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 CONGO





Model Joint Operating Agreement Of 1987


CONGO



Model Joint Operating Agreement Of 1987TABLE OF CONTENT

Article 1 - Definitions

Article 2 - Purpose, effective date and term

Article 3 - PARTICIPATING INTERESTS of the PARTIES

Article 4 - OPERATOR

4.01 Appointment of OPERATOR

4.02 Exclusive right to operate

4.03 Employees and contractors

4.04 Conduct of PETROLEUM WORKS

4.05 Expenditures

4.06 Claims

4.07 Liability

4.08 Resignation or removal of OPERATOR

4.09 Appointment of new OPERATOR

4.10 Transfer of duties and obligations

4.11 Payment of Royalty

4.12 Vocational training and employment of personnel

Article 5 - Operating Committee

5.01 Overall Supervision

5.02 Decisions of the Operating Committee

5.03 Operating Committee meetings

5.04 Chairman

5.05 Operating Committee minutes

5.06 Decisions without a meeting

5.07 Technical sub-committees

5.0 8.................

Article 6 - Work programs and budgets

6.01 Submittal of yearly work program and budget

6.02 Approval of yearly work program and budget

6.03 Revision of work program and budget

6.04 Cash advances

6.05 Authorization for expenditure

6.06 Form of AFE

Article 7 - Confidential information

7.01 Information

7.02 Disclosure of confidential information

7.03 Trades of well and other data

Article 8 - Costs, expenses, materials and equipment

8.01 Ownership

8.02 Costs and expenses

8.03 ACCOUNTING PROCEDURE

8.04 Audit

8.05 Default and lien

8.06 Non-applicability to

Article 9 - Financing of PETROLEUM WORKS — Contributions of funds

9.01 General

9.02 Contributions by the COMPANIES

9-03 Contributions by

9.04 CONTRIBUTIONS ACCOUNTS

9.05 offset contributions





116

TABLE OF CONTENT

Article 1 - Definitions

Article 2 - Purpose, effective date and term

Article 3 - PARTICIPATING INTERESTS of the PARTIES

Article 4 - OPERATOR

4.01 Appointment of OPERATOR

4.02 Exclusive right to operate

4.03 Employees and contractors

4.04 Conduct of PETROLEUM WORKS

4.05 Expenditures

4.06 Claims

4.07 Liability

4.08 Resignation or removal of OPERATOR

4.09 Appointment of new OPERATOR

4.10 Transfer of duties and obligations

4.11 Payment of Royalty

4.12 Vocational training and employment of personnel

Article 5 - Operating Committee

5.01 Overall Supervision

5.02 Decisions of the Operating Committee

5.03 Operating Committee meetings

5.04 Chairman

5.05 Operating Committee minutes

5.06 Decisions without a meeting

5.07 Technical sub-committees

5.0 8.................

Article 6 - Work programs and budgets

6.01 Submittal of yearly work program and budget

6.02 Approval of yearly work program and budget

6.03 Revision of work program and budget

6.04 Cash advances

6.05 Authorization for expenditure

6.06 Form of AFE

Article 7 - Confidential information

7.01 Information

7.02 Disclosure of confidential information

7.03 Trades of well and other data

Article 8 - Costs, expenses, materials and equipment

8.01 Ownership

8.02 Costs and expenses

8.03 ACCOUNTING PROCEDURE

8.04 Audit

8.05 Default and lien

8.06 Non-applicability to

Article 9 - Financing of PETROLEUM WORKS — Contributions of funds

9.01 General

9.02 Contributions by the COMPANIES

9-03 Contributions by

9.04 CONTRIBUTIONS ACCOUNTS

9.05 offset contributions





116

 9.06 End of COMPANIES*s obligations.......


9.07 SuDplying LIQUID HYDROCARBONS to the


COMPANIES. . . ...............


9.08 COMPANIES* right to adjust their respective


contributions among themselves.......





Article 10 - Disposition of Production.


10.01 Liftings......... '.........


10.02 Available Oil. . . ............


10.03 Nominations................


10.04 Make-up Rights. . .............


10.05 Apportionment. . .......... . . .


10.06 Failure to Offlift. . ...........


10.07 Off-take procedure. ............


10.08 Risk of loss. ...............


10.09 Payments to .............


.10.10 Domestic market obligation. . .......


10.11 NATURAL GAS. ... ............


10.12 No joint marketing. .............


10.13 Purchase by the COMPANIES........ .


Article 11 - Permits - Surrender and Withdrawal. . . ;


11.01 Permits...................


11.02 Surrender. ................


11.03 Right to withdraw.............


Article 12 - Assignment. ... ............


12.01


12.02 Size of PARTICIPATING INTEREST assigned and


12.03 approval. .................


Preferential right of acquisition. ......


12.04 Effective date of assignment........


Article 13 - Relationship of the PARTIES........


Article 14 - United States income tax election.....


Article 15 - Arbitration.........‘.......


Article 16 - Insurance.................


Article 17 - Applicable laws..............


Article 18 - Force Majeure...............


Article 19 - Notices. . ................


Article 20 - Miscellaneous...............


20.01 Topical headings...............


20.02 Singular and plural words...........


20.03 Language of the AGREEMENT..........


Article 21 - Amendments.............\ . .


EXHIBIT 1





Copy of Decree granting the PERMIT .





EXHIBIT 2





ACCOUNTING PROCEDURE





EXHIBIT 3


Price of liquid HYDROCARBONS . ..........•


EXHIBIT 4


Definition of Interest Rate referred to


in Sub-Paragraph 9.03.2(c) of the AGREEMENT . . .


117


9.06 End of COMPANIES's obligations

9-07 Supplying LIQUID HYDROCARBONS to the COMPANIES

9-08 COMPANIES' right to adjust their respective contributions among themselves



Article 10 - Disposition of Production

10.01 Liftings

10.02 Available Oil

10.03 Nominations

10.04 Make-up Rights

10.05 Apportionment

10.06 Failure to Offlift

10.07 Off-take procedure

10.08 Risk of loss

10.09 Payments to

10.10 Domestic market obligation

10.11 NATURAL GAS

10.12 No joint marketing

10.13 Purchase by the COMPANIES

Article 11 - Permits - Surrender and Withdrawal

11.01 Permits

11.02 Surrender

11.03 Right to withdraw

Article 12 - Assignment

12.01 .....................

12.02 Size of PARTICIPATING INTEREST assigned and approval

12.03 Preferential right of acquisition

12.04 Effective date of assignment

Article 13 - Relationship of the PARTIES

Article 14 - United States income tax election

Article 15 - Arbitration

Article 16 - Insurance

Article 17 - Applicable laws

Article 18 - Force Majeure

Article 19 - Notices

Article 20 - Miscellaneous

20.01 Topical headings

20.02 Singular and plural words

20.03 Language of the AGREEMENT

Article 21 – Amendments

EXHIBIT 1

Copy of Decree granting the PERMIT

EXHIBIT 2

ACCOUNTING PROCEDURE

EXHIBIT 3

Price of liquid HYDROCARBONS

EXHIBIT 4

Definition of Interest Rate referred to in Sub-Paragraph 9.03.2(c) of the AGREEMENT



117

 TRANSLATION OF -


JOINT OPERATING AGREEMENT














AMONG











{her-ei'ha'fter sometimes referred


to as ), a nationale with registered


offices at Brazzaville,*.; .^presented by ^ , duly


authorized to that eftep£','"





of the first part,











(hereinafter sometimes referred to as ), a


corporation with registered offices at


, represented by


, duly authorized to that effect,


of the second part,








(hereinafter sometimes referred to


as ), a corporation with registered offices at


represented by , duly authorized to that effect,





of the third part,

















118


TRANSLATION OF

JOINT OPERATING AGREEMENT





AMONG





(hereinafter sometimes referred to as ), a societe nationale with registered offices at Brazzaville, represented by , duly authorized to that effect,



of the first part,



(hereinafter sometimes referred to as ), a corporation with registered offices at ,

represented by

, duly authorized to that effect,



of the second part,



(hereinafter sometimes referred to as ), a corporation with registered offices at

represented by , duly authorized to that effect,



of the third part,







118Preamble



WHEREAS, ________ is the holder of the Type "A" hydrocarbon exploration perit as described below;



WHEREAS, this permit was granted to with the option for it to associate with the other signatories of this agreement to pursue the working thereof, which the partied wish to do;



WHEREAS, in order to realize this goal, the parties to this agreement are signing on this day with the ________ a convention governing their relations with the ________ and



WHEREAS, the parties with hereby to set forth the terms and conditions which shall govern the relations among themselves,



NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:



Article 1- Definitions



Whenever the following terms are used in this Agreement, they will have the meaning set forth below;



1.01 "AGREEMENT": This joint operating agreement for exploration and exploitation of hydrocarbons.



1.02 "PARTY" or "PARTIES": The Parties to the AGREEMENT and their respective successors and assigns.



1.03 "PERMIT": The type "A" exploration permit known as "________" granted to ________ by the Decree, a copy which is attached hereto as Exhibit 1, and all its extensions, amendments, variations or renewals, if any, as well as any exploitation permits which may be granted over any part of its surface.



1.04 "ACCOUNTING PROCEDURE": The accounting procedure attached hereto as Exhibit 2.



1.05 "CALENDAR YEAR": Twelve (12) consecutive months beginning on January 1st of any year.



1.06 "QUARTER": A consecutive three-month period beginning on the first day of January, April, July, or October of any CALENDAR YEARPreamble



WHEREAS, ________ is the holder of the Type "A" hydrocarbon exploration perit as described below;



WHEREAS, this permit was granted to with the option for it to associate with the other signatories of this agreement to pursue the working thereof, which the partied wish to do;



WHEREAS, in order to realize this goal, the parties to this agreement are signing on this day with the ________ a convention governing their relations with the ________ and



WHEREAS, the parties with hereby to set forth the terms and conditions which shall govern the relations among themselves,



NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:



Article 1- Definitions



Whenever the following terms are used in this Agreement, they will have the meaning set forth below;



1.01 "AGREEMENT": This joint operating agreement for exploration and exploitation of hydrocarbons.



1.02 "PARTY" or "PARTIES": The Parties to the AGREEMENT and their respective successors and assigns.



1.03 "PERMIT": The type "A" exploration permit known as "________" granted to ________ by the Decree, a copy which is attached hereto as Exhibit 1, and all its extensions, amendments, variations or renewals, if any, as well as any exploitation permits which may be granted over any part of its surface.



1.04 "ACCOUNTING PROCEDURE": The accounting procedure attached hereto as Exhibit 2.



1.05 "CALENDAR YEAR": Twelve (12) consecutive months beginning on January 1st of any year.



1.06 "QUARTER": A consecutive three-month period beginning on the first day of January, April, July, or October of any CALENDAR YEAR









1.07 "____________": The Repulic of



1.08 "CONVENTION": The instrument entered into

between the , , and to

define and govern their respective rights and obligations

within the scope of their operations for working the

PERMIT.



1.09 "DOLLARS": The currency of the United States of

America.



1.10 "FISCAL YEAR": A CALENDAR YEAR, except for the

first fiscal year which begins upon the effective date of

the AGREEMENT.



1.11 "FRENCH FRANCS" - The Currency of Republic of France.



1.12 "HYDROCARBONS": Solid, liquid and gaseous

hydrocarbons discovered and/or produced on the PERMIT.



1.13 "NATURAL GAS": Gaseous HYDROCARBONS produced by

the PARTIES on the PERMIT, but excluding condensates which

by normal field methods of processing are separated and

recovered as a liquid.



1.14 "LIQUID HYDROCARBONS": HYDROCARBONS produced by

the PARTIES on the PERMIT, but excluding NATURAL GAS.



1.15 "OPERATOR": The PARTY designated in accordance

with paragraph 4.01 hereof to conduct the PETROLEUM WORKS,

as this term is hereinafter defined in paragraph 1.19

below, on the PERMIT for the joint benefit of the PARTIES.



1.16 "NON-OPERATOR": Each of the PARTIES other than

OPERATOR.



1.17 "PARTICIPATING INTEREST": The percentages, as

determined in accordance with Article 3 below, in which

the PARTIES participate at any given time in the expenses,

rights and obligations under the PERMIT and the AGREEMENT,

and share at any given time in the production of

HYDROCARBONS in accordance with Article 10 below.



1.18 "COMPANIES": The PARTIES, except



1.19 "AFFILIATED COMPANY":



1.19.1 Any company in which more than 50% of the

voting rights in ordinary shareholders' meetings are held

directly or indirectly by one of the COMPANIES;



1.19.2 Any company which holds, directly or

indirectly, more than 50% of the voting rights in the

ordinary shareholders' meetings of one of the COMPANIES;







120























1.07 "____________": The Repulic of



1.08 "CONVENTION": The instrument entered into

between the , , and to

define and govern their respective rights and obligations

within the scope of their operations for working the

PERMIT.



1.09 "DOLLARS": The currency of the United States of

America.



1.10 "FISCAL YEAR": A CALENDAR YEAR, except for the

first fiscal year which begins upon the effective date of

the AGREEMENT.



1.11 "FRENCH FRANCS" - The Currency of Republic of France.



1.12 "HYDROCARBONS": Solid, liquid and gaseous

hydrocarbons discovered and/or produced on the PERMIT.



1.13 "NATURAL GAS": Gaseous HYDROCARBONS produced by

the PARTIES on the PERMIT, but excluding condensates which

by normal field methods of processing are separated and

recovered as a liquid.



1.14 "LIQUID HYDROCARBONS": HYDROCARBONS produced by

the PARTIES on the PERMIT, but excluding NATURAL GAS.



1.15 "OPERATOR": The PARTY designated in accordance

with paragraph 4.01 hereof to conduct the PETROLEUM WORKS,

as this term is hereinafter defined in paragraph 1.19

below, on the PERMIT for the joint benefit of the PARTIES.



1.16 "NON-OPERATOR": Each of the PARTIES other than

OPERATOR.



1.17 "PARTICIPATING INTEREST": The percentages, as

determined in accordance with Article 3 below, in which

the PARTIES participate at any given time in the expenses,

rights and obligations under the PERMIT and the AGREEMENT,

and share at any given time in the production of

HYDROCARBONS in accordance with Article 10 below.



1.18 "COMPANIES": The PARTIES, except



1.19 "AFFILIATED COMPANY":



1.19.1 Any company in which more than 50% of the

voting rights in ordinary shareholders' meetings are held

directly or indirectly by one of the COMPANIES;



1.19.2 Any company which holds, directly or

indirectly, more than 50% of the voting rights in the

ordinary shareholders' meetings of one of the COMPANIES;







120













1*19 *3 Any company whose voting rights in


ordinary shareholders * meetings are subject to more than


50% control by a company-which itself holds, directly or


indirectly, more than 50% of the voting rights in the


ordinary shareholders’ meetings of one of the COMPANIES;


1.19 . Any company in which -more than 50% of the


voting rights in ordinary shareholders1 meetings are held


directly 'or indirectly by several COMPANIES, or by several


companies as described In sub-paragraphs 1.18.1 to 1.18.3


above.


1.20 "PETROLEUM WORKS”: All the activities, wherever


carried out, relating to exploration, development,,


exploitation, transportation, storage and disposition, in


the CONGO or for export, of HYDROCARBONS.


1.21 “EXPLORATION WORKS”: That part of the PETROLEUM WORKS which is .


undertaken with the purpose of discovering one or several hydrocarbon deposits,


including:


(i) The aeromag survey realized before the granting of the


PERMIT but included on cornnon acceptance by the .


and the COMPANIES in the ..EXPj-OjtATlON WORK?, and its


interpretation, and J


(ii) seismic surveys ancfv'the discovery*..well and all subsequent


works on the 'same' anomal ly., '-uod’eri'aken until the date on


which the Operating Coipm.ittee\.prbvided for in the JOINT


OPERATING AGREEMENT decides-;' pursuant to Article 5 of the


JOINT OPERATINGJU&EEM&NT, that a discovered deposit of


HYDROCARBONS....isl^ commercially exploitable.


1.22 "DEVELOPMENT 'AND EXPLOITATION WORKS": All


PETROLEUM WORKS other than EXPLORATION WORKS, including


the transportation of HYDROCARBONS to the point of


pfflifting by the PARTIES.


1.23 "JOINT ACCOUNT": The account or accounts


maintained by OPERATOR in accordance with the ACCOUNTING


PROCEDURE, to which shall be charged the costs and


expenses of PETROLEUM WORKS performed under the AGREEMENT,


and which are to be borne by the PARTIES, proportionally


to their respective PARTICIPATING INTERESTS.


1.24 “ADVANCE ACCOUNT”: The accounts maintained by the OPERATOR for each


COMPANY to record entries respecting to advances made by the COMPANIES to the


OPERATOR on the behalf of and the reimbursements made by


and so in accordance with the provisions of Article 9 below.


1.25 "BARREL": Unit equal.to 42 U.S. gallons (one


U.S. gallon being equal to 3*785^1 litres) measured at 6.0°


Fahrenheit.


Article 2 - Purpose, effective date and term


2.01 The purpose of the AGREEMENT is to set forth the


terms and conditions under which the PARTIES shall jointly


1 9 1


1.19.3 Any company whose voting rights in ordinary shareholders' meetings are subject to more than 50% control by a company which itself holds, directly or indirectly, more than 50% of the voting rights in the ordinary shareholders' meetings of one of the COMPANIES;



1.19.4 Any company in which more than 50% of the voting rights in which ordinary shareholders' meetings are held directly or indirectly by several COMPANIES, or by several companies as described in sub-paragraphs 1.18.1 to 1.18.3 above.



1.20 "PETROLEUM WORKS": All the activities, wherever carried out, relating to exploration, development, exploitation, transportation, storage and disposition, in the CONGO or for export, of HYDROCARBONS.



1.21 "EXPLORATION WORKS": That part of the PETROLEUM WORKS which is undertaken with the purpose of discovering one or several hydrocarbon deposits including:



(i) The aeromag survey realized before the granting of the pERMIT but included on common acceptance by [cut off] the and the COMPANIES in the EXPLORATION WORKS, and its interpretation, and



(ii) seismic surveys and the discovery well and all subsequence works on the same anomally, undertaken until the date on which the Operating Committee provided for in the JOINT OPERATING AGREEMENT decides, pursuant to Article 5 of the JOINT OPERATING AGREEMENT, that a discovered deposit of HYDROCARBONS is commercial exploitable.



1.22 "DEVELOPMENT AND EXPLOITATION WORKS": All PETROLEUM WORKS other than EXPLORATION WORKS, including the transportation of HYDROCARBONS to the point of offlifting by the PARTIES.



1.23 "JOINT ACCOUNT": The account or accounts maintained by OPERATOR in accordance with the ACCOUNTING PROCEDURE, to which shall be charged the costs and expenses of PETROLEUM WORKS performed under the AGREEMENT, and which are to be borne by the PARTIES, proportionally to their respective PARTICIPATING INTERESTS.



1.24 "ADVANCE ACCOUNT": The accounts maintained by the OPERATOR for each COMPANY to record entries respecting to advances made by the COMPANIES to the OPERATOR on behalf of [blank] and the reimbursements made by [blank] and so in accordance with the provisions of Article 9 below.



1.25 "BARREL": Unit equal to 42 U.S. gallons (one U.S. gallon being equal to 3.78541 litres) measured at 60° Fahrenheit.



Article 2 - Purpose, effective date and term

2.01 The purpose of the AGREEMENT is to set forth the terms and conditions under which the PARTIES shall jointly



121Work the PERMIT, which is hereby made available to them for the purpose of [name]. It shall become effective on the date of the Act having the force of Law approving the PERMIT and the CONVENTION and, subject to the other provisions of the AGREEMENT, it will remain in full force and effect for the duration of the PERMIT and, in any event, until the assets acquired hereunder shall have been disposed of and the final settlement of the accounts among the PARTIES shall have been made.



Article 3 - PARTICIPATING INTERESTS of the PARTIES

The PARTICIPATING INTEREST of the PARTIES shall be as follows:

Name of the PARTY PARTICIPATING INTEREST

20.00%

|50.00%|

|30.00%|

________

|80.00% | 20.00%

Article 4 - OPERATOR

4.01 Appointment of OPERATOR

4.01.1 ESSO is hereby appointed OPERATOR.

However, upon expiration of the ten (10) year period commencing upon the Date of Completion of the Development Works on the PERMIT, [name] may request to act as OPERATOR on all or part of the PERMIT, provided that it has previously reimbursed the the COMPANIES, in accordance with the provisions of the AGREEMENT, for all the COMPANIES' contributions made pursuant to Article 9 below and that it demonstrates its ability to perform the functions of OPERATOR, both from a technical standpoint and with respect to undertakings toward money lenders and equipment suppliers. In such case, it shall give three (3) months' prior notice thereof to the COMPANIES. The Operating Committee will consider [name] request at its very next meeting and, after having determined that the two conditions set forth above in this sub-paragraph 4.01.1 have been met, will determine the date and practical conditions for the transfer of OPERATOR's functions to

4.01.2 for the purpose of this paragraph 4.01 the phrase "Date of Completion Of the Development Works"



122



Work the PERMIT, which is hereby made available to them for the purpose of [name]. It shall become effective on the date of the Act having the force of Law approving the PERMIT and the CONVENTION and, subject to the other provisions of the AGREEMENT, it will remain in full force and effect for the duration of the PERMIT and, in any event, until the assets acquired hereunder shall have been disposed of and the final settlement of the accounts among the PARTIES shall have been made.



Article 3 - PARTICIPATING INTERESTS of the PARTIES

The PARTICIPATING INTEREST of the PARTIES shall be as follows:

Name of the PARTY PARTICIPATING INTEREST

20.00%

|50.00%|

|30.00%|

________

|80.00% | 20.00%

Article 4 - OPERATOR

4.01 Appointment of OPERATOR

4.01.1 ESSO is hereby appointed OPERATOR.

However, upon expiration of the ten (10) year period commencing upon the Date of Completion of the Development Works on the PERMIT, [name] may request to act as OPERATOR on all or part of the PERMIT, provided that it has previously reimbursed the the COMPANIES, in accordance with the provisions of the AGREEMENT, for all the COMPANIES' contributions made pursuant to Article 9 below and that it demonstrates its ability to perform the functions of OPERATOR, both from a technical standpoint and with respect to undertakings toward money lenders and equipment suppliers. In such case, it shall give three (3) months' prior notice thereof to the COMPANIES. The Operating Committee will consider [name] request at its very next meeting and, after having determined that the two conditions set forth above in this sub-paragraph 4.01.1 have been met, will determine the date and practical conditions for the transfer of OPERATOR's functions to

4.01.2 for the purpose of this paragraph 4.01 the phrase "Date of Completion Of the Development Works"



122



shall mean the date of completion of the last development well drilled on the first commercial deposit of HYDROCARBONS discovered on the PERMIT.



