This license contract was originally executed in the Albanian language and, such Albanian language version shall govern in all matters relating to this license contract.
If, pursuant to an assignment Albpetrol, will be comprised of Albpetrol and a foreign partner, an English language translation of this license contract shall be appended to the instrument of transfer. By execution of such instrument of transfer, the parties to such instrument of transfer (including government acting in accordance with its authority under this license contract to approve such transfer) shall agree that such English language version is an accurate translation of this Albanian language version, and that such English language version shall prevail over the Albanian language version in all matters related to this license contract, including any amendments, notices and communications, for so long as Albpetrol, includes such foreign partner. In that event, all information, notices and communications to be given or delivered under this contract shall be in both the Albanian and the English languages, or accompanied by an English translation.
This license agreement shall remain in effect during the evaluation period and any extension made under this contract (Section 7.3) and any development and production period if entered pursuant to Art. 7.4 and Art. 8.
At the end of any development and production period the government and Albpetrol may agree to further 5 year extensions in accordance with the procedures set forth in Art. 8.3(c) in this contract.
Environmental impact assessment and management plan
Albpetrol shall as soon as reasonably possible submit for the approval from the Environmental Authority a report on the environmental baseline status of the Project Area. With each expansion of the project area, Albpetrol shall submit for the approval from the Environmental Authority a report on the environmental baseline status of the expanded portion of the project area as at the relevant date. Albpetrol shall not then be liable for any environmental damages incurred prior to the effective date of the approved environmental baseline study, and the government shall indemnify and hold harmless Albpetrol from any third-party claims with respect to claims under this article.
Albpetrol shall conduct petroleum operations in a safe and proper manner in accordance with Albanian Law and generally accepted international petroleum industry practice.
If the government reasonably determines that any works or installations erected by Albpetrol or any petroleum operations conducted by Albpetrol endanger or may endanger persons or third party property or cause pollution or harm the environment to an unacceptable degree, the governmentmay require Albpetrol to take remedial measures uthin a reasonable period and to repair any damage to the environment.
Albpetrol may flare the associated gas which is not required for use in petroleum operations under Art. 11.2 (i) if, in Albpetrol's opinion, such associated gas production is not economical and commercially viable or (ii) when it is in accordance with good oilfield practice. However, if the government believes that such associated gas should be utilized, the government may take this associated gas free of charge and use it if the costs, risk and expenses for the installation of equipment, as required in order to deliver associated gas to the government, are borne by the government, and such delivery causes neither an interruption of petroleum operations nor a negative effect on Albpetrol's economic benefits.
The government shall ensure that Albpetrol as use of the railways, roads, highways, water, land surface, timber, electricity, sanitary structures and other infrastructures in Albania, at commercially reasonable rates and on a non-discriminatory basis, so as to be able: (i) to perform the petroleum operations in compliance with this license contract; and (ii) to produce, transport, export and sell petroleum in or from Albania as provided in this license contract and the petroleum law.
At the sole expense and cost of National Petroleum Agency, the National Petroleum Agency, shall have the right to inspect and audit Albpetrol or its successor, transferee or assignee's books of account and accounting records with regard to the petroleum operations, but no more than once in a fiscal year, except as otherwise agreed with operator.
The audit right will cease 3 years after closure of such fiscal year. Any exception to the Albpetrol or its successor, transferee or assignee's accounting records shall be communicated to Albpetrol or its successor, transferee or assignee in written form within 3 years from the date on which Albpetrol or its successor, transferee or assignee hands over their accounting records for such fiscal year. Otherwise such accounting records shall be deemed to be correct and, going forward, may not be subject to objection.
Albpetrol and its respective affiliates, subcontractors and expatriate personnel shall be exempted from Albanian taxes and duties, with respect to all activities relating to the petroleum operations to the extent so provided in Albanian Law. This exemption does not include normal port, warehouse and postal charges and other similar customary charges of general application for actual services rendered.
Employees of Albpetrol and its sub-contractors will not be subject to taxes and duties on any income or profit realized by them, directly or indirectly, from their work in the petroleum operations, nor on the import or re-export of their personal or household belongings, which items may be freely imported and subsequently exported.
