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AN ACT TO RATIFY THE PRODUCTION SHARING


CONTRACT BETWEEN NATIONAL OIL COMPANY


OF LIBERIA REPRESENTING THE REPUBLIC OF


LIBERIA AND ORANTO PETROLEUM LIMITED


FOR OFFSHORE BLOCK LB 14














APPROVED JULY 23, 2009














PUBLISHED BY AUTHORITY


MINISTRY OF FOREIGN AFFAIRS


MONROVIA, LIBERIA

















PRINTED JULY 29,2009


 PRODUCTION SHARING CONTRACT














BETWEEN




















NATIONAL OIL COMPANY OF LIBERIA











REPRESENTING THE REPUBLIC OF LIBERIA








AND









ORANTO PETROLEUM LIMITED

















OFFSHORE BLOCK LB 14


 2009








"AN ACT TO RATIFY THE PRODUCTION SHARING CONTRACT BETWEEN


THE NATIONAL OIL COMPANY REPRESENTING THE REPUBLIC OF


LIBERIA AND ORANTO PETROLEUM LIMITED FOR OFFSHORE BLOCK


LB-14.”





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


REPUBLIC OF LIBERIA IN LEGISLATURE ASSEMBLED:


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


RATIFY THE PRODUCTION SHARING CONTRACT BETWEEN THE


NATIONAL OIL COMPANY REPRESENTING THE REPUBLIC OF LIBERIA


AND ORANTO PETROLEUM LIMITED OFFSHORE BLOCK LB 14”, as herein


recited below word for word in the authentic English version be, and the


same is hereby ratified to give full force and effect to the provision as


contained herein.





SECTION II: SHORT TITLE: This Act to ratify the PRODUCTION


SHARING CONTRACT BETWEEN THE NATIONAL OIL COMPANY


REPRESENTING THE REPUBLIC OF LIBERIA AND ORANTO PETROLEUM


LIMITED FOR OFFSHORE BLOCK LB 14” shall also be cited as the


PRODUCTION SHARING CONTRACT ACT OF LIBERIA AND ORANTO


PETROLEUM LIMITED ”








SECTION III: That any and all obligations, covenants, terms and


conditions as contained in the above mentioned PRODUCTION SHARING


CONTRACT shall be carried to fi.il 1 completion unless otherwise modified,


amended, or repealed.


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


into handbill.


*


ANY LAW TO THE CONTRARY NOTWITHSTANDING


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





Table of Contents





ITICLE 1 -DEFINITIONS....................................................................................................... 2


ITICLE 2 SCOPE OF THE CONTRACT.............................................................................. 6


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


ITICLE 4 EXPLORATION WORK COMMITMENTS..,..................................................... .9





ITICLES 5 ESTABLISHMENT AND APPROVAL OF ANNUAL WORK PROGRAMS


AND BUDGETS.......................................................................................................................... 11





ITICLE 6 CONTRACTOR’S OBLIGATIONS IN RESPECT OF THE EXPLORATION 13


HlRIODS AND ENVIRONMENTAL MANAGEMENT..........................................................





ITICLE 7 CONTRACTOR’S RIGHTS IN RESPECT OF THE EXPLORATION 15


PERIODS....................................................................................................................................


ARTICLE 8 ACTIVITY REPORTS DURING THE EXPLORATION PERIODS AND


IUPERVISION OF PETROLEUM OPERATIONS....................................................................16


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


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


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


ARTICLE 12 GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION IN


RESPECT OF A COMMERCIAL DISCOVERY........................................................................23


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


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


ARTICLE 15 CONTRACTOR’S OBLIGATIONS AND RIGHTS IN RESPECT OF


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


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


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


ARTICLE 18 VALUATION OF PETROLEUM........................................................................37


ARTICLE 19 BONUSES AND HYDROCARBON DEVELOPMENT FUND.........................40


ARTICLE 20 OWNERSHIP AND ABANDONMENT OF ASSETS........................................42


ARTICLE 21 NATURAL GAS---................................................................. 43


ARTICLE 22 FOREIGN EXCHANGE CONTROL...................................................................47


ARTICLE 23 APPLICABLE LAW............................................................................................48


ARTICLE 24 MONETARY UNIT.......................................................................................49


ARTICLE 25 ACCOUNTING METHOD AND AUDITS................................................ 50


ARTICLE 26 IMPORT AND EXPORT.....................................................................................51


ARTICLE 27 DISPOSAL OF PRODUCTION...........................................................................53








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ARTICLE 28 PROTECTION OF RIGHTS................................................................................54


ARTICLE 29 PERSONNEL AND TRAINING..........................................................................56


ARTICLE 30 ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE EXPLOITATION


AUTHORIZATIONS....................................................................................................................58


ARTICLE 31 ARBITRATION....................................................................................................59


ARTICLE 32 TERMINATION..................................................................................................61


ARTICLE 33 FORCE MAJEURE..............................................................................................63


ARTICLE 34 JOINT AND SEVERAL OBLIGATIONS AND GUARANTEES......................64


ARTICLE 35 RIGHTS OF ASSIGNMENT...............................................................................65


ARTICLE 36 STABILITY OF CONDITIONS...........................................................................66


ARTICLE 37 IMPLEMENTATION OF THE CONTRACT......................................................67


ARTICLE 38 EFFECTIVE DATE..............................................................................................69


APPENDIX 1................................................................................................................................71


APPENDIX 2................................................................................................................................7h^







































































4


 PRODUCTION SHARING CONTRACT





BETWEEN


The Republic oi Liberia, (STATE) represented for the purposes of this Contract by the


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


Liberia, the Minister of Finance, the Minister of Lands, Mines & Energy and the Chairman of


the National Investment Commission





AND


Orauto Petroleum Limited, a company incorporated in the jurisdiction of Nigeria,


hereinafter referred to as “the Contractor”.


WHEREAS


• the discovery and exploitation of petroleum are important for the interest and the


economic development of the country and its people;


• the Contractor wishes to undertake operations for exploration and development for


exploitation, transportation, storage, processing and marketing of Hydrocarbons;


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


entirety of available areas in Liberia including the Delimited Area defined hereinafter;


• NOCAL wishes to promote the development of the Delimited Area, and the


Contractor wishes to cooperate with NOCAL by assisting it in the exploration for and


production of the potential resources within the Delimited Area, and thereby


encouraging the economic growth of the country;


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


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


specified hereinafter. NOW THEREFORE, THE PARTIES HEREBY AGREE AS


FOLLOWSft-


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ARTICLE 1


DEFINITIONS


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


1.1 AFFILIATED COMPANY means:


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


any entity constituting the Contractor; or


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


a company or entity which itself directly or indirectly controls any entity constituting


the Contractor.


Such “control'’ means direct or indirect ownership by a company or any other entity


of holding filly percent (50%) or more of the shares, conferring voting rights, forming


the stock of another company.


1.2 ANNUAL WORK PROGRAM means the document describing, item by item, the


Petroleum Operations to be carried out during a Calendar Year within the Delimited


Area and in each Exploration Perimeter, if any, established in accordance with the


Contract.


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


more Hydrocarbon discoveries have been made, and in respect of which NOCAL has


granted to the Contractor an exclusive appraisal authorization for the purpose of


appraising the extent of said discoveries.


1.4 ARMS LENGTH SALES For the purpose of determining arms length sales, the


price of Crude Oil will generally be based in a per barrel basis of one or more Crude


Oil blends which at the time of calculation are being freely and actively traded in the


international oil market and have similar characteristics and quality to the Crude Oil


being marketed. The price for such Crude Oil will be ascertained from Piatt’s Crude


Oil Market Wire daily publication or the spot market for the same Crude Oil


ascertained in a similar manner.


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


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


1.6 BARREL means U.S. barrel, i.e., 42 U.S. gallons measured ul u lemptffauufc of 60° F


and under an atmospheric pressure.


1.7 BUDGET means the itemized cost estimates of the Petroleum Oporation?'described


in an Annual .Work Program.


-i


1.8 CALENDAR QUARTER means a period of threo (3) consecutive months beginning


on January 1, April 1, July 1 or October 1, and ending on the following March thirty-


first (31s*), June thirtieth (30th), September thjrtjpth^J3Qlh) or December (31Jt),


respectively, according to the Gregorian calendar


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


on January first (1st) and ending on the following December thirty-first (31s'),


1.10 according to the Gregorian calendar.


CAPITAL GOODS means:


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


these goods, for use exclusively and directly in manufacturing, agriculture, or


forestry;


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


or petroleum project or in mining or petroleum exploration or development;


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


motorcycles, sedans or luxury vehicles as defined by regulation) and spare


parts for these goods; and,


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


begins, intermediate inputs (including but not limited to explosives, drilling


mud, grinding balls, tires for trucks used in operations, and similar items


specified in regulations).


1.11 COMMERCIAL PRODUCTION


(a) “commercial production” begins on the date of the first shipment of petroleum


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


regular program of profit-seeking activity.


1.12 (b) Commercial production ends on the last day of a tax period in which the


number of shipments is less than one-tenth of the average shipments during


the first three years of commercial production.


CONTRA Cl' means this Production Sharing Contract and its appendices forming an


integral part hereof, together with any extension, renewal, replacement or


1.13 modification hereto, which may be mutually agreed between the Parties.


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


on the Effective Date or on the anniversary thereof.


1.14 CONTRACTOR means Oranto Petroleum Limited and any of its successors and


permitted assigns that shall act as Operator and shall conduct Petroleum Operations.


1.15 CRUDE OIL means crude mineral oil, asphalt, ozokerite, and all kinds of petroleum


Hydrocarbon and bituqicn, either solid or liquid in their natural condition or obtained


from Natural Gas by condensation or extraction, including condensates and Natural


1.16 Gas liquids. .)





DELIMITED AREA means the area in respect of which NOCAL under


Contract, grants to the Contractor an exclusive exploration right. The ai








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surrendered by the Contractor In accordance with the provisions of Articles 3.5 and


3.6 shall be deemed as excluded from the Delimited Area, which shall be reduced


accordingly. Conversely, the Exploration Pcrimetcr(s) shall be an integral part of the


Delimited Area during the term of the relevant exclusive exploration authorization.


1.17 DELIVERY POINT means the F. O. B. point connection the loading facilities to the


vessel when loading Crude Oil in the Republic of Liberia or any other transfer point


mutually agreed between the Parties.


1.18 DOLLAR means dollar of the United Suites of America.


1.19 EFFECTIVE DATE means the date of ratification and publication of the hand bill


under Article 38


1.20 EXPI-OITATION PERIMETER means any part of the Delimited Area in respect of


which NOCAL has granted to the Contractor an exclusive exploitation authorization.


1.21 EXPLORATION means acquisition of seismic data, prospecting,, drilling and all


other activities leading to the establishment of existence or non-existence of


hydrocarbon in the Delimited Area.


1.22 EXPLORATION PERIMETER means any part of the Delimited Area in respect of


which NOCAL has granted the relevant exclusive Exploration Authorization.


1.23 FIELD means a commercial accumulation of Petroleum in one or several overlaying


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


1.24 FISCAL YEAR means a period of twelve (12) consecutive months beginning on


January first (1st) and ending on the following December thirty-first (3151).


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


all ministries, national directorates, departments, national institutes, provincial


government, provincial directorates, commissions, agencies and corporations under


the direct or indirect control of a government or owned thereby and shall include any


court, legislature, council or other state government or national, regional, provincial,


municipal or local authorities.