4.02 Exclusive right to operate



In accordance with approved programs and budgets and subject to instructions which may be given to it from time to time by the Operating Committee, OPERATOR shall have exclusive charge of and shall conduct all PETROLEUM WORKS.



All PETROLEUM WORKS will be conducted by OPERATOR or by its duly authorized agents or by independent contractors engaged by it.



4.03 Employees and contractors



The number of employees, the selection of such employees, the hours of work and the compensation to be paid to all employees in connection with PETROLEUM WORKS shall be determined by OPERATOR, and all employees and contractors employed or used in PETROLEUM WORKS shall be employees or contractors of OPERATOR.



4.04 Conduct of PETROLEUM WORKS



In the conduct of PETROLEUM WORKS, OPERATOR shall:



(a) carry out diligently all operations in accordance with practices generally followed by the petroleum industry, conform to good oil field and engineering practices and perform such operations in an efficient and economical manner. All operations shall be conducted in compliance with the provisions of the PERMIT and applicable laws and regulations.



(b) Permit the representatives of any of the PARTIES to have free access, at their own risk and expense, to the locations where PETROLEUM WORKS are carried out at all reasonable times with the right to observe any and all operations being conducted for the joint account of the PARTIES and to inspect all materials, equipment and other property jointly owned by the PARTIES. Each PARTY through its duly authorized agents or employees shall be permitted to examine and have access to, at all reasonable times, any and all data and interpretations thereof, including but not limited to, cores, samples, logs and surveys concerning PETROLEUM WORKS. OPERATOR shall furnish to the PARTIES upon request a copy thereof, the cost of which will be charged to the JOINT ACCOUNT.



123

shall mean the date of completion of the last development


well drilled on the first commercial deposit of


HYDROCARBONS discovered on the PERMIT.


*1-02 .Exclusive right to operate





In accordance with approved programs and budgets





and subject to instructions which may be given to it from


time to time by the Operating Committee, OPERATOR shall


have exclusive charge of and shall conduct all PETROLEUM


WORKS.





All PETROLEUM WORKS will be conducted by OPERATOR


or by its. duly authorized agents or by independent


contractors engaged by it.


4.03 Employees and contractors





. Z t


The number of employees, 'the- selection of such


employees, the hours of work .and-Ythe' compensation to be


paid to all employees in connection withV'PEJHOLEUM WORKS


shall be determined by OPERAT-OR, and Ya.il Vemployees and


contractors employed dr.. Used in RE-TX.pL.EUM WORKS shall be


employees or contractors* of OR.^RA-TOK*':


4.0*4 Conduct of -PETBplElftM/ORKS








In the conduct }df PETROLEUM WORKS, OPERATOR shall:


(a) carry out‘**d*ili gently all operations in accordance


with practices generally followed by the petroleum


industry, conform to good oil field and engineering


practices and perform such operations in an efficient and


economical manner. All operations shall be conducted in


compliance with the provisions of the PERMIT and -


applicable laws and regulations.


(b) Permit the representatives of any of the PARTIES


to have free access, at their own risk and expense, to the


locations where PETROLEUM WORKS are carried out at all


reasonable times with the right to observe any and all


operations being conducted for the joint account, of the


PARTIES and to inspect all materials, equipment and other


property jointly owned by the PARTIES. Each PARTY through


its duly authorized agents or employees shall be permitted


to examine and have access to, at all reasonable times,


any and all data and interpretations thereof, including


but not limited to, cores, samples, logs and surveys


concerning PETROLEUM WORKS. OPERATOR shall furnish to the


PARTIES upon request a-copy thereof, the cost of which


will be charged to the JOINT ACCOUNT.








1 2 3


(c) Keep the premises and property jointly-owned by


the PARTIES free from any liens, charges and encumbrances


arising -out of the PETROLEUM WORKS.


(d) . Promptly pay all costs and expenses incurred by


it in its operations for the PETROLEUM WORKS when due and


payable*


(e) Make for the account of the PARTIES all payments


(other than taxes which are measured by the income of the PARTIES


and the Mining Royalty - subject for this later to the provisions


of the subparagraph 4.11 below) as provided under the CONVENTION


and applicable laws. OPERATOR will not be held responsible for and


will not be liable for any default or delay of payment of any


other PARTY when such PARTY is directly assessed and such


delay or default’is unknown to OPERATOR. In the event


OPERATOR is aware of or has been notified of a default or


delay in payment, OPERA-TOR may, after consultation with


thB PARTIES, make such immediate! expenditures-as may be


necessary to protect the PERHIT-Vfrom b.eing forfeited; such


expenditures shall be reported prompily>.£©-‘the PARTIES by


OPERATOR and the proyi-isions- of paragraph 8*05 below shall


apply* \>0 " v-4. *'•


(f) Provide arid maintain.; force any and all


insurance as may be req&5>Xe^ P** OPERATOR by applicable


laws, and provide suchAa*d<5itional insurance as may be


mutually agreed ypoii.>y’ the PARTIES pursuant to Article 16


below. \ /


(g) Prepare and furnish to the PARTIES progress


reports on the PETROLEUM WORKS,* including geological and


geophysical reports, daily drilling reports, well logs,


surveys, reports on pressure and production tests and


reports which OPERATOR Is required to furnish to the


and such reports, data, statements and information as may


be prescribed from time to time by the Operating Committee


4.05 Expend!tures





OPERATOR shall carry out each program of


operations adopted by the PARTIES within the limits of the


approved budget therefor and shall neither undertake any


operations not included in an approved program nor make


any expenditures during a FISCAL YEAR In excess of the


budgeted amounts approved therefor, subject to the


following:


(a) If necessary to carry out an approved program,


OPERATOR is authorized to make expenditures in excess of


the budget adopted therefor up to but not exceeding ten


percent (10?) of such budget item, provided, however, that


no cumulative total of such excess expenditures shall


124


(c) Keep the premises and property jointly-owned by the PARTIES free from any liens, charges and encumbrances arising out of the PETROLEUM WORKS.



(d) Promptly pay all costs and expenses incurred by it in its operations for the PETROLEUM WORKS when due and payable.



(e) Make for the account of the PARTIES all payments (other than taxes which are measured by the income of the PARTIES and the Mining Royalty - subject for this later to the provisions of the subparagraph 4.11 below) as provided under the CONVENTION and applicable laws. OPERATOR will not be held responsible for and will not be liable for any default or delay of payment of any other PARTY when such PARTY is directly assessed and such delay or default is unknown to OPERATOR. In the event OPERATOR is aware of or has been notified for a default or delay in payment, OPERATOR may, after consultation with the PARTIES, make such immediate expenditures as may be necessary to protect the PERMIT from being forfeited; such expenditures shall be reported promptly to the PARTIES by OPERATOR and the provisions of paragraph 8.05 below shall apply.



(f) Provide and maintain in force any and all insurance as may be required of OPERATOR by applicable laws, and provide such additional insurance as may be mutually agreed upon by the PARTIES pursuant to Article 16 below.



(g) Prepare and furnish to the PARTIES progress reports on the PETROLEUM WORKS, including geological and geophysical reports, daily drilling reports, well logs, surveys, reports on pressure and production tests and reports which OPERATOR is required to furnish to the and such reports, data, statements and information as may be prescribed from time to time by the Operating Committee.



4.05 Expenditures



OPERATOR shall carry out each program of operations adopted by the PARTIES within the limits of the approved budget therefor and shall neither undertake any operations not included in an approved program nor make any expenditures during a FISCAL YEAR in excess of the budgeted amounts approved therefor, subject to the following:



(a) If necessary to carry out an approved program, OPERATOR is authorized to make expenditures in excess of the budget adopted therefor up to but not exceeding ten percent (10%) of such budget item, provided, however, that no cumulative total of such excess expenditures shall





124exceed five percent (5%) of the total budget. Such excess expenditures shall be reported promptly to the Operating Committee by OPERATOR.



(b) OPERATOR is also authorized to make unforeseen expenditures within the scope of PETROLEUM WORKS during any CALENDAR YEAR not included in (but relaxed to) an approved program and not provided for in an adopted budget, limited, however, to a total not exceeding one hundred thousand DOLLARS ($100,000) or the equivalent thereof in another currency; provided thast such expenditures shall not be for purposes theretofore rejected by the Opperating Committee and provided further that OPERATOR shall promptly submited to the Operating Committee a report relating to such expenditures. When such expenditures have been approved by the Operating Committee, the amount authorized shall be again set at one hundred thousand DOLLARS ($100,000) or the equivalent thereof in any other currency, it being the intention of the PARTIES that OPERATOR shall have authority permanently to expend said amount under the terms and conditions set forth above.



(c) Notwithstanding the provisions of sub-paragraph (b) above, in case of emergency within the scope of the PETROLEUM WORKS, OPERATOR may make such immediate expenditures as it deems necessary for the protection of life and property and such emergency expenditures shall be reported promptly to the Operating Committee by OPERATOR.



(d) Unless otherwise decided by the Operating Committee, OPERATOR shall invite competitive bids for materials or services estimated to cost more than two hundred and fity thousand DOLLARS ($250,000) per bid. The PARTIES shall be free to submit bids.



4.05 Claims



Any and all claims and suits arising out of the PETROLEUM WORKS, to the extent not covered by insurance, may be compromised, settled or shall be defended by OPERATOR provided, however, that OPERATOR shall not pay more than the equivalent of twenty five thousand DOLLARS ($25,000) in the settlement of any claims or suit without obtaining the prior approval of the Operating Committee. Any claim or suit for any amount shall be promptly reported to the Operating Committee. OPERATOR shall follow the instructions of the Operating Committee with respect to cliams and suits which exceed the equivalent of twenty five thousand DOLLARS ($25,000). Each PARTY hereto shall have the right to be represented by its own counsel and at its expense in the settlement, compromise or dfense of cliams and suits in amounts in the excess of



125exceed five percent (5%)'of the total budget. Such excess


expenditures shall be reported promptly to the Operating


Comroi t tee . by OPERATOR .


(b) -OPERATOR is al so authorized to make unforeseen


expenditures within the scope of PETROLEUM WORKS during


any CALENDAR YEAR not included in (but-related to) an


approved program and not provided for in an adopted


budget, limited, however, to a total not exceeding one


hundred thousand DOLLARS. ($100,000) or the equivalent


thereof in another currency; provided that such


expenditures shall not be for purposes theretofore


rejected by the Operating Committee and provided further


that OPERATOR shall promptly submit to the Operating


Committee a report relating to such expenditures. When


such expenditures have been approved by the Operating


Committee, the amount authorized shall be again set at one


hundred thousand DOLLARS ($100,00.0);. or the equivalent


thereof in any other. currencyi.t\ being the intention of


the PARTIES that OPERATOR sh'ali'--.jiave authority permanently


to expend said amount undb'h '-.ti>e terms-..arid. \conditions set


forth above. •; ) V"‘- \\


(c) Notwithst'a-miirig the.-provisions of sub-paragraph


(b) above, in case **d‘f eme.rge'acy'vv?ithin the scope of the


PETROLEUM WORKS, OPERATO*R\:md*y“*make such immediate


expenditures as it deems-;necessary for the protection of


life and* property.-ah.d such emergency expenditures shall be


reported promptly tp "the Operating Committee by OPERATOR'.


(d) * Unless otherwise decided by the Operating


Committee, OPERATOR shall invite competitive bids for


materials or services estimated to cost more than two


hundred and fifty thousand DOLLARS ($250,000) per bid.


The PARTIES shall be free to submit bids.


^ Claims


Any and all claims and suits arising out of the


PETROLEUM WORKS, to the extent not covered by insurance,


may be compromised, settled or shall be defended by


OPERATOR provided, however, that OPERATOR shall not pay


more than the equivalent of twenty five thousand DOLLARS


($25,000) in the settlement of any claim or suit without


obtaining the prior approval of the Operating Committee.


Any claim or suit for any amount shall be promptly


reported to the Operating Committee. OPERATOR shall


follow the instructions of the Operating Committee with


respect to claims and suits which exceed the equivalent of


twenty five thousand DOLLARS ($25,000). Each PARTY hereto


shall have the right to be represented by its own counsel


and at its expense in the settlement, compromise or


defense of claims'and suits in amounts in excess of the


equivalent of twenty five thousand DOLLARS ($25,000) or which, in the opinion of the PARTY in question, involve an issue of principle. In such a case, the PARTY desiring to be represented by its own counsel shall notify the other PARTIES of such representation.



4.07 Liability



OPERATOR shall not be liable to the other PARTIES hereto for anything done or omitted to be done by OPERATOR in the conduct of PETROLEUM WORKS hereunder, except in cases of material breach of the AGREEMENT, willful misconduct, willful failure to act or such wanton and reckless conduct as constitutes in effect an utter disregard for harmful, foreseeable and avoidable consequences.



4.08 Resignation or removal of OPERATOR



OPERATOR may resign as such at any time by written notice to each NON-OPERATOR. OPERATOR may be removed as such if it has failed in a substantial manner to perform its duties and obligations hereunder as determined by the affirmative vote of the Operating Committee. In this case, the decision of the Operating Committee shall be arrived at by a unanimous vote of NON-OPERATORS. Resignation or removal of OPERATOR shall not become effective until six (6) months after the date of notice of such resignation or removal unless prior thereto a new OPERATOR takes over.



4.09 Appointment of new OPERATOR



Upon resignation or removal of OPERATOR, a PARTY which is willing to serve as such shall be designated as the successor OPERATOR by a vote of the Operating Committee. The Party which has been removed may not, in voting for its successor OPERATOR, vote to reinstate itself.



4.10 Transfer of duties and obligations



Immediately after notice of resignation or removal of OPERATOR is given, the PARTIES, at their expense, shall arrange for the taking of an inventory of the equipment, materials and supplies acquired by OPERATOR. From the date OPERATOR ceases to act as such, it shall turn over to the new OPERATOR or the PARTIES in the case a new OPERATOR has not been selected, all materials, equipment and supplies and all records and documents in its possession or custody as OPERATOR. The accounts of the resigning or removed OPERATOR relating to PETROLEUM WORKS for the current calendar year and a period

126equivalent of twenty five thousand DOLLARS ($25,000) or


which, in the opinion of the PARTY in question, involve an


issue of principle. In such a case, the PARTY desiring to


be represented by its own counsel shall notify the other


PARTIES o'f such representstion.


4.07 Liability


OPERATOR shall not be liable to the other PARTIES


hereto for anything done or omi'tTted to be done by OPERATOR


in the conduct of PETROLEUM WORKS hereunder, except in


cases of material breach of the AGREEMENT, willful


misconduct, willful failure to act or such wanton and


reckless conduct as constitutes in effect an utter


disregard for harmful, foreseeable and avoidable


consequences.


4.08 Resignation or removal of‘-OPERATOR


OPERATOR may resign (as) such at \apy. ..time by


written notice to each $0Nv.(ilfER'ATOR ..-*:** OPERATOR may be


removed as such if it vhate-.ifailed in\a\substantial manner


to perform its duti-.e'^ ah-d obiigati-oris hereunder as


determined by the af.f.i'rmatiyeCof the Operating


Committee. In this case,./£be decision of the Operating


Committee shall be arriyed-.'at' by a unanimous vote of


NON-OPERATORS. Resigna\lon or removal of OPERATOR shall


pot become effectvVe'.until six (6) months after the date


of notice of such 'r.e-si gnat ion or removal unless prior


thereto a new OPERATOR takes over.


4.09 Appointment of new OPERATOR





Upon resignation or removal of OPERATOR, a PARTY


which is willing to serve as such shall be designated as


the successor OPERATOR by a vote of the Operating


Committee. The PARTY which has been removed may not, in


voting for its successor OPERATOR, vote to reinstate


itself.


4.10 Transfer of duties and obligations





Immediately after notice of resignation or


removal of OPERATOR is given, the PARTIES, at their


expense, shall arrange for the taking of an inventory of


the equipment, materials and supplies acquired by


OPERATOR. From the date OPERATOR ceases to act as such,


it shall turn over to the new OPERATOR or the PARTIES in


the case a new OPERATOR has not been selected, all


materials, equipment and supplies and all records and


documents in its possession or custody as OPERATOR. The


accounts of the resigning or removed OPERATOR relating to


PETROLEUM WORKS for the current calendar year and a period


12 6


of twenty four (2*1) months preceding such CALENDAR YEAR


shall remain subject to potential audit and correction in


accordance with the ACCOUNTING PROCEDURE for twenty four


(2*0 months after the date the resignation or removal has


taken effect.


In case of resignation or removal of OPERATOR,


the personnel of citizenship employed by


such OPERATOR for the purpose, of the PETROLEUM WORKS shall be taken in the


new OPERATORS employ under the same terms.


4.11 Payment of Mining Royalty


OPERATOR shall deliver to the on behalf and pursuant to instruc¬


tions of the PARTIES any mining royalty in kind due to the . The mining


royalty payable in cash or quantities of HYDROCARBONS offlifted by a PARTY


shall be paid separately to by such a PARTY, or by the OPERATOR on


the behalf of this PARTY with a formal agency.agreement ("mandat") which may


be revoked at any time.








4.12 Vocational training andfepiployment of- \ T--X' ' _ personnel


Upon determinattoiv-byfthe Opera-tTng'yCoTnmittee that a commercial


discovery has been made shall-earry'-out the vocational training,


in accordance with vocational traipihg\pro‘grams.approved by the OPERATING


COMMITTEE, and the recruiting, under the* conditions set forth in the


CONVENTION, of persenhelXwith the objectives (i) of permitting the


gradual, replacement of OPERATOR?£ foreign personnel assigned to the


PETROLEUM WORKS by { }‘personnel, and (ii) of gradually placing


in the position of taking over the role of OPERATOR. To this


end, OPERATOR shall carry out the above-mentioned vocational training


programs and shall have personnel assigned to OPERATOR participate


in the PETROLEUM WORKS. -OPERATOR shall keep the PARTIES informed of the


progress of these vocational training programs and of the integration of


personnel Into the PETROLEUM WORKS.











Article 5 - Operating Committee


5.01 Overall Supervision





Immediately 'after execution of the AGREEMENT,


there shall be established an Operating Committee,


composed of a representative of each PARTY with full


authority to represent and bind the PARTY by whom

















l. .L


of twenty four (24) months preceding such CALENDAR YEAR shall remain subject to potential audit and correction in accordance with the ACCOUNTING PROCEDURE for twenty four (24) months after the date the resignation or removal has taken effect.



In case of resignation or removal of OPERATOR, the personnel of citizenship employed by

such OPERATOR for the purpose of the PETROLEUM WORKS shall be taken in the new OPERATOR'S employ under the same terms.



4.11 Payment of Mining Royalty



OPERATOR shall deliver to the on behalf and pursuant to instructions of the PARTIES any mining royalty in kind due to the . The mining royalty payable in cash or quantities of HYDROCARBONS offlifted by a PARTY shall be paid separately to by such a PARTY, or by the OPERATOR on the behalf of this PARTY with a formal agency agreement ("nandat*) which may be revoked at any time.



4.12 Vocational training and employment of personnel



Upon determination by the Operating Committee that a commercial discovery has been made OPERATOR shall carry out the vocational training, in accordance with vocational training programs approved by the OPERATING COMMITTEE, and the recruiting, under the conditions set forth in the CONVENTION, of personnel with the objectives (i) of permitting the gradual replacement of OPERATOR'S foreign personnel assigned to the PETROLEUM WORKS by personnel, and (ii) of gradually placing

in the position of taking over the role of OPERATOR. To this end, OPERATOR shall carry out the above-mentioned vocational training programs and shall have personnel assigned to OPERATOR participate in the PETROLEUM WORKS. OPERATOR shall keep the PARTIES informed of the progress of these vocational training programs and of the integration of personnel into the PETROLEUM WORKS.



Article 5 - Operating Committee

5.01 Overall Supervision



Immediately after execution of the AGREEMENT, there shall be established an Operating Committee, composed of a representative of each PARTY with full authority to represent and bind the PARTY by whom



127









appointed in all matters arising under the AGREEMENT.

Each PARTY shall appoint one representative and one

alternate by written notice to OPERATOR and all other

PARTIES. The alternate appointed by a PARTY shall only

act in the event the representative appointed by such

PARTY is not available. Each PARTY shall have the right

notifying in writing the other PARTIES to that effect.

Except as otherwise provided in the AGREEMENT, the

Operating Committee shall administer, superwise, direct

and control all operations hereunder.



5.02 Decisions of the Operating Committee



Subject to the provisions of paragraph 4.08 and 4.09 above and of

subparagraph 11.03(c) below, decisions of the Operating Committee shall be

made by an unanimous vote of the PARTIES, each PARTY having one vote. This

paragraph shall be modified by a common agreement between the PARTIES in

case of transfer by a PARTY of all or part of its PARTICIPATING INTEREST.







5.03 Operating Committee meetings



The Operating Committee shall meet whenever

requested by OPERATOR by the giving of fifteen (15) days

prior written notice, which notice shall include the

proposed agenda, the date, time and place of the meeting.

Each PARTY may at any time require OPERATOR to call a

meeting, in accordance with the procedure set forth above,

to discuss specific questions which shall then be part of

the agenda of said meeting.



The Operating Committee shall meet at least once

in each CALENDAR YEAR to consider and approve the work

program and budget referred to in Article 6 below. The

decisions of the Operating Committee shall be binding on

all PARTIES except as herein otherwise specifically

provided. No decision on any matter not included on the

proposed agenda of a meeting shall be taken, unless

representatives of the PARTIES unanimously agree to the

contrary.



5.04 Chairman



shall preside over the meetings of

the Operating Committee . OPERATOR shall act as secretary.







128





























 appointed in all matters arising under the AGREEMENT.


Each PARTY shall appoint one representative and one


alternate by written notice to OPERATOR and all other


PARTIES. The alternate appointed by a PARTY shall only


act In the event the representative appointed by such


PARTY is not available. Each PARTY .shall have the right


to change its representati ve and alternate at any t-ime by


notifying in writing the other PARTIES to that effect.


Except as otherwise provided in the AGREEMENT, the


Operating Committee shall administer, supervise, direct


and control all operations hereunder.








