has not given its decision,


that assignment shall be deemed to be approved by NOCAL.


From the date of approval of an assignment, the assignee shall comply with the terms and


conditions of this Contract.


35.2 Subject to the prior written approval of the State , through NOCAL, all or part of the joint and


several rights and obligations arising from this Contract may be freely assigned at any time by


any of the entities constituting the Contractor to one or more Affiliated Companies or other


entities constituting the Contractor.









































»























63


 ARTICLE 36





STABILITY OF CONDITIONS








36.1 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 ail said laws and





regulations, as it regards, to, inducing but not limited to the economic, petroleum, fiscal aid


financial provisions of this Contract








36.2 This Contract may not be amended, cancelled or modified by virtue of the adoption or


amendment of any Law by the State of Lfceria after the Effective Date of this Contract. This


Contract may only be amended or nxxfified by written agreement of the Parties to this Contract^'


 ARTICLE 37





IMPLEMENTATION OF THE CONTRACT


37.1 The Parties agree to cooperate in every possible manner to achieve the objectives of this


Contract.


NOCAL shall facilitate the Contractor's performance of its activities by granting it any permits,


licenses, access rights neoessary for the performance of the Petroleum Operations and by


making available to it any appropriate service* and facilities, so that the Parties can obtain the


best benefit from a sincere cooperation. However, the Contractor shall be responsible for any


applicable fees or payments required by any applicable Law to appropriate authorities and shall


observe the applicable procedures and formalities, and shall apply to the competent Ministries


and/or Agencies of the Administniion.


The Parlies agree lo respect the terms of this Contract and not to unilaterally abrogate any part


of the terms and conditions contained heroin.


372 Any notices a other communication under this Contract shall be deemed to have been made


when they are delivered to an authorized representative of the Party concerned at the location


of Said Party's principal office in Liberia, or sent by telegram, cable or facsimile with ail


expenses paid, or deposited as registered letters with the Postal administration of Liberia with


postage prepaid.


Notifications shall be deemed to have been made on the date when the addressee shall


receive them.


Notices to NOCAL should be sent to:


President and CEO


National 09 Company of Liberia


Episcopd Church Plaza, 2r* Floor


1000 Monrovia


10 Liberia


E-mail: fodeekromah2001@yahoo.com


Tel: +231-651-2929


Notices to Anadarko should be sent to:


International Negotiations Manager


Anadarko Liberia Company


1201 Lake Robbins Drive


The Woodlands, IX 77380


Fax: +1-632-636-8023


Tel: 1-832-636-2827


Email: John.Bostock@anadarko.com


37.3 If NOCAL considers that the Contractor has committed a breach in the performance of any cf


its obligations, it shall so notify the Contractor in writing and the Contractor shall have sixty (60)


days to remedy the breach or refer the matter to arbitration in accordance with this Contract^----


65











Jo


37.4 The terms and oondUiens of this Contact may be mod fed arty in writing and by mutual


agreement between the Paries.


37.5 Unless otherwise sped fed in wrifing, NOCAL chaH represent Gw STATE under this Contract


and is empowered to grant, in the name and on behalf of the ST ATE, any consent necessary or


usetrt for the implementation of this Contract


37.6 Headings in this Contract are inserted for purposes of convenience and reference and in no


event shall define, restrict a describe foe scope a object of foe Contract a of any of its


clauses


37.7 Appendices 1 and 2 attached hereto shall form and integral part of this Contract


37.8 Any waiver of the STATE a NOCAL concerning the performance of any obligation of the


Contractor shall be in writing and signed by foe representative of foe STATE or NOCAL, and no


waiver shall be implied if IheSTATE or NOCAL does not exercise any of its rights to which it is


entitled under this Contract^













































































66


 ARTICLE 38








EFFECTIVE DATE





Upon execution by the Partes and when promulgated as the law of the Republic of Lfoeria, tils


Contract shad become effective, the date of ratification and publication of the hand bfB shad be referred


to as the Effective Date, and said Contract shad become binding on the Partes. In addition to the


foregoing, the STATE and/or NOCAL shad take ad actions necessary foliowing the Execution Date to


give this Contract the full force and effect of law In the Republic of Liberia





Counterparts. This Contract may be executed in multiple counterparts, and by different Parties In


separate counterparts, and each such counterpart shad be deemed an original Contract for all


purposes, provided that no Party shad be bound by this Contract unless and until ad parties have


executed a counterpart


IN WITNESS WHEREOF, the Partes have signed this Contract on the date as set forth below.