1.26 Hydrocarbon means the definition under the Liberian Petroleum I^aw of 2000.


1.27 LAW(S) means any constitution, ratified treaty obligation, law, statute, decree, rule,


regulation, judicial act of decision, judgment, order, proclamation, directive,


executive order or other sovereign act of the State


9


1.28 Marine Pollution means the introduction by the contractor or sub-contractor, directly


or indirectly, of substances or energy, including toxic waste, oil spills or any other


solids, liquids or gases into the marine environment (including estuaries) in such


deleterious effects aS harm to living resources, hazard to human health, hindrance to


marine activities including fishing and navigation, or impairment of quality for use of


sea-water, and reduction of amenities.








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


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


extracted in association with petroleum, such as, without limitation, nitrogen,


hydrogen sulfide, carbon dioxide, helium and water vapor.





IJO NON-ASSOCIATED NATURAL GAS means Natural Gas other than Associated


Natural Gas.


I 31 Operator shall mean Oranto Petroleum Limited and any subsequent Contractor party


approved as Operator.


1.32 PARTIES means NOCAL and the Contractor, and PARTY means either NOCAL or





the Contractor.


1.33 PETROLEUM COSTS means all expenditures actually incurred and paid by the


Contract for the purposes of the Petroleum Operations under this Contract, and


determined in accordance with the Accounting Procedure attached hereto as Appendix


2.





PETROLEUM OPERATIONS means all activities undertaking by the Contractor,


including but not limited to exploration, appraisal, prospecting, assessment,


marketing, abandonment, decommissioning, development, drilling, production,


exploitation, processing, storage, transport, distribution, sale, etc of Crude Oil and


Natural Gas.





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


amended from time to time, or any succession code.


1.36 THIRD PARTY means a company or any other entity, other than the Contractor,


which docs not come within the foregoing definition.


1.37 TOTAL PRODUCTION means the total production of Crude Oil or the total production of Natural Gas obtained from the whole Delimited Area less the quantities used for the requirements of the Petroleum Operations and any Unavoidable Losses.





1.38 Unavoidable Loss means any loss that is solely caused by un-intentional or un-willful


misconduct or gross negligence. 




























i














5


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ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL





ARTICLE 2





SCOPE OF THE CONTRACT





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


Liberian Petroleum Law and includes all the provisions of the agreement between


2.2 NOCAL and the Contractor.


NOCAL authorizes the Contractor to be the Operator pursuant to the terms set forth


herein and to carry out the useful and necessary Petroleum Operations in the


2.3 Delimited Area, on an exclusive basis.


The Contractor under takes, for all the work necessary for carrying out the Petroleum


Operations provided for hereunder, to comply with good international petroleum


industry practice and to be subject to the laws and regulations in force in Liberia unless otherwise provided under this Contract. 

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

performance of the Petroleum Operations.


2.5 The Contractor shall bear alone the financial risk associated with the performance of


the Petroleum Operations. The Petroleum Costs related thereto shall be recoverable


2.6 by the Contractor in accordance with the provisions or Article 16.2.


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


the Petroleum Operations shall be shared between the Parties according to the terms


2.7 set forth in Articles 16.2 and 16.3.


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


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


hereunder, including without limitation any agreement, for the provision of goods and


services in respect of Petroleum excess of $250,000.00 binding on the


entities constituting the Contractor.                                                                


























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ARTICLE 3


DURATION OF EXPLORATION PERIODS AND SURRENDERS


3.1 The exclusive exploration authorization is hereby granted to the Contractor for a


period of nine (9) consecutive years defined by three (3) consecutive periods.


A first Exploration Period of four (4) Contract Years, a second Exploration Period of


three (3) Contact Years and the third Exploration Period of two (2) Contract Years in


respect of the entire Delimited Area.


The first Exploration Period will be divided to two stages, a first stage of two (2)


Contract Years and a second stage of two (2) Contract Years. After the 2D and 3D


Seismic Surveys, based on the evaluation result, the contractor has the right to decide


whether to go on to the second stage according to its own judgment. The contractor


shall have the right' to terminate the project at any stage, but must be done in


accordance with the provisions of Articles 4.7 and 32.1 of this Contract.


3.2 If during the first exploration period set forth above the Contractor has fulfilled the


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


Government, the exclusive exploration authorization shall, at the Contractor’s request,


be renewed for a second exploration period of two (2) Contract Years.


3.3 If, at the end of such second exploration period and provided that is has fulfilled its


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


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


3.4 The applications referred to in Articles 32 and 33 shall be made at least sixty (60)


days prior to the expiration of the current exploration period.


3.5 The Contractor shall surrender at least the following surfaces:


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


expiration of the first exploration period.


b. Additional twenty-five percent (25%) of the initial surface of the Delimited


Area at the expiration of the second exploration period.


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


simple geometrical shape delimited by north-south, cast-west lines or by natural


boundaries of the area concerned.


For the purpose of computing the surface to be surrendered, the surface in respect to


any Exploration Perimeter shall be deducted from the initial surface of the Delimited


Area.


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


deducted for die surfaces to be surrendered. 










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


shall have the right to determine the size, shape and location of areas to be


surrendered.


The Contractor undertakes to furnish NOCAL with a precise description and a map


showing the details of the surrendered areas and those retained, together with a report


specifying the work carried out in the surrendered areas from the Effective Date and


the results obtained.


3.6 During any exploration period, the Contractor may, at any time, notify NOCAL that it


surrenders the whole or any part of the Delimited Area and the rights granted to it by


giving sixty (60) day’s notice to that effect.


No surrender during or at the expiration of any exploration period shall reduce the


work commitments and the investment obligations set forth in Article 4 for the current


exploration period.


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


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


Perimeters which would have been granted and to carryout the Petroleum Operations


therein.


3.7 At tire expiration of the third exploration period set forth in Article 3.3, the Contractor


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


Appraisal Perimeters and Exploitation Perimeters which would have then been


granted or applied for.


3.8 If at the expiration of all the exploration periods the Contractor has not been obtained


or is not applying for an exclusive appraisal authorization or an exclusive exploitation


authorization, this Contractor shall terminate.


If an exploratory well is operating at the expiry of an exploration period, then


NOCAL shall grant Contractor an extension of the exclusive exploration authorization


of 90 days (after the exploration well is terminated and the rig released) in order to


evaluate the results of the well and at Contractor’s discretion apply for an exclusive


appraisal authorization or an exclusive exploitation authorization.


3.9 The termination of this Contract, whatever the reason thereof except arising from


Force Majeure, shall not relieve the Contractor of any obligations under this Contract

that wee incurred prior to, or arising from, said termination and which shall be fulfilled. 

















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ARTICLE 4


EXPLORATION WORK COMMITMENTS





4.1 The Contractor shall commence the geological and seismic work within six (6)


months from the Effective Date.








4.2 The Contractor, during the first exploration period defined in Article 3.1, shall carry


out a minimum work programme at a cost of no less than 10 Million Dollars which


includes the following:


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


(b) 2D Seismic Survey of 300 km.; and,


(c) Contingent on a successful 3D seismic acquisition program and subsequent


interpretation of the data, the Contractor undertakes to make reasonable efforts to drill


in the first period. In the event that such a well is drilled in the first exploration period


it would satisfy the second exploration period minimum well commitment.


4.3 The Contractor, during the second exploration period defined in Article 3.1, shall


curry out a minimum work programme at a cost of no less than 12 million Dollars,


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


4.4 The Contractor, during the third exploration period defined in Article 3.1, shall carry


out a minimum work programme at a cost no less than 15 million Dollars, including


acquisition of 800 sq. km. of 3D Seismic Data and commitment to drill a minimum of


one (1) exploration well.


4.5 Each of the exploratory wells shall be drilled to a minimum depth of two thousand


(2,000) meters, after deduction of the water depth, or 100 meters into the top of the


Albian section, whichever shall come first, or to a lesser depth if the continuation of


drilling performed in accordance with good international petroleum industry practice


is prevented for any of the following reasons:





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


depth;


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


abnormal formation pressure;


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


the continuation of drilling by the use of appropriate equipment; -


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


protection, the laying of casing preventing the minimum contractual depth


from being reached.











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4.6 In the event that any of the above reasons stated in section 4.5 occurs, the exploratory


well shall be deemed to have been drilled to the minimum contractual depth.


Notwithstanding any provision in this Article to the contrary, NOCAL and the


Contractor may, at any time, agree to abandon the drilling of a well at a lesser depth


than the minimum contractual depth.


4.7 In order to carry out the exploration drilling defined in Article 4.3 and 4.4 in the best


technical conditions in accordance with good international petroleum industry


practice, the Contractor undertakes to make the expenditure required to meet the


objectives of the well work programme which will include drilling and as appropriate,


testing.


4.8 If during the exploration period the Contractor has performed its work commitments


for an amount lesser than the amount specified above, it shall be deemed to have


fulfilled its investment obligations relating to that period. Conversely, the Contractor


shall perform the entirety of its work commitments set forth in respect of an


exploration period even if it results in exceeding the amount specified above for that


period.


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


the amount of seismic data acquired during any exploration period exceed the number


of wells and/or the amount of seismic data provided for in the work commitment for


that period, as specified in this Article 4, the number of additional exploration wells


drilled and/or the amount of seismic data acquired by the Contractor during such


exploration period may be carried forward and treated as work undertaken in


discharge of the Contractor’s commitment to drill exploration wells and/or seismic


data acquired during the succeeding period.


4.10 if at the expiration of any of the three (3) exploration periods defined in Articles 3.1,


3.2 and 3.3 or upon the date of surrender of the whole Delimited Area, or upon the


date of termination of this Contract, the Contractor has not fulfilled its applicable


work commitments set forth in this Article, it shall pay as compensation to NOCAL,


within thirty (30) days after that date of expiration, surrender or termination, the


work commitments above-defined for the current





























4




















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ARTICLES 5








ESTABLISHMENT AND APPROVAL OF ANNUAL WORK


PROGRAMS AND BUDGETS








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


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


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


Budget for die entire Delimited Area, specifying the Petroleum Operations that the


Contractor proposes to perform during the Calendar Year and their cost.


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


Operations specified in said Annual Work Program, it shall, within thirty (30) days


after receipt of the program, so notify the Contractor, presenting all justifications


deemed useful. In that event, NOCAL and the Contractor shall meet as soon as


possible to consider the proposed revisions or modifications and to mutually establish


the Annual Work Program and the related Budget in its final form, in accordance with


good international petroleum industry practice. However, during the Exploration


Period, the Annual Work Program and the related Budget established by the


Contractor after the above mentioned meeting shall be deemed to be approved


provided that they comply with the obligations set forth in Article 4.


Each part of the Annual Work Program and Budget, in respect of which NOCAL has


not proposed any revision or modification within the period of thirty (30) days above-


mentioned, shull be carried out by the Contractor within the stated time.


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


within the period of thirty (30) days above-mentioned, such Annual Work Program


and the related Budget submitted by the Contractor shall be deemed to be approved by


NOCAL. It is agreed by NOCAL and the Contractor that the Contractor may acquire


knowledge as and when the work is implemented or certain events may justify


changes to the details of the Annual Work Program. In that event, after notification to


NOCAL, the Contractor may make such changes provided that the basic objectives of


said Annual Work Program are not modified.


5.4 Whenever NOCAL is required to exercise its discretion or its approval is required


under this Contract, it shall exercise its discretion or grant its approval on the basis of


the efficient and economic conduct of Petroleum Operations in respect of the


Delimited Area and in accordance with good international oil industry practice.