5.02 Decisions of the Operating Committee





Subject to the provisions of paragraphs 4.08 and 4.09 above and of


subparagraph 11.03(c) below, decisions of the Operating Committee shall be


made by an unanimous vote of the PARTIES, each PARTY having one vote. This


paragraph shall be modified by a common agreement between the PARTIES in


case of transfer by a PARTY of all or part qf.-its PARTICIPATING INTEREST.

















5.03 Operating Nlbmmitfe,e! Meetings


'The Operatip-g \6-bifimittee shall- meet* whenever





^requested by OPERA-TOiR jby the -giving of fifteen (15) days


prior written noticewhich notice shall include the


proposed agenda, the date, time and place of the meeting.


Each PARTY may -at any 'time require OPERATOR to call a


meeting, in accordance with the procedure set forth above,


to discuss specific questions which shall then be part of


the agenda of said meeting.





The Operating Committee shall meet at least once


in each CALENDAR YEAR to consider and approve the work


program and budget referred to in Article 6 below. The


decisions of the Operating Committee shall be binding on


all PARTIES except as herein otherwise specifically


provided. No decision on any matter not included on the


proposed agenda of a meeting shall be taken, unless


representatives the PARTIES unanimously agree to the


contrary.


5.04 Chairman








shall preside over the meetings of


the Operating Committee. OPERATOR shall act as secretary.





5.05 Operating Committee minutes

Written minutes of each meeting shall be prepared by OPERATOR with copies sent to the PARTIES as soon as possible thereafter for approval or comment within thirty (30) days of receipt. Failure to respond within the thirty (30) day period shall constitute approval of such minutes.



5.06 Decisions without a meeting

Any matter may be submitted to the Operating Committee for decision without actually holding a meeting, provided that such matter is submitted in writing to all PARTIES by OPERATOR. In such a case, each PARTY shall, within ten (10) days from receipt, communicate its written vote to OPERATOR; any matter which receives the affirmative vote provided for in paragraph 5.02 above shall be deemed adopted in the same manner as if a formal meeting had been held. OPERATOR shall retain written minutes of each such vote and shall advise each PARTY of the results of each such vote.



5.07 Technical sub-committees

5.07.1 The Operating Committee shall establish any necessary sub-committees and at least one technical sub-committee, each composted of a representative of each PARTY. The functions and powers of such sub-committees shall be determined by the Operating Committee.

5.07.2 The meeting's rules and the procedure for calling the meetings of the sub-committees shall be the same as those provided for the Operating Committee. The representative of OPERATOR shall preside over each meeting of a sub-committee and shall act as secretary.

5.07.3 When entrusted by the Operating Committee with the power to make decisions, sub-committees shall decide by unanimous vote; falling which, they shall refer the matters to the Operating Committee.



5.08 The Operating Committee and any sub-committee may decide to hear any person for whom a hearing is requested by a PARTY. Each PARTY may, in addition, have experts of its choice attend the meetings of the Operating Committee or of any sub-committee.



Article 6 - Work programs and budgets



6.01 Submittal of yearly work program and budget

On or before the thirtieth (30th) day of September of each CALENDAR YEAR, OPERATOR shall submit to





1295.05 Operating Committee minutes

Written minutes of each meeting shall be prepared by OPERATOR with copies sent to the PARTIES as soon as possible thereafter for approval or comment within thirty (30) days of receipt. Failure to respond within the thirty (30) day period shall constitute approval of such minutes.



5.06 Decisions without a meeting

Any matter may be submitted to the Operating Committee for decision without actually holding a meeting, provided that such matter is submitted in writing to all PARTIES by OPERATOR. In such a case, each PARTY shall, within ten (10) days from receipt, communicate its written vote to OPERATOR; any matter which receives the affirmative vote provided for in paragraph 5.02 above shall be deemed adopted in the same manner as if a formal meeting had been held. OPERATOR shall retain written minutes of each such vote and shall advise each PARTY of the results of each such vote.



5.07 Technical sub-committees

5.07.1 The Operating Committee shall establish any necessary sub-committees and at least one technical sub-committee, each composted of a representative of each PARTY. The functions and powers of such sub-committees shall be determined by the Operating Committee.

5.07.2 The meeting's rules and the procedure for calling the meetings of the sub-committees shall be the same as those provided for the Operating Committee. The representative of OPERATOR shall preside over each meeting of a sub-committee and shall act as secretary.

5.07.3 When entrusted by the Operating Committee with the power to make decisions, sub-committees shall decide by unanimous vote; falling which, they shall refer the matters to the Operating Committee.



5.08 The Operating Committee and any sub-committee may decide to hear any person for whom a hearing is requested by a PARTY. Each PARTY may, in addition, have experts of its choice attend the meetings of the Operating Committee or of any sub-committee.



Article 6 - Work programs and budgets



6.01 Submittal of yearly work program and budget

On or before the thirtieth (30th) day of September of each CALENDAR YEAR, OPERATOR shall submit to





129the PARTIES the work program which it proposes to carry


out on the PERMIT during the subsequent CALENDAR YEAR as


well as the budget relating thereto. However, OPERATOR


shall, within sixty (60) days from the effective date of


the AGREEMENT, as defined In paragraph 2.01 above, submit


the work program which It proposes to carry out on the


PERMIT during the current and next CALENDAR YEARS, as well


as the budgets respectively relating thereto.


This work program shall Include as a minimum the


work required to be performed under the provisions of the


PERMIT during such CALENDAR YEAR." At the time this


CALENDAR YEAR’S program and budget are submitted, a


provisional work program and budget for the next two (2)


succeeding CALENDAR YEARS shall be presented by OPERATOR.


OPERATOR shall submit a work program and budget as soon as


possible after the execution of this AGREEMENT for the


then current year.


6.02 Approval of yearly work program and budget


On or before the twent.ie£h...{20th) of December of


each CALENDAR YEAR the Operatihg-^Commi ttee shall agree


upon and adopt the work j?nogkam; and p.u-dgetyfor the


subsequent CALENDAR YEAS..: \&'t the time'-of agreeing upon


and adopting a work-program and.,budget, the Operating


Committee shall, oh'ly- -on a pro-visional basis, consider,


but shall not adopt,'*** a work \p*rdgVam for the next two (2)


succeeding'CALENDAR YEAiLSvV' AS' soon as possible after the


adoption of a work prO*'g-i\a'si- 'and budget, OPERATOR shall mail


a copy thereof to .eadh. ..-PARTY.


6.03 Revision of work program and budget.


Each yearly budget shall contain an itemized


estimate on a quarterly basis of the costs of the


PETROLEUM WORKS provided for in the related work program


during each QUARTER of the period and an itemized estimate


of all other expenditures to be made by OPERATOR Including


(but not necessarily limited to) rentals, taxes (other


than taxes measured by the income of the PARTIES) and


other payments. Each work program and-budget shall be


subject to review and revision by the Operating Committee


from time to time and at least once a year on or about the


thirtieth (30th) day of June.


6.0^ Cash advances


OPERATOR shall have the right to require each


PARTY to advance its share of anticipated cash


requirements within the limits of the amounts provided for

















1 3 0


the PARTIES the work program which it proposes to carry out on the PERMIT during the subsequent CALENDAR YEAR as well as the budget relating thereto. However, OPERATOR

shall, within sixty (60) days from the effective date of

the AGREEMENT, as defined in paragraph 2.01 above, submit the work program which it proposes to carry out on the PERMIT during the current and next CALENDAR YEARS, as well as the budgets respectively relating thereto.



This work program shall include as a minimum the work required to be performed under the provisions of the PERMIT during such CALENDAR YEAR. At the time this CALENDAR YEAR'S program and budget are submitted, a provisional work program and budget for the next two (2)

succeeding CALENDAR YEARS shall be presented by OPERATOR. OPERATOR shall submit a work program and budget as soon as possible after the execution of this AGREEMENT for the then current year.



6.02 Approval of yearly work program and budget



On or before the twentieth (20th) of December of each CALENDAR YEAR the Operating Committee shall agree upon and adopt the work program and budget for the subsequent CALENDAR YEAR. At the time of agreeing upon and adopting a work program and budget, the Operating Committee shall, only on a provisional basis, consider, but shall not adept, a work program for the next two (2) succeeding CALENDAR YEARS. As soon as possible after the

adoption of a work program and budget, OPERATOR shall mail a copy thereof to each PARTY.



6.03 Revision of work program and budget.



Each yearly budget shall contain an itemized estimate on a quarterly basis of the costs of the PETROLEUM WORKS provided for in the related work program during each QUARTER of the period and an itemized estimate of all other expenditures to be made by OPERATOR including (but not necessarily limited to) rentals, taxes (other than taxes measured by the income of the PARTIES) and other payments. Each work program and-budget shall be subject to review and revision by the Operating Committee from time to time and at least once a year on or about the thirtieth (30th) day of June.



6.04 Cash advances



OPERATOR shall have the right to require each PARTY to advance its share of anticipated cash requirements within the limits of the amounts provided for





130in approved budgets. Such cash advances shall be effected


in accordance with the provisions of the ACCOUNTING


PROCEDURE -


6.05 Authorization for exoenditure





• Unless otherwise agreed by the Operating


Committee, OPERATOR shall submit to the Operating


Committee, for prior approval, an authorization for


expenditure (hereinafter ^AFE”) covering each individual


expenditure In excess of one million DOLLARS ($1,000,000)


within the approved work program and'budgets Said AFE


shall be submitted thirty (30) days in advance of the


proposed expenditure. Expenditures of one million DOLLAR ct (/)


($1,000,000) or less shall be approved by OPERATOR withou


further action by the Operating Committee and an AFE shall


be furnished to the PARTIES for information,


6.06 Form of AFE





Each AFE shall include :-the.;following Information:


(a) A brief description-..of the ...pfcro'pbs-al.


(b) A concise-~;Sta:t''ement summarizing the procedure or


method to be followed and the-\ahticipated results.


9 V* 4 \ \ 4 V**


(c) Estimated cost..‘broken down by major components.


(d) In the ‘drilling of a well, the location,


the anticipated iepth and all other pertinent data.


Article 7 - Confidential information





7.01 Information





Each PARTY shall have the right to examine and


make copies of all geological, geophysical and other


technical data relating to the PERMIT and to the PETROLEUM


WORKS, including all charts, maps, interpretations and all


other records obtained and/or prepared by OPERATOR.


7.02 Disclosure of confidential information





All information acquired by any PARTY hereto with


respect to the PETROLEUM WORKS shall be considered as


confidential and, subject to the terras of the PERMIT,


shall-not be divulged to any third party (except to


AFFILIATED COMPANIES) except with the unanimous approval


of the PARTIES. The provisions of this paragraph 7*02


shall not be applicable to any disclosure required by any


laws, rules or regulations of any governmental agency or


stock exchange.














in approved budgets. Such cash advances shall be effected

in accordance with the provisions of the ACCOUNTING

PROCEDURE.



6.05 Authorization for expenditure



Unless otherwise agreed by the Operating

Committee, OPERATOR shall submit to the Operating

Committee, for prior approval, an authorization for

expediture (hereinafter "AFE")covering each individual

expediture in excess of one million DOLLARS ($1,000,000)

within the approved work program and budget. Said AFE

shall be submitted thirty (30) days in advance of the

proposed expediture. Expeditures of one million DOLLARS

($1,000,000) or less shall be approved by OPERATOR without

further action by the Operating Committee and an AFE shall

be furnished to the PARTIES for information.



6.06 Form of AFE



Each AFE shall include the following information:



(a) A brief description of the proposal.



(b) A concise statement summarizing the procedure or

method to be followed and the anticipated results.



(c) Estimated cost broken down by major components.



(d) In the case of drilling of a well, the location,

the anticipated depth and all other pertinent data.



Article 7 - Confidential information



7.01 Information



Each PARTY shall have the right to examine and

make copies of all geological, geophysical and other

technical data relating to the PERMIT and to the PETROLEUM

WORKS, including all charts, maps, interpretations and all

other records obtained and/or prepared by OPERATOR.



7.02 Disclosure of confidential information



All information acquired by any PARTY hereto with

respect to the PETROLEUM WORKS shall be considered as

confidential and, subject to the terms of the PERMIT,

shall not be divulged to any third party (except to

AFFILIATED COMPANIES) except with the unanimous approval

of the PARTIES. The provisions of this paragraph 7.02

shall not be applicable to any disclosure required by any

laws, rules or regulations of any governmental agency or

stock exchange.







131





















7.03 Trades of well and other data


OPERATOR may, with the approval of the Operating


Committee, make well data trades and other data trades


with third parties for the benefit of the PARTIES with any


data so obtained to be available to all PARTIES, OPERATOR


shall enter into an undertaking with any such third_ party


to keep such Information confidential.


Article 8 - Costs, expenses, materials and equipment


8.01 Ownershit


All materials and equipment acquired by OPERATOR


for PETROLEUM WORKS shall be owned by the PARTIES In


undivided shares in the proportion of their PARTICIPATING


INTERESTS at any given time. However, in the event that


prior to the commencement of commercial production the


PARTIES decide to surrender the PERMIT, it is agreed that


all the assets acquired for the. PETROLEUM WORKS and which


can be saved and removed from the JPEBMIT, and which have


been paid by the COMPANIES/thr^ugh their contributions


made in accordance withrA'rticTe 9 belqw.^-.shall belong


exclusively to the PAfTKfES- that haye\paid for them.


agrees that*' in no ..case It" will have any rights


to these assets, \hq Vetter ..«h£-t '-these may be. To this


end, 'shall e.xec.ute-*and deliver to the other


PARTIES all InstrumentsAiieVfc'Ssary to transfer its


undivided share In..-thfoV'-'assets, and the COMPANIES


receiving .them shall .hot be. liable for any payment for any


tax, duties or btbe'r* charges whatsoever which may be


attached to this"*transfer.


8.02 Costs and expenses


All costs and expenses of PETROLEUM WORKS,


including the costs and expenses borne for the-acquisition


of all materials and equipment acquired for the benefit-of


the PARTIES, shall be borne.by the PARTIES in proportion


to their respective PARTICIPATING INTERESTS at the time


when such costs and expenses are incurred. Similarly, all


liabilities arising out of the PETROLEUM WORKS shall be -


shared among the PARTIES in proportion to their respective


PARTICIPATING INTERESTS.


8.03 ACCOUNTING PROCEDURE


All costs and expenses of whatever kind that are'


incurred in the conduct of PETROLEUM WORKS shall be


determined and settled In the manner provided for in the


ACCOUNTING PROCEDURE, and OPERATOR shall keep its records


of costs and expenses in accordance with such ACCOUNTING


PROCEDURE. In the event of conflict between the AGREEMENT


7.03 Trades of well and other data



OPERATOR may, with the approval of the Operating Committee, make well data trades and other data trades with third parties for the benefit of the PARTIES with any data so obtained to be available to all PARTIES. OPERATOR shall enter into an undertaking with any such third party to keep such information confidential.



Article 8- Costs, expenses, materials and equipment



8.01 Ownership



All materials and equipment acquired by OPERATOR for PETROLEUM WORKS Shall be owned by the PARTIES in undivided shares in the proportion of their PARTICIPATING INTERESTS at any given time. However, in the event that prior to the commencement of commercial production the PARTIES decide to surrender the PERMIT, it is agreed that all the assets acquired for the PETROLEUM WORKS and which can be saved and removed from the PERMIT, and which have been paid by the COMPANIES through their contributions made in accordance with Article 9 below, shall belong exclusively to the PARTIES that have paid for them.



agrees that in no case it will have any rights to these assets, no matter what these may be. To this end, shall execute and deliver to the other PARTIES all instruments necessary to transfer its undivided share in these assets, and the COMPANIES receiving them shall not be liable for any payment for any tax, duties or other charges whatsoever which may be attached to this transfer.



8.02 Costs and expenses



All costs and expenses of PETROLEUM WORKS, including the costs and expenses borne for the acquisition of all materials and equipment acquired for the benefit of the PARTIES, shall be borne by the PARTIES in proportion to their respective PARTICIPATING INTERESTS at the time when such costs and expenses are incurred. Similarly, all liabilities arising out of the PETROLEUM WORKS shall be shared among the PARTIES in proportion to their respective PARTICIPATING INTERESTS.



8.03 ACCOUNTING PROCEDURE



All costs and expenses of whatever kind are incurred in the conduct of PETROLEUM WORKS Shall be determined and settled in the manner provided for the ACCOUNTING PROCEDURE, and OPERATOR shall keep its records of costs and expenses in accordance with such ACCOUNTING PROCEDURE. In the event of conflict between the AGREEMENT



132and the ACCOUNTING PROCEDURE, the provisions of the AGREEMENT shall prevail.



8.04 Audit



The books and accounting entries of OPERATOR pertaining to the PETROLEUM WORKS shall be maintained in accordance with the ACCOUNTING PROCEDURE and shall be subject to audit and periodic inspection by any or all NON-OPERATORS in accordance with the ACCOUNTING PROCEDURE.



8.05 Default and lien



(a) If any PARTY shall fail to advance to OPERATOR its share of expenditures, or to make its contribution to the costs and expenses of the PETROLEUM WORKS, as provided for in the AGREEMENT, such PARTY shall be in the default and OPERATOR shall immediately so notify such PARTY (hereinafter referred to as the "Defaulting PARTY"). A copy of such notice, which will name the bank or banks, and specify the account of the OPERATOR, shall be simultaneously forwarded to each of the other PARTIES to acquaint them with the facts constituting such default. Each non-defaulting PARTY shall, within twenty (20) days of receiving a copy of such notice, advance to OPERATOR a share of the amount in respect of which the Defaulting PARTY is in default, in the proportion that its PARTICIPATING INTEREST bears to the aggregate of all the PARTICIPATING INTERESTS of the non-defaulting PARTIES. Each non-defaulting PARTY shall continue to advance to OPERATOR an identical share of the sums due in the future in respect of which the Defaulting PARTY has reimbursed the sums due, or the Defaulting PARTY's PARTICIPATING INTEREST shall have been assigned, or until operations shall have been abandoned pursuant to sub-paragraph 8.05(c) below. The amounts so advanced by a non-defaulting PARTY shall thereupon become a debt due by the Defaulting PARTY, payable on demand and bearing interest, as hereinafter provided. OPERATOR shall have the right to bring suit to enforce the collection of all sums payable by a Defaulting PARTY to any non-defaulting PARTY.



(b) The Defaulting PARTY may remedy its default by depositing, within ninety (90) days following the notice provided for in sub-paragraph 8.05 (2) above, the amount in default to the account of OPERATOR in the bank or banks stipulated in such notice. If the Defaulting PARTY chooses to remedy its default, it shall deposit at the same time and in the same manner an additional amount equal to the interest due and computed as set forth in sub-paragraph 8.05 (e) below.



133and the ACCOUNTING PROCEDURE, the provisions of the


AGREEMENT shall prevail,


8.04 Audit


The books and accounting entries of OPERATOR


pertaining to the PETROLEUM WORKS shall be maintained in


accordance with the ACCOUNTING PROCEDURE and shall be


subject to audit and periodic inspection by any or all of


NON-OPERATORS in accordance with the ACCOUNTING PROCEDURE,


8.05 Default and lien


(a) If any PARTY shall fail to advance to OPERATOR


its share of expenditures, or to make its contribution to


the costs and expenses of the PETROLEUM WORKS, as provided


for in the AGREEMENT, such PARTY shall be in default and


OPERATOR shall immediately so notify such PARTY,


(hereinafter referred to as the.-”Defaulting PARTY”). A


copy of such notice, which will name the bark or- banks,


and specify the account of••■th.|‘‘--OPERATOR, shall be


simultaneously f orwarded-. to ..'each of.._ uh-eVo-ther PARTIES to


acquaint them with t-h'e. -facts constituting such default.


Each non-defaultin|--;.P-0iTY shal*l.,\v'ithin twenty (20) days


of receiving a copjf of such./ijotlce, advance to OPERATOR a


share of the amount in ..respect-' of which the Defaulting


PARTY is in default, ihvthe" proport ion that its


PARTICIPATING INTER£§T.\bears to the aggregate of all the


PARTICIPATING jp*T£RE:$TS of the non-defaulting PARTIES.


Each non-defauitir'g" PARTY shall continue to advance to'


OPERATOR an identical share of the sums due in the future


in respect of which the Defaulting PARTY is in default


until the Defaulting PARTY has reimbursed the sums due, or


the Defaulting PARTY1s PARTICIPATING INTEREST shall have


been assigned, or until operations shall have been


abandoned pursuant to sub-paragraph 8.05(c) below. The


amounts so advanced by a non-defaulting PARTY shall


thereupon .become a debt due by the Defaulting PARTY,


payable on demand and bearing interest; as hereinafter


provided. OPERATOR shall have the right to bring suit to


enforce* the collection of all sums payable by a Defaulting


PARTY to any non-defaulting PARTY.


(b) The Defaulting PARTY may remedy its default by


depositing, within ninety (90) days following the notice


provided for in sub-paragraph 8.05 (a) above, the amount


in default to the account of OPERATOR in the bank or banks


stipulated in such notice. If the Defaulting PARTY


chooses to-remedy its default, it shall deposit at the


same time and in the same manner an additional amount


equal to the interest due and computed as set forth in


sub-paragraph 8.05 (e) below.








133


Upon the payment by a Defaulting PARTY of any


amount in default, the amount so paid shall be distributed


and paid to the other non-defaulting PARTIES proportion¬


ately to the contributions theretofore made by. them. In


the event that the Defaulting PARTY has failed to remedy


such default within such ninety (90) day period, that


PARTY shall automatically be deemed to have elected~to


withdraw from the AGREEMENT and shall, notwithstanding any


other provisions of the AGREEMENT, forfeit all rights


hereunder, including its right to HYDROCARBONS, effective


as of the last day of said ninety (90) day period.