ONBEHALF OF NOCAL AND THE GOVERNMENT OF LIBERIA:


f





:odee Kromah Date


ESIDENT/CEO


NATIONAL OIL COMPANY OF LIBERIA





f


xAon. Clemenceau B. Urey Date


CHAIRMAN, BOARD OF Dll


)NAL OIL COMPANY;





o'?,- )^T-ey?


Eugene H. Shannon Date


ER OF LANDS, MINES & ENERGY


ER1A











Date








3.-IV <>1





Hon. Richard V. Tolbert Date


CHAIRMAN, NATIONAL INVESTMENT COMMISSION


REPUBLIC OF LIBERIA
































67


ON BEHALF OF ANADARKO LIBERIA BLOCK 10 COMPANY:








M M\4kH-





Bernard Sanger Data


Country Manager


Anadarko Liberia Block 10 Company





/f A*/o?


Date


Hon. Philip AZ Banks


MINISTER OF JUSTICE


REPUBLIC OF LIBERIA





3//o3/*j








Approved: » Date


Her Excellency


Ellen Johnson Sirteaf


PRESIDENT


REPUBLIC OF LIBERIA














Ratified: Date


National Legislature of the Republic of Liberia^p''

































































68














«


 APPENDIX 1





Attached lo and made part of this Contra* between the Republic of Liberia and the Contractor.


DEUMTTED AREA


On the Effective Date, the Delimited Area, designated as Block LB-10, is formed by the area included


inside the perimeter constituted by the points indicated on the map attached thereto.


The geographical coordinates of those points are the following, with Reference to the Greenwich


meridian:


Point Longitude Latitude


A 10*24* 3.252* W 4*50*59.206* N


B 9*48* 1.22* W 5*36*35.946* N


C 9*34* 55.203* W 5* 25* 22.01* H


D 10* 12* 17.242* W 4*38*29.278* N


Those coordinates are only given for purposes of defining the Delimited Area and shall not be


considered as the boundaries of the national Jurisdiction of Liberia.


The surface cf the Delimited Area above-defined is deemed to be equal to about 3,440 sq. km.

































































69


 APPENDIX 2





Attached to and made part of this Contract between the ReptiiKc of Liberia and the Contractor.





ACeWOTtNg-PRQCEDVBE





Article I - General Provision*


1.1 Object





This Accounting Procedure shall be fallowed and observed in the performance of the


obligations under the Contract to which this Appendix Is attached.


The purpose of this Accounting Procedure is to establish the principles of accounting which


shall reflect the Operators actual costs relating to joint operations to the end that the Operator


shall subject to the processes of the Contract neither gain nor lose by reason of the fact that it


acts as Operator.


1.2 Accounts and Statements


The registers and accounting books of the Contractor shall be in conformity with accounting


rules and regulations for business applicable in Liberia. However, toe Contractor may apply


the accounting rules and procedures in conformity with the Revenue Code of Liberia,


In accordance with the provisions of Article 25 of the Contract, accounts, books and registers


shall be maintained and recorded in Dollars. These accounts shall be used, inter alia, to


determine the amount of Petroleum Costs, the recovery of said Cods, toe production sharing,


as, welt as for the purposes of Contractor's tax return.


The Contractor shall record alt operations connected with the Petroleum Operations in


accounts separate from those relating to any other activities which it may carry out in toe


Republic of Liberia.


All accounts, books, records and statements, together with documents supporting expenses


incurred, such as invoices and service contracts, shall be kept in the Republic of Liberia in


order to be provided at the request of toe cOnf^jeteft authorities of Liberia.


□ Interpretation





In the event of any conflict between the provisions of this Accounting Procedure and the


Contract, the provisions of the Contract shall prevail.


I.4 The definitions contained in Article 1 of toe Contract shall apply to this Accounting Procedure


and shall have toe same meanings when used herein. In addition certain terms used herein


are defined as follows:





Exclusive Operation Account shaft mean toe accounts maintained by Operator to record all


expenditures, receipts and other transactions of Parties participating in Operations by less toa^£_








70


 all parti os.





Material shall moan the personal property, Including but not fimited to equipment and supplies,


acquired and held (or use In the Petroleum Operations. .