5.5 At the commencement of the first Exploration Period NOCAL and the Contractor


shall form a Joint Operations Committee (JOC) consisting of not more than three (3)


members appointed by NOCAL and not more than three (3) members appointed by


the Contractor. Each Party shall have the right to change its representative by giving


thirty (30) days notice to such effect to the other Parties. The purpose of this JOC will


be to review presem anil future Petroleum Operations and report jointly to NOCAL


and the Contractor








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5.6 The JOC shall meet twice every calendar year or as otherwise agreed by the members.


No meeting of the JOC shall be held unless two (2) members each appointed by the


Contractor and NOCAL are present.





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


the second anniversary following the Effective Date. Thereafter, NOCAL and the


Contractor shall have the alternating right to nominate a Chairman of the JOC who


shall hold office for a period of two (2) years.





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


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


fees for attendance at the JOC (payable by the Contractor) in amounts to be mutually


agreed by the Parties. 













































































































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ARTICLES 5


ESTABLISHMENT AND APPROVAL OF ANNUAL WORK





PROGRAMS AND BUDGETS








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


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


submit for approval to NOCAL, on Annual Work Program together with the related


Budget for die entire Delimited Areu, specifying tho Petroleum Operations, that the


Contractor proposes to perform during Use Calendar Year und their coat.


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


Operations specified in said Annual Work Program, it shall, within thirty (30) days


after receipt of the program, so notify the Contractor, presenting all justifications


deemed useful. In tliut event, NOCAL und the Contractor shall meet as soon as


possible to consider the proposed revisions or modifications und to mutually establish


the Annual Work Program and the related Budget in its final form, in accordance with


good international petroleum industry practice. However, during lire Exploration


Period, the Annual Work Program und the related Budget established by the


Contractor alter the above mentioned meeting shall be deemed to be approved


provided that they comply with the obligations set forth in Article 4.


Each part of the Annual Work Program and Budget, in respect of which NOCAL has


not proposed any revision or modification within the period of thirty (30) days above-


mentioned. shall be carried out by the Contractor within the stated time.


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


w ithin the period of thirty (30) days above-mentioned, such Annual Work Program


and the related Budget submitted by the Contractor shall be deemed to be approved by


NOCAL. It is agreed by NOCAL and the Contractor that the Contractor may acquire


knowledge as and when the work is implemented or certain events may justify


changes to the details of the Annual Work Program. In that event, after notification to


NOCAL the Contractor may make such changes provided that the basic objectives of


said Annual Work lYogram are not modified.


5.4 Whenever NOCAL is required to exercise its discretion or its approval is required


under this Contract, it shall exercise its discretion or grant its approval on the basis or


the efficient and economic conduct of Petroleum Operations in respect of the


Delimited Area and in accordance with good international oil industry practice.


5.5 At the commencement of the first Exploration Period NOCAL and the Contractor


shall form a Joint Operations Committee (JOC) consisting of not more thari three (3)


members appointed by NOCAL und not more than three (3) members appointed by


the Contractor. Each Party shall have Use right to change its representative by giving


thirty (30) days notice to such effect to the other Parties. The purpose of this JOC will


be to review presen; art figure Petroleum Operations and report jointly to NOCAL


and the Contractor *











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5.6 The JOC shall meet twice every calendar year or as otherwise ugreed by the members.


No meeting of the JOC shall be held unless two (2) members each appointed by the


Contractor and NOCAL arc present.


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


the second anniversary following the Effective Date. Thereafter, NOCAL and the


Contractor shall have the alternating right to nominate a Chairman of the JOC who


shall hold office for u period of two (2) years.


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


will regarded as recoverable costs. Members of the JOC shall lie entitled to sitting


fees for attendance agreed by the Parties. 







































































































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ARTICLE 6


CONTRACTOR’S OBLIGATIONS IN RESPECT OF THE


EXPLORATION PERIODS AND ENVIRONMENTAL MANAGEMENT


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


equipment, facilities and materials required to carry out the Petroleum Operations.


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


to carry out the Petroleum Operations.


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


Annual Work Programs which shall be carried out in the most appropriate manner in


observance of good international petroleum industry practice.


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


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


treatable water encountered during its work;


(b) Provide an effective and safe method for the discharge or disposal of drill


cuttings and drilling muds generated during drilling operations;


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


potentially commercially viable show encountered during drilling and the


exploitability of any possible Hydrocarbon discoveries and;


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


waste lubricating oils generated by its operations;


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


the environment.


6.5 The Contractor further undertakes to carry out all petroleum operations in accordance


with the Environmental Protection and Management Laws of Liberia and consistent


with good international petroleum industry practice. In this respect, the Contractor


shall:


(a) Submit to the Government and Environmental Impact Statement (E1S) prior to


the commencement of exploration and production.


(b) Take reasonable preventative, corrective and restorative measures to protect


from pollution, contamination or damage resulting Petroleum Operations


water bodies, land surfaces and the atmosphere, and that any pollution,


contamination and damage of such water bodies, land surface and atmosphere


hereunder the rectified.


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


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


Delimited Area to a state in which it was before the Petroleum Operations.


However, the Contractor shall have no liability for any environmental


damages caused after the transfer of such assets as per Article 20.1.  







13


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U>|4 I’lCJUNL 10. 2009 CONFIDENTIAL








6.6 All works and facilities by the Contractor hereunder Mull, according to their


nature and to the circumstances, be built, placed, signaled. marked, fitted and


preserved so as to allow at any time and in safety free passage to navigation within the


Delimited Area, and without prejudice to the forgoing, the Contractor shall, in order


to facilitate navigation, install the sound and optical devices approved or required by


the competent authorities and maintain them in a manner satisfactory to said


authorities.


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


for the purposes hereof, the Contractor shall not disturb and existing graveyard or


building used for religious purposes, nor cause a nuisance to any government or


public building, except with the prior consent of NOCAL. and shall make good the


damage caused by it in that event.


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


necessary precautions to prevent Marine Pollution in Liberian waters in support of


Petroleum Operations.


6.9 In order to prevent pollution. NOCAL and Contractor agree that Contractor shall


conduct its petroleum operations consistent with good international petroleum


industry practice environmental as may be applicable to prevent pollution and


preserve the environment. NOCAL. the Contractor and EPA shall meet and consider


any measure, which may be necessary to preserve the environment.


6.10 NOCAL and the Contractor shall commission periodic environmental audits as


required to ensure compliance with EIS.

6.11 The Contractor and its subcontractors shall be obligated to give preference to


enterprises and goods from Liberia, if conditions of proven experience, price, quality,


delivery time and terms of payment arc similar to those from other countries or from


non-Liberian sources.





















































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ARTICLE 7


CONTRACTOR’S RIGHTS IN RESPECT OF THE EXPLORATION


PERIODS


7.1 Without prejudice to the provisions hereof, the Contractor shall have the right to carry


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


alia;


(a) full responsibility for, management of and control over all the Petroleum


Operations;


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


independent contractors, and to pay accordingly any of their expenses and


costs in the place and in the currency chosen by the Contractor.


7.2 The Contractor shall have the right to clear the ground, dig, perforate, drill, build,


erect, place, supply, operate, manage and maintain ditches, pools, wells, trenches,


excavations, dams, canals, water conduits, plants, tanks, basins, maritime and other


storage facilities, primary distillation units, first extraction gasoline separator units,


sulfur plants, and other facilities for Petroleum production, together with the


pipelines,, pumping stations, generator units, power plants, high voltage lines,


telephone, telegraph, radio and other communication facilities, factories, warehouses,


offices, employees' housing, hospitals, premises, ports, docks, harbors, dikes, jetties,


dredges, sea walls, under water piers and other facilities, ships, vehicles, railways,


warehouses, workshops, foundries, repair shops and all the auxiliary services which


are necessary for or useful to the Petroleum Operations or in connection therewith;


and all additional facilities which are or may become necessary for or reasonably


subsidiary to the carrying out of the Petroleum Operations.


7.3 The agents, employees and representatives of the Contractor or its subcontractors


shall have the right, for the purposes of the Petroleum Operations to enter into or


leave the Delimited Area and shall have free access to all the facilities set up by the


Contractor.


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


Liberia, to remove and use the surface soil, mature timber, clay, sand, limestone,


gypsum, stones and other similar materials, which may be necessary for the


performance of the Petroleum Operations.


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


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


the performance of the Petroleum Operations, subject to payment of fees applicable in


Liberia, when they are located on land owned by the STATE and placed in the


vicinity of the land w-here said Operations are taking place. NOCAL shall assist the


Contractor in obtaining any such consent from any Liberian administrative bodies.













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


that existing irrigation or navigation are not impaired and that land, house or watering places


for livestock are not deprived or a reasonable quantity of water.








ARTICLE 8





ACTIVITY REPORTS DURING TIIE EXPLORATION PERIODS AND


SUPERVISION OF PETROLEUM OPERATIONS


8.1 Subject to the terms of Articles 8.5 and 8.6, NOCAL shall own and may freely use all


the original data and documents relating to the Petroleum Operations such as, but


without limitation, records, samples, geological, geophysical, petrophysical, drilling


and operating reports.


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








(a) daily reports on drilling operations;





(b) weekly reports on seismic operations;


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


Operations carried out together with a detailed statement of Petroleum Costs


in respect of the preceding quarter,





(d) prior to the end of February of each Calendar Year, an annual report on the


Petroleum Operations carried out together with a detailed statement of


Petroleum Costs in respect of the preceding Calendar Year.





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


as they are prepared or obtained:





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


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


map profiles, sections or other documents related thereto, as well as, at


NOCAL’s request, the originals of all recorded seismic magnetic tapes;





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


with a complete set of recorded logs;





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


the flow or production of a well;


(e) a cop>^ of all reports relating to core analyses.





i


All maps, sections, profiles, logs and all other geological or geophysical documents


shall be supplied on an appropriate transparent support In vlow of subsequent


reproduction.  







16


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


samples of fluids produced during drill tests or production tests shall also be supplies


to NOCAL within a reasonable period.


Upon expiration or in the event of surrender or termination of this Contract, the





original documents and samples relating to the Petroleum Operations shall be


provided to NOCAL.





8.4 The Contractor shall keep NOCAL informed of its activities through the duly


designated representative of the latter. In particular, the Contractor shall notify


NOCAL as soon as possible and in any event at least fifteen (15) days in advance of


all projected Petroleum Operations, such as any geological survey, seismic surveys,


and commencement of drilling and installation of a platform. In the event the


Contractor decides to abandon drilling it shall notify NOCAL thereof within at least


seventy-two (72) houts prior to such abandonment, unless operational safety demands


a faster response.


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


analysis supplied by the Contractor pursuant to this Contract shall be treated as


confidential and shall not be disclosed by any Party to any other person without the


express written consent of the other Parties within the life of the exploration,


appraisal, development, production or exploration authorization period.





8.6 The provision of Article 8.5 shall not prevent disclosure:





8.6.1 By NOCAL or the State


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


(b) For the purpose of complying with the State’s international obligations





for the submission of statistic and related data.





8.6.2 By the Contractor





(a) To its affiliates, advisors or consultants


(b) To a bona fide potential assignee or all or part or the contractor’s


interest hereunder


(c) To banks or other lending institutions for the purpose of seeking





external financing of costs of the Petroleum Operations


(d) To Non-Affiliates who shall provide services for the Petroleum


Operations, including sub-contractors, vendors, and other service


(e) contractors, where this is essential for their provision of services.


i


To government agencies for obtaining necessary rulings, permits,


licenses' and approvals, or as may be required by applicablelaw or


financial stock exchange, accounting or reporting practices^








17


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Any Party disclosing information or providing data to a Third Party under die terms


Article shall require such persons to undertake the confidentiality of such data.