(c) The Defaulting PARTY withdrawing as provided


above shall share in the obligations and liabilities which


have been incurred by the PARTIES prior to the effective


date of its withdrawal in. accordance with the provisions


of the AGREEMENT as If such default had not occurred. In


addition to the other legal remedies available to them,


each non-defaulting PARTY shall have the option (but only


after consultation with the other::npn-defaulting PARTIES)


exercisable by notice in wri..t.ing-.;:within .thirty (30) days


after the expiry of the said iiiiiety (90) 'da.y period to


require the Defaulting ..P.A.RfY- to assign VbO " it*, at the


expense of the Def aulti.jtfg** PARTY ,v thb. entire PARTICIPATING


INTEREST of the Defaultlng PAR/TY\f-r.ee of charge and free


of all liens and enoumbrance's>;\‘eycept those arising in


favor of-one or several .of *th.e other non-defaulting


PARTIES. If the said ^gtioii is exercised by more than one


non-defaulting PARTY*”*‘£'he" Defaulting PARTY shall assign


its PARTICIPATING"* "IN-TSREST to such non-defaulting PARTIES


exercising such bp&loi} in the proportion that the


PARTICIPATING INTEREST of each of them bears to the sum of


their PARTICIPATING INTERESTS prior to such assignment.


The Defaulting PARTY shall execute and deliver at its cost


any and all documents and take at its cost any and all


action necessary to effect the assignment of its


PARTICIPATING INTEREST in the PERMIT to such non¬


defaulting PARTIES. If the non-defaulting PARTIES (or any


of them) have not elected by the end of the said thirty


(30) day period to acquireall of the Defaulting PARTY’S


PARTICIPATING INTEREST, no assignment of the Defaulting


PARTY’S PARTICIPATING INTEREST shall be made and, in that


event, the PETROLEUM WORKS hereunder shall thereupon be


abandoned at the earliest possible date and each PARTY,


including the Defaulting PARTY, shall pay its PARTICIPAT¬


ING INTEREST share of all costs of abandoning the


PETROLEUM WORKS.


(d) Until such time as the assignment of its said


total PARTICIPATING INTEREST has been completed, and to


the extent that such joinder may be necessary or


appropriate, the Defaulting PARTY shall remain obligated


to join with the other PARTIES to perform any action which





13 4














Upon the payment by a Defaulting PARTY of any

amount in default, the amount so paid shall be distributed

and paid to the other non-defaulting PARTIES proportion-

ately to the contributions theretofore made by them. In

the event that the Defaulting PARTY has failed to remedy

such default within such ninety (90) day period, that

PARTY shall automatically be deemed to have elected to

withdraw from the AGREEMENT and shall, notwithstanding any

other provisions of the AGREEMENT, forfeit all rights

hereunder, including its right to HYDROCARBONS, effective

as of the last day of said ninety (90) day period.



(c) The Defaulting PARTY withdrawing as provided

above shall share in the obligations and liabilities which

have been incurred by the PARTIES prior to the effective

date of its withdrawal in accordance with the provisions

of the AGREEMENT as if such default had not occurred. In

addition to the other legal remedies available to them,

each non-defaulting PARTY shall have the option (but only

after consultation with the other non-defaulting PARTIES)

exercisable by notice in writing within thirty (30) days

after the expiry of the said ninety (90) day period to

require the Defaulting PARTY to assign to it, at the

expense of the Defaulting PARTY, the entire PARTICIPATING

INTEREST of the Defaulting PARTY free of charge and free

of all liens and encumbrances, except those arising in

favor of one or several of the other non-defaulting

PARTIES. If the said optiong is exercised by more than one

non-defaulting PARTY, the Defaulting PARTY shall assign

its PARTICIPATING INTEREST to such non-defaulting PARTIES

exercising such option in the proportion that the

PARTICIPATING INTEREST of each of them bears to the sum of

their PARTICIPATING INTEREST prior to such assignment.

The Defaulting PARTY shall execute and deliver at its cost

any and all documents and take at its cost any and all

action necessary to effect the assignment ot its

PARTICIPATING INTEREST in the PERMIT to such non-

defaulting PARTIES. If the non-defaulting PARTIES (or any

of them) have not elected by the end of the said thirty

(30) days period to acquire all of the defaulting PARTY's

PARTICIPATING INTEREST, no assignment of the defaulting

PARTY's PARTICIPATING INTEREST shall be made and, in that

event, the PETROLEUM WORKS hereunder shall thereupon be

abandoned at the earliest possible date and each PARTY

including the Defaulting PARTY, shall pay its PARTICIPAT-

ING INTEREST share of all costs of abandoning the

PETROLEUM WORKS.



(d) Until such time as the assignment of its said

total PARTICIPATING INTEREST has been completed, and to

the extent that such joinder may be necessary or

appropriate, the Defaulting PARTY shall remain obligated

to join with the other PARTIES to perform any action which









134























the remaining PARTIES wish to perform within the scope of the AGREEMENT to protect the rights and benefits of the PARTIES under the PERMIT.



(e) All unpaid amounts owed by the Defaulting PARTY shall bear interest monthly at the rate, determined as set forth below, in effect on the respective due dates. The applicable interest rate will be the arithmetic average of the high and low interest rate per annum applicable for one-month DOLLAR deposits on the London interbank market (rounded, if necessary, to the nearest one-sixteenth percent (1/16%)), as published on the respective due dates in Times, plus a two and a half (2 1/2%) margin. Such interest rate shall be applied to any unpaid amounts on a month-by-month basis, a new interest rate being computed aniversary date of any due date.



(f) Each PARTY, in addition to its other rights and remedies, shall have and is hereby given a lien on the PARTICIPATING INTEREST of each of the other PARTIES severally in the PERMIT, and in all jointly-owned assets and in all the production obtained from the PERMIT and the income deriving therefrom. The non-defaulting PARTIES shall be entitled to enforce such lien in accordance with the laws of the jurisdiction where the assets are located. All monies recovered from the exercise of the lien on a Defaulting PARTY's property and PARTICIPATING INTEREST shall, after deduction of all costs incurred in connection with such recovery, be credited against all amounts due from such Defaulting PARTY under the terms of the AGREEMENT and any excess funds remaining shall be paid over to the Defaulting PARTY. Any deficiency remaining due after application of the foregoing procedure shall remain the obligation of the Defaulting PARTY and may be collected as any other debt. Notwithstanding the foregoing provisions, if at the date of exercising the lien against the property and the PARTICIPATING INTEREST of a Defaulting PARTY, there has been produced as much as ninety percent (90%) of the estimated recoverable reserves from a reservoir located on the PERMIT (based upon estimates approved by the Operating Committee), the Defaulting PARTY shall not be entitled to any payment for its PARTICIPATING INTEREST in the jointly-owned assets, the production from such reservoir and the income deriving therefrom until abandonment of production from such shall be required to bear its prorata share of the cost of abandonment to the extent that abandonment costs exceed the value of salvage.the remaining PARTIES wish to perform within the scope of the AGREEMENT to protect the rights and benefits of the PARTIES under the PERMIT.



(e) All unpaid amounts owed by the Defaulting PARTY shall bear interest monthly at the rate, determined as set forth below, in effect on the respective due dates. The applicable interest rate will be the arithmetic average of the high and low interest rate per annum applicable for one-month DOLLAR deposits on the London interbank market (rounded, if necessary, to the nearest one-sixteenth percent (1/16%)), as published on the respective due dates in Times, plus a two and a half (2 1/2%) margin. Such interest rate shall be applied to any unpaid amounts on a month-by-month basis, a new interest rate being computed aniversary date of any due date.



(f) Each PARTY, in addition to its other rights and remedies, shall have and is hereby given a lien on the PARTICIPATING INTEREST of each of the other PARTIES severally in the PERMIT, and in all jointly-owned assets and in all the production obtained from the PERMIT and the income deriving therefrom. The non-defaulting PARTIES shall be entitled to enforce such lien in accordance with the laws of the jurisdiction where the assets are located. All monies recovered from the exercise of the lien on a Defaulting PARTY's property and PARTICIPATING INTEREST shall, after deduction of all costs incurred in connection with such recovery, be credited against all amounts due from such Defaulting PARTY under the terms of the AGREEMENT and any excess funds remaining shall be paid over to the Defaulting PARTY. Any deficiency remaining due after application of the foregoing procedure shall remain the obligation of the Defaulting PARTY and may be collected as any other debt. Notwithstanding the foregoing provisions, if at the date of exercising the lien against the property and the PARTICIPATING INTEREST of a Defaulting PARTY, there has been produced as much as ninety percent (90%) of the estimated recoverable reserves from a reservoir located on the PERMIT (based upon estimates approved by the Operating Committee), the Defaulting PARTY shall not be entitled to any payment for its PARTICIPATING INTEREST in the jointly-owned assets, the production from such reservoir and the income deriving therefrom until abandonment of production from such shall be required to bear its prorata share of the cost of abandonment to the extent that abandonment costs exceed the value of salvage. 8.06 Non-applicability to HTDK0-C0NG0





As long as the COMPANIES1 obligation to





finance fs PARTICIPATING INTEREST share of


the expenses and investments relating to PETROLEUM WORKS


on a given commercial field has not terminated in


accordance with paragraph 9-06 below, a_ny failure'by a


COMPANY to make a payment to OPERATOR, as provided for In'


paragraph 8.05 above, of any advance or contribution


relating to PETROLEUM WORKS on a given commercial field,


shall be deemed to be a default by such COMPANY and not by








8.07 Work to Which All Parties Have Not Consented





8.07.1 For-the purpose of the present paragraph 8.07:





(i) An exploration well (hereinafter.designated


"exploration well") designates.:...





- either a well drilledv©fr-:£he Permit\upon


any surface outride..the interpreted--closure


of any geolpgicai\‘structure-.br, the interpreted


- limits of,a\'res.ervoir located In a stratigraphic


trap updnwhich a wel-l.has'-been drilled in which


hydrocarbons in guaptifi'es which, are probably


commercial are. present*; or


- a well /drii.le.& "or deepened on the Permit on





any surface which is inside the interpreted


closure'of any geological structure or the


interpreted limits of a reservoir located in


a stratigraphic trap upon which a well has been


drilled in which hydrocarbons in quantities which


are probably commercial are present, such well


being drilled or deepened to a depth which is .


either above or below the stratigraphic level in


which said hydrocarbons are present in the


interpreted limits of such closure or of such


reservoir and which is not completed in a


geologic stratum in which such hydrocarbons are


present.


/


(ii) A step-out well (hereinafter designated "step-





out well”) means any well drilled to the same field


of hydrocarbons located on a geologic structure or


in a stratigraphic trap on which an exploration well


has discovered hydrocarbons, provided that these


fields have not yet been declared commercial by the


Operating Committee at the date on which the drilling


of the step-out well is proposed in the form of an


additional- program upon the conditions set forth in


paragraph 8.07.2 hereinafter.


13 6





8.06 Non-applicability to HYDRO-CONGO



As long as the COMPANIES' obligation to finance 's PARTICIPATING INTEREST share of the expenses and investments relating to PETROLEUM WORKS on a given commercial field has not terminated in accordance with paragraph 9.06 below, any failure by a COMPANY to make a payment to OPERATOR, as provided for in paragraph 8.05 above, of any advance or contribution relating to PETROLEUM WORKS on a given commercial field, shall be deemed to be a default by such COMPANY and not by



8.07 Work to Which All Parties Have Not Consented



8.07.1 For the purpose of the present paragraph 8.07:



(i) An exploration well (hereinafter designated "exploration well") designates:



- either a well drilled on the Permit upon any surface outside the interpreted closure of any geological structure or the interpreted

- limits of a reservoir located in a stratigraphic trap upon which a well has been drilled in which hydrocarbons in quantities which are probably commercial are present; or



-a well drilled or deepened on the Permit on any surface which is inside the interpreted closure of any geological structure or the interpreted limits of a reservoir located in a stratigraphic trap upon which a well has been drilled in which hydrocarbons in quantities which are probably commercial are present, such well being drilled or deepened to a depth which is either above or below the stratigraphic level in which said hydrocarbons are present in the interpreted limits of such closure or of such reservoir and which is not completed in a geologic stratum in which such hydrocarbons are present.



(ii) A step-out well (hereinafter designated "step-out well") means any well drilled to the same field of hydrocarbons located on a geologic structure or in a stratigraphic trap on which an exploration well has discovered hydrocarbons, provided that these fields have not yet been declared commercial by the Operating Committee at the date on which the drilling of the step-out well is proposed in the form of an additional program upon the conditions set forth in paragraph 8.07.2 hereinafter.





136

8.07.2 In addition to the work provided for in approved programs by the Operating Committee, each Party (subject to the provisions of Article 8.07.1 hereinbelow) may request the Operator to carry out an additional program or work of exploration and delineation of a field on the following conditions:



(a) For each budgetary year, each Party may request the drilling of an exploration well or the drilling of two step-out wells or the deepening of any exploration or step-out well;



(b) The Party wishing to carry out an additional program (hereinafter called the "Requesting-Party") must notify the other Parties in writing no later than:



within thirty (30) days of the approval or the

revision of the annual program and budget of

exploration for the year in question as

concerns the drilling of a well;



not later than forty-eight (48) hours after

the completion of drilling operations by the

Operator as concerns the deepening of a well

in the course of drilling.



This notification must indicate the operations to

be carried out for the realization of the

additional program as well as the estimate of the

cost of such program.



(c) Subject to the provisions of paragraph 8.07.9

(a) hereinafter, the Parties other than the

Requesting Party may notify the Requesting Party

of their intention to participate in the

additional program. Such notification must be made no

later than:



(i) thirty (30) days as regards the drilling of a well;



(ii) forth-eight (48) hours as regards the deepening of

a well;



following the notification provided for under paragraph

8.07.2 (b).



(d) No additional program may be undertaken if a Party,

other than the Requesting Party, shows that such operations

would be likely to cause delay or unusual hindrance to the

carrying out of a work program previously decided upon by

the Operating Committee.



8.07.3



(a) If all of the Parties have not chosen to participate

in the cost of such well, the petroleum operations related

to the well will be carried out for the account of the

Party or Parties who have chosen to participate in such

cost (hereinafter called the "Consenting Parties").

8.07.2 In addition to the work provided for in approved programs


by the Operating Committee, each Party (subject to the provisions of Article 8.07.


hereinbelow) may reauest the Operator to carry out an additional program or work


of exploration and delineation of a field on the following conditions:





(a) For each budgetary year, each Party may request the


drilling, of an exploration well or the drilling of two


step-out wells or the deepening of any exploration or step-


out wel 1;


fb) The Party wishing to carry out an additional program


(hereinafter called the "Requesting^Party") must notify the


other Parties in writing no later than:


within thirty (30) days of the approval or


the revision of the annual program and budget


of exploration for the year in question as


concerns the drilling of a well;


not later than forty-eight (48) houFs-.after the


completion of drilling operationsv-fiy*the Operator


as concerns the deepening off a in thet,cQurse


of drilling.





This notification must 'indicate the'op^ations to be carried out


for the realization of?the additional..program as well as the


estimate of the cost of such.-program'.





(c) Subject to the prdvifibhs of paragraph 8.07.9 (a) hereinafter,


the Parties other than'-..the Requesting Party may notify the Request¬


ing Party of their:\in.fention to participate in the additional program.


Such notification must be made no later than:


(i) thirty (30) days as regards the drilling of





a well;


(ii) forty-eight (48) hours as regards the deepening


of a well;


following the notification provided for under paragraph 8.07.2 (b).





(d) No additional program may be undertaken if a Party, other than


the Requesting Party, shows that such operations would be likely to


cause delay or unusual hindrance to the carrying out of a work progri


previously decided upon by the Operating Committee.


8.07.3





(a) If all of the Parties have not chosen to participate in the


cost of such well, the petroleum operations related to the well


will be carried out for the account of the Party or Parties who


have chosen to participate in such cost (hereinafter called the


"Consenting Parties").





j-


The risk and cost involved in the carrying out

of such work will be borne by each of the

Consenting parties in proportion to the

percentage of participation of all Consenting

Parties taken together (hereinafter called the

"Percentage of Consent").



(b) The Consenting Parties will inform the

non-Consenting Parties of the carrying out of

each of the operations undertaken in accorda

with the present Article, including their cost

and the data obtained After the completion of

each well the Consenting Parties will notif the

non-Consenting Parties of the result of the well

within ten (10) days following the data when

the results are known. The non-Consenting

Parties may consult or obtain all documents

concerning the will in due course.



8.07.4 Work not resulting in a commercial well.



If the work in question results in a dry well, each of the Consenting Parties will bear the entirety of the costs and risks of plugging and abandoning up to his Percentage of Consent.



8.07.5 Work resulting in a commercial well



(a) If work related to an exploration well or step-out well or if deepening operations carried out upon an exploration well or upon a step-out well result in a well which the Consenting Parties decide to complete as a productive well (or in the event that they should decide not to complete as a productive well but to drill into the reservoir of hydrocarbons which is thus discovered by drilling one or several development wells), the non-Consenting Parties will have the possibility of joining in such discovery upon the conditions set forth in paragraph 8.07.5 (b) and (c) below, subject to notifying the Consenting Parties within thirty (30) days following notification of the results as contemplated in paragraph 8.07.3 (b) above.



(b) The work of completing and equipping the drilled well, the drilling operations and equipping operations respecting all other development wells as well as the Construction of all Supplementary installations, will be financed by the Consenting Parties and the non-Consenting Parties who join in the discovery (all of these Parties taken together being hereinafter called the "Taking Parties") in the proportion that percentage of participation of each one of them represents in proportion to the percentage of participation of all of them taken together.



(c) The Consenting Parties will freely dispose, up to the limit of their percentage of consent respectively, of the production of a well completed as productive until the value of the hydrocarbons produced from such well and sold, valued as is provided hereinbelow after deduction of all royalties due upon such quantities shall be equal to the sum of the following amounts:



(i) the total on the one hand of the drilling cost and cost of testing the well up to and including the christmas tree and on the other hand the development cost of such well; and













The risk and cost involved in the carrying out of such .work


will be borne by each of the Consenting Parties in proportion


to the percentage of participation of all Consenting Parties


taken together (hereinafter called the "Percentage of Consent"}-


(b) The Consenting Parties will inform the non-Consenting Parties


of the carrying out of each of the operations undertaken in accorda


with the present Article, including their cost and the data obtaine


After the completion of each well the Consenting Parties will notif


the non-Consenting Parties of the results of the well within ten (1


days* following the date when the results are known. The non-Conser


ing Parties may consult or obtain all documents concerning the weV


in due course.


8.07.4 Work not resulting in a commercial well.


If the work In question results in a dry well, each of the Consenting


Parties will bear the entirety of.the costs and risks of-plugging and abandon


ing up to his Percentage of Consent.


8.07.5 Work resulting in S'conmerci.alV*^eTi


(a) If work related to an.:expl©.rat1on well' or \step-out well or if


deepening operations carried oy.t ""•uport an exploration'wel 1 or upon a step-


out well result in a wel 1 whicfrthe Consent}ri'g'Parties' decide*.±o romplete.


as a productive well (or incite event, thafethey should decide not to


complete as a productive well but td'd^IlT into the reservoir of hydrocarbons


which is thus discovered by drilling./one or several development wells),


the non-Consenting Parties will have the possibility of Joining in such


discovery upon the conditv6ns;%sei forth in paragraph 8.07.5 (b; and (c)


below, subject to notifying.-the Consenting Parties within thirty (30) days


following notification of the results as contemplated in paragraph 8.07.3 (b)


above.





(b) The work of completing and equipping the drilled well, the drilling


operations and equipping operations respecting all other development welTs as


well as the construction of all supplementary installations, will be financed


by the Consenting Parties and the non-Consenting Parties who join in the


discovery (all of these Parties taken together being hereinafter called the


“Taking Partied”) in the proportion that percentage of participation of each


one of them represents in proportion to the percentage of participation of


all of them taken together.


(c) The Consenting Parties will freely dispose, up to the limit of


their percentage of consent respectively, of the production of a well completed


as productive until the value of the hydrocarbons produced from such well and


sold, "valued as is provided hereinbelow after deduction of all royalties due


upon such quantities shall be equal to the sum of the following amounts:


(1) the total on the one hand of the drilling cost and


cost of testing the well up to and including the Christmas


tree and on the other hand the development cost of such well;


and














(ii) one thousand percent (1000%) in case of the drilling or

deepening of an exploration well or eight hundred percent

(800%) in the case of the drilling or deepening of a step=

out well of the share corresponding to the

percentage of participation of the non-Consenting

Parties who joined in the discovery in the drilling cost

and the cost of testing the well in question, subject to

the provisions of paragraph 8.07.9 (a) hereinafter.



In the event that a well drilled in the framework of an additional program

shall have not been completed as a productive well but shall have led to the

drilling of one or several other development wells or in the event that the

mean production of the wells of a field thus discovered shall be greater than

that of the well in question, the cumulative value of the production will

be that of the producction of the well done under the additional programme

shall be that of the putative well whose production shall be deemed

the average production of the wells of the field discovered.





8.07.6 Valuation of Hydrocarbons





The liquid of hydrocabons produced and sold shall be valued, for the

purpose of the present paragraph 8.07, at the price effectively realized

by the Consenting Parties in selling such liquid hydrocabons, or, in event

of sale to affiliates, at the price calculated by using the commercial

reference value FOB as defined in Annex 3 of the Contract.



In the event that natural gas shall be discovered in quantities judged commercial

by the Operating Committee, the Parties shall determine by common agreement

the details of valuation of natural gas for the purposes of the present paragraph

8.07.



8.07.7 End of Operations



Beginning the first day of the month which follows the month in the course

in which the value of production is equal to the amounts to be receovered, as

defined hereinabove, the development well or wells in question will be produced

for the account of all Taking Parties in performance with the provisions of

the Contract, and thereafter the costs of producing such wells shall be borne

and paid by the Parties as provided for the Contract.



8.07.8 Accounting/Audit



The accounting for the additional work will be done in accordance with

the provisions of the Accounting Agreement and the Books of Account of the

Operator respecting such operations shall be open for inspection by the Parties

at any reasonable time. The Parties shall have the right to examine the Books

of the Operator in accordance with the provisions of paragraph 8.04 hereinabove.



8.07.9 Consenting Parties/Requesting Parties



(a) As long as the advances made by the Companies in accordance

with Article 9 hereinbelow to cover the share corresponding to







139





























































(ii) one thousand percent (1000%) in case of the drilling or

deepening of an exploration well or eight hundred percent

(800%) in the case of the drilling or deepening of a step=

out well of the share corresponding to the

percentage of participation of the non-Consenting

Parties who joined in the discovery in the drilling cost

and the cost of testing the well in question, subject to

the provisions of paragraph 8.07.9 (a) hereinafter.



In the event that a well drilled in the framework of an additional program

shall have not been completed as a productive well but shall have led to the

drilling of one or several other development wells or in the event that the

mean production of the wells of a field thus discovered shall be greater than

that of the well in question, the cumulative value of the production will

be that of the producction of the well done under the additional programme

shall be that of the putative well whose production shall be deemed

the average production of the wells of the field discovered.