Albpetrol shall be liable to tax on Profit in conformity with Law No.7811, date 12.04.1994 “On approval of decree No.782, date 22.2.1994 “On the fiscal system in the hydrocarbons sector (Exploration-Production).”
Albpetrol shall pay the petroleum profit tax in cash or in kind. The government shall annually notify Albpetrol in writing, no later than October Ist of each fiscal year, whether Albpetrol shall pay Albanian tax on profit for the immediately following fiscal year in cash or in kind. Should the government fail to notify Albpetrol as required by, and within the term specified in this Art. 14.2. Albpetrol will make the payments for the relevant period in cash.
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Albpetrol shall recover all petroleum costs under this license contract out of 100% of the available petroleum after deducting the Albpetrol share (referred to as “cost recovery petroleum”).
To the extent that, in a fiscal year, costs and expenses recoverable exceed the value of the cost recovery petroleum for such fiscal year, the excess shall be carried forward for recovery in the succeeding fiscal year or fiscal years until fully recovered, but will in no case be carried forward after the termination of this license contract.
Albpetrol shall give priority to the goods and materials produced in Albania if these goods and materials are being offered under equally favorable conditions regarding the quality, price and availability and in the quantities required.
In order to ensure the services required in the petroleum operations Albpetrol can employ sub-contractors, but Albpetrol shall give priority to services performed by Albanian sub-contractors if such services are offered under equally favorable conditions regarding the quality, price and availability they may be offered by foreign sub-contractors.
Albpetrol (or its successor, transferor, assignee) will select its management and employees according to its discretion, and shall determine the conditions of employment and the number of employees to be used for petroleum operations.
Albpetrol shall be entitled to use free of charge and for the performance of the petroleum operations, all other assets, equipment, means and infrastructure (including roads, electricity power lines and water, oil and gas pipelines) formerly owned or in the possession of AAP and existing on the date this contract is signed, in the contract area or elsewhere as described in Annex F of the petroleum agreement, on an "as is" basis and available for delivery, but (unless otherwise agreed with the supplier) subject to payment, on a non-discriminatory basis, at reasonable cost for electricity, water, oil and gas used. Albpetrol shall be entitled to use under commercially reasonable terms and conditions, the pipelines that transport the petroleum produced in the contract area to the ports and refineries in Albania.
The government shall ensure that Albpetrol has use of the railways, roads, highways, water, land surface, timber, electricity,
sanitary structures and other infrastructures in Albania, at commercially reasonable rates and on anon-discriminatory basis, so as to be able: (i) to perform the petroleum operations in compliance with this license contract; and (ii) to produce, transport, export and sell petroleum in or from Albania as provided in this license contract and the petroleum law.
Albpetrol shall:
(i) select eight wells from the contract area for reactivation or re- completion in the Driza reservoir;
(ii) select two wells from the contract area for reactivation or re-complction
in the Marinza reservoir;
(iii) select two wells from the contract area for reactivation or re-completion in the southern area Patos Marinza (Driza); and
(iv) maintain the following existing 28 producing wells and disposal well: all pad D and pad II wells and pre-existing wells 989, 1317, 2250, 2471, AAP-1,976, 3013, 876 and disposal well 1842.
The above wells are the “evaluation wells”. The square area 142.25 m North, East, South and West centred on each evaluation well shall comprise the “evaluation area.”
Albpetrol commits to expend at least US$ 2,000,000 in capital expenditures conducting the evaluation program and adding the water disposal well contemplated in clause 4(iv). If the cost of the capital expenditures for the evaluation program and the water disposal well arc less than US$ 2,000,000 Albpetrol may elect to expand the activities of the evaluation program by selecting additional wells for reactivation or re-completion.
Albpetrol shall also conduct the following activities during the evaluation period:
(i) carry out an update of the reserves evaluation of the contract area to a level of detail determined by Albpetrol;
(ii) evaluate existing and future infrastructure for development and commercialisation of product for internal and export markets;
(iii) review gas conservation and utilisation within the evaluation area; and
(iv) increase water disposal capacity in the evaluation area by adding an additional disposal well;
(v) develop truck offloading options at either Ficr or Ballsh refineries for crude oil sales delivery of production; and
(vi) review and report on continuous and extract technology.