ARTICLE 9





OCCUPATION OF LAND





The STATE shall make available to the Contractor, and only for the purposi


Petroleum Operation, any land, which it owns and which is necessary for said opera!


Contractor shall have the right to build and the obligation to maintain, above and I


ground, the facilities nccessaiy for the Petroleum Operations.


The Contractor shall indemnify the STATE for any damage caused to the land


connection with the construction, use and maintenance of its facilities on such land.


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


and piping systems above and below the ground and along the land not bclongi


STATE, provided that the Contractor pays to the land-owners, a reasonable com


mutually agreed upon,


The rights on land owned by private persons, which would be necessary for the cai


of the Petroleum Operations, shall be acquired by direct agreement between the C


and the private person concerned.


In event an agreement cannot be reached between the Contractor and privafc


concerned, the Contractor shall request the State to facilitate the process of n<


between the private owner and the Contractor for the acquisition of the land a


market value.


Notwithstanding anything mentioned herein to the contrary, any and all costs exp


Contractor pursuant to this A be considered cost recoverable and shall


be treated as Petroleum Costs





















































18


 'I








ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL








ARTICLE 10





USE OF FACILITIES





10.1 For the purpose of the Petroleum Operations, the Contractor shall have the right to


use, in accordance with the applicable laws, including but not limited to, any railroad,


tramway, road, airport, landing strip, canal, river, bridge, waterway and any telephone


or telegraph network in Liberia whether owned by the STATE or by any private


enterprise, subject to the payment of fees then in effect or mutually agreed upon


which will ,not he in excess of the prices and tariffs charged to Third Parties for


similar services.


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


Operations any land, sea or air transportation means for the transportation of its


employees or equipment, subject to compliance with the laws and regulations which


generally govern the use of such means of transportation.


10.2 The STATE shall have the right to use for exceptional matters any transportation and


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


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


Third Parties for similar services provided that such use does interfere with Petroleum


Operations. In the event of any requisition of such facilities, the State shall indemnify


the Contractor for all loss, damages, claims, penalties and cause of actions sustained


for the period of such requisition of such facilities.


10.3 IStb,thing in this Contract shall limit the STATE’S right to build, operate and maintain’


on, under and along the land made available to the Contractor for the purposes of the


Petroleum Operators, roads, railroads, airports, landing strips, canals, bridges,


pipelines, useful telephone and telegraph lines, provided that such rights is not


exercised in a manner which restricts or hinders the Contractor’s rights hereunder, or


the Petroleum Operations.










19


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL





ARTICLE 11





APPRAISAL OF A PETROLEUM DISCOVERY


i-


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


notify NOCAL thereof and submit to it, within thirty (30) days after the date of the


temporary plugging or abandonment of the discovery wdll, a report including all


available information relating to said discovery.


*


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


Petroleum discovery, it shall submit for approval to NOCAL, within six (6) months


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


estimate of the related Budget.


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


regards its approval and performance, it being understood that the submitted program


shall comply with good international petroleum industry practice.


11.3 If the Contractor meets the conditions referred to in Article 11.2 and on request to


NOCAL, the letter shall grant to it an exclusive appraisal authorization for duration of


two (2) years from the date of approval of the appraisal work program and the related


Budget, in respect of the Appraisal Perimeter specified in said program. Except


otherwise provided by this Article, the Contractor shall, during the term of said


exclusive appraisal authorization, be subject to the same regime as that applicable to


the exclusive exploration authorization.


11.3.1 The Contractor shall then diligently carry out the appraisal work program for


the discovery in question; in particular it shall drill the appraisal wells and


carry out the production tests specified in said program.


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


the appraisal period above-defined, the duration of said period may be


extended by a maximum of six (6) months, provided that such extension is


justified by the continuation of the drilling and production tests specified in


the appraisal program.


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


and granted by NOCAL in the event that further geological, geophysical,


.,. subsurface, facilities or commercial work is considered justified by the


Contractor in order to establish whether the field corresponding to the


Petroleum discovery is commercial.


11.3.2 Within three (3) months after the completion of appraisal work, and no later


than thirty (30) days prior to the expiration of the appraisal period, the


■ : Contractor shall provide NOCAL with a detailed report giving all the


information relating to the discovery and the appraisal thereof.


1L3.3 If, after having carried out the appraisal work, the Contractor considers that


the Field corresponding to the Petroleum discovery is commercial, it shall


submit to NOCAL, together with the previous report, an application for an





20


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





exclusive exploitation authorization accompanied by a detailed development


and production plan for said Field, specifying inter alia;


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


the Contractor, so that it covers the areas defined by the seismic


.closure of the field concerned, together with all the technical


justifications with respect to the extent of said Field;


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


recoverable reserves and the corresponding annual productions,


together with a study on the methods of recovery and the possible


valorization of the products associated with Crude Oil, such as any


Associated Natural Gas;


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


production, such as the number of development wells, the number


platforms, pipelines, production, processing, storage and loading


facilities together with their specifications;


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


production start-up;


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


economic evaluation demonstrating the commercial nature of the


discovery in question.


11.3.4 The commercial nature of one or more Petroleum Fields shall be determined


by the Contractor, provided that it shall, at the end of appraisal work, submit


to NOCAL the economic study referred to in Article 11.3.3 (e) demonstrating


the commercial nature of said Field or Fields.


A Field may be declared commercial by the Contractor if, after taking into


account the provisions of this Contract and the submitted development and


production plan, the projected incomes and expenses determined in


accordance with good international petroleum industry practice confirm the


commercial nature of said Field.


11.3.5 For the purposes of evaluating the commercial nature of said Field or Field,


NOCAL and the Contractor shall meet within thirty (30) days after the


submission of the development and production plan accompanied by the


economic evaluation.


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


subject to the approval of* NOCAL. Within nine (90) days after the


submission of said plan, NOCAL may propose revisions or modifications


hereto by notifying the Contractor thereof with all the useful justifications. In


that event, the .Partied shall meet as soon as possible in order to consider the


proposed revisions or rhodifications and establish by mutual agreement the


plan in its final form; the plan shall be deemed to be approved by NOCAL


upon the date of such agreement*^/











21


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





If the Parties fail to an agreement by mutual negotiation, the Contractor has


the right to make the final decision of the dovolopmcnt and production plan.


Should NOCAL fail to notify the Contractor of Its wish for revision or


modification within the above-mentioned nine (90) day period, the plan


submitted by the Contractor shall be deemed to be approved by NOCAL at the


expiration of said period, automatically entry into force.





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


notification to NOCAL of a Petroleum discovery, has not applied for an exclusive


appraisal authorization or if, after its granting, it has not commenced the appraisal


work in respect of said discovery, or if the Contractor, within eighteen (18) months


after completion of the appraisal work, docs not declare the discovery as commercial,


NOCAL may require that the Contractor surrenders all its rights in respect of the area


deemed to encompass said discovery without any compensation for the Contractor. In


the event of a .difference of opinion between the Contractor and NOCAL, either Party


may request a determination by a Sole Expert as provided in Articles 31.4 and 31.5 If,


within sixty (60) days after Sole Experts decision, the Contractor has not notified its


decision to apply for an exclusive appraisal authorization, it shall surrender said area


and will forfeit all its rights on Petroleum which could be produced from said


discovery, and any area so shall be deducted from the surfaces to be


surrendered under Article 3.5


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL


ARTICLE 12





GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION IN





RESPECT OF A COMMERCIAL DISCOVERY


12.1 A commercial Petroleum discovery shall entitle the Contractor to an exclusive right, if


it so requests pursuant to the conditions set forth in Article 11.3.3, to obtain, in respect


of the field concerned, an exclusive exploitation authorization covering the related


Exploitation Perimeters with the Delimited Area shall not be limited.


12.2 If the Contractor makes several commercial discoveries in the Delimited Area, each


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


exclusive exploitation authorization each corresponding to an Exploitation Perimeter.


The number of exclusive exploitation authorizations and related Exploitation


Perimeters within the Delimited Area shall not be limited.


12.3 If in the course of work carried out after the grant of an exclusive exploitation





authorization, it appears that the area defined by the seismic closure of the Field


concerned is larger than originally estimated pursuant to Article 11.3.3, NOCAL shall


grant to the Contractor, as part of'the exclusive exploitation authorization already


granted, an additional area so that the entirety of said field is included in the


Exploitation Perimeter, provided, however, that the Contractor supplies NOCAL,


together with its application with the technical evidence of the extension so required


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


Delimited Area as defined at the time of said application.


12.4 Where a field extends beyond the boundaries of the Delimited Area, NOCAL may


require the Contractor to exploit said Field in association with the right holder of the


adjacent area under the provisions of a unitization agreement


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





submit to its approval the development and production plan of the Field concerned


which shall be prepared in agreement with the right holder of the adjacent area.jS/L^




















1
































23


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDEN TIAL





ARTICLE 13





DURATION OF THE EXPLOITATION PERIOD





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


authorized to carry out the exploitation of a Field declared commercial is set at


twenty-five (25) years from its date of issue.


If upon expiration of the exploitation period of twenty-five years above-defined, a


commercial exploitation of a Field remains possible NOCAL may authorize the


Contractor, at the latter’s request submitted at least twelve (12) months prior to said


expiration, to continue under this Contract the exploitation of said Field during an


additional period of no more than ten (10 years, provided that the Contractor has


fulfilled all its obligations during the current exploitation period.


If, upon expiration of that additional exploitation period, a commercial exploitation of


said Field remains possible, the Contractor may request NOCAL at least twelve (12)


months prior to said expiration that it be authorized to continue the exploitation of


said Field under this Contract, during the current exploitation.


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


exploitation authorization by giving at least twelve (12) months’ prior notices which


may be reduced with NOCAL’s consent.


That notice shall be accompanied by the list of steps which the surrendering


Contractor undertakes to take, in accordance with good international petroleum


industry practices arising out of its surrender.


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


consecutive period of at least six (6) months, (unless extended by periods of Force


Majcure) decided by the Contractor without NOCAL’s consent, or abandonment of


the exploitation of Field, may give rise to the withdrawal of the exclusive exploitation


authorization concerned. In the event of any disagreement between NOCAL and the


Contractor regarding the circumstances of the interruption then the JOC shall meet to


resolve the disagreement.


13.4 Upon expiration surrender or withdrawal of the last exclusive exploitation


authorization granted to the Contractor, this Contract shall terminate.


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


Contractor of anv obligations incurred prior to, or arising from, said expiration or

















•)














24


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





ARTICLE 14


EXPLOITATION OBLIGATION


14.1 For any field in respect of which an exclusive exploitation authorization has been


granted, the Contractor undertakes to perform, at its sole cost and its own financial


risk, all the Petroleum Operations useful and necessary for the exploitation of said


Field.


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


evidence, during either the development period or the production period, that the


exploitation of a field cannot be commercially profitable notwithstanding that an


exclusive exploitation authorization has been granted in accordance with the


provisions of Article 12.1, NOCAL agrees not to force the Contractor to continue the


exploitation of such Field.





In that event, NOCAL, in its discretion, may withdraw the exclusive exploitation


authorization concerned from the Contractor wfthout any compensation for the latter,


by giving a sixty (60) days’ prior notice


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL





ARTICLE 15


CONTRACTOR’S OBLIGATIONS AND RIGHTS IN RESPECT OF


EXCLUSIVE EXPLOITATION AUTHORIZATIONS


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


approval of the development and production plan referred to in Article 11.3.6 and


shall continue it with the maximum diligence.


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


respect of any exclusive exploitation authorization.


15.3 the Contractor shall have the right to build, use, operate and maintain all the


Petroleum storage and transportation facilities which are necessary for the production


transportation and sale of Petroleum produced, pursuant to the conditions specified in


this Contract.