8.07.6 Valuation of Hydrocarbons





The liquid of hydrocabons produced and sold shall be valued, for the

purpose of the present paragraph 8.07, at the price effectively realized

by the Consenting Parties in selling such liquid hydrocabons, or, in event

of sale to affiliates, at the price calculated by using the commercial

reference value FOB as defined in Annex 3 of the Contract.



In the event that natural gas shall be discovered in quantities judged commercial

by the Operating Committee, the Parties shall determine by common agreement

the details of valuation of natural gas for the purposes of the present paragraph

8.07.



8.07.7 End of Operations



Beginning the first day of the month which follows the month in the course

in which the value of production is equal to the amounts to be receovered, as

defined hereinabove, the development well or wells in question will be produced

for the account of all Taking Parties in performance with the provisions of

the Contract, and thereafter the costs of producing such wells shall be borne

and paid by the Parties as provided for the Contract.



8.07.8 Accounting/Audit



The accounting for the additional work will be done in accordance with

the provisions of the Accounting Agreement and the Books of Account of the

Operator respecting such operations shall be open for inspection by the Parties

at any reasonable time. The Parties shall have the right to examine the Books

of the Operator in accordance with the provisions of paragraph 8.04 hereinabove.



8.07.9 Consenting Parties/Requesting Parties



(a) As long as the advances made by the Companies in accordance

with Article 9 hereinbelow to cover the share corresponding to







139

















































the percentage of participation of in-the costs and


investments relating to the petroleum operations shall not have


been reimbursed entirely by as provided for in


Article 9 Hereinbelow:


shall not be a Requesting Party


will be deemed to be a Consenting P^rty


only if the additional program of work results in


placing into development and exploitation of a field:


(i) .remaining indebted to the


other Consenting Parties for its share in the


additional work in accordance with the terms


provided for in Article 9 hereinafter,


(ii) but without being the beneficiary of the


amounts* provided for in pafa'g/aph 8.07 5 {.c} (ii)


hereinabove, such sums b£ir>g..owed only\to>the*‘Consenf-


ing Parties other thfii Y"“ V-


(b) When c.ah-;become a.-Re'q-ueSting Party, she will participate


in the'additional work on the and conditions as the other


Parties, Vv* V**




































































140


the percentage of participation of in the costs and investments relating to the petroleum operations shall not have been reimbursed entirely by as provided for in Article 9 hereinbelow:



shall not be a Requesting Party



will be deemed to be a Consenting Party only if the additional program of work results in placing into development and exploitation of a field:



(i) remaining indebted to the other Consenting Parties for its share in the additional work in accordance with the terms provided for in Article 9 hereinafter.



(ii) but without being the beneficiary of the amounts provided for in paragraph 8.07 f (c) (ii) hereinabove, such sums being owed only to the Consenting Parties other than



(b) When can become a Requesting Party, she will participate in the additional work on the same terms and conditions as the other Parties.







140Article 9 - Financing: of PETROLEUM WORKS --- Advances of funds





9.01 General





Advances of funds relating to the PETROLEUM


WORKS shall be made by the PARTIES pro rata to their


respective PARTICIPATING INTERESTS, subject however to the


following provisions of this Article 9*


9.02 Advances by the COMPANIES_


9,02.1 Advances by the COMPANIES relating


to" EXPLORATION WORKS


Subject to the provisions of sub-paragraph 9*03.1


below, the COMPANIES shall contribute all of the funds


necessary to cover expenses and investments corresponding


to EXPLORATION WORKS. „ \


9.02.2 Advances}, fey'"the COMPANIES-. relating


,to :b£VELO?MENT\-AW EXPLOITATION WORKS


Subject to the pro\ris.lohs of sub-paragraph 9*03.2


below, the COMPANIES shal!l\contribute all of the funds


necessary to cover expe'rise’s and investments corresponding


to. DEVELOPMENT AND* EXPLOITATION WORKS


V


9.03 Advances by_





9.03.1 Advances by _towards


EXPLORATION WORKS


(a) In case of discovery of a commercial field


on the PERMIT, s PARTICIPATING


INTEREST share In the COMPANIES’ past and


future expenses and Investments for


EXPLORATION WORKS shall be'-charged to


in the ADVANCE ACCOUNTS and


offset by . in accordance with the


provisions of paragraphs 9*0^ and 9*05 below.


























141


Article 9 - Financing of PETROLEUM WORKS -- Advances of funds



9.01 General

Advances of funds relating to the PETROLEUM WORKS shall be made by the PARTIES pro rate to their respective PARTICIPATING INTERESTS, subject however to the following provisions of this Article 9.



9.02 Advances by the COMPANIES



9.02.1 Advances by the COMPANIES relating to EXPLORATION WORKS



Subject to the provisions of sub-paragraph 9.03.1 below, the COMPANIES shall contribute all of the funds necessary to cover expenses and investments corresponding to EXPLORATION WORKS.



9.03 Advances by



9.03.1 Advances by towards EXPLORATION WORKS



(a) In case of discovery of a commercial field on the PERMIT,

a PARTICIPATING INTEREST share in the

COMPANIES' past and future expenses and investments for

EXPLORATION WORKS shall be charges to in

the ADVANCE ACCOUNTS and offset by in

accordance with the provisions of paragraphs 9.04 and 9.05

below.(b) Amounts so recorded shall bear interest at


the rate of six and one-half percent (6.5£)


per annum, computed from the first day of


the calendar month following the date of


advance of the corresponding amount by


a COMPANY to OPERATOR. Interest amounts


shall be ^charged quarterly by OPERATOR and


shall be exclusive of any other cost,


whether financial or other agio or


. commission on such amounts.


*9.03.2 Advances by towards





DEVELOPMENT AND EXPLOITATION WORKS





(a) may elect to contribute all or part of


its PARTICIPATING INTEREST share of investments for


the DEVELOPMENT AND EXPLOITATION WORKS on each


commercial field. As soon as possible after the date


when the OPERATING COMMITTEE- gegi.ded that the field


in question is commercial,.. \ . shall notify


the COMPANIES of the extent"-tcfwhich - \ elects


to contribute its PARTICIPATING INTEREST '-share of such


funds for the DEVELOPMENT AND EXPLOITATION WORKS.


(b) In case V' '' electS./Viot\t<5* contribute all or part





of its PARTICIPATING INTEREST''share of funds necessary for


the DEVELOPMENT AND..tXPL(>lfATION WORKS, the COMPANIES shall


advance these fujfd'sfiDri the basis of the proportion between


each of their "PARTICIPATING INTEREST and the sum of


PARTICIPATING:‘INTERESTS of all the COMPANIES.





•s PARTICIPATING INTEREST share of the COMPANIES


advance towards DEVELOPMENT AND EPXLOITATION WORKS shall


be recorded in the ADVANCE ACCOUNTS, as set forth in paragr.


9.04 below, and offset by in accordance with


the provisions of paragraph 9.05 below. Each such amount


advanced by the COMPANIES shall, bear interest from the


first day of the calendar month which follows the month dur


which such amount was advanced until the date of


corresponding offset contribution, at the Interest Rate per


annum, plus a one percent (1%) margin, defined in Exhibit <


to the AGREEMENT. Such rate shall be exclusive of any othe


cost, whether financial or other, agio or commission on


amounts so advanced by the COMPANIES.



































14 2


(b) Amounts so recorded shall bear interest at

the rate of six and one-half percent (6.5%)

per annum, computed from the first day of

the calendar month following the date of

advance of the corresponding amount by

a COMPANY to OPERATOR. Interest amounts

shall be charged quarterly by OPERATOR and

shall be exclusive of any other cost,

whether financial or other agio or

commission on such amounts.



9.03.2 Advances by towards

DEVELOPMENT AND EXPLOITATION WORKS



(a) may elect to contribute all or part of

its PARTICIPATING INTEREST share of investments

for the DEVELOPMENT and EXPLOITATION WORKS on each

commercial field. As soon as possible after the

date when the OPERATING COMMITTEE decided that the

field in question is commercial, shall notify

the COMPANIES of the extent for which elects

to contribute its PARTICIPATING INTEREST share of

such funds for the DEVELOPMENT AND EXPLOITATION

WORKS.



(b) In case elects not to contribute all or part

of its PARTICIPATING INTEREST share of funds

necessary for the DEVELOPMENT AND EXPLOITATION

WORKS, the COMPANIES shall advance these funds on

the basis of the proportion between each of their

PARTICIPATING INTEREST and the sum of

PARTICIPATING INTERESTS of all the COMPANIES.



's PARTICIPATING INTEREST share of the

COMPANIES advance towards DEVELOPMENT AND

EXPLOITATION WORKS shall be recorded in the

ADVANCE ACCOUNTS, as set forth in paragr 9.04

below, and offset by in accordance with

the provisions of paragraph 9.05 below. Each such

amount advanced by the COMPANIES shall, bear

interest from the first day of the calendar month

which follows the month dur which such amount was

advanced until the date of corresponding

offset contribution, at the Interest Rate per

annum, plus one percent (1%) margin, defined in

Exhibit to the AGREEMENT. Such rate shall be

exclusive of any other cost, whether financial or

other, agio or commission on amounts so advanced

by the COMPANIES.





142 9.04 ADVANCE ACCOUNTS


OPERATOR shall keep an ADVANCE ACCOUNT between and each


COMPANY. The ADVANCE ACCOUNTS shall be opened by OPERATOR as soon as possible


after the Operating Committee shall have declared the first discovery of a


commercial field of LIQUID HYDROCARBONS on the Permit. OPERATOR shall record


in each COMPANY*s ADVANCE ACCOUNT, in accordance with each COMPANY'S respective


advances, the following entries:








9.04.2 To be credited to_:





Any reimbursement made by in accordance with paragraph


9.05 below.


9.05 *s reimbursements





9.05.1


Amounts charged to in each ADVANCE ACCOUNT shall be


reimbursable by , not only the capita^'b^it financial expenses


and interest incurred, from the date of thefijist regular-.marketing of


LIQUID HYDROCARBONS from the PERMIT. i. } NX *


9.05.2 vAX . v../\ \ V


The reimbursement by\..-- .. •;. bf\the‘ debit balance on ADVANCE ACCOUNTS


and the payment of the mining royalty..du.e\by-*' on its PARTICIPATING


INTEREST share of production of LIQUI.D.. HYDROCARBONS in accordance with the


provisions of the CONVENTION shall be made by allocation of a part of *s


PARTICIPATING INTEREST share-'of.‘production which is entitled to, valued


if n£cessary-at the price def.iped in Exhibit 3 hereto.


9.05.3


The computation of amounts to be contributed by referred to


in sub-paragraph 9.05.2 above, as well as their allocation, shall be made each


quarter, except in special cases for which the PARTIES will define by.common


agreement the appropriate adjustments to the procedure defined in sub-paragraphs


9.05.2 to 9.05.5.


9.05.4


In tbe event that, for such quarter, the sum of:


(i) amounts due by as mining royalty on


its part of production of LIQUID HYDROCARBONS


(ii) debit balance of each ADVANCE ACCOUNT exceed 75% of


*s PARTICIPATING INTEREST share of production which


is entitled to for the quarter in question, any excess of


such amounts over 75% shall be carried forward and reimbursed


in the same manner and under the same limitation from the


PARTICIPATING INTEREST share of production to which


will later be entitled to;








14 3


9.04 ADVANCE ACCOUNTS



OPERATOR shall keep an ADVANCE ACCOUNT between and each COMPANY. The ADVANCE ACCOUNTS shall be opened by OPERATOR as soon as possible after the Operating Committee shall have declared the first discovery f a commercial field of LIQUID HYDROCARBONS on the Permit. OPERATOR shall record in each COMPANY'S ADVANCE ACCOUNT, in accordance with each COMPANY's respective advances, the following entries:



9.04.2 To be credited to :



Any reimbursement made by in accordance with paragraph 9.05 below.



9.05 's reimbursements



9.05.1 Amounts charged to in each ADVANCE ACCOUNT shall be reimbursable by , not only the capital but financial expenses and interest incurred, from the date of the first regular marketing of LIQUID HYDROCARBONS from the PERMIT.



9.05.2



The reimbursement by of the debit balance on ADVANCE ACCOUNTS and the payment of the mining royalty due by on its PARTICIPATING INTEREST share of production of LIQUID HYDROCARBONS in accordance with the provisions of the CONVENTION shall be made by allocation of a part of PARTICIPATING INTEREST share of production which is entitled to, valued if necessary-at the price defined in Exhibit 3 hereto.



9.05.3 The computation of amounts to be contributed by referred to in sub-paragraph 9.05.2 above, as well as their allocation, shall be made each quarter, except in special cases for which the PARTIES will define by common agreement the appropriate adjustments to the procedure defined in sub-paragraphs 9.05.2 to 9.05.5.



9.05.4



In the event that, for such quarter, the sum of:



(i) amounts due by as mining royalty on its part of production of LIQUID HYDROCARBONS



(ii) debit balance of each ADVANCE ACCOUNT exceed 75% of 's PARTICIPATING INTEREST share of production which is entitled to for the quarter in question any excess of such amounts over 75% shall be carried forward and reimbursed in the same manner and under the same limitation from the PARTICIPATING INTEREST share of production to which will later be entitled to;





143 However in the event that, at any time, the part of LIQUID HYDROCARBONS


received by after any and all allocation is inadequate to allow HYDRO-


CONGO to comply with its obligation for payment of corporate tax hereto, the


PARTIES shall meet to determine a new rate for LIQUID HYDROCARBONS to be allocated


to in order that could pay the said corporate tax.














9.05.5


For the purpose of applying sub-paragraph 9.05.1 to 9.05.4 above,


the payment made by will be allocated in the following manner and


in the following order:





1) payment of the mining royalty due by on its


PARTICIPATING INTEREST share of production of LIQUID


HYDROCARBONS.


2) 's offset contributions to the ADVANCE ACCOUNTS


of the COMPANIES by way of reimbursement of the advances


made by the COMPANIES, in the following manner and in the


following order: V*--\


a) Amounts charged to **'**’ as Interest '


on the COMPANIES’ advances toward..EXPLORATION


WORKS in accordahp^'Vfth sub-paragraph 9.03.1


above; \...-' Vv**


b) Amounts charged to and representing


the COMPANIES advances***.toward expenses and investments


for EXPLORATION’ WORKS*in accordance with paragraph


9.03.1 (a) above;-*'


tr -


c) Other amounts charged to in the ADVANCE


ACCOUNTS beginning - if any - by the amounts charged


to as interest on the COMPANIES’ advances


toward DEVELOPMENT AND EXPLOITATION WORKS in accordance


with paragraph 9.03.2 above.








9.05.6


Except in the case provided for the procedure defined under paragraph


9.05.2 to 9.05.5 above, may freely reimburse tn cash all or part


of the amounts registered on debit balance of the ADVANCE ACCOUNTS and do so simply


by bank transfer to the account of the OPERATOR who shall credit in


the ADVANCE ACCOUNTS as of the last of the current quarter at the date of valuation


of the transfer.





In case of reimbursement in cash and as so far as possible, this


reimbursement shall be made by in the same currency as the one used


by the COMPANIES for the advances thus reimbursed.


In the opposite case the OPERATOR shall make or cause to be made the


CONVENTION in money or monies desired at the best possible terms for the account


of


14 4


However in the event that, at any time, the part of LIQUID HYDROCARBONS received by after any and all allocation is inadequate to allow HYDRO-CONGO to comply with its obligation for payment of corporate tax hereto, the PARTIES shall meet to determine a new rate for LIQUID HYDROCARBONS to be allocated to in order that could pay the said corporate tax.







9.05.5



For the purpose of applying sub-paragraph 9.05.1 to 9.05.4 above, the payment made by will be allocated in the following manner and in the following order:



1) payment of the mining royalty due by on its PARTICIPATING INTEREST share of production of LIQUID HYDROCARBONS.



2) 's offset contributions to the ADVANCE ACCOUNTS of the COMPANIES by way of reimbursement of the advances made by the COMPANIES, in the following manner and in the following order:



a) Amounts charged to as interest on the COMPANIES' advances toward EXPLORATION WORKS in accordance with sub-paragraph 9.03.1 above;



b) Amounts charged to and representing the COMPANIES advances toward expenses and investments for EXPLORATION WORKS in accordance with paragraph 9.03.1 (a) above;



c) Other amounts charged to in the ADVANCE ACCOUNTS beginning - if any - by the amounts charged to as interest on the COMPANIES' advances toward DEVELOPMENT AND EXPLORATION WORKS in accordance with paragraph 9.03.2 above.



9.05.6



Except in the case provided for the procedure defined under paragraph 9.05.2 to 9.05.5 above, may freely reimburse in cash all or part of the amounts registered on debit balance of the ADVANCE ACCOUNTS and do so simply by bank transfer to the account of the OPERATOR who shall credit in the ADVANCE ACCOUNTS as of the last of the current quarter at the date of valuation of the transfer.



In case of reimbursement in cash and as so far as possible, this reimbursement shall be made by in the same currency as the one used by the COMPANIES for the advances thus reimbursed.



In the opposite case the OPERATOR shall make or cause to be made the CONVENTION in money or monies desired at the best possible terms for the account of  9.06 End of .COMPANIES'- obligation to contribute


_'s PARTICIPATING INTEREST share


of expenses and investments relating; to


PETROLEUM WORKS





When all advances made by the Companies to under t’n


present Article have been reimbursed, the obligation of the Companie


advance the share of in the financing of petroleum works


end, and will assume itself the whole of the financing of


its share petroleum operations in accordance with its percentage of


participation.








9.07 Supplying: LIQUID HYDROCARBONS to the COMPANIES











For the purpose of the application of paragraph 9.05 above,


, hereby gives the Operator power to supply to the COMPANIES every


Quarter that part of its PARTICIPATING INTEREST share of production of LIQUID


HYDROCARBONS to which is entitle^ fdr such Quar ter and which'is


allocated to reimbursement of the advance^■ jp'f the COMPANIES in accordance


with paragraph 9.05 above. \ .’V*








10 - Disposition of Production


10.01 Liftings








10.01.1 Each Party"Vs -€he right each calendar year in accordance with


the provisions of this Articl.e.-to receive in kind and to lift separately the


quantities of hydrocarbons corresponding to its percentage of participation


times the amount of available oil as determined for each" field for the year


in question as well as to have the free right of disposal of such quantity


This right of each Party as defined is designated under the term Lifting


Right in the present Article.


The "available oil” as used in this Article 10 is equal to the capacity of opt


production for each field for each calendar year in the conditions provided for


in Article 10.02 hereinabove diminished by the amount taken by Operator for car<1


ing out the PETROLEUM WORKS subject to the Contract.


10.01.2 Provisions of the present Article do not apply in the event of





discovery of gas or in case of production of hydrocarbons resulting from the


application Clause 8.07.


10.02 Available Oil





(a) Before the first of July of year A, Operator will advise


each Party the estimated volume of available oil for each field


and for each one of the calendar years following: A+l, A+2,


and A*3.








145


9.06 End of COMPANIES' obligation to contribute

's PATICIPATING INTEREST share

of expenses and innvestment relating to

PETROLEUM WORKS



When all advances made by the Companies to

under the present Article have been reimbursed, the obligation of the Companie advance the share of in the financing of petroleum works end, and will assume itself the whole of financing of its share petroleum operations in accordance with its percentage of participation.



9.07 Supplying LIQUID HYDRACARBONS to the COMPANIES



For the purpose of the application of paragraph 9.05 above, , herebay gives the Operator power to supply to the COMPANIES energy Quarter that part of its PATICIPATION INTEREST share of production of LIQUID

HYDRACARBONS to which is entitled for such Quarter and which is allocated to reimbursment of the advances of the COMPANIES in accordance with paragraph 9.05 above.



10 Disposition of Production



10.01 Liftings



10.01.1 Each Party has the right each calendar year in accordance with the provisions of the Article to receive in kind and to lift separately the,

quantities of hydrocarbons corresponding to its percantage of participation times the amount of available oil as determined for each field for the year

in question as well as to have the fire right of disposal of such quantity. This right of each Party as defined is designated under the term Lifting Right in the present Article.



The "available oil" as used in this Article 10 is equal to the capacity of opt production for each field for each caledar year in the conditions provided for

in article 10.02 hereinabove deminished by the amount taken by Oprerator for carrying out the PETROLEUM WORKS subject to the Contract.



10.01.2 Provisions of the present Article do npt apply in the event of discovery of gas or in case of production of hydrocarbons resulting fram the application Clause 8.07.



10.02 Available Oil



(a) Before the first oj July of year A, Operator will advice each Party the estimated volume of available of for each field and for each one of calendar

years following: A+1, A+2, and A+3. (b) Before the first of October of year A, the Operating Committee


will determine for each field the volume of available oil for


each one of the three following calendar years. 4


The volume of available oil of each field will be set firmly


quarter by quarter for year A+l and by way of estimate for


years A to A+2 and A+3.


The volume of available oil thus fixed shall be immediately


notified in writing by the Operator to each of the Parties.





10.03 Lifting Requests


Before the first of November of each year the Parties after having mutually


consulted each other will notify the Operator in writing of their requests for


liftings of liquid hydrocarbons for. each field for the three calendar years


following.





10.03.1 For year A+l they will be segregated for each field by quarter


taking into account the quarterly division of the volume of available oil of each


field for the year in question; also they will be as equally as possible spread


out over the year, provided the Parties do not\ agree otherwise.


10.03.2 For determination of the^Tifiirig requests .for the year A+l, the


Parties have agreed that if the lifting-.request of a.Par:ty...for a given field and


for year A+l is less than his liftingVight' (such-Party is called an underlifter}


a Party or several Parties provided that the.lr\original lifting requests were ■


equal to their lifting rights.A'inay buy f'r$m ttii underlifter and lift (such


Parties being deemed to be *bybVlifter$laTi1\or part of the quantities of liquid


hydrocarbons corresponding to the-4i.ffe'hdhce between the lifting right and the


lifting request of* the underl iffW^for - the field in question and'for'year A+l*


10.03.3 To this ehd,\before the November 30 of the year A, the underlifter


must advise the other PartieV-of the quantities of liquid hydrocarbons by field and


by quarter which he will not lfit and which is thus placed at their disposition in


the course of year A+l.


Within fifteen (15) days following the notice given by the underlifter, each'Part


if desirous of overlifting all or part of the quantities of liquid hydrocarbons not


lifted, must notify the underlifter of his intention to purchase such quantities.