Arbitration between National Petroleum Agency and Albpetrol:
All disputes arising in connection with this license contract between the government and Albpetrol alone shall be finally settled by binding arbitration taking place in Tirana in accordance with Albanian legislation In the event licensee consists of Albpetrol and a foreign partner and such foreign partner gives notice in writing to National Petroleum Agency and to Albpetrol that, in its reasonable judgment, a dispute between Albpetrol and the government affects such foreign partner’s interests, any such dispute, whether having just arisen or already the subject of pending arbitration under this Art. 25.2. shall be resolved in accordance with Art. 25.3.
At the request of either Albpetrol or the government the arbitration under Art. 25.3 shall include a determination of whether the foreign partner was reasonable in its assertion that the dispute affected its interests. If it is determined that such assertion was not reasonable, the arbitrage award shall include a determination of the costs of the arbitration which are in excess of those which would have been incurred by Albpetrol and he government had such arbitration taken place or been concluded under Art. 25.2. and the foreign partner shall be responsible for the payment of all such excess costs.
The arbitration proceeding shall take place in Zurich, Switzerland and shall be conducted in the English language. All documents submitted therein and the award of the arbitral panel shall also be in English. Clauses of this license contract related to arbitration will continue to be in force despite die termination of this license contract. The Ministry of Industry and Energy (for itself and the Albanian Government) and NPA irrevocably waive any right of immunity or any right to object to this arbitration agreement, any arbitration award, any judgment regarding the enforcement of an arbitration award of the execution of any arbitration.
The terms and conditions in this license contract are strictly confidential. During the term of this license contract and for 5 years afterwards, Albpetrol or its transferee or successor will never and in no circumstance render public the terms and conditions of this license contract or any data or information obtained in compliance with this license contract to a third party without the prior written approval of the government, which approval will not be unreasonably withheld. The above will not be applied:
(a) to the extent that a party that constitutes licensee is required by the laws, rules and regulations of a government or a government department or agency or stock market which has jurisdiction over this party or its affiliates, to disclose this information or data;
(b) to disclose to an affiliate of a [party that constitutes the licensee provided that such affiliate shall agree that the clauses of this section of this article are binding before such disclosure is made;
(c) in case of a party that constitutes the licensee, concerning disclosure to a financial institution, bank, audit, auditing company, legal adviser, consultant or sub-contractor in the ordinary course of business of the parties, including financing purposes, as long as the said financial institution, bank, audit, auditing company, legal adviser, consultant or sub-contractor submits, in writing, in a similar way, to maintain such information and data as confidential;
(d) to a bona fide prospective assignee of licensee, on the condition that the prospective assignee similarly undertakes in writing to keep confidential the information and data disclosed;
(e) for purposes of enforcement of any provision of this license contract or;
(f) in the case of the government, disclosure of the data related only to parts of the contract area which Albpetrol, has relinquished before such disclosure.
A party may require that any damage resulting from the violation of this Art. 16.7 be determined by arbitration.
The activities of Albpetrol or its transferee, successor or signee, in performing the petroleum operations shall be governed by and conducted in accordance with the requirements of the Albanian Law. All questions with respect to the interpretation or enforcement of, or the rights and obligations of the parties under, this license contract and which are the subject of arbitration in accordance with Art. 25:
(i) shall be governed by the laws of the Republic of Albania in the case of a dispute subject to resolution under Art. 25.2 or
(ii) shall be governed by the laws of England in the case of a dispute subject to resolution under Art. 25.3.
The provisions of this license contract shall have full legal effect in accordance with Art. 27.
Notwithstanding Art. 3.1(b), If: any right or benefit granted (or which is intended to be granted) to Albpetrol under this license contract is infringed in some way, a greater obligation or responsibility shall be imposed onto Albpetrol (or its assignee, successor, transferee), in whatever way other way the economic benefits accruing to Albpetrol from this license contract are negatively influenced by Art. 3.1(b); and that event is not provided for under this contract, Albpetrol and the government will immediately amend this license contract, or the government and the Ministry will immediately undertake other necessary actions to eliminate the negative economic effect on Albpetrol.