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


which is on the surface land of Liberia or under the waters that lie within the


jurisdiction of the State which is necessary for the Petroleum Operations, provided


that it shall submit plans to NOCAL for approval prior to the commencement of work;


any pipeline crossing or running alongside roads or passageways (other than those


used exclusively by the Contractor) shall be built so as not to hinder the passage on


those roads or passageways.


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


pipeline or processing, transportation or storage facility built for the purses of the


Petroleum Operations, be obligated to accept the flow of Petroleum coming from


exploitations other than that of the Contractor, provided that such flow shall not cause


prejudice to the Petroleum Operations, and provided, further, that a reasonable tariff


covering a normal remuneration for capital invested in respect of the pipeline or


facility concerned shall be paid by the user.


15.5 Following the grant of an exclusive exploitation authorization, the Contractor


undertakes to proceed diligently with the carrying out of development wells, spacing


them in a manner so as to ensure, in accordance with good international petroleum


industry practice, the maximum economic recovery of the Petroleum contained in the


Field in question.


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


comply with all good international petroleum industry practice which in particular


ensures the good conservation of fields and maximum economic recovery of


Petroleum.


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


recovery processes if theymay lead to an increase In Petroleum recovery rate under


economic conditions^/ Q~z£t^











26


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15.7 The Contractor shall provide NOCAL with all the reports, studies, measurement


results, tests and documents enabling the monitoring of the proper exploitation of


each Field. , «


The Contractor shall, in particular, carry out the following measures on each


producing well:


(a) monthly testing of production and gas/oil ratio;


.-(b) half-yearly measurement of the field reservoirs pressure.


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


Petroleum in accordance with the provisions of Article 15.6.


The annual production rates of each field shall be submitted by the Contractor


together with the Annual Work Programs for the approval of NOCAL which shall not


be withheld provided that the Contractor gives proper technical and economic


grounds.


15.9 The Contractor shall measure, at the Delivery Point, all Petroleum produced and not


used for the requirements of the Petroleum Operations, and excluding Unavoidable


Losses, after extraction of water and sediments, by using the measurement appliances


and procedures customarily used in the international petroleum industry.


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





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


If the Contractor wishes to change said measurement appliances or procedures, it shall


obtain prior approval from NOCAL. Where the appliances and procedures used


therefore have caused an overstatement or understatement of measured quantities, the


error shall be deemed to have existed since the date of the last calibration of the


appliances, unless the contrary can be justified,/«nd die proper adjustment shall be


made for the period of existence of such error. Wy















































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ARTICLE 16


RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING





16.1 From the commencement of regular production of Crude Oil, the Contractor shall


market all the production of Crude Oil obtained from the Delimited Area, in


accordance with the provisions hereinafter defined.


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


each Calendar Year a portion of the Production in no event greater titan seventy


percent 70%) of the total Production of Crude Oil or gas from the Delimited Area, or


only any lesser percentage which would be necessary and sufficient, to recover


remaining cost.


The Value of. such portion of total Production allocated to the recovery of the


Petroleum Costs by the Contractor, as defined in the preceding paragraph, shall be


calculated in accordance with the provisions of Article 18.


If during a Calendar Year the Petroleum Costs not yet recovered by the Contractor


under the provisions of this Article 16.2 exceed the equivalent in value of seventy


percent (70%) of the Total Production of Crude Oil or Total Production of Gas from


the Delimited Area, as calculated above, the balance of the Petroleum Costs which


cannot be recovered in that Calendar Year shall be carried forward in the following


Calendar Year or Years until full recovery of the Petroleum Costs or until the


expiration of this Contract.


16.3 The quantity of Crude Oil from the Delimited Area remaining during each Calendar


Year after the Contractor has taken from the Total Production the portion necessary


for the recovery of the Petroleum Costs, hereinafter referred to as “Remaining Oil


Production,” shall be shared between NOCAL and the Contractor, on a field by field


basis, as follows:





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


from the Delimited Area:





Increments of daily oil


Total Production (in NOCAL’s Share Contractor’s Share


Barrels per day)


From 0 to 100,000 35% 65%


From 100,000 to 150,000 47% 53%


Over 150,000 55% 45%





16.4 In case of natural gas, the following production shuring shall applyu.


Increments of dqily Gas NOCAL’s Share Contractor’s Share


Total Production 30% 70% £











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For the purpose of this Article, the daily total Production shall be the average rate of


Total Production during the calendar quarter in question.








16.5 NOCAL may receive its share of production defined in Article 16.3 and 16.4 either in


kind or in cash.


16.6 If NOCAL wishes to receive in kind all or part of its share of production defined in


Article 163 or 16.4 it shall so notiiy in writing the Contractor at least ninety (90) days


prior to the beginning of the calendar quarter concerned specifying the precise


quantity that it wishes to receive in kind during said quarter.


16.7 If NOCAL wishes to receive in cash all or part of its share of production defined in


Article 16.3 or 16.4 or if NOCAL has not notified the Contractor if its decision to


receive its share of production in kind pursuant to Article 16.7, the Contractor shall


market NOCAL’s share, of production to be taken in cash for the quarter concerned,


lift said share during such quarter and pay to NOCAL within thirty (30) days


following the date of each lifting, an amount equal to the quantity corresponding to


NOCAL’s share of production multiplied by the sale price defined in Article 18.


NOCAL may require payment, for sales of its share of production sold by the


Contractor, in Dollars or in the foreign currency in which the sale has been mader/fo^










































































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ARTICLE 17


TAXATION


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





Petroleum Operations, be subject to the laws generally applicable and the regulations


in force in Liberia concerning taxes which are or may be levied on incomes, or


determined thereto.





17.2 Surface Rent.





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


consolidated account per square kilometer of the area remaining of the


Delimited Area, in the amounts as set out below:


4


Phase of Operation Surface Rentals Per Annum


First Exploration Period $30 per sq. km.





Second Exploration Period $50 per sq. km.





Third Exploration Period $75 per sq. km.





Development & Exploitation Area $100 per sq. km





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


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


of the Effective Date.





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


adjustment in accordance with the GDP Implicit Price Deflator as published


and revised from time to time by the U.S. Department of Commerce, Bureau


of Economic Analysis (“the deflator”) and the Central Bank of Liberia (CBL).


The inflation-adjusted rent shall be effective January 1 of each calendar year


based on the ratio of the value of the revised deflator for the second quarter of


the immediately preceding calendar year to the value of the revised deflator


for the second quarter of 2008.





17.3 Income Tax





(a) Rate. The rate of tax on taxable income shall be twenty-five percent (25%).


The Contractor shall be liable to pay its income tax directly to the Government


of Liberia.


f


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


individually to any entity comprising the Contractor under this Contract and


the Contractor is legally responsible for paying tax with respect to income of


the project.


i


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


Contractor’s taxable income shall be determined separately for each








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Production Sharing Contract or other project engaged in by the Contractor in


Liberia, and the Contractor shall not be permitted to consolidate income or


loss of this Production Sharing Contract or other project with that of any other.


(d) The filing and advance payment rules for the regular income tax under the


Revenue Code apply to Contractor.


Determination ofTaxable Income


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


considered to be income of a resident legal person or of a permanent


establishment taxable according to rules applicable to a resident legal person


under the Revenue Code. Taxable income and income tax liability are


determined under provisions of the regular jncome tax provisions of the


Revenue Code subject to special rules under this Article.


(b) The Contractor’s gross income includes:


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


petroleum project as specified in the Petroleum Law;


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


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


Liberia, including currency gains when realized, less the deductions set


forth in Article !7 of this contract.


(c) Deductions Allowed from Gross Income. In accordance with the regular


income tax provisions of the Revenue Code, all expenditures incurred during


the tax period wholly, exclusively and necessarily in connection with project


operations (including non-capital operating costs but excluding capital costs


except to the extent of the annual allowance for depreciation), are allowed as


deductions, including but not limited to the following items:


(1) An allowance for depreciation of plant and equipment in accordance


with the depreciation rules of the regular income tax provisions of the


Revenue Code, subject to the special rule of Article 17.5.


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


permitted under the regular income lax provisions of the Revenue


Code as modified by Article 17.6.


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


incurred in connection with operations and paid to an affiliate or to a


third party, for the tax period incurred, subject to the special rule of


Article 17.7.


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


the extent allowed by Article 17.8











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(5) Payments to a Government-approved trust fund for reclamation and


decommissioning, subject to the specific limitations set out in Article


17.9.


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


management fees paid, whether to an affiliate or to a third party, but


not the amount in excess of two percent (2%) of other operating


expenses incurred for the tax period.


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


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


income taxation in a prior tax period.


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


within the meaning of the regular income tax provisions of the


Revenue Code for educational or community development projects,


social welfare, or medical purposes or for the provision of other social


services.


(9) Expenses related directly to the project’s “other income” under


subsection (b) (2), to the extent otherwise allowable as a deduction the


regular income tax provisions of the Revenue Code and this Article.


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


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


duties paid by the employee to the Government.


(2) A loss from a hedging transaction.


(3) Any incentive deduction allowed under the Revenue Code.


17.5 Special Rule for Depreciation


(a) For property placed in service before the start of commercial production, the


period for depreciation of property described the regular income tax provisions


of the Revenue Code shall begin in the first tax period in which commercial


production begins.


(b) The cost of tangible moveable property shall be recovered over the period and


by the method described in the regular income tax provisions of the Revenue


Code.





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


the Revenue Code for recovering the cost of tangible fixed property and


intangible property, Contractor shall be entitled to recover the cost of this


property oh an asset-by-asgetbasis over a five-year period at the rate of twenty


percent (2’b%) per year.











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(d) Contractor’s tangible fixed property outside the project’s production area (or


beginning inside and extending outside) shall be depreciated over a 15-year


period or the expected period of commercial production (whichever is shorter)


using the straight-line method.


(e) If a project is terminated before the end of the cost recovery period, the


remaining unrecovered cost is treated as an expense deduction in determining


taxable income for the tax period in which the project is terminated.


17.6 Special Rule for Net Operating Loss Carry Forward. For the purposes of


determining Contractor’s taxable income, the for carry forward of net operating loss


under the regular income tax provisions of the Revenue Code shall begin with the first


tax period in which commercial production begins and shall be seven years rather


than five.


17.7 Special Rule for Interest Deduction


(a) Interest incurred in a tax period and subject to the limitations of the regular


income tax provisions of the Revenue Code may be carried forward to the next


tax period.


(b) The amount of the carry forward is treated as interest incurred in the


subsequent period, and is deductible to the extent permitted under the regular


income tax provisions of the Revenue Code.


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


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


period in which commercial production begins.


17.9 Special Rule for Decommissioning Expenses


(a) Payment for decommissioning expenses is deductible from gross income


under Article 17.4(c) only in the amount paid during the tax period:


(1) To defray reclamation or decommissioning expenses upon cessation of


commercial production, and remedying damage caused to land used by


the project or environmental damage the project may have caused


(including damage that extends beyond the contract area), but not if


drawn from a trust fund described in paragraph (2).


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


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


the Minister in regulations and subject to any limitations or


requirements provided in regulations.


t


(b) tion under subsection (a) but not used for the














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(1) If remaining after the tax period in which commercial production ends,


shall be included in income for the following tax period; or


(2) If used for another purpose, shall be included in income in the tax


period within which the amount is so used.


17.10 Attribution of Expenditures. Exploration, development, and capital goods


expenditures incurred prior to a project’s first tax period are attributable to it for


income tax purposes as follows:


(a) Exploration expenditures incurred prior to the identification of a site for


development are attributable to the first development site established under


this Contract and leading to commercial production.