The conditions of sale (the term, the price the delay for payment ...) of


the liquid hydrocarbons‘over!ifted will be fixed by common agreement between the


overlifter and underlifter In a separate contract.


10.03.4 The lifting request of each Party will show as the case may be if


need be, the quantities of liquid hydrocarbons by field which will be the subject of


the overlifting, as well as segregation by quarter in the course of the year A+l.


10.03.5 The lifting request of the Parties notified to the Operator will:


- be firm for year A+l; they may not be modified for


any reason and in particular in the event of default


of lifting by one of the Parties except, in the event


of unanimous agreement of the Parties, or in the event


of a change in the volume of available oil for a field








14 6


(b) Before the first of October of year A, the Operating Committee will determine for each field the volume of available oil for each one of the three following calendar years.



The volume of available oil of each field will be set firmly quarter by quarter for year A+1 and by way of estimate for years A to A+2 and A+3.



The volume of available oil thus fixed shall be immediately notified in writing by the Operator to each of the Parties.



10.03 Lifting Requests



Before the first of November of each year the Parties after having mutually consulted each other will notify the Operator in writing of their requests for liftings of liquid hyrdrocarbons for each field for the three calendar years following.



10.03.1 For year A+1 they will be segregated for each field by quarter taking into account the quarterly division of the volume of available oil of each field for the year in question; also they will be as equally as possible spread out over the year, provided the Parties do not agree otherwise.



10.03.2 For determination of the lifting requests for the year A+1, the Parties have agreed that if the lifting request of a Party for a given field and for Year A+1 is less than his lifting right (such Party is called an underlifter) a Party of several Parties provided that their original lifting requests were equal to their lifting rights, may buy from the underlifter and lift (such Parties being deemed to be overlifters) all or part of the quantities of liquid hydrocarbons corresponding to the difference between the lifting right and the lifting request of the underlifter for the field in question and for year A+1.



10.03.3 To this end, before the November 30 of the year A, the underlifter must advise the other Parties of the quantities of liquid hydrocarbons by field and by quarter which he will not lfit and which is thus placed at their disposition in the course of year A+1.



Within fifteen (15) days following the notice given by the underlifter, each Part if desirous of overlifting all or part of the quantities of liquid hydrocarbons not lifted, must notify the underlifter of his intention to purchase such quantities. The conditions of sale (the term, the price the delay for payment...) of the liquid hydrocarbons overlifted will be fixed by common agreement between the overlifter and underlifter in a separate contract.



10.03.4 The lifting request of each Party will show as the case may be if need be, the quantities of liquid hydrocarbons by field which will be the subject of the overlifting, as well as segregation by quarter in the course of the year A+1.



10.03.5 The lifting request of the Parties notified to the Operator will:



be firm for year A+1; they may not be modified for any reason and in particular in the event of default of lifting by one of the Parties except, in the event of unanimous agreement of the Parties, or in the event of a change in the volume of available oil for a field





146

for year A+1, and or in case of a change in the division of the percentage of participation amongst the Parties notified to the the Operator will be estimated only for the years A+2 and A+3.

10.03. As long as shall not have completely reimbursed the advances which had been made to it by the companies in conformance with Artice 9 hereinabove.

a) wiil be deemed for each calendar year to have given a lifting request equal to its lifting right for such year and,

b) may not acquire from the underlifter, on the terms set forth in paragraph 10.03 and sub-paragraph 10.03.4 of the present Article all or part of the quantities of the iquid hydro-carbons corresponding to the differencebetween the lifting right



10.03.7 For a given field the sum of the lifting requests of the Partiesfor a given year may not be in excess of the sum of the lifting rights of all of provisions of the second paragraph here inabove.



10.03.8 For year A+1 the Operating Committe will determine before December 31 the production for each of the fields which will be equal to the sum of the firm lifting requests of the Parties with regard to the field, as





10.04 Apportionment



The Operator will do his best to produce in the course of each quarter the quantities of available oil suffcient, following deduction of the quantities used up to the amount subject of their request in the course of the quarter in question as contemplated hereinabove..



10.04.1 In the event that the actual capacity of production of a field for a period of year A+1 is seen to be different from the volume of available petroleum fixed for such period, the Operator must notify without delay the Parties of the differences thus determined; the Operator Committee will decide in such case a new volume of availlabe petroleum for this period of year A+1.



10.04.2 In the event that the actual capacity of production of a field for a period of year A+1 is less than the sum of the lifting requests of all proportion.as the reduction in the volume of available oil of such field for the period in question.



10.04.3 In the event that the real capacity off production of a field for a period of year A+1 is in excess of the sum of the lifting requests of the Parties for such perioid, the excess of production which results will be divided between the Parties on the basis of their respective lifting rights concerning the field in question; it being understood that if a Party request less than



147for year A+1, and or in case of a change in the division of the percentage of participation amongst the Parties notified to the the Operator will be estimated only for the years A+2 and A+3.

10.03. As long as shall not have completely reimbursed the advances which had been made to it by the companies in conformance with Artice 9 hereinabove.

a) wiil be deemed for each calendar year to have given a lifting request equal to its lifting right for such year and,

b) may not acquire from the underlifter, on the terms set forth in paragraph 10.03 and sub-paragraph 10.03.4 of the present Article all or part of the quantities of the iquid hydro-carbons corresponding to the differencebetween the lifting right



10.03.7 For a given field the sum of the lifting requests of the Partiesfor a given year may not be in excess of the sum of the lifting rights of all of provisions of the second paragraph here inabove.



10.03.8 For year A+1 the Operating Committe will determine before December 31 the production for each of the fields which will be equal to the sum of the firm lifting requests of the Parties with regard to the field, as





10.04 Apportionment



The Operator will do his best to produce in the course of each quarter the quantities of available oil suffcient, following deduction of the quantities used up to the amount subject of their request in the course of the quarter in question as contemplated hereinabove..



10.04.1 In the event that the actual capacity of production of a field for a period of year A+1 is seen to be different from the volume of available petroleum fixed for such period, the Operator must notify without delay the Parties of the differences thus determined; the Operator Committee will decide in such case a new volume of availlabe petroleum for this period of year A+1.



10.04.2 In the event that the actual capacity of production of a field for a period of year A+1 is less than the sum of the lifting requests of all proportion.as the reduction in the volume of available oil of such field for the period in question.



10.04.3 In the event that the real capacity off production of a field for a period of year A+1 is in excess of the sum of the lifting requests of the Parties for such perioid, the excess of production which results will be divided between the Parties on the basis of their respective lifting rights concerning the field in question; it being understood that if a Party request less than



147his lifting right, the other Parties may buy all or part of the quantities of available liquid hydrocarbons thus not requested, in accordance with the provisions the third paragraph hereinabove.



The request of a Party concerning the excess of production for a given field will be added to his original firm lifting request to constitute the new firm lifting request of such Party for year A+1.



10.05 Failure to Offtake



10.05.1 If, following insufficient liftings during the year A+1 and in spite of the flexibility at the end of the year defined under paragraph 10.06 hereinbelow, the actual lifting of hydrocarbons of a Party from a given field during the year A_1 are less than his firm lifting request for such field, such Party will lose his right to lift the difference between the two quantities.



10.05.2 The quantities of liquid hydrocarbons in question, corresponding to the difference thus defined, whether stored in tanks or left in the ground, shall serve to fulfill the lifting requests of the Parties for the following year.





10.06 Offtake Procedure



10.06.1 As long as shall not have fully reimbursed the advances made by the companies to under Article 9 above, the Companies shall be obligated to offlift that portion of 's available oil under paragraphs 9.05 and 9.06 above to which they are entitled.



10.06.2 Subject to the foregoing, the distribution of available oil produced during any quarter to the Party shall be such that each Party shall receive available oil in like grade, gravity, and quality to that received by each other Party and, to the extent that distribution on such basis is impracticable because of unavailability of facilities or offlifting schedules, a method of making periodic adjustments shall be determined by the Parties. If there is more than one field terminal, Operator shall attempt to have available oil nominated by a Party delivered to it, or the Party it will designate, at the field terminal of its choice provided that such delivery does not cause any additional charges to be incurred and utilization by such Party of such field terminal facilities in excess of its participating interest share is not detrimental to the other Parties. The quantity of available oil that any Party is entitled to offlift during a quarter shall be offlifted by reasonably regular intervals, and in such manner as not to interfere unreasonably or unnecessarily with the offlifting by any other Party of the quantity of available oil it is entitled to offlift during each quarter. In no event may a Party lift quantities of hydrocarbons in excess of his lifting rights.



10.06.3 For the purpose of making adjustment to the greatest extent possible as between the real liftings for adjustments to the greatest extent possible as between the real liftings for a year of each Party and his firm lifting request for such year, the Parties shall agree by a separate contract upon the flexibility as to the quantities to be retained for producing reasons at the end of each year. For the determination of this flexibility as to quantities the Parties will take late consideration the storage capacities and transportation capabilities as well as the characteristics of the ships loading at the terminal.





148his lifting right, the other Parties may buy all or part of the quantities of available liquid hydrocarbons thus not requested, in accordance with the provisions the third paragraph hereinabove.



The request of a Party concerning the excess of production for a given field will be added to his original firm lifting request to constitute the new firm lifting request of such Party for year A+1.



10.05 Failure to Offtake



10.05.1 If, following insufficient liftings during the year A+1 and in spite of the flexibility at the end of the year defined under paragraph 10.06 hereinbelow, the actual lifting of hydrocarbons of a Party from a given field during the year A_1 are less than his firm lifting request for such field, such Party will lose his right to lift the difference between the two quantities.



10.05.2 The quantities of liquid hydrocarbons in question, corresponding to the difference thus defined, whether stored in tanks or left in the ground, shall serve to fulfill the lifting requests of the Parties for the following year.





10.06 Offtake Procedure



10.06.1 As long as shall not have fully reimbursed the advances made by the companies to under Article 9 above, the Companies shall be obligated to offlift that portion of 's available oil under paragraphs 9.05 and 9.06 above to which they are entitled.



10.06.2 Subject to the foregoing, the distribution of available oil produced during any quarter to the Party shall be such that each Party shall receive available oil in like grade, gravity, and quality to that received by each other Party and, to the extent that distribution on such basis is impracticable because of unavailability of facilities or offlifting schedules, a method of making periodic adjustments shall be determined by the Parties. If there is more than one field terminal, Operator shall attempt to have available oil nominated by a Party delivered to it, or the Party it will designate, at the field terminal of its choice provided that such delivery does not cause any additional charges to be incurred and utilization by such Party of such field terminal facilities in excess of its participating interest share is not detrimental to the other Parties. The quantity of available oil that any Party is entitled to offlift during a quarter shall be offlifted by reasonably regular intervals, and in such manner as not to interfere unreasonably or unnecessarily with the offlifting by any other Party of the quantity of available oil it is entitled to offlift during each quarter. In no event may a Party lift quantities of hydrocarbons in excess of his lifting rights.



10.06.3 For the purpose of making adjustment to the greatest extent possible as between the real liftings for adjustments to the greatest extent possible as between the real liftings for a year of each Party and his firm lifting request for such year, the Parties shall agree by a separate contract upon the flexibility as to the quantities to be retained for producing reasons at the end of each year. For the determination of this flexibility as to quantities the Parties will take late consideration the storage capacities and transportation capabilities as well as the characteristics of the ships loading at the terminal.





14810.06.4 This same contractual document hereinabove mentioned shall adopt reasonable rules for regulating the lifting of available oil in conformance with the preceding provisions of this Article. Such rules must include adequate provisions concerning prior notice to be given to the Operator with respect to the scheduling of liftings, the use of installations for loading and at the terminal belonging to the Parties, the responsibility for demurrage and all related questions. Such rules may be modified from time to time by the Parties to extent judged desirable.



10.06.5 For the first year of production of a field the provisions of the present Article will apply insofar as possible.



10.07 Risk of Loss



All risk of loss as regards available oil lifted from a storage tank owned in common shall be borne by the Party who lifted the available oil in question, beginning from the moment when such available oil flowed beyond the connecting flange of the loading installations owned in common.



The loss of available oil occurring upstream of such flange will be borne by each of the Parties in proportion to his respective percentage of participation.



10.08 Payments Owed to the



Each Party will be solely responsible for all the payments due to and imposed on the basis of the quantities produced of Liquid Hydrocarbons, such quantities being calculated on the basis of the available oil lifted by each Party, and not on the basis of its PARTICIPATING INTEREST.



10.09 Obligations Regarding the National Market



In order to contribute to the supply of the National Market, not-withstanding any contrary provision in the AGREEMENT, each PARTY shall be considered as having regularly called for and lifted its share of Liquid Hydrocarbons delivered; the OPERATOR shall produce and deliver all necessary Liquid Hydrocarbons for that purpose.



10.10 Natural Gas



If the Parties decide to produce natural gas upon the Permit, they will negotiate adequate and mutually acceptable details with regard to the production and the disposition of natural gas. The details thus negotiated must have so far as possible the same economic effect amongst the Parties as would be produced by the application of the principles set forth in the Convention and in the present Article 10.



10.11 Purchase by the Companies



The Companies are required at the request of to purchase or to cause to be purchased in proportion to their respective percentages of participation all or part of the production of which is at the disposition of after allocation of a part of such production in accordance with paragraph 9.05 hereinabove. To this end:





14910.06.4 This same contractual document hereinabove mentioned shall adopt reasonable rules for regulating the lifting of available oil in conformance with the preceding provisions of this Article. Such rules must include adequate provisions concerning prior notice to be given to the Operator with respect to the scheduling of liftings, the use of installations for loading and at the terminal belonging to the Parties, the responsibility for demurrage and all related questions. Such rules may be modified from time to time by the Parties to extent judged desirable.



10.06.5 For the first year of production of a field the provisions of the present Article will apply insofar as possible.



10.07 Risk of Loss



All risk of loss as regards available oil lifted from a storage tank owned in common shall be borne by the Party who lifted the available oil in question, beginning from the moment when such available oil flowed beyond the connecting flange of the loading installations owned in common.



The loss of available oil occurring upstream of such flange will be borne by each of the Parties in proportion to his respective percentage of participation.



10.08 Payments Owed to the



Each Party will be solely responsible for all the payments due to and imposed on the basis of the quantities produced of Liquid Hydrocarbons, such quantities being calculated on the basis of the available oil lifted by each Party, and not on the basis of its PARTICIPATING INTEREST.



10.09 Obligations Regarding the National Market



In order to contribute to the supply of the National Market, not-withstanding any contrary provision in the AGREEMENT, each PARTY shall be considered as having regularly called for and lifted its share of Liquid Hydrocarbons delivered; the OPERATOR shall produce and deliver all necessary Liquid Hydrocarbons for that purpose.



10.10 Natural Gas



If the Parties decide to produce natural gas upon the Permit, they will negotiate adequate and mutually acceptable details with regard to the production and the disposition of natural gas. The details thus negotiated must have so far as possible the same economic effect amongst the Parties as would be produced by the application of the principles set forth in the Convention and in the present Article 10.



10.11 Purchase by the Companies



The Companies are required at the request of to purchase or to cause to be purchased in proportion to their respective percentages of participation all or part of the production of which is at the disposition of after allocation of a part of such production in accordance with paragraph 9.05 hereinabove. To this end:





149(a) [blank] must for each calendar year during which it wishes such purchase to be made, to so give notice no later than the first of November of the previous calendar year, to the other Parties and specify the quantities it asks other Parties to purchase. The other Parties will divide such quantities among themselves.



(b) The price of purchase of Liquid Hydrocarbons is the price determined in conformance with Exhibit 3 of the Contract.



(c) The price of purchase of Natural Gas shall be fixed timely, by common Agreement between Parties.(a) [blank] must for each calendar year during which it wishes such purchase to be made, to so give notice no later than the first of November of the previous calendar year, to the other Parties and specify the quantities it asks other Parties to purchase. The other Parties will divide such quantities among themselves.



(b) The price of purchase of Liquid Hydrocarbons is the price determined in conformance with Exhibit 3 of the Contract.



(c) The price of purchase of Natural Gas shall be fixed timely, by common Agreement between Parties. Article 11 Permits Surrender and Withdrawal





11.01 Permits








'a) After any discovery of a commercial field of hydrocarbons the Operating


Jommittee will define the areas which shall be applied for for development


purposes.





will apply for in its own name and for the account of the Parties


participating in the development of the field, for the exploitation permits


and any other administrative authorizations required; will give


to the Companies concerned their share of the benefits in conformance with


the provisions of the Contract and of the Decrees granting the mining titles.


(b) undertakes to maintain the Permit in force, including exploitation


permits, and to request the renewal thereof as provided for in the Code Minier of


the , in accordance with the decisions of the Operating Committee.


(c) Upon request of any one of the Partie$v!$&erator shall call a meeting of the


Parties at least one hundred and twentyi (1205' days before, .the expiration of the


initial term or any extension of .theXPejitiit, or of'each'exploration permit for


hydrocarbons deriving therefrom-,. ln:-order to decide whether the Parties wish


to extend such permits. In-.;the\.event that at'iMst one of the Parties {herein¬


after referred to as the "Extending Part^,T)/'v(i-shes. to so extend a permit, it


shall so request ,'and \ will do whatever is necessary


for this purpose. The PARTICIPAT$N&./i NTERESTS of'the Extending Parties shall


be revised proportionally to teikdOinto account the absence of the non-extending


Parties.


(d) However in the event that all of. the Parties are not in agreement as to


the commercial character of the field, those which shall not have recognized


it as such must ipso facto renounce all right and interest in the production


of the field and proceed with the authorities of the Government to


carry out all formalities which may be necessary for the transfer of their


rights over the area in question to the Parties who have accepted the


commercial character of such area, and to permit them thus to carry out the


contemplated producing operations.


will apply for in its own name and for the account of the Parties


participating in the development of the field, for the exploitation permits


required. will give to the Parties concerned their share of the


benefits in conformance with the provisions of the Contract and the Permit.





























-f. r- ■*


i O JL


Article 11 - Permits - Surrender and Withdrawal



11.01 Permits

(a) After any discovery of a commercial field of hydrocarbons the Operating Committee will define the areas which shall be applied for for development purposes.



[blank] will apply for in its own name and for the account of the Parties participating in the development of the field, for the exploitation permits and any other administrative authorizations required; [blank] will give to the Companies concerned their share of the benefits in conformance with the provisions of the Contract and of the Decrees granting the mining titles.



(b) [blank] undertakes to maintain the Permit in force, including exploitation permits, and to request the renewal thereof as provided for in the Code Minier of the [blank], in accordance with the decisions of the Operating Committee.



(c) Upon request of any one of the Parties, Operator shall call a meeting of the Parties at least one hundred and twenty (120) days before the expiration of the initial term or any extension of the Permit, or of each exploration permit for hydrocarbons deriving therefrom, in order to decide whether the Parties wish to extend such permits. In the event that at least one of the Parties (herein after referred to as the "Extending Party") wishes to so extend a permit, it shall so request [blank], and [blank] will do whatever is necessary for this purpose. The PARTICIPATING INTERESTS of the Extending Parties shall be revised proportionally to take into account the absence of the non-extending Parties.



(d) However in the event that all of the Parties are not in agreement as to the commercial character of the field, those which shall not have recognized it as such must ipso facto renounce all right and interest in the production of the field and proceed with the authorities of the [blank] Government to carry out all formalities which may be necessary for the transfer of their rights over the area in question to the Parties who have accepted the commercial character of such area, and to permit them thus to carry out the contemplated producing operations.



[blank] will apply for in its own name and for the account of the Parties participating in the development of the field, for the exploitation permits required. [blank] will give to the Parties concerned their share of the benefits in conformance with the provisions of the Contract and the Permit.



15111.02 Surrender



In the event it becomes necessary to surrender any portion of the PERMIT, will at least one hundred and twenty (120) days in advance notify the Operating Committee of the date upon which such surrender has to be made. The Operating Committee will then decide which portion or portions to surrender, and will then take the appropriate steps to effect such surrenders.



11.03 Right to withdraw



Subject to the following provisions, each PARTY (hereinafter referred to as the "Withdrawing PARTY") shall have the right to surrender its entire PARTICIPATING INTEREST in the exploration permit or in any exploitation permit arising out of the PERMIT and to withdraw to this extent from the AGREEMENT, by giving written notice



152 11.02 Surrender








In the event it becomes necessary to surrender


any portion of the PERMIT, will at least one


hundred and twenty (120) days in advance notify the


Operating Committee of the date upon which such surrender


has to be made. The Operating Committee will then decide


which portion or portions to surrender, and


will then take the appropriate steps to effect such


surrenders.





11.03 Right to withdraw


Subject to the following provisions, each PARTY


(hereinafter referred to as the "Withdrawing PARTY") shall


have the right to surrender its ..entire PARTICIPATING


INTEREST in the exploration pertfi'b or in any exploitation


permit arising out of the PERMIT and to-, withdraw to this


extent from the AGREEMENT.,i -by giving writ-ten notice


thereof to the other PARTIES, provided that the minimum work requirements set forth in the exploration or exploitation permit with respect to which the Withdrawing PARTY wishes to withdraw are fully satisfied or the minimum work requirements that are not fulfilled may be avoided by a surrender on the effective date of the withdrawal. The effective date of such withdrawal shall be the date upon which the notice of withdrawal has been received by all PARTIES. The other PARTIES shall have thirty (30) days after receipt of said notice to elect whether to take over or not the Withdrawing PARTY's PARTICIPATING INTEREST. If none of the other PARTIES elects within the said thirty (30) days to take over the Withdrawing PARTY's PARTICIPATING INTEREST, the AGREEMENT shall terminate as soon as it is reasonably possible as to the exploration or exploitation permit in question and all PARTIES shall request to relinquish the same, and each PARTY shall pay its PARTICIPATING INTEREST share of all costs of abandoning the PETROLEUM WORKS and of such relinquishment of said permit.



In the event any of the non-withdrawing PARTIES notifies the Withdrawing PARTY within the said thirty (30) days of their desire to take over the Withdrawing PARTY's PARTICIPATING INTEREST, the PARTICIPATING INTEREST of the Withdrawing PARTY shall be divided among the non-withdrawing PARTIES in proportion to their respective PARTICIPATING INTERESTS, unless otherwise agreed.





