People of the Kurdistan region.

Iraq

20/1/2004

English

Kurdistan region, Iraq. The area in which the operation is located is described in annex A.

Genel Enerji A.S.

If the commercial production of hydrocarbures remains possible beyond the first period of 25 years, Genel Enerji, after giving notice to the government at least one year prior to the end of such a period, and after obtaining approval by the Coordination Committee (defined in Art. 6) of a revised Development Plan shall be entitled to have an extension of the term of the contract with respect with the area in which the production is still possible for an additional term of 5 years or the producing life of the area.

Hydrocarbons

Barham Salih, Prime Minister for the government of Kurdistan region.

Mehmet Sepil, authorised representative of Genel Enerji.

Prime Minister of Kurdistan regional government

The term of the contract shall be deemed from the date in which the handover of petroleum operation occurred and continue for a total of 25 consecutive agreement years (12 consecutive months after 20/1/2004), unless the contract is sooner terminated in accordance with Art. 28 of contract.

Production Sharing Agreement

Genel Enerji shall prepare an Environmental Impact Assessment (EIA) in accordance with the environmental laws for the purpose of obtaining a permit for petroleum operations from the authority. The EIA shall incorporate the baseline study and shall be submitted to the government.

The Coordinator Commmittee, composed by representatives of the government and of Genel Enerji, review and approve the insurance program proposed by Genel Enerji, the emergency procedures on safety and environmental protection and all the programs and budgets which are in connection with environmental protection. In conducting petroleum operations, Genel Enerji shall operate according to international petroleum industry practices and use best endeavors to minimize potential disturbances to the environment, including the surface, subsurface, sea, air, flora, fauna, other natural resources and property. The order of priority for action shall be protection of life, environment and property. Genel Enerji shall take all necessary steps to respond to, and shall promptly notify the government of, all emergency and other events (including explosions, leaks and spills), occulting in relation to the petroleum operations which are causing or likely to cause material environmental damage or material risk to health and safety. Such notice shall include a summary description of the circumstances and steps taken and planned by the contractor to control and remedy the situation. In such events the government shall assist Genel Enerji by making available any labor, materials and equipment requested by the company, which will have to reimburse the government.

Genel Enerji may utilize the water necessary for petroleum operation on condition that reasonable efforts are taken to minimize potentially adverse effects on irrigation and navigation, and that land, houses and the watering places arc not adversely affected.

On an annual basis Geenel Enerji shall submit to the governmental agency an internationally recognized auditor's report on costs and expenses incurred, that under Article 10 should be compensated by cost recovery petroleum, the report shall also include a profit calculation pursuant to provisions of Article 16 of the contract. The government shall have the right to audit the books and account maintained by Genel Enerji. Any audit exceptions shall be made in writing and notified to Genel Enerji within 180 days following completion of the audit in question. Genel Enerji shall answer the notices of exception within 180 days of the receipt of such notice and shall promptly make all the adjustments in its accounts and to the payment due to the government. If Genel Energji and the government are unable to reach an agreement on proposed audit adjustments they may by mutual agreement refer their dispute for binding and final resolution by an internationally recognized firm of public accountants acceptable to both of them. For the purposes of auditing, the Government may examine and verily, at reasonable times upon prior notice to Genel Enerji, all documents, correspondence and records considered necessary by the government to audit and verify the charges and credits. Furthermore, the auditors shall have the right in connection with such audit, to visit and inspect at reasonable times, all sites, plants, facilities, warehouses and offices of Genel Energji directly or indirectly serving the petroleum operations and to question personnel associated with those operations. Where the government requires verification of charge made by an affiliated company of Genel Enerji, the government shall have the right to obtain an audit certificate from an internationally recognized firm of public accountants acceptable to both the government and Genel Enerji, which may be the Genel Enerji statutory auditor.

Each contractor party, foreign employee and operator shall be entitled to full and complete exemption form all government taxes prior to or after the 20/1/2004 and shall be subject only to the applicable law on the 20/1/2004 in the Kurdistan region. Genel Enerji, each foreign employee and operator shall be entitled to full and complete exemption from all government taxes prior to or after the 20/1/2004, except as otherwise provided for in this contract.

Effective from the handover date, following the deduction of royalty and the recovery of expenses and costs from the available petroleum, the remaining petroleum in any quarter shall be allocated between the parties in each quarter in the following proportions: - until the cumulative available crude oil after deduction of the royalty reaches 50 million barrels the Government share will be 80% and the Genel Enerji share will be 20%; - thereafter, until the cumulative available crude oil after the deduction of the royalty reaches 50 hundred million barrels in the government share will be 85% and Genel Enerji share will be 15 %; - thereafter, available crude oil after deduction of the royalty exceeding 5 hundred million barrels the government share will be 90% and Genel Enerji share will be 10%. Any available natural gas, which Genel Enerji intends to produce and sell, shall be the subject of the profit sharing provisions of the new agreements referred to in Article 15.

Genel Enerji is entitled to recover the operation expenses (all costs and expenses incurred in respect of day to day petroleum operations) from the available petroleum (those not used for carrying out the operations) minus the royalty. From the 80% of the remaining petroleum, capital expenditures (development expenditures, appraisal expenditures, exploration expenditures, drilling costs) shall be recovered in the quarter they are incurred. To the extent that, in a quarter, outstanding recoverable cost and expenses exceed the value of crude oil or natural gas available, the excess shall be carried forward for recovery in the next succeeding quarters until fully recovered, but in no case after termination of the contract.