(b) Subsequent exploration expenditures within the Delimited Area are attributed


in the same fashion to any subsequent development site leading to commercial


production.


(c) Exploration, development, and capital goods expenditures not attributable to a


project as described in this paragraph are not deductible in determining taxable


income.





17.11 Treatment of Property Transfers


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


transfer of depreciable property used by the project is treated in accordance


with the Revenue Code. Transfer of non-depreciable property used in the


business, or transfer of property other than property connected with petroleum,


is determined in accordance with the property transfer rules of the Revenue


Code.





(b) Special Cases


(1) Hedging. Hedging transactions are taxable as a separate business





activity, and hedging gains and losses incurred arc not includible or


deductible in determining taxable income of the project.





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


investment is determined under die Revenue Code and is includible in


income of a project, except to the extent reduced by any deductions


permitted under the Revenue Code for loss Incurred on the disposition


of property other than property used in a business if the property is


held for investment.





17.12 Successor Agreement. If this Contract is terminated and a now agreement is entered


into with Contractor for the same contract area, the prefect's -loss carry forward


existing at the termination date of the development agreement is deductible in the first


tax period of the successor project under the successor agreement, provided:





(a) The whole of the geographic atea covered by the contract area of the success*;


agreement is within the contract area of the original agreement; and








34


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL





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


termination of the original agreement.


17.13 Assignment of Rights and Interest If Contract assigns its rights and interest





pursuant to Article 35


(a) The taxable income of the project shall continue to be determined using the


tax cost and other tax attributes applicable at the date of the interest transfer,


and


(b) Contractor shall determine gain or loss under the regular income tax


provisions of the Revenue Code, which also applies to determine the


transferee’s tax cost in the interest. ■>











17.14 Transactions Between Related Persons


(a) General Rule. A project’s gain, loss, and other tax consequences in


transactions with related persons are subject to in Article 1.30 and regular


income tax provision of the Revenue Code concerning related persons.


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


Contractor and a related person shall be on the basis of competitive


international prices and such other terms and conditions as would be fair and


reasonable had the transaction taken place between unrelated parties dealing at


arms’ length.


(c) Disclosure. Contractor must:


(1) Disclose related-party transactions and contemporaneously document


the manner in which prices are set in transfers to related persons.


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


accordance with the law of the related person’s country of residence.


(d) Guidelines. The Minister shall follow OECD transfer pricing guidelines in


evaluating the validity of the price set in a related party transfer.


17.15. Partnerships and Joint Ventures


(a) Pass-Through of Tai Attributes. If Contractor is organized as a partnership


or similar form of unincorporated joint venture, the project’s income,


expenses, loss, credits, and character of income or loss shall be attributed to


the partners in accordance with their interests (including the items specified in


Article 17.4, for the puipose of determining taxable income, loss, credits, and


tax liability sepyately for each partner.


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


(1) The provisions of this Article shall apply separately to each partner,











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 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL





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


liable for income tax as determined under this Article.


17.16 Withholding Taxes. Contractor shall withhold taxes in accordance with the general


provisions of the Revenue Code, except that it shall withhold tax on payments made


to nonresidents at the following rates:


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


(b) Interest, six percent (6%).


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


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


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


materials for use directly in agriculture or forestry, or in a mining or petroleum


project or in natural resource exploration and development;


(b) Capital
















































































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ARTICLE 18


VALUATION OF PETROLEUM


18.1 For the purposes of this Contract, the Crude Oil price shall be the F.O.B. “Market


Price” at the Delivery Point, expressed in Dollars per barrel and payable within thirty


(30) days after the date of the bill of lading, as determined hereinafter for each


quarter.


A market Price shall be determined for each type of Crude Oil or Crude Oil mix.


18.2 The Market Price applicable to lifting of Crude Oil made during a calendar quarter


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


average of the process obtained for Crude Oil from the Delimited Area during said


quarter by the Contractor and by NOCAL from independent purchasers, as adjusted to


take into account the differences in quality and gravity as well as in F.O.B. delivery


terms and payment conditions.


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


basis of the prices obtained on the international market during said quarter between


independent buyers and sellers for sales of crude oils of quality similar to the Crude


Oil from the Delimited Area in the same markets as those in which the Liberian Crude


Oil would normally be sold, as adjusted to take into account the differences in quality,


gravity, transportation as well as in sales and payment conditions. For the avoidance


of doubt, oil sales into the Liberian market shall be valued according to the terms of


this Article 18.3.


18.4 The following transactions shall, inter alia, be excluded from the calculation of the


market Price of Crude Oil:


(a) Sales in which the buyer is an Affiliated Company of the seller as well as sales


between entities constituting the Contractor;


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


sales fully or partially made for reasons other then the usual economic


incentives involved in Crude Oil sales on the international market (such as


exchange contracts, sales from government to government or to government


agencies).


18.5 Within ten (10) days following the end of each quarter, the Parties shall advise each


other of the prices obtained for their share of production of Crude Oil from the


Delimited Area sold to independent purchasers during the quarter in question,


indicating for each sale the identity of the purchaser, the quantities sold, the delivery


and payment terms.


Within twenty (20) days following the end of each quarter, the Contractor shall


determine in accordance} with the provisions of Article 18.2 or Article 18.3, as the


case may be, the Market Price applicable for the quarter concerned, and shall notify


NOCAL of that Market Price, indicating, the method of calculation and all data used


in the calculation of that Market Price





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With in thirty (30) days following receipt of the notice referred to in the preceding


paragraph, NOCAL shall verify that the calculation of Market Price complies with the


provisions hereof and shall notify the Contractor of its acceptance or objections.


Failing notification from NOCAL within that thirty (30) day period the market Price


provided for in the Contractor’s notice referred to in the preceding paragraph shall be


deemed to have been accepted by NOCAL.


In the event that NOCAL has notified objections to the Market Price, the parties shall


meet within fifteen (15) days following NOCAL’s notification to mutually agree on


the Market Price. If the parties fail to agree on the Market Price applicable to a given


quarter within seventy-five (75) days after the end of that quarter, NOCAL or the


Contractor may immediately submit to an expert, appointed in accordance with the


following paragraph, the determination of the Market Price (including the


determination of reference crude oils if the parties have not determined them).


The expert shall determine the price within thirty (30) days after his appointment and


his conclusions shall be final and binding on the Parties. The expert shall decide in


accordance with the provisions of this Article.


The expert shall be selected by agreement between the parties or, if no agreement is


reached, by the International Center of Expertise of the International Chamber of


Commerce in accordance with its rules on Technical Expertise, at the request of the


most diligent party. The expertise costs shall be charged to the Contractor and


included in the Petroleum Costs.


18.6 In the event it would be necessary to calculate on a provisional basis during a quarter


the Crude Oil price applicable to the lifting made during said quarter, that price shall


be established as follows:


(a) For any sale to independent buyers, the price applicable to that sale shall be


the price obtained for the Crude Oil for said sale, as adjusted to take into


account the F.O.B. delivery terms and thirty (30) days payment terms.


(b) For any lifting other than those which arc the subject of a sale to independent


buyers, the price applicable to that lifting shall be the Market Price determined


for the preceding quarter or, if that Market Price has not been determined a


price set up by agreement between the Parties or, failing agreement, the last


known Market Price.


Once the Market Price for a quarter has been determined on a final basis, adjustments,


if required, shall bo made within thirty (30) days.


18.7 PAYMENT OF ROYALTY


The Government of Liberia, through NOCAL, hereby agrees to expressly exclude


Section 3.7- Royalty as Tax of the Liberian Petroleum Law from being applied to or


having any effect on this Contract. The Government of Liberia, through NOCAL,


hereby further expressly waives any and all rights it may presently have or will have





38


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under the Liberian Petroleum Law, other laws, regulations, rules, orders, or decrees


which requires any royalty payment by the Contractor on the total production of


liquid and gaseous hydrocarbon from petroleum operations





18.8 EQUITY PARTICIPATION OF THE GOVERNMENT


The Government of Liberia, through NOCAL, hereby agrees to expressly exclude





Section 3.3 The National Oil Company’s Participation in Ownership of the Liberian


Petroleum Law from being applied to or having any effect on this Contract. The


Government of Liberia, through NOCAL hereby further waives any and all rights it


may presently have or will have under the Liberian Petroleum Law, other laws,


regulations, rules, orders, or decrees which requires the receipt of any equity interest


by NOCAL in and to the authorized, issued and outstanding capital share of the


Contractor in the petroleum operations at any time..


18.9 STOCK PURCHASE BY LIBERIAN CITIZENS





The Government of Liberia, through NOCAL, hereby agrees to expressly exclude


Section 3.4 of the Petroleum Law, (Stock Purchase by Liberians), from being applied


to or having any effect on this Contract. The Government of Liberia, through NOCAL


hereby further waives any and all rights it has or will have under the Petroleum Law,


or any other Law which requires the Contractor to make available (i) 10% of its stock


or shares, and/or (ii) other stock and/or share purchase to Liberian Citizens, through


procedures provided in die Petroleum Law and/or any other Law. In the event the


Contractor becomes a publicly traded company, then Liberian Citizens shall have the


option to purchase shares of the Contractor made available for purchase on the stock


exchange upon which the Contractor may be listed, subject to applicable taws.





In order to make an impact on the Social-Economic Development of the Liberian


Citizens, the Contractor undertakes to make an annual contribution of (one million


United States Dollars) US $1,000,000 during Exploitation Period directly to the


NOCAL into bank accounts held and controlled by NOCAL which shall be used for


social service programs such as the construction of schools, hospitals, roads etc. This


contribution is in addition to die Social and Welfare Budget payments stated in 29.3


of this Contract. This contribution borne by the Contractor shall be included in


recoverable Petroleum Costs. Prior to making any such payments the Contractor shall


■ verify bank accounts to which payment is to be made and NOCAL agrees to


• >' cooperate, assist to provide Contractor with any information it requires to conduct


such verification.


As provided in Article 19.3.3, all payments made under this Contract shall be made in


accordance with protocols laid down by the Extractiyelndustries Transparency


# Initiative (Em) X^b





e>


I





«














39





ifr


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 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL





ARTICLE 19


BONUSES AND HYDROCARBON DEVELOPMENT FUND





19.1 The Contractor shall pay to NOCAL the following bonuses:


(a) Three million dollars (US$3,000,000) when the total Production of Crude Oil


from the Delimited Area first reaches the average rate of thirty thousand


(30.000) barrels per day during a period of thirty (30) consecutivo days.


(b) Four million dollars (US$4,000,000) when the total Production of Crude Oil


from the Delimited Area first reaches the average rate of fifty thousand


(50.000) barrels per day during a period of thirty (30) consecutive days.


(c) Six million dollars (US$6,000,000) when the Total Production of Crude Oil





form ‘ the Delimited Area first reaches the average rate of one hundred


thousand (100,000) barrels per day during a period of thirty (30) consecutive


days.


Each of the amounts referred to in (a), (b), and (c) above shall be paid with thirty (30)


days following the expiration of the reference period of thirty (30) consecutive days.





19.2 These bonuses shall be recoverable and shall therefore be treated as Petroleum


Expenditure.


19.3 HYDROCARBON DEVELOPMENT FUND





19.3.1 To stimulate research in the field of hydrocarbon, most especially in


continental areas, and to assist the Government in its overall goal of


achieving energy sustainability, a Hydrocarbon Development Fund, to


be managed by NOCAL, has been established.


The Contractor shall make a total contribution of five-hundred


thousand dollars (US$500,000.00). The payment shall be made within


thirty (30) days of the Effective Date of this Agreement.