153thereof to the other PARTIES, provided that the minimum work requirements set forth in the exploration or exploitation permit with respect to which the Withdrawing PARTY wishes to withdraw are fully satisfied or the minimum work requirements that are not fulfilled may be avoided by a surrender on the effective date of the withdrawal. The effective date of such withdrawal shall be the date upon which the notice of withdrawal has been received by all PARTIES. The other PARTIES shall have thirty (30) days after receipt of said notice to elect whether to take over or not the Withdrawing PARTY's PARTICIPATING INTEREST. If none of the other PARTIES elects within the said thirty (30) days to take over the Withdrawing PARTY's PARTICIPATING INTEREST, the AGREEMENT shall terminate as soon as it is reasonably possible as to the exploration or exploitation permit in question and all PARTIES shall request to relinquish the same, and each PARTY shall pay its PARTICIPATING INTEREST share of all costs of abandoning the PETROLEUM WORKS and of such relinquishment of said permit.



In the event any of the non-withdrawing PARTIES notifies the Withdrawing PARTY within the said thirty (30) days of their desire to take over the Withdrawing PARTY's PARTICIPATING INTEREST, the PARTICIPATING INTEREST of the Withdrawing PARTY shall be divided among the non-withdrawing PARTIES in proportion to their respective PARTICIPATING INTERESTS, unless otherwise agreed.





153 Such right of withdrawal shall be subject to the following provisions:



(a) The withdrawing PARTY shall without compensation of any kind and at its sole risk and expense, prepare and execute all necessary documents to assign its PARTICIPATING INTEREST and take any and all steps necessary to obtain the consent of the

and deliver such documents to the non-withdrawing PARTIES. The latter shall, on or before the expiration of thirty (30) days after the receipt of such documents, pay to the withdrawing PARTY the reasonable salvage value of its PARTICIPATING INTEREST in any equipment, facilities and wells on the exploration or exploitation permit in question as of the effective date of withdrawal, determined in accordance with the provisions of the ACCOUNTING PROCEDURE, LESS (i) the estimated cost of salvaging as determined by competitive bids, and (ii) the estimated cost of plugging and abandoning any then existing wells. If the cost of salvaging is in excess of the value of the salvage, the Withdrawing PARTY shall pay its share of such excess in cash concurrently with the delivery to the non-withdrawing PARTIES of documents referred to above.

Such right of withdrawal shall be subject to the following provisions:



(a) The withdrawing PARTY shall without compensation of any kind and at its sole risk and expense, prepare and execute all necessary documents to assign its PARTICIPATING INTEREST and take any and all steps necessary to obtain the consent of the

and deliver such documents to the non-withdrawing PARTIES. The latter shall, on or before the expiration of thirty (30) days after the receipt of such documents, pay to the withdrawing PARTY the reasonable salvage value of its PARTICIPATING INTEREST in any equipment, facilities and wells on the exploration or exploitation permit in question as of the effective date of withdrawal, determined in accordance with the provisions of the ACCOUNTING PROCEDURE, LESS (i) the estimated cost of salvaging as determined by competitive bids, and (ii) the estimated cost of plugging and abandoning any then existing wells. If the cost of salvaging is in excess of the value of the salvage, the Withdrawing PARTY shall pay its share of such excess in cash concurrently with the delivery to the non-withdrawing PARTIES of documents referred to above.

(b) The Withdrawing PARTY shall, concurrently with the delivery to the non-withdrawing PARTIES of documents referred to above, pay all amounts due and any expenses incurred by the PARTIES hereto in connection with its withdrawal, including, but not limited to, any taxes or other fees on the transfer of any equipment, facilities and wells mention in sub-paragraph (a) above as well as any taxes or other fees on the assignment of the PARTICIPATING INTEREST. Any and all obligations of the Withdrawing PARTY shall, however, be reduced to the extent that they can be reduced or cancelled under the provisions of the exploration or exploitation permit in question, and the Withdrawing PARTY shall pay all of any amounts due and expenses incurred to obtain such reduction or cancellation; if any or all of the other PARTIES join in the withdrawal, then such PARTIES shall pay any such amounts due and expenses incurred in proportion to their respective PARTICIPATION INTERESTS.



(c) On the effective date of withdrawal, the Withdrawing PARTY shall cease to be a PARTY to the AGREEMENT insofar as the same covers the exploration or exploitation permit from which it withdraws. The Withdrawing PARTY shall continue to be responsible for its PARTICIPATION INTEREST share of the claims, costs and expenses incurred by OPERATOR and costs and expenses included in work programs and budgets approved by the Operation Committee prior to the date of notice of withdrawal, even though the works may be completed later. If a PARTY did not approve a particular project decided upon by the Operation Committee and elects to withdraw because of such project by notice of withdrawal to the other PARTIES prior to the date on which such project is deemed adopted, such PARTY shall incur no obligation in connection with expenditures and commitments pursuant thereto. For the purpose of this sub-paragraph, a program and budget relating to a project which is not unanimously approved shall not be deemed as adopted until the fifteenth (15th) day following its approval by vote of the Operation Committee. If notice of withdrawal is given as aforesaid, then each of the non-withstanding PARTIES shall have the right to request that another vote on such project shall be taken by all non-withdrawing PARTIES. Notice that such vote is requested shall be given by any non-withdrawing PARTIES to the other non-withdrawing PARTIES within seven (7) business days subsequent to the expiration of the aforesaid fifteen (15) day period, and the votes shall be cast by notice to the OPERATOR within seven (7) business days following such notice being given. The affirmative votes of all non-withdrawing PARTIES shall be required to re-adopt the project. If a second vote does not re-adopt the project, it shall be abandoned, and, at the election of the Withdrawing PARTY,

155(b) The Withdrawing PARTY shall, concurrently with the delivery to the non-withdrawing PARTIES of documents referred to above, pay all amounts due and any expenses incurred by the PARTIES hereto in connection with its withdrawal, including, but not limited to, any taxes or other fees on the transfer of any equipment, facilities and wells mention in sub-paragraph (a) above as well as any taxes or other fees on the assignment of the PARTICIPATING INTEREST. Any and all obligations of the Withdrawing PARTY shall, however, be reduced to the extent that they can be reduced or cancelled under the provisions of the exploration or exploitation permit in question, and the Withdrawing PARTY shall pay all of any amounts due and expenses incurred to obtain such reduction or cancellation; if any or all of the other PARTIES join in the withdrawal, then such PARTIES shall pay any such amounts due and expenses incurred in proportion to their respective PARTICIPATION INTERESTS.



(c) On the effective date of withdrawal, the Withdrawing PARTY shall cease to be a PARTY to the AGREEMENT insofar as the same covers the exploration or exploitation permit from which it withdraws. The Withdrawing PARTY shall continue to be responsible for its PARTICIPATION INTEREST share of the claims, costs and expenses incurred by OPERATOR and costs and expenses included in work programs and budgets approved by the Operation Committee prior to the date of notice of withdrawal, even though the works may be completed later. If a PARTY did not approve a particular project decided upon by the Operation Committee and elects to withdraw because of such project by notice of withdrawal to the other PARTIES prior to the date on which such project is deemed adopted, such PARTY shall incur no obligation in connection with expenditures and commitments pursuant thereto. For the purpose of this sub-paragraph, a program and budget relating to a project which is not unanimously approved shall not be deemed as adopted until the fifteenth (15th) day following its approval by vote of the Operation Committee. If notice of withdrawal is given as aforesaid, then each of the non-withstanding PARTIES shall have the right to request that another vote on such project shall be taken by all non-withdrawing PARTIES. Notice that such vote is requested shall be given by any non-withdrawing PARTIES to the other non-withdrawing PARTIES within seven (7) business days subsequent to the expiration of the aforesaid fifteen (15) day period, and the votes shall be cast by notice to the OPERATOR within seven (7) business days following such notice being given. The affirmative votes of all non-withdrawing PARTIES shall be required to re-adopt the project. If a second vote does not re-adopt the project, it shall be abandoned, and, at the election of the Withdrawing PARTY,

155its notice of withdrawal may be cancelled, within seven


(7) business days from the date of receipt of OPERATOR’S


notice of the result of such second vote, by notice given


to all the other PARTIES. If the project is re-adopted


(or if no second vote thereon is requested), the


Withdrawing PARTY shall assign its PARTICIPATING INTEREST


in the exploration or exploitation permit in question to


the non-withdrawing PARTIES who shall accept such


assignme-nt. The assignment shall be made conditional upon


the commencement of work on the project, in questidn by the


non-withdrawing PARTIES- within two hundred and seventy


(270) days from the date on which the Operating Committee


first voted and adopted the project, and diligent


prosecution thereof.


(d) Until such time as a valid assignment of


withdrawing PARTY’S interest is completed, the Withdrawing-


PARTY shall remain obligated to join in any action


required of the PARTIES hereto for. the maintenance in


force of the exploration and exploitation permit


concerned, -it being understood that the Withdrawing PARTY*


shall npt by such joinder or participation in any action


following the effective dat.e-d'f^withdrawal incur any


financial responsibili ty.:*o-K obi I gatiqn\';a homing aft.er the


effective date of with.dr.a'w'aX other-*ih^an as provided in


this paragraph 11.03b-... \ ... "*•


(e) Each non-v?.i'thdrawi.hg)i>ARTY shall share in the


benefits, obligations andv-rlgiits attributable to the


Withdrawing PARTY** s P-A.%T46lPATING INTEREST in the


proportion that ea-cri n.bh-withdrawing PARTY’S PARTICIPATING


INTEREST bears td thVtotal PARTICIPATING INTERESTS of all


non-withdrawing PARTIES, or in such other proportions as


may**be mutually agreed.


-(f) shall have no right to withdraw


pursuant to the provisions of this paragraph 11.03.


Article 12 - Assignment


12.01 Principle


The PARTIES shall not have the right to assign,


transfer, convey, encumber, hypothecate or otherwise


dispose of its PARTICIPATING INTEREST or part thereof


except in accordance with the provisions of the CONVENTION


and of paragraph -11.03 and paragraphs 12.02 through 12.04


of the AGREEMENT.





This.Article shall not apply:


(a) to any assignment which is required to be made


between the PARTIES hereto under the AGREEMENT;





(b) to any assignment to an affiliate Company.


its notice of withdrawal may be cancelled, within seven (7) business days from the date of receipt of OPERATOR's notice of the result of such second vote, by notice given to all the other PARTIES. If the project is re-adopted (or if no second vote thereon is requested), the Withdrawing PARTY shall assign its PARTICIPATING INTEREST in the exploration or exploitation permit in question to the non-withdrawing PARTIES within two hundred and seventy (270) days from the date on which the Operating Committee first voted and adopted the project, and diligent prosecution thereof.



(d) Until such time as a valid assignment of withdrawing PARTY's interest is completed, the Withdrawing PARTY shall remain obligated to join in any action required of the PARTIES hereto for the maintenance in force of the exploration and exploitation permit concerned, it being understood that the Withdrawing PARTY shall not by such joinder or participation in any action following the effective date of withdrawal incur any financial responsibility or obligation accruing after the effective date of withdrawal other than as provided in this paragraph 11.03.



(e) Each non-withdrawing PARTY shall share in the benefits, obligations and rights attributable to the Withdrawing PARTY's PARTICIPATING INTEREST in the proportion that each non-withdrawing PARTY's PARTICIPATING INTEREST bears to the total PARTICIPATING INTERESTS of all non-withdrawing PARTIES, or in such other proportions as may be mutually agreed.



(f) shall have no right to withdraw pursuant to the provisions of this paragraph 11.03



Article 12 - Assignment



12.01 Principle



The PARTIES shall not have the right to assign, transfer, convey, encumber, hypothecate or otherwise dispose of its PARTICIPATING INTEREST or part thereof except in accordance with the provisions of the CONVENTION and of paragraph 11.03 and paragraphs 12.02 through 12.04 of the AGREEMENT.



This Article shall not apply:



(a) to any assignment which is required to be made between the PARTIES hereto under the AGREEMENT;



(b) to any assignment to an affiliate Company.





156(c) to a mortgage, pledge, hypothecation, production payment or the like, provided that:

(i) any required Government approval is obtained, and,

(ii) the PARTICIPATING INTEREST of the other PARTIES under the PERMIT and the AGREEMENT, and in any joint assets, the production therefrom and the income thereof is in no way affected in any manner whatsoever, and,

(iii) all costs and expenses incurred by the PARTY granting a security interest or in connection with the creation of same shall be borne by such PARTY and should any other PARTY incur any costs and expenses in connection therewith, the PARTY - creating the security interest shall reimburse the other PARTIES for same.



12.02 Condition of Assignment



Within prejudice of the provisions of the CONVENTION and of the paragraph 12.03 below:

12.02.1 Each Party may freely assign all or part of its percentage of participation with respect to one or more mining titles, to one or more Companies with which it is affiliated.

12.02.2 Each Party may assign to a third Party all or part of its percentage of participation with respect to one or more mining titles subject to the provisions of Articles 12.02.3 and 12.03 hereinafter.

12.02.3 In the event of an assignment by a Party to a third Party of all o part of its percentage of participation, the assignee must have previous been approved in writing by the other Parties, such approval not to be withheld without valid reason.



12.03 Preferential right of acquisition



12.03.1 In the event any PARTY wishes to dispose of all or any part of its PARTICIPATING INTEREST, it shall notify each of the other PARTIES of its intention to do so stating the price and all terms upon which it is offering to dispose of such PARTICIPATING INTEREST or part thereof and give to each of them thirty (30) days within which to accept such offer. If such terms and conditions include consideration which is not entirely in cash, then the offering PARTY shall stipulate the fair market value in cash of such consideration.

12.03.2 If a PARTY accepts such offer, then the PARTICIPATING INTEREST of the offering PARTY and that of the accepting PARTY shall be adjusted accordingly and if more than one PARTY accepts such offer the PARTICIPATING INTEREST being offered shall be divided among the accepting PARTIES in the proportion that their respective PARTICIPATING INTERESTS bear to the sum of the





157(c) to a mortgage, pledge, hypothecation, production payment or the like, provided that:

(i) any required Government approval is obtained, and,

(ii) the PARTICIPATING INTEREST of the other PARTIES under the PERMIT and the AGREEMENT, and in any joint assets, the production therefrom and the income thereof is in no way affected in any manner whatsoever, and,

(iii) all costs and expenses incurred by the PARTY granting a security interest or in connection with the creation of same shall be borne by such PARTY and should any other PARTY incur any costs and expenses in connection therewith, the PARTY - creating the security interest shall reimburse the other PARTIES for same.



12.02 Condition of Assignment



Within prejudice of the provisions of the CONVENTION and of the paragraph 12.03 below:

12.02.1 Each Party may freely assign all or part of its percentage of participation with respect to one or more mining titles, to one or more Companies with which it is affiliated.

12.02.2 Each Party may assign to a third Party all or part of its percentage of participation with respect to one or more mining titles subject to the provisions of Articles 12.02.3 and 12.03 hereinafter.

12.02.3 In the event of an assignment by a Party to a third Party of all o part of its percentage of participation, the assignee must have previous been approved in writing by the other Parties, such approval not to be withheld without valid reason.



12.03 Preferential right of acquisition



12.03.1 In the event any PARTY wishes to dispose of all or any part of its PARTICIPATING INTEREST, it shall notify each of the other PARTIES of its intention to do so stating the price and all terms upon which it is offering to dispose of such PARTICIPATING INTEREST or part thereof and give to each of them thirty (30) days within which to accept such offer. If such terms and conditions include consideration which is not entirely in cash, then the offering PARTY shall stipulate the fair market value in cash of such consideration.

12.03.2 If a PARTY accepts such offer, then the PARTICIPATING INTEREST of the offering PARTY and that of the accepting PARTY shall be adjusted accordingly and if more than one PARTY accepts such offer the PARTICIPATING INTEREST being offered shall be divided among the accepting PARTIES in the proportion that their respective PARTICIPATING INTERESTS bear to the sum of the





157PARTICIPATING INTERESTS of the accepting PARTIES, unless otherwise agreed. The preferential right of acquisition may be exercised by the accepting Parties only as regards the total of the participating interest offered. If the PARTICIPATING INTEREST offered is not accepted in full by the other PARTIES or any of them within the thirty (30) days period, them the offering PARTY may assign such PARTICIPATING INTEREST of part thereof, provided that such assignment shall be at a price no lower and upon terms no more favorable to the third party than the price and terms upon which the PARTICIPATING INTEREST was offered to the other PARTIES, and such assignment shall have been completed within one hundred and eighty (180) days from the date upon which the offer was made to the PARTIES.



12.03.3 When the advances made by the Companies under Article 9 hereinabove to cover the share of

equal to its percentage of participation in the cost and investments related to petroleum operations shall have been reimbursed entirely by as provided in such Article 9,

will then have the benefit of the preferential right of acquisition provided for under paragraph

12.03.1 hereinabove.



12.04 Effective date of assignment



No assignment and no transfer shall be effective until the first day of the calendar month following that in which the assignor or assignee shall have furnished OPERATOR with (i) an executed or certified photostatic copy of the assignment or transfer deed thereof, (ii) an executed or certified photostatic copy of all required government approvals, (iii) the post office address of assignee, and, in addition, assignee shall have properly ratified the AGREEMENT and shall assume and agree in writing with the PARTIES at the time of the assignment to take over and perform all obligations and liabilities hereunder attributable to the interest assigned. No assignment shall operate to relieve any PARTY of any obligations hereunder which accrued or were incurred prior to the effective date of such assignment.



Article 13 - Relationships of the PARTIES



13.01 The rights, duties, obligations and liabilities of the PARTIES under the AGREEMENT shall be several and not joint, and each PARTY shall be responsible only for its obligations as set out herein, it being the express purpose and intention of the PARTIES that the AGREEMENT shall not be construed as creating a corporation, a corporate body, an association, or a partnership among them.



14 United States Income Tax Electior



14.01 In view of the fact that all hydrocarbons produced and saved the Operator hereunder shall be owned by the parties separately in proportion to their respective participating interests, the Parties recognize that the amount each Party realizes from the sale or other disposition of its share of hydrocarbons produced and saved under the terms of this Contract shall be the individual and separate income of such Party. PARTICIPATING INTERESTS of the accepting PARTIES, unless otherwise agreed. The preferential right of acquisition may be exercised by the accepting Parties only as regards the total of the participating interest offered. If the PARTICIPATING INTEREST offered is not accepted in full by the other PARTIES or any of them within the thirty (30) days period, them the offering PARTY may assign such PARTICIPATING INTEREST of part thereof, provided that such assignment shall be at a price no lower and upon terms no more favorable to the third party than the price and terms upon which the PARTICIPATING INTEREST was offered to the other PARTIES, and such assignment shall have been completed within one hundred and eighty (180) days from the date upon which the offer was made to the PARTIES.



12.03.3 When the advances made by the Companies under Article 9 hereinabove to cover the share of

equal to its percentage of participation in the cost and investments related to petroleum operations shall have been reimbursed entirely by as provided in such Article 9,

will then have the benefit of the preferential right of acquisition provided for under paragraph

12.03.1 hereinabove.



12.04 Effective date of assignment



No assignment and no transfer shall be effective until the first day of the calendar month following that in which the assignor or assignee shall have furnished OPERATOR with (i) an executed or certified photostatic copy of the assignment or transfer deed thereof, (ii) an executed or certified photostatic copy of all required government approvals, (iii) the post office address of assignee, and, in addition, assignee shall have properly ratified the AGREEMENT and shall assume and agree in writing with the PARTIES at the time of the assignment to take over and perform all obligations and liabilities hereunder attributable to the interest assigned. No assignment shall operate to relieve any PARTY of any obligations hereunder which accrued or were incurred prior to the effective date of such assignment.



Article 13 - Relationships of the PARTIES



13.01 The rights, duties, obligations and liabilities of the PARTIES under the AGREEMENT shall be several and not joint, and each PARTY shall be responsible only for its obligations as set out herein, it being the express purpose and intention of the PARTIES that the AGREEMENT shall not be construed as creating a corporation, a corporate body, an association, or a partnership among them.



14 United States Income Tax Electior



14.01 In view of the fact that all hydrocarbons produced and saved the Operator hereunder shall be owned by the parties separately in proportion to their respective participating interests, the Parties recognize that the amount each Party realizes from the sale or other disposition of its share of hydrocarbons produced and saved under the terms of this Contract shall be the individual and separate income of such Party. 14.02 Notwithstanding any provisions herein that the rights and liabilities of the Parties hereunder are several and not joint or collective or that the agreement and operations hereunder shall not constitute a partnership, any Party which is subject to the Internal Revenue Laws of the United States recognizes that the relationship of the Parties hereunder is a partnership for United States Income Tax purposes and such Party is subject to the partnership provisions of the Internal Revenue Code of 1954 and all amendments thereto. Any party which is subject to the Internal Revenue Laws of the United States agrees not to elect to be excluded from the application of Sub-Chapter K of Chapter 1 of Subtitle A of the Internal Revenue Code of 1954, as amended, unless each Party subject to the Internal Revenue Laws of the United States shall hereafter agree to make such election to be excluded.



14.03 Any Party which is subject to the Internal Revenue Laws of the United States agrees that United States Partnership Income tax Returns shall be filed covering operations under this agreement. _______ agrees to use its best efforts in the preparation and filing of the Tax Partnership Returns and in making any appropriate elections on such returns, acting on behalf of itself and any other Party which is subject to the Internal Revenue Laws of the United States, but in doing so, ______shall incur no liability to any other Party with regard to such returns or elections. Each Party agrees to furnish such information relating to the operations conducted under this Contract as shall be required by United States Tax Law for tax reporting purposes, is hereby authorized and accept to make the following choices under the Internal Revenue Code, for U.S. Tax returns for a partnership which will be filed in connection with Petroleum Works:



(a) The U.S. accrual method of accounting shall be adopted for U.S. tax returns purpose, and the proof of such an election shall be furnished to U.S. tax authorities.



(b) The accounting of the partnership shall be maintained on a calendar year basis.



(c) According to the Section 263 of the Internal Revenue Code of 1954 of the United States, the partnership shall elect (and proof of this election shall be furnished to U.S. tax authorities) to consider all the "intangible drilling and development costs" as expenses for the purpose of U.S. tax returns.



(d) For the requirement of U.S. tax returns, the partnership shall make such other decisions which may be necessary under the Internal Revenue Code of 1954, as may be required by the Party or Parties subject to such U.S. tax law.