I. 5 Modification*


The provisions of this Accounting Procedure may be modified by mutual agreement between


the Parties.


The Parties agree that if any provision of the Accounting Procedure proves inequitable to either


Party, such provision shall be modfied In good faith by the Parties.


Article II - Petroleum Costs


II. 1 Petroleum Costs Account


The Contractor shall malntan a ’Petroleum Costs Account* which will record in detail the


expenses I neared by the Contractor directly relating to the Petroleum Operations carried out


under this Contract, and which win be oost recoverable in accordance with the provisions of


Article 16 of the Contract


The Petroleum Cods Aooount shall, Inter alia, record separately, by Appraisal Perimeter cr


Exploitation Perimeter If any, the foMcwtfng expenses:


(a) exploration expenditures;


(b) appraisal expenditures;


(c) development expenditures;


(d) exploitation expenses;


(e) financial costs;


(f) overhead costs In Liberia;


(g) overhead ooets abroad.


The Petroleum Coats Aooount shall enable, inter alia, to identity at any time:


(a) Iho total amount of Petroleum Coets 6ince the Effective Date;


(b) the total amount of Petroleum Costs recovered;


(c) the total amount crodited to the Petroleum Costs Account pursuant to Article 11.4(b)


below:








71


(d) the total amount of Petroleum Costewttch remain to be recovered.


(e) the cafaiafai of taxable incorna.


For tha purpoeos of Artide 16 of the Contract, Petroleum Costs shall be recovered In the


following sequence:


(a) exploitation expenses In respect of a Reid loaned and paid from the date of


commencement of regular production;





(b) financial costs;


(o) other Petroleum Costs.


In addition, within each of the foregoing categories, the costs shall be recovered in the





sequence in which they are incurred.


Unless otherwise provided for in (his Accounting Procedure the intent of the Parties is not (o


duplicate any item of the credit or debit of the aooounls maintained under the Contract.


Items debited to the Petroleum Costs Account


The fallowing expenses and costs shaB be debited to the Petroleum Costs Account and also be


deductible for income tax return purposes, accord eg to Article 17:


112.1


Personnel Expenses





All payments and costs in respect to Contractor’s emptoyees will be those costs


directly or indirectly assigned to foe Petroleum Operations canted out under this


Contract The precise amounts of expenses wS be reviewed in the future and will be


in agreement with accepted human resource procedures adopted by the Contractor


that are generally applicable in international oil and gas industry. The expenses


allowed wil be the actual expenses incurred as permitted by such human resource


procedures.


11.2.2 Overhead Costs In Liberia


Wages and salaries of the Contractor's personnel directly engaged in the Petroleum


Operations in the Republic of Liberia, whose work time is not directly allocated to the


programs, ac well as costs of maintaining and operating in Liberia a main and


administrative office and suboffioes necessary for the Petroleum Operations.








11.23 Overhead Costs Abroad


The Contractor shaft charge costs paid abroad, connected to the carrying out of the


Petroleum Operations by the Contractor or Us Affifiated Companies. The amounts


charged shall be the actual costs borne by the Contractor. These costs, including a


detailed breakdown of the costs, wBl be provided to the JOC for its review











72 f





56 I








11.2.4 Buttings





Construction, maintenance expenses, ae welt as rents paid for all offices, houses,


warehouses and bulldings of other types, including housing for employees, and cost of


equipment, furniture, and flttings necessary fcr the operation of those buildings directly


required for the performance of the Petroleum Operations.


11.2.5 Damages and Loses*


All oo8ts and expenses necessary for the repair or replacement of joint property


resulting from damages and losses incurred by fire, flood, storm, theft, accident, a any


other oause. Operator shall furnish NOCAL written notice of damages and losses


Inourred in exoesa of one hundred thousand U.S. dollars (US 100.000) for each


inoident as soon as practicable after a report thereof has been rooeived by the


Operator. The Operator shall furnish to any Non-Operator, in respect of any damage


and loss, suoh Information and documentation as may be reasonably requested


11.2.6 Materials, Equipment and Rentals


Costs of equipment, materials, machinery, and facilities purchased or provided for use


in the Petroleum Operations, as weR as rentals a compensations paW or Incurred fa


the use of any equipment or fadBtSee required directly for the performance of the


Petroleum Operations.