The royalty shall be paid by Genel Enerji to the government or any authority as designated by the government in quarterly installments in arrears, since the first day of the first quarter following the commencement of commercial production. The royalty shall be calculated as the following percentages of available crude oil produced in the relevant quartet: - 4% until the daily production is 20 thousand barrels; - 5% the daily production exceeding 20 thousand barrels up to 50 thousand barrels; - 6% the daily production exceeding 50 thousand barrels up to 1 hundred thousand barrels; - 7% the daily production exceeding 1 hundred thousand barrels up to 1 hundred fifty thousand barrels; - 8% the daily production exceeding 1 hundred 50 thousand barrels up to 2 hundred thousand barrels; - 9% the daily production exceeding 2 hundred thousand barrels up 2 hundred 50 thousand barrels; - 10% the daily production exceeding 2 hundred 50 thousand barrels up to 3 hundred thousand barrels; - 11% the daily production exceeding 3 hundred thousand barrels up to 3 hundred 50 thousand barrels; - 12% the daily production exceeding 3 hundred 50 thousand barrels of the available crude oil.

Genel Enerji shall withhold tax on payments to subcontractors at a rate of 5%.

The government shall provide or otherwise procure access by Genel Enerji to all existing facilities and infrastructure in the contract area owned by the government for the purpose of carrying out its petroleum operations during the term of the contract. Such access shall be on terms as regards access and tariffs no less favorable than those offered to other persons or entities. Genel Enerji shall have the right to use existing pipeline and terminal facilities belonging to or under the control of the government. The government shall assist in making these facilities available to the company on terms with regard to access and tariff that are no less favorable than those make available to others. Subject to prior approval by the Coordination Committee and prior consent of any necessary local administration or government body and relevant landowners, Genel Enerji shall have the right to build all the infrastructures useful to petroleum operations or related to them and everything that is or could become necessary or accessory to carry out the petroleum operations, in accordance with current legislation.

Genel Enerji has the exclusive rights to conduct petroleum operations in the agreed area during the term of the contract. The company shall perform the minimum work program within the first 12 months period. Such a program requires Genel Enerji to drill two wells to a minimum depth to reach the deepest production zone or otherwise agreed by the coordination committee, or taking into consideration the export opportunities, more wells, in the contract area. The minimum expenditure for implementing this program shall not be less than US $ 5 millions. When Genel Enerji finds petroleum or any significant additional production within the agreed area, it shall notify the Coordination Committee within 45 days of reaching such a conclusion. Further, Genel Enerji shall present to the Committee a study program specifying the appraisal work. After the approval of such a study and after having carrying out the study, the company shall submit to the Coordination Committee the evaluation report and a written declaration about the feasibility of petroleum production. If the production is feasible, Genel Enerji shall propose a development plan (with also an abandonment and site restoration program) and, after it has been approved, proceed to implement it in accordance with good international petroleum industry practice. Before the 31st October of each year, Genel Enerji shall submit to the Coordination Committee an annual work program and budgets in conformity with the approved development plan. The Committee has to approve it within 45 days, and if it fails to notify its approval or disapproval within said days, the proposed work program and budget shall be deem to have been approved.

All disputes between the government and Genel Enrji arising in out of or relating to this contract, or to the breach, lamination or validity thereof, which they are unable to resolve amicably, shall be referred by either party to arbitration in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNICTRAL) in force on the date when this contract was signed. The arbitral tribunal shall apply the contract as supplemented and interpreted by general principle of the law effective in Kurdistan Region and the laws of England as are in force on the 20/1/2004. Where these principles are in conflict with each other, the laws of England shall prevail. A party need not exhaust administrative or judicial remedies prior to commencement of arbitral proceedings. For the purpose of an arbitration under the UNCITRAL Rules the appointing authority shall be the International Court of Arbitration of the International Chamber of Commerce, there shall be a single arbitrator appointed in accordance with said Rules, the seat and venue of the arbitration will be London. United Kingdom and will be conducted in the English language. Arbitration provisions shall have no application to a dispute or disagreement which has, in accordance with the provisions of this contract, been referred for the opinion of an internationally recognized independent expert appointed pursuant to Article 6. The award of the arbitration tribunal will be final and binding upon the parties.

All information and data acquired or obtained by any party of the contract in respect of petroleum operations shall be considered confidential and shall be kept confidential and not be disclosed during the term of the contract to any person or entity not a party to the contract, except to an affiliate of Genel Enerji, to a governmental agency or other entities in accordance with the contract. Disclosure as pursuant to Article 27.2 (d), (e), and (f) shall not be made unless the disclosing party has obtained a written undertaking from the recipient party to keep the data and information strictly confidential for at least 3 years and not to use or disclose the data and information except for the express purpose for which disclosure is to be made.

The construction, validity and performance of the contract shall be governed by current legislation (which means legislative acts, and normative documents that are effective on the 20/1/2004 in the Kurdistan Region) and the laws of England.

The government agrees and commits to Genel Enerji, for the duration of the contract, to maintain the stability of the fiscal conditions of the contract. If at any time after the contract has been signed there is a change in the applicable Kurdistan regional government laws, regulations or other provisions of effective current legislation related to fiscal matters, which to a material degree adversely affect the economic position of Genel Enerji, the terms and conditions of the contract shall be altered so as to restore Genel Enerji to the same overall economic position as that which it would have been in if there had not been the amendment. If Genel Enerji believes that its economic position has been adversely affected, under Article 26.4 it may give notice to the government describing how its position has been so affected. The parties shall thereafter promptly meet in order to reach agreement on the remedial action to be taken. If after 90 days the matters have not been resolved, any party can refer the dispute to arbitration in accordance with Article 29.