14.04 The Parties subject to U.S. tax laws agree that for United States Income Tax purposes the gains and losses from sales, abandonments and other dispositions of property (other than hydrocarbons) and all classes of costs, expenses, and credits, including depreciation and depletion with regard to the Petroleum Works, shall be shared and accounted for as follows for U.S. Income Tax returns purposes:



(a) Production Costs shall be allocated as deductions to each Party subject to U.S. income tax laws.



(b) Exploration Costs and Drilling and Development Costs, other than those incurred in respect to depreciable property, shall be allocated as deductions to each Party subject to U.S. income tax laws in accordance with its respective contributions to such costs.



(c) Depreciation on equipment and other personal or real property shall be allocated to each Party in accordance with its respective contributions to the adjusted basis of such equipment and real or personal property. For determination of depreciation principles, including the questions related to the period of utilization of equipment and other personal or real property in this Article 14.04, the Operator pledge to consult the other Parties subject to U.S. income tax laws.



159. 14.02 Notwithstanding any provisions herein that the rights and liabilities of the Parties hereunder are several and not joint or collective or that the agreement and operations hereunder shall not constitute a partnership, any Party which is subject to the Internal Revenue Laws of the United States recognizes that the relationship of the Parties hereunder is a partnership for United States Income Tax purposes and such Party is subject to the partnership provisions of the Internal Revenue Code of 1954 and all amendments thereto. Any party which is subject to the Internal Revenue Laws of the United States agrees not to elect to be excluded from the application of Sub-Chapter K of Chapter 1 of Subtitle A of the Internal Revenue Code of 1954, as amended, unless each Party subject to the Internal Revenue Laws of the United States shall hereafter agree to make such election to be excluded.



14.03 Any Party which is subject to the Internal Revenue Laws of the United States agrees that United States Partnership Income tax Returns shall be filed covering operations under this agreement. _______ agrees to use its best efforts in the preparation and filing of the Tax Partnership Returns and in making any appropriate elections on such returns, acting on behalf of itself and any other Party which is subject to the Internal Revenue Laws of the United States, but in doing so, ______shall incur no liability to any other Party with regard to such returns or elections. Each Party agrees to furnish such information relating to the operations conducted under this Contract as shall be required by United States Tax Law for tax reporting purposes, is hereby authorized and accept to make the following choices under the Internal Revenue Code, for U.S. Tax returns for a partnership which will be filed in connection with Petroleum Works:



(a) The U.S. accrual method of accounting shall be adopted for U.S. tax returns purpose, and the proof of such an election shall be furnished to U.S. tax authorities.



(b) The accounting of the partnership shall be maintained on a calendar year basis.



(c) According to the Section 263 of the Internal Revenue Code of 1954 of the United States, the partnership shall elect (and proof of this election shall be furnished to U.S. tax authorities) to consider all the "intangible drilling and development costs" as expenses for the purpose of U.S. tax returns.



(d) For the requirement of U.S. tax returns, the partnership shall make such other decisions which may be necessary under the Internal Revenue Code of 1954, as may be required by the Party or Parties subject to such U.S. tax law.



14.04 The Parties subject to U.S. tax laws agree that for United States Income Tax purposes the gains and losses from sales, abandonments and other dispositions of property (other than hydrocarbons) and all classes of costs, expenses, and credits, including depreciation and depletion with regard to the Petroleum Works, shall be shared and accounted for as follows for U.S. Income Tax returns purposes:



(a) Production Costs shall be allocated as deductions to each Party subject to U.S. income tax laws.



(b) Exploration Costs and Drilling and Development Costs, other than those incurred in respect to depreciable property, shall be allocated as deductions to each Party subject to U.S. income tax laws in accordance with its respective contributions to such costs.



(c) Depreciation on equipment and other personal or real property shall be allocated to each Party in accordance with its respective contributions to the adjusted basis of such equipment and real or personal property. For determination of depreciation principles, including the questions related to the period of utilization of equipment and other personal or real property in this Article 14.04, the Operator pledge to consult the other Parties subject to U.S. income tax laws.



159.(d) Deduction for legal depletion under the Section 613 of the


Internal Revenue Code shall be calculated separately by


each Party subject to LUS. Income tax laws, in taking


Into account the hydrocarbons lifted or sold by the Party


subject to U.S. income tax laws and the costs and expenses


connected with.


The deduction for depletion of costs under the Section 611


of the Internal Revenue Code of 1954 shall be allocated -


if necessary - to each Party subject to the U.S. Income tax


laws, in proportion with Its contribution in the duly adjusted


depletion basis of the property.


(e) Gains and losses from each sale, abandonment or other disposition


of property (other than hydrocarbons) shall be attributed to the


Parties subject to U.S. Income tax laws in such manner as to


reflect the gains and losses that'would have been includable in


their respective Income Tax Returns if such property were held by


the Parties subject to U.S. income tax laws outside, this Contract.


The computation shall take into account each Party's share of the


proceeds derived from each sale or other disposition of such property


during the year, selling expenses and the Parties’ respective con¬


tributions to the unadjusted cost basis of such property, less any


allowed or allowable depreciation,, depletion, amortization, credits


or other deductions which have been allocated to each Party subject


to U.S. income tax laws with respect to such property as provided


in this Article 14. .


(f) All other classes of costs,..expenses and credits not falling within


paragraph (a), (b), (c), 06) andf**Xe) of paragraph 14.04, shall be


allocated to and accoufl't'£

tax laws in accordance'vfth its respecfcjve\cbntributions to such


cost, expenses a.nd -cre.dTts. .... \ \


14.04.1 As\used" in" paragraph..1*4-04 * the words “adjusted basis" or


"adjusted cost" shall "mpa:n the "adjtisted'-basis" as defined under Section 1011


of the Internal Revenue Code of l§54*\o‘f. *the U.S., as amended.


14.1)5 Upon termination.of’*this Contract, if the capital accounts of the Parties


subject to U.S. income..tix laws, as finally adjusted to reflect all contributions, of


property and cash an'd al.Y;-d$stributions of income, gain or loss, costs, expenses


and deductions, (1) \are.-Tiot in the ratio of the Parties ownership interest of


the properties coverecf'by this Contract or (2) do not each have a zero balance, the


Parties subject to U.S. income tax laws agree, to make such adjustments to the extent


necessary to cause the capital accounts to be in the same ratio as the participating


interests of the Parties or to each have a zero balance.


14.06 It is the intent of the Parties subject to U.S. income tax laws to this


Contract that the foregoing provisions of this Article 14 shall be limited to their


-application to matters relating to United States income tax'es and shall not in any


way change, amend, or affect the rights, obligations or liabilities of the Parties


otherwise contained in this Contract or the Legislation of the People’s Republic


of the Congo, and it is agreed that nothing contained in this Contract shall be


construed as creating an association or corporation of any kind.


14.07 Each Party shall be liable for the payment of its own income taxes to


the State authorities to which it may be subject to and for the execution of its


share of contractual responsibilities for which it is liable. It will compensate


each other Party and will hold them harmless from any loss, costs and.liabilities


connected herewith-


Article 15 - Arbitration


15.01 All disputes arising in connection with the


AGREEMENT which cannot be resolved amicably shall be


finally settled by arbitration.


15.02 Arbitration will be In accordance with the


Rules of Conciliation and Arbitration of the International


Chamber of Commerce, unless the petitioner prefers that


the arbitration take place In accordance with the rules of


the International Centre for the Settlement of Investment


Disputes (the "Centre”) set up by the Convention for the


(d) Deduction for legal depletion under the Section 613 of the Internal Revenue Code shall be calculated separately by each Party subject to U.S. income tax laws, in taking into account the hydrocarbons lifted or sold by the Party subject to U.S. income tax laws and the costs and expenses connected with.



The deduction for depletion of costs under the Section 611 of the Internal Revenue Code of 1954 shall be allocated-if necessary-to each Party subject to the U.S. income tax laws, in proportion with its contribution in the duly adjusted depletion basis of the property.



(e) Gains and losses from each sale, abandonment or other disposition of property (other than hydrocarbons) shall be attributed to the Parties subject to U.S. income tax laws in such manner as to reflect the gains and losses that would have been includable in their respective Income Tax Returns if such property were held by the Parties subject to U.S. income tax laws outside this Contract. The computation shall take into account each Party's share of the proceeds derived from each sale or other disposition of such property during the year, selling expenses and the Parties' respective contributions to the unadjusted cost basis of such property, less any allowed or allowable depreciation, depletion, amortization, credits or other deductions which have been allocated to each Party subject to U.S. income tax laws with respect to such property as provided in this Article 14.



(f) All other classes of costs, expenses and credits not falling within paragraph (a), (b), (c), (d) and (e) of paragraph 14.04, shall be allocated to and accounted for by each Party subject to U.S. income tax laws in accordance with its respective contributions to such cost, expenses and credits.



14.04.1 As used in paragraph 14.04, the words "adjusted basis" or "adjusted cost" shall mean the "adjusted basis" as defined under Section 1011 of the Internal Revenue Code of 1954 of the U.S., as amended.



14.05 Upon termination of this Contract, if the capital accounts of the Parties subject to U.S. income tax laws, as finally adjusted to reflect all contributions of property and cash and all distributions of income, gain or loss, costs, expenses and deductions, (1) are not in the ratio of the Parties ownership interest of the properties covered by this Contract or (2) do not each have a zero balance, the Parties subject to U.S. income tax laws agree to make such adjustments to the extent necessary to cause the capital accounts to be in the same ratio as the participating interests of the Parties or to each have a zero balance.



14.06 It is the intent of the Parties subject to U.S. income tax laws to this Contract that the foregoing provisions of this Article 14 shall be limited to their application to matters relating to United States income taxes and shall not in any way change, amend, or affect the rights, obligations or liabilities of the Parties otherwise contained in this Contract or the Legislation of the People's Republic of the Congo, and it is agreed that nothing contained in this Contract shall be construed as creating an association or corporation of any kind.



14.07 Each Party shall be liable for the payment of its own income taxes to the State authorities to which it may be subject to and for the execution of its share of contractual responsibilities for which it is liable. It will compensate each other Party and will hold them harmless from any loss, costs and liabilities connected herewith.

Article 15 - Arbitration



15.01 All disputes arising in connection with the AGREEMENT which cannot be resolved amicably shall be finally settled by arbitration.



15.02 Arbitration will be in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, unless the petitioner prefers that the arbitration take place in accordance with the rules of the International Centre for the Settlement of Investment Disputes (the "Centre") set up by the Convention for the



160Settlement of Investment Disputes between States and citizens of other States (ICSID); for this purpose, agrees to cause to write to the Centre as soon as possible after the execution hereof (i) to designate to the Centre, in accordance with paragraph 1 of Article 25 of the ICSID, that, for purposes of the arbitration, is an agency of , and (ii) to give its approval to 's consent to this arbitration clause, in accordance with paragraph 3 of Article 25 of the said ICSID.



15.03 Each party to a dispute shall be entitled to appoint one arbitrator and such parties shall agree on another arbitrator, if necessary, to achieve an odd number of arbitrators. In the event that agreement upon another arbitrator cannot be reached, such arbitrator shall be appointed by the Court of Arbitration of the International Chamber of Commerce, or by the chairman of the Administrative Council of the Centre, as the case may be.



15.04 Arbitration shall take place in Paris, France. The award which will be rendered in English and French with both texts having equal validity shall be final and binding upon the parties to the arbitration. Judgement upon the award rendered may be entered in any court or other authority for a judicial acceptance of the award and an order of enforcement, as the case may be.



15.05 The costs of arbitration shall be borne equally by the parties to said arbitration.



16 Insurance



The Operator will procure and maintain in effect the usual and legally required policies of insurance, in the name and for the account of the Parties and shall inform the Parties of same. Each Party retains the exclusive responsibility in proportion to eh participation that it holds for the consequences of all risks not covered by the policies procured by the Operator for the common account and to this end, the Operator will advise the other Parties of all necessary facts relating to the procuring and the management of the policies as well as of any indemnification of losses, whether it pertains to policies procured separately or for the common account.



Article 17 - Applicable Law



The AGREEMENT is governed by the laws of



Article 18 - Force Majeure



18.01 In the event one of the PARTIES find it impossible, either partially or totally, to carry out one or more of its obligations contemplated by the AGREEMENT or arising therefrom by reason of force majeure, an unforeseeable circumstance (cas fortuit) or any event which may be assimilated to force majeure (hereinafter collectively referred to as "FORCE MAJEURE"), the PARTY who invokes FORCE MAJEURE shall so notify the other PARTIES as soon as possible.



18.02 Said notice shall be given as promptly as possible in accordance with Article 19 below and shall so forth those circumstances which establish the FORCE MAJEURE.



18.03 There shall be considered as FORCE MAJEURE, a events independent of the will or control of the PARTY claiming the FORCE MAJEURE, which result in the total or partial obstruction, or significant delay, in the performance of the obligations of such PARTY without its being able reasonably to control or avoid the same. For the purpose of the AGREEMENT, FORCE MAJEURE shall include but not be limited to: war, serious civil unrest,





161Settlement of Investment Disputes between States and citizens of other States (ICSID); for this purpose, agrees to cause to write to the Centre as soon as possible after the execution hereof (i) to designate to the Centre, in accordance with paragraph 1 of Article 25 of the ICSID, that, for purposes of the arbitration, is an agency of , and (ii) to give its approval to 's consent to this arbitration clause, in accordance with paragraph 3 of Article 25 of the said ICSID.



15.03 Each party to a dispute shall be entitled to appoint one arbitrator and such parties shall agree on another arbitrator, if necessary, to achieve an odd number of arbitrators. In the event that agreement upon another arbitrator cannot be reached, such arbitrator shall be appointed by the Court of Arbitration of the International Chamber of Commerce, or by the chairman of the Administrative Council of the Centre, as the case may be.



15.04 Arbitration shall take place in Paris, France. The award which will be rendered in English and French with both texts having equal validity shall be final and binding upon the parties to the arbitration. Judgement upon the award rendered may be entered in any court or other authority for a judicial acceptance of the award and an order of enforcement, as the case may be.



15.05 The costs of arbitration shall be borne equally by the parties to said arbitration.



16 Insurance



The Operator will procure and maintain in effect the usual and legally required policies of insurance, in the name and for the account of the Parties and shall inform the Parties of same. Each Party retains the exclusive responsibility in proportion to eh participation that it holds for the consequences of all risks not covered by the policies procured by the Operator for the common account and to this end, the Operator will advise the other Parties of all necessary facts relating to the procuring and the management of the policies as well as of any indemnification of losses, whether it pertains to policies procured separately or for the common account.



Article 17 - Applicable Law



The AGREEMENT is governed by the laws of



Article 18 - Force Majeure



18.01 In the event one of the PARTIES find it impossible, either partially or totally, to carry out one or more of its obligations contemplated by the AGREEMENT or arising therefrom by reason of force majeure, an unforeseeable circumstance (cas fortuit) or any event which may be assimilated to force majeure (hereinafter collectively referred to as "FORCE MAJEURE"), the PARTY who invokes FORCE MAJEURE shall so notify the other PARTIES as soon as possible.



18.02 Said notice shall be given as promptly as possible in accordance with Article 19 below and shall so forth those circumstances which establish the FORCE MAJEURE.



18.03 There shall be considered as FORCE MAJEURE, a events independent of the will or control of the PARTY claiming the FORCE MAJEURE, which result in the total or partial obstruction, or significant delay, in the performance of the obligations of such PARTY without its being able reasonably to control or avoid the same. For the purpose of the AGREEMENT, FORCE MAJEURE shall include but not be limited to: war, serious civil unrest,





161Insurrection, strikes, earthquake, fire, explosion, other


catastrophes and all hindrances resulting from orders or


prohibitions of governmental authorities or which are the


result or the consequence of a delay by such .authority in


Issuing an authorization or a requested opinion.


18.0*1 FORCE MAJEURE shall, however, not be validly


invoked if the events, acts or occurrences involved are


.reasonably foreseeable and could be remedied by t-he


exercise of reasonable diligence or by recourse to more


onerous measures than those which were taken.





18.05 The period for performance of the obligations


affected by FORCE MAJEURE shall be extended automatically


for a period equivalent to the delay caused by said FORCE


MAJEURE, It being understood (i) that such extension sha K H


not give rise to any penalty for the account of the PART


-responsible for performing these obligations, and (ii)


that obligations other than those affected by FORCE


MAJEURE* shall continue to be performed in accordance with


the provisions of the AGREEMENT.


18.06 In all cases, the PARTI concerned shall, in


agreement with the other PARTIES, take all appropriate


measures to assure the norniaT..resumption of the:


performance of the obl-Igat-iohs affept-ed by FORCE MAJEURE.


If, as a result-of ..-FORCE/MAJEUREdh.e.’of the PARTIES is


unable to perform'd'ts-.obligations\sls set forth in the


AGREEMENT duriq.g\a:-.period o£ "three* (3) consecutive months


as from thq-notification-rhereihabove provided, the PARTIi


shall meet as) Soon as possible to examine the consequence


of the events Involved^, and -in particular the delays in


the performance .pf-./the*-respective obligations of each of


the PARTIES. ..-IC\t*fce'* PARTIES cannot reach an agreement


regarding s.;ich consequences, they shall submit their


dispute to arbitration In acqordance with the provisions


of Article...15 above.


Article 19 - Notices





19.01 All notices and other communications provided


for In the AGREEMENT shall be -in writing and may be give


(i) by personal delivery to an authorized representative


of the PARTY to whom the notice is addressed or (ii) by


registered mail return receipt requested, or by (iii)


telex, telecopier, or telegram to the PARTI to be notifi


at the appropriate following address:


For


























Telex:


attention:





The General Manager








16 2





insurrection, strikes, earthquake, fire, explosion, other catastrophes and all hindrances resulting from orders or prohibitions of governmental authorities or which are the result or the consequence of a delay by such authority in issuing an authorization or a requested opinion.



18.04 FORCE MAJEURE shall, however, not be validly invoked if the events, acts or occurrences involved are reasonably foreseeable and could be remedied by the exercise of reasonable diligence or by recourse to more onerous measures than those which were taken.



18.05 The period for performance of the obligations affected by FORCE MAJEURE shall be extended automatically for a period equivalent to the delay caused by said FORCE MAJEURE, it being understood (i) that such extension shal not give rise to any penalty for the account of the PARTY responsible for performing these obligations, and (ii) that obligations other than those affected by FORCE MAJEURE shall continue to be performed in accordance with the provisions of the AGREEMENT.



18.06 In all cases, the PARTY concerned shall, in agreement with the other PARTIES, take all appropriate measures to assure the normal resumption of the performance of the obligations affected by FORCE MAJEURE. If, as a result of FORCE MAJEURE, one of the PARTIES is unable to perform its obligations as set forth in the AGREEMENT during a period of three (3) consecutive months as from the notification hereinabove provided, the PARTIES shall meet as soon as possible to examine the consequences of the events involved, and in particular the delays in the performance of the respective obligations of each of the PARTIES. If the PARTIES cannot reach an agreement regarding such consequences, they shall submit their dispute to arbitration in accordance with the provisions of Article 15 above.



Article 19 - Notices



19.01 All notices and other communications provided for in the AGREEMENT shall be in writing and may be give (i) by personal delivery to an authorized representative of the PARTY to whom the notice is addressed or (ii) by registered mail return receipt requested, or by (iii) telex, telecopier, or telegram to the PARTY to be notifi at the appropriate following address:



For



Telex:



attention:

The General Manager



162For ESSO:



Telex:



attention:



For: ___________________

________________________

________________________

________________________

________________________



Telex: _________________



Attention: _____________



19.02 Such notices and communications shall be deemed to have been given on the day on which they are delivered to the PARTY to be notified. All notices given by telex, telecopier or telegram shall be confirmed as soon as possible in writing as provided in (i) or (ii) above. Any PARTY may, at any time and from time to time, change its address under paragraph 19.01 by giving the other PARTIES ten (10) days' notice in writing thereof.



Article 20 - Miscellaneous



20.01 Topical headings



The topical headings used herein are for convenience only and shall not be construed as having any substantive significance or as indicating that all of the provisions of the AGREEMENT relating to any topic are to be found in any particular article or paragraph bearing such topical heading.



20.02 Language of the AGREEMENT



The AGREEMENT is made in French, the French text is the only authentic one. However and English translation shall be prepared and initialed for approv by the Parties. In case of difficulty in the interpretation of the AGREEMENT, reference shall be made to the English text for the purpose of clarification.



Article 21 - Amendments



At the request of any of the PARTIES, amendments may be made to any one of several clauses of this AGREEMENT, with the mutual agreement of the PARTIES.





163 For ESSO:




















Telex:


attention:








For:

















Telex:





Attention: _


19-02 . Such notices and c.Qbauoaications shall be deemed


to have been given'on the day on'which th-eyVare delivered


to the PARTY to be not if i.jed:.'-.,;Ail noti.c'es\.g*iv-en by telex,


telecopier or tele gran*:'shall be confirmed :as soon as


possible in writing a-s '^’hovided In-.jt'i) '-or (iI) above. Any


PARTY may, at any!.ti&'e'-and from'-.time"‘*to time, change its


address under paragraph 19.0t byVgiving the other PARTIES


ten (10) days* notice ia-vVi-tla'g thereof.


Article 20 - Miscell'afre'p&s


20.01 Too leal -headings


The topical headings used herein are for


convenience only and shall not be construed as having any


substantive significance or as indicating that all of the


provisions of the AGREEMENT relating to any topic are to


be found in any particular article or paragraph bearing


such topical heading.


20.02 Language of the AGREEMENT


The AGREEMENT is made in French, the French text is the only authenti


one. However an English translation shall be prepared and initialed for approv


by the Parties. In case of difficulty in the interpretation of the AGREEMENT,


reference shall be made to the English text for the purpose of clarification.





Article 21 - Amendments





At the request of any of the PARTIES, amendments


may be made to any one or several clauses of this


AGREEMENT, with the mutual agreement of the PARTIES.

















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IN WITNESS WHEREOF, the AGREEMENT has been executed in _________, on __________.





________________________ _____________________________

















_______________________________



_______________________________















164IN WITNESS WHEREOF, the AGREEMENT has been


executed in , on ,


EXHIBIT I

---------





MAP OF THE "___________________" PERMIT

---------------------------------------











EXHIBIT II

-----------







MINIMUM WORK PROGRAM

--------------------







/_To be completed_ /







165

 EXHIBIT I























HAP OF THE " _" PERMIT












































N 'EXHIBIT ..-IT -..;-.




















{ MIKTrtUM WORK PROGRAM

















/To be completed /




































































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