19.3.2 The contribution to the Hydrocarbon Development Fund referred to in


Article 19.3.1 wiH^fccoverable and therefore, shall be considered as


Petroleum Costs
































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19.4 RURAL ENERGY FUND


19.4.1 In accordance with the National Energy Policy, a Rural Energy Fund


(REFUND) has been established, inter alia, to integrate renewable energy


technologies into rural development. Considering that oil is a finite resource, it


is the policy of the Government that oil resources be used to support the


development of renewable energy resources in order to ensure energy


security and sustainability upon cessation of petroleum production.


The contractor shall therefore make an annual contribution of one-hundred





thousand dollars (US$100,000.00) during exploration and production through


NOCAL to the REFUND. The first payment shall be made within thirty (30)


days of die Effective Date of this Contract and thirty (30) days after each








































































































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ARTICLE 20


OWNERSHIP AND ABANDONMENT OF ASSETS


20.1 Upon expiration, surrender or termination of this Contract, whatever the reason


thereof, in respect of all or part of the Delimited Area, or at the end of exploitation of


a Field, the Contractor shall transfer at no cost to NOCAL the ownership of assets,


movables and immovables, used for the requirements of the Petroleum Operations


carried out in the area so surrendered, located whether inside or outside the Delimited


Area, such as wells and their equipment, building, warehouses, docks, lands, offices,


plants, machinery and equipment, bases, harbors, wharfs, jetties, buoys, platforms,


pipelines, roads, bridges, railroads and other facilities.


Such transfer of ownership shall cause the automatic cancellation of any security or


surety concerning those assets, or which those assets constitute.


However, the Contractor may continue to use those assets beyond the date referred to


in the first paragraph, for the requirements of its Petroleum Operations in Liberia


governed by other contracts.


20.2 If NOCAL decides not to accept, all or part of the assets, the transfer of ownership


provided for in Article 20.1, it may, not later than ninety (90) days following the date


specified in said Article, require the Contractor in accordance with good international


petroleum industry practice, to perform abandonment operations and to remove, at the


cost of the Contractor, the (the accrued^sts of which shall be cost recoverable)


facilities relating to the surrendered area.Tw/(S^'

































































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ARTICLE 21





NATURAL GAS





I Non-Associated Natural Gas





21.1.1 In the event of a Non-Associated Natural Gas discovery, die Contractor shall


engage in discussions with NOCAL with a view to determining whether the


appraisal and exploitation of said discovery have a potentially commercial


nature.


21.1.2 If the Contractor, after the above-mentioned discussions, considers that the





appraisal of such Non-Associated Natural Gas discovery is justified, it shall


undertake the appraisal work program for said discovery.


The Contractor shall have the right, for the purposes of evaluating the


commerciality of the Non-Associated Natural Gas discovery, if it so requests


at least thirty (30) days prior to the expiration of the third exploration period


set forth in Article 3.3 to be granted an exclusive appraisal authorization


concerning the Appraisal Perimeter of the abovementioned discovery, for a


term of two (2) years.


In addition, the Parties shall jointly evaluate the possible outlets for the





Natural Gas, both on the local market and for export, together with the


necessary means for its marketing, and they shall consider the possibility of a


joint marketing of their shares of production in the event the Natural Gas


discovery would not otherwise be commercially exploitable. For that purpose,


a Consultative Committee for Natural Gas shall be established by the Parties


to ensure the coordination of the upstream and downstream components of the


Natural Gas project and facilitate its evaluation and implementation.


21.1.3 If, despite their reasonable endeavors, the Parties are not able to develop a





market for a Non-Associated Natural Gas discovery, the Contractor may, prior


to the expiry of the term of the exclusive appraisal authorization, request a


further three (3) year extension of the exclusive appraisal authorization for the


Appraisal Perimeter of the discovery and NOCAL will not unreasonably


withhold its approval for said extension. Further extension, of the exclusive


appraisal authorization may be requested by the Contractor prior to the expiry


of the then current authorization \L will not unreasonably withhold


its approval for those extensions,























?











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21.14 Following completion of appraisal work, in the event the Parties should jointly


• n.M' decide that the exploitation of that discovery is justified to supply the local


market, or in the event the Contractor should undertake to develop and


produce that Natural Gas for export, the Contractor shall submit prior to the


expiration of the appraisal period an application for and exclusive exploitation


authorization which NOCAL will grant under the terms provided by Article


12.1.


j (•


The Contractor shall then have the right and obligation to proceed with the


development and production of that Natural Gas in accordance with the


approved development plan, referred to in Article 11.3 and the provisions of


this Contract applicable to Crude Oil shall apply, mutatis mutandis, to Natural


Gas, unless otherwise specifically provided under Article 21.3.


' •- V* t


21.1.5 If the Contractor considers that the appraisal of the Non-Associated natural


Gas discovery concerned is not justified, NOCAL may, by giving twelve (12)


months prior notice which may be reduced either with NOCAL’s consent or


automatically in the event the exclusive exploration authorization expires


earlier, require the Contractor surrender its rights in respect of the area


encompassing said discovery.





In the same manner, if the Contractor, after completion of appraisal works,


considers that the Non-Associated Natural Gas discovery is not commercial,


NOCAL may, by giving three (3) months prior notice, unless the exclusive


exploration authorization expires earlier, require the Contractor to surrender its


rights on the area encompassing said discovery.


In both cases, the Contractor shall forfeit its rights to all Non-Associated





natural Gas which could be produced from said discovery, and NOCAL may


then carry out, or cause to be carried out, all the appraisal, development,


production, processing, transportation and marketing work relating to that


discovery, without any compensation for the Contractor.





21.1.6 Notwithstanding the terms of Article 21.1.4, if the Operator is of the view that


the Non-Associated Gas discovery in question is non-economic as a


standalond development but can demonstrate that there is sufficient


prospectivity in the region to support a combined development of current


discovered reserves and future exploration prospects as a combined economic


development, then NOCAL will provide the Contractor a period of thirty-six


(36) months before exercising its rights pursuant to Article 21,1.4.





21.2 ASSOCIATED NATURAL GAS


21.2.1 Intfie event of a commercial discovery of Crude Oil, the Contractor shall state


if it considers that the production of Associated Natural Gas is likely to exceed


the quantities necessary for the requirements of the Petroleum Operations


related to the production of Crude Oil (including re-injection operations), and


if it considers that such excess is capable of being produced in commercial








44


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quantities. In the event the Contractor shall have informed NOCAL of such as


excess, the Parties shall jointly evaluate the possible outlets for that excess of


Natural Gas, both on the local market and for export (including the possibility


of joint marketing of their shares of production of that excess of Natural Gas


in the event such excess would not other wise be commercially exploitable),


together with the means necessary for Its marketing.


In the event the Parties should decide that the development of the excess of


Natural Gas is justified, or in the event die Contractor would wish to develop


and produce that excess for export, the Contractor shall indicate in the


development and production program referred to in Article 11.33 the


additional facilities necessary for the development and exploitation of that


excess and its estimate of the costs related thereto.


The Contractor shall then have the right to proceed with the development and


exploitation of that excess in accordance with the development and production


program approved by NOCAL under the terms provided by Article 11.3.6, and


the provisions of the Contract applicable to Crude Oil shall apply, mutatis


mutandis, to the excess of Natural Gas, unless otherwise specifically provided


by Article 21.3.


A similar procedure shall be applicable if the sale of marketing of Associated


Natural Gas is decided during the exploitation of a Field.


21.2.2 In event the Contractor should not consider foe exploitation of foe excess of


Natural Gas as justified and if NOCAL, at any time, would wish to utilize it,


NOCAL shall notify foe Contractor thereof, in which event:


(a) the Contractor shall make available to NOCAL free of charge at foe


Crude Oil and Natural Gas separation facilities all or part of foe excess


that NOCAL wishes to lift;


(b) NOCAL shall be responsible for the gathering, processing,


compressing and transporting of that excess from the abovementioned


separation facilities, and shall bear any additional costs related thereto;


(c) foe construction of the facilities necessary for the operations referred to


in paragraph (b) above, together with the lifting of that excess by


NOCAL, shall be carried out in accordance with good international


petroleum industry practice and in such a manner as not to hinder the


production, lifting and transportation of Crude Oil by foe Contractor.


21.2.3 Any excess of Associated Natural Gas which would not be utilized under


Articles 21.2.1 and 21.23 shall be re-injected by foe Contractor. However, foe


Contractor shall have foe right to flare said gas in accordance with good


international petroleum industry practice, provided that foe Contractor


furnishes NOCAL with a report demonstrating that said gas cannot be


economically utilized to improve foe rate of recovery of Crude Oil by means


of re-injection pursuant to foe provisions of Article 15.6, and provided











45


 ✓ ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





further, that NOCAL approves said flaring, which approval shall not be


unreasonably withheld.





21.3 Provisions common to Associated and Nos-Associated Gas


21.3.1 In order to encourage the exploitation of Natural Gas, NOCAL may grant to


the Contractor specific benefits when they are duly justified concerning, inter


alia, the recovery of the Petroleum Costs relating to Natural Gas.


1 21.3.2 The Contractor shall have the right to dispose of its share of production of


Natural Gas, in accordance with the provisions of this Contract It shall also


have file right to proceed with the separation of liquids from all Natural Gas


Produced, and to transport, store as well as sell on the local market or for


export its share of liquid petroleum so separated which will be considered as


Crude Oil for the purposes of their sharing between the Parties under Article


16.


21.3.3 For the purposes of this Contract, the Natural Gas price, expressed in Dollars


per million BTU, shall be equal to:


(a) With respect to Natural Gas export sales to Third Parties, the price


obtained from purchasers;





(b) With respect to sales on the local market of Natural Gas as a " '


price as NOCAL and the Contractor shall mutually agree upo





















































f





-i











46


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ARTICLE 22








FOREIGN EXCHANGE CONTROL





22.1 The Contractor shall comply with the foreign exchange control regulations, subject to


the provisions of this Article.





22.2 The Contractor shall have the right to retain abroad all the foreign currencies arising


from export sales of all Petroleum to which it is entitled under this Contract, or from


assignments, as well as equity, incomes from loan and more generally, all assets


acquired abroad by it, and to freely dispose of such foreign currencies or assets to the


extent that they may exceed its requirements for its operations in Liberia.


22.3 No restriction shall be exercised on importation by the Contractor of funds intended


for the performance of the Petroleum Operations.





22.4 The Contractor shall have the right to purchase currencies of Liberia with foreign


currencies, and freely exchange into foreign currencies of its election any funds held


by it in Liberia in excess of its local requirements at exchange rates which shall not be


less favorable/Sum those generally applicable to any other buyer or seller of foreign


currencies^wra^’

























































































47


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL


ARTICLE 23 '











GOVERNING LAW








i •,*


Applicability of Liberian Law: Except as explicitly provided in this Contract, tbp. Contractor


shall be subject to Liberian Law as in effect firim time io time, including with respect to


labour, environmental, health and safety, custbnis and tax matters, and shall conduct itself in


a manner consistent wldi Liberia’s obligation under international treaties and agreements


insoftr as those have the effect of Law in Liberia.