11.2.7 Services


Coets of services directly related to Petroleum operations rendered by subcontractors


and oonsdtants, as wed as any oosts directly related to services rendered by the


STATE or NOCAL or any other authorities of the Republic of Liberia.


Costs of servioos (fireotly elated to Petroleum Operations rendered by Affiliated


Companies, provided that such oosts shall not exceed those normally charged by


independent oompanles for an Identical a similar service.


11.2.8 Insurance Premiums and Losses


Premiums paid, Including thoee paid to Affiliated Companies, fa insurances


customarily taken out fa the Petroleum Operations to be carried out by the Contractor.


Losses not covered by the applicable insurance provisions, including the relevant


deductible amount* will also be debited to this Account.


11.2.9 Legal Expenm


All expenses of handling, investigation defending, protecting a recovering joint


property and settlement of litigation a dams directly arising by reason of the


Petroleum Operations.^__

















73


 11.2.10 Financial Costs





All interests paid by the Contractor in respect of the loans from Third parties and


advances obtained from Affifiated Companies, provided that those loans and advances


shall bo for the purpose of the financing of Petroleum Costs related only to the


development of Petroleum Operations in respect of a field under this contract In the


event such financing Is provided by Affiliated Companies, the aHowabte interest rales


shall not exceed the rates customarily used in the international financial market for


loans of a similar nature.


11.2.11 Other Expenses


Any other expenses incurred and pad by the Contractor for the purposes of the


necessary and proper conduct of the Potrctoum Operations under the approved annual


Work Programs and Budgets, other than the expenses covered and deal! with by the


Foregoing provisions of this Article and other Iran the expenses excluded from the


Petroleum Costs.


11.2.12 Ecological and Environmental Charges





All costs incurred for the benefit of the Joint property and other property under the


Contract as a result of governmental a regulatory requirements and/or Operator’s


policies to comply with environments rules applicable to Operations. These costs may


include periodic environmental audits, ecological or archaeological surveys and


pollution control procedures required by the applicable Laws..


H.3 Expenses not chargeable to the Petroleum Costs Account





The expenses which are not directly necessary tor the performance of the Petroleum


Operations, and the expenses excluded by he provisions of the Contract or this Accounting


Procedure as well as by the regdations in farce in Lfceria, are not chargeable to the Petroleum


Cods Account and shall therefore not be recoverable.





Such expenses shall be:


(a) expenses relating to the period before the Effective Date;





(b) any expenses relating to he operations carried out beyond the Delivery Point, such as


transportation and marketing costs;


(c) financial costs relating to the financing of exploration Petroleum Operations, and those


relating to ^he share of financing of development Petroleum Operations;


(d) bonuses defined in Article 18.9 and Article 19.1 of the Contract;


11.4 Kama credited to the Petroleum Costs Account





The following incomes and procoods shall, inter afia, be crediled to the Petroleum Costs


Account: 'r£^'








74











h


(a) Income arising irom the marketing of the quantity of Crude Oil to which the Contractor


is enticed under Article 16 of the Contract foe the pupra© of recovery of the Petroleum


Costs;


(b) any other Inoomos or proceeds related to the Petrdeum Operations epedficaly those


arising from:


• Safes of related eutetanoea;


• Any services rendered to Third Parties using the facilities dedicated to the


Petroleum Operations, Including, but not limited to, processing, transportation and


storage of products far Third Parties in those fadfities.^>'










































































t


























75


r











Article III - Cost Evaluation Basl* For Service*, Materials and Equipment Used In the Petroleum


Operation*


111.1 Technical Services


A reasonable rale shall be charged for the technical services rendered by the Contractor or Its





Affiliated Companies lor the cfirect benefit of the Petroleum Operations carried out under the


Contract, such as gas, water, core analyses and any other analyses and tests, provided that


such charges shall not exceed those normaBy charged by independent technical service


companies and laboratories far similar services.


111.2 Purchase of Materials and Equipment


Materials and equipment purchase from turd Parties and directly necessary for the


performance of the Petroleum Operations carried out under the Contract shall be charged to


the Petroleum Costs Account at "Net Cost* Incurred by tire Contactor.


«


'Net Cost* shall Include such items as taxes, shipping agent fees, transportation, loading and


unloading costs, license fees, related to the supply of materials and equipment, as well as


transit losses not recovered through insurance.


111.3 Use of Equipment and Facilities Exclusively by tha Contractor





Equipment and facilities owned by the Contractor and used directly for the Petroleum


Operations shall be charged to foe Petroleum Costs Aooount at a rental rate which shall be


sufficient to cover maintenance, repairs, depredation and services required for the


performance of the Petroleum Operations.


Maintenance, repairs, and services required for foe performance of the Petroleum Operations





shall be charged to the Petroleum Costs Accounts as operating expenses


111.4 Valuation of Materials


Ail materials transferred to Liberia from foe Contractor's warehouses, or from thoee of any


entity constituting the Contractor or their Affiliated Companies, stuti be vriued as follows:


(a) New Material





New material (oondifion *A") means new material which has never been used; one


hundred percent (100%) of the current market price, which corresponds to the price


normally charged for amfiar supplies in amVs length transactions between buyer and


seller.


Material in good condition (condition *B*) means material in good condition which is still


usable for its original purpose without repair, at a maximum of seventy-five percent


(75%) of the price of new material .3Ls>

















76


(b) Other Used Material


Other used material (condition *0*) means material sti usable lor its original purpose,


but only after repairs and Reconditioning: at a madman of fifty percent (50%) of the


prioe of new material.


(c) Material In Poor Condition


Material in poor condition (oondfion 17) means material no longer usable for He


original purpose but still usable far other purposes: at a mad mum of twenty-five


percent (25%) of the price of new material.


(d) Scrap Material


Scrap material (condition *E*) means material beyond usage and repair: prevailing


price of scrap material.


ill.5 Warranty of Material


The Operator does not warrant the material charged to the joint account beyond the


manufacture’s or supplier's guarantee, express a fanpfad.


Ill .6 Materials and Equipment Disposed By the Contractor





Material and equipment purchased by art the entities constituting the Contractor shall be valued


in accordance with the principles defined in Article ttl.4 shove.


Materials and equipment purchased by any entity constituting the Contractor or by Third Parties


shall be valued at the received sale prioe, which shall In no event be less than the price


determined in accordance with the principles defined in Article III .4 above.


The corresponding amounts shall be credtod to the Petroleum Costs Account


Article IV - Inventories





IV.1 Period


The Contractor shall keep a permanent Inventory both in quantity and value of all normally


controllable materials used for the Petroleum Operations and shah proceed at reasonable


Intervals with (lie physical Inventories as required by the Parties.


IV.2 Notice ,


A written ndioe of Intontlon to take an Inventory shall be send by the Contractor at least ninety


(90) days prior to the oommoncement of said inventory so that the STATE and the entities


constituting toe Contractor may be represented at their own expenses during the inventory


operations. 'Yj














77











XL


IV. 3 Information





In the event the STATE or any entity constituting the Contractor shall not be represented at an


Inventory, such Party or Parties shall be bound to accept the inventory taken by the Contractor


which shall furnish to such Party or Parties a copy of said inventory.


Article V - Financial and Accounting Statements


The Contractor shall furnish the STATE and NOCAL with all the reports, records and


statements provided by the preridonsd the Ccrtiact and the appficafele regulations and, inter


alia, the following financial and accounting statements:


V.1 State of Exploration Work Obligations


Such annual statement shall be submitted not later than one (1) month after the end of each


Contractual Year in respect of the exploration periods.


It shall present with details the exploration work and expendturos carried out by the Contractor


to fulfil! its obligations sol forth in Article 4 of the Contract, exdudng specifically appraisal woils


and related appraisd expenditures as well as development expenditures, exploitation


expenses, overhead costs and bonuses.


V2 Statement of Recovery of Petroleum Costs


A quarterly statement shall be submitted not later than one (1) month after the end of each


Calendar Quarter. It shall present the fcflowng items of the Petroleum Costs Account:


(a) the amount of Petroleum Costs which remain to be recovered at the beginning of the


quarter;


(b) the amount of Petroleum Costs in respect of that quarter and recoverable under the


provisions of the Contract;


(c) the quantity and the value of toe production of Petroleum taken by the Contract of


during the quarter for the purpose of recovery of the Petroleum Costs;


(d) the amount of incomes cr proceeds credited for the purpose of Artide II.4 (b) above


during the quarter;


(e) the amount of Petroleum Costs which remain to be recovered at


the end of the quarter.





In addition, an annual statement of the recovery of Petroleum Costs shall be submitted prior to


the end of February of each Calendar Year.y




















78


.Statement of Production





After commencement of production, such monthly statement shall be submitted not later than


fifteen (15) days after the end cf each month.


It shall present far each month the detailed production of each Exploitation Perimeter and, inter


alia, the quantities of Hydrooarbons:


(a) stored at the beginning of the month;


(b) lifted during the month;


(c) lost and used for the requirements of the Petroteum Operations;


(d) stored at the end of the mopth. 'jp













































































79


 2009


2009








FOURTH SESSION OF THE FIFTY SECOND FOURTH SESSION OF THE FITY SECOND


LEGISLATURE OF THE REPUBLIC OF LIBERIA LEGISLATURE OF THE REPUBLIC OF LIBERIA


SENATE’S ENDORSEMENT TO HOUSES’S ENGROSSED


HOUSE’S ENGROSSED BILL NO.17 ENTITLED:


BILL NO. 17 ENTITLED


“AN ACT TO RATIFY THE PRODUCTION SHARING


CONTRACT FOR BLOCK LB-10 SIGNED BETWEEN “AN ACT TO RATIFY THE PRODUCTION SHARING


THE NATIONAL OIL COMPANY OF LIBERIA CONTRACT FOR BLOCK LB-10 SIGNED BETWEEN


(NOCAL) ON BEHALF OF THE REPUBLIC OF THE NATIONAL OIL COMPANY OF LIBERIA


LIBERIA AND ANADARKO LIBERIA COMPANY” (NOCAL) ON BEHALF OF THE REPUBLIC OF





On motion, Bill read. On motion, the Bill was adopted on its LIBERIA AND ANADARKO LIBERIA COMPANY”





first reading and sent to Committee room on Thursday, July 16, On motion, Bill read. On motion, the Bill was adopted on its


2009 @12:40 GMT. first reading and sent to Committee room on Thursday, July 23,


On motion, Bill taken from committee room for its second 2009 @ 11:30 a.m.


reading. On motion, under the suspension of the rule, the On motion, Bill taken from committee room for its second


second reading of the Bill constituted the third reading and the reading. On motion, under the suspension of the rule, the


Bill was adopted, passed into the frill force of law, and ordered second reading of the Bill constituted the third reading and the


engrossed today Tuesday, July 21,2009 @16:15 GMT. Bill was adopted, passed into the frill force of law, and ordered


engrossed today Thursday, July 23,2009 @ 12:50 GMT.


 2009














ATTESTATION TO:








“AN ACT TO RATIFY TIIK PRODUCTION SHARING CONTRACT FOR BLOCK LB-


10 SIGN HI) BETWEEN TIIK NATIONAL OIL COMPANY OF LIBERIA (NOCAL) ON


BEHAI,F OF TIIK REPUBLIC OF LIBERIA AND ANADARKO LIBERIA COMPANY”


























VICE PRESIDENT OF THE HE 1*C 13LI IEPGBLIC'QF LII LIBERIA/PRESIDENT


OF THE LIBERIAN SENATE i ILL.























SECRETARY, d




















SPEAKERJ KILSl/QrKEFRKSENTATIVESjTLt^


 REPUBLIC OF LIBERIA


THE HONORABLE HOUSE OE KEKKESEHTATIVES


Cnpito- Raili ng


P O Bex 9005


Monrovia, Liberia














2009





FOURTH SESSION OF THE FIFTY-SECOND LEGISLATURE OF


THE REPUBLIC OF LIBERIA


SCI IEDUI.E OF I IIP. HOUSE’S ENROLLED BILL NO. 16 ENT ITLED:











“AN ACT TO RATIFY I HE PRODUCTION SHARING CONTRACT FOR


BLOCK LIMO SIGNED BETWEEN THF. NATIONAL OIL COMPANY OF


LIBERIA (NOCAL) ON BEHALF OF THE REPUBLIC OF LIBERIA AND


ANADARKO LIBERIA BLOCK 10 COMPANY”














PRESENTED TO THE PRESIDENT OF THE REPUBLIC OF LIBERIA


FOR EXECUTIVE APPROVAL.








, ,JL


RECEIVED I HIS > DAY OF A.D. 2009














a r ri if: hour of

















Till-: PRESIDENT OF THE REPUBLIC OF LIBERIA