: i: r*


Construction and Interpretation-This Contract and the rights, obligations and duties of the


Parties under this Coatract shall be construed and interpreted in accordance with Liberian


Law and by such roles and pridciplcs of international law as may be applicable, particularly


with regard to an investment by Nationals of one country in another country. However, in the


event of a conflict between this Contract and any Law --- except for the Constitution in effect


as of tho Effective Date ■--- the rights, obligations and duties of a Party shall be deemed to be


those set forth in this ContracL^pf '













































































i





•1

















48


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ARTICLE 24








MONETARY UNIT





24.1 The registers and accounting books relating to this Contract shall be maintained and


recorded In Dollars. Said registers and accounting books shall be used to determine


llie Petroleum Costs, gross Income, exploitation costs and net profits for the purpose


of the preparation of the Contractor’s tax return; they shall contain, inter alia.


Contractor’s accounts lowing the sales of Petroleum under this Contract


24.2 Whenever It is necessary to convert into Dollars expenses and incomes expressed in


another currency, the exchange rates to be used shall be equal to the arithmetic


average of the daily cfaafeg rates for the purchase and sale,*as published in the Central


Bank of Liberia wchsila (http://wwwcbLorgJr) for the Liberian Dollar and the Wall


Street Journal for purchase of ofoer currencies during the month when the expenses


were paid and the Income received.


20 The originals of tho registers and accounting boctorefcntd to in Article 24.1 shall


be kept in Liberia or as otherwise determined by Contractor. The registers and


by detailed Documents with respect to receipts




































































>





■i














49


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ARTICLE 25





ACCOUNTING METHOD AND AUDITS


25.1 The Contractor shall maintain its accounts in accordance with the regulations in force


and with the provisions of the Accounting Procedure set out in Appendix 2 attached


hereto forming an integral part of this Contract


25.2 After giving the Contractor notice thereof In writing, NOCAL shall have the right to


cause die registers and accounting books relating to the Petroleum Operations to be


inspected and audited by its own agents or by experts of its election, and shall have n


period of four (4) months following tho cud of each Calendar Year to cany out those


inspections or audits relating to said year and may submit its objections to the


Contractor for any contradictions or criers found during such inspection or audits.





Should NOCAL fail to within the abovementiooed period of four (4)


months, no further objc or claim shall be made by the Liberian administration for


die Calendar year concerned WT
























































VI'


•«l


Oli
































50


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL








ARTICLE 26





IMPORT AND EXPORT





26.1 lift!





















































(b) ^ bcbSTV k^ooctncto^^ wbconCBrtof^^** furniture, clothing,





household appliances and all personal effects for all the foreign employees and


their families assigned to work in Liberia for the Contractor or its contractors


or subcontractors.





(c) However, the Contractor, its agents, contractors and subcontractor* undertake


not to proceed with the imports mentlonod In Article 26.1 (a) Insofar as such


items are available in Liberia under equivalent condition, of quantity, quality,


prioc, delivery and terms of payment unless specific requirements or technical


emergencies are presented by the Contractor.


(d) The Contractor. Its agents, contractor* and subcontractor* shall have the right


to re-export from Liberia, free of all duties and taxes and at any time, all the


items imported under Article 26.1 (a) and (b) which are no longer necessary


for the Petroleum Operations except the items which have become the


property of the State under the provisions of Article 20.





26.2 During the period from the. inception of exploration until the date commercial


production begins, tho following goods In addition to Article 26.1 are exempt from


import duties:


1


(a) Plant or equipment. Including but not limited to four-wheel-drive motor


vehicle* but not motorcycles, sedans or luxury vehicles as defined by


regulation) and iput parts for these goods;











51


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL





(b) Intermediate inputs (including but not limited to explosives, drilling mud.


grinding bulls, tuec for trucks used in operations, and similar items specified


in regulations), and ,


(c) Raw materials.


26.3 The Contractor, ha agents, contractors and subcontractors shall provided that they


inform tho STATE in advance of their Intent to sell and subject to the provisions of


Article 20, have the tight to sell in Liberia, all equipment, materials, machinery and


tools, goods and supplies which they have imported when they are considered as


surplus and no longer necessary for the Petroleum Operations. In that event, the seller


shall be responsible for paying all dutlea and taxes applicable on the date of the


transaction and for Tiling all the formalities prescribed by the regulations in force.


26.4 During tho teem of this Contract, the Contractor, its customers and their carriers shall


have the rfrfC to export freely ai the export point selected for fort purpose, free of all


duties and taxes and at my time, the portion of Petroleum to which foe Contractor is


entitled in accordance with foe provisions of this Contract, after deduction of all


dehvencs made to the STATE, provided however that foce for unprocessed


exporubles foall bo paid.





26.5 Contractor is not exempt from customs user fees of two and half percent (2.5%)


including fees for the inspection or pre-shipment


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL








ARTICLE 27


DISPOSAL OF PRODUCTION








27.1 Each Year, up to a total of ten percent (10%) of i Oil


to which the Contractor b entitled, shall ! to NOCAL by 0k


purpose of satisfying the needs of the of Liberia.


of* in








The quantity of Crude Oil the to NOCAL shall be


o it by NOCAL at least (3) prior to the beginning of








272 The price of the Crude Oil sold to NOCAL under Article 27.1 for the needs of the


domestic maikct shall be the Market Price defined in Article If.


That Crude Oil price shall be peyable to the Contractor in Dollars within 45 days








273 The of title to. »d risk oC the to which each


party is c made at the Delivery








27.4 Each of the Parties shall have the right and obligation, to dbpese of nd HA the share


of Petroleum to which I b entitled under this Contract Such ihare shall be lifted oa


as regular a basis as possible, it being understood that each of the Parties, within


reasonable limits, will be authorized to lift more (ovtriift) or leas (under!i ft) that its


share of Petroleum produced and unlifted by the lifting day to the extent that such


overlift or underlift does not infringe on the rights of the other Part/ and b compatible


with the production rate and the storage capacity.


In the establishment of tho sequence of liftings, priority will bo given to the Party with


tho largest share of produced and unllftod quantity of Petroleum at a given time. The


Parties shall periodically meet to establish a provisional lifting program on the basis


of tho principles above-described and taking into account the wishes of the Ihulios as


regards the datos and quantitiw oClheir liftings, provided that thoso wishes are


compatible with said princlples.~py^p7i'


 ORAWO BLOCK LB-I4PSCJIWE 10,2009 CONFIDENTIAL





ARTICLE 2»








PROTECTION OF RIGHTS


The Contractor shall take all necanary steps to achieve the objectives of this Contract


28.1


In Hi conduct of Petroleum Operations.





28.2 NOCAL shall take all nocessory steps to facilitate the implementation by the


Contractor of the objectives of this Contract, and the STATE shall protect the


property and operations of the Contractor, Its employees and agents In the territory of


Liberia.





MJ At the





of Hi


to prohibit anchoring in the vicinity of


prohibit any hindrance to the use of any


on land or





28.4 The Contractor shall take out and cause to be taken out by Us contractors and


subcontractors, in respect of the Petroleum Operations all insurances of the type and


for such amounts customarily used in the international petroleum industry, including


without limitation, third party liability insurance and insurances to cover


damage to property, facilities, equipment and materials, without prejudice to such


insurances with would be required under Liberian legislation.





26.5 To enable the Contractor to carry out expeditiou 'y


Operations, NOCAL shall have toe obligation to an





i to:





28.5.1 Obtain the approvals or





28.5.2 Oo through the formalities of exchanging foreign





28.5 J Obtain office space, office supplies, transportation, and








28.5.4 Oo





28.5.5 Obtain entry and exit visas for the Expatriate Employees who will come to Liberia for


tho implementation of the Contract and for their dependants who will visit them or


reside in Liberia for a long period and provide assistance for their transportation and


moving as well as medical services and travel In Liberia;





28.5.6 Obtain cxessary permission to if data and


for analysis or








28.5.7 Contract departments engaged In fishing, aquatic product*, meteorology, oocin


shipping, civil aviation, railway, transportation, communication rnd services for


 ORANTO BLOCK I.B-14 PSC JUNE 10, 2009 CONFIDENTIAL








on a timely basis approvals necessary for the conduct of the Petroleum Operation*


under the Contract.


JB.6 NOCAL may, at the request of the Contractor, sell to the Contractor data and samples


concerning the Contract Area other than those produced as a result of Petroleum


Operations hereunder in accordance with any relevant rules and regulations and


NOCAL shall also assist the Contractor to arrange the purchase of any oceanic


environment, hydrological, mctooratadcaj .earthquake and other data available from


the relevant department in Liberia.


































































































i

















55


 ORANTO BLOCK LB-14 PSC JUNB 10,2009 CONFIDENTIAL





ARTICLE 29





PERSONNEL AND TRAINING


29.1 The Contractor shall give preference in employment to Liberian Nationals provided


that they are suitably qualified and available, which shall be determined by the sole


opinion of the Contractor, provided however, the Contractor shall have the right to


employ its own key penonnei in appropriate positions, and provided also that such


conditions are in cooformity with the Labour Practices Lew of Liberia.





29.2 Upon commencement of the Petroleum Operations, the Contractor shall provide an


annual contribution for Training Programmes and the Contractor shall make direct


payment to NOCAL of an annual Training Budget oft


(a) $ 12S,000 Dollars during each year of the exploration period;





(b) $175,000 Dollars during each year of the exploitation period.





Additionally, the Contractor shall make an annual contribution of One Hundred


Thousand Dollars ($100,000) to the University of Liberia, paid to dheedy lo NOCAL


for subsequent payment to (be University of Liberia, for the enhancement of


programmes in Geology, Mining Engineering. General Science and Environmental


Studies.


funding for Social and Welfare programmes in Liberia and for that purpose foe


Contractor shall make an annual Social and Welfare Budget payment d.rcctly to


NOCAL:


(a) $ 150,000.00 Dollars during each year of ihe exploration period;


(b) $250,000.00 Dollars during each year of the exploitation period.


The Training and Social and Welfare and University expenses borne by the


Contractor shall be included in recoverable Petroleum Costs. Funding for the


Training, Contribution to the University of Liberia and Social and Welfare


Programmes shall be paid within thirty (30) days of the Effective Date. Thereafter,


payments shall be made within thirty days of each subsequent anniversary of the





Such contributions for the Training. Social & Welfare and University of Liberia shall


be paid directly into bank accounts held and controlled by NOCAL or the University


of Liberia. Prior to making any such payment, the Contractor shall verify such bank


accounts sod NOCAL agrees to cooperate, assist and provide Contractor any


information \f requires to conduct such verification.





Aa provided la Article I9J3, all payments made under this Contract shall be made


in accordance- vri£ yagogb laid down by the Extractive Industries Transparency


Initiative (EITI).'


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL








29.4 The Entry into Liberia of *1) foreign personnel shall be authorized and the STATE


shall issue the documents necessary for that entry to all members of die foreign


personnel, such as entry visas, working permits and exit visas, in compliance with the


immigration regulations in force hi Liberia.


At the request of the Contractor, the STATE shall facilitate any Immigration


formalities with the Immigration Bureau, at the points of entry into and exit from


Liberia, in respect of the Contractor’s employees, contractors, subcontractors and


agents, and their families, ull without undue delays.


29.5 All the employees required for the conduct of the Petroleum Operations shall be under


the Contractor's authority or that of Its contractors, subcontractors and agenta, In their


capacity as employers. Their work, number of working hours, salaries and any other


matter* relating to their employment conditions shall be determined by the Contractor


or its contractors, subcontractors and agents, and shall conform to the Labour


Practices Law of Liberia.


29.6 The STATE and/or NOCAL shall assist Contractor in obtaining all Liberian


governmental permissions, registrations, licenses, and all other approvals or rights


that are needed for carrying out Petroleum Operations under this Contract provided


however, that Contract^ sliMte responsible for applicable fees required by law to


> - the relevant authoritics^j













































































57


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL





ARTICLE 30





ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE EXPLOITATION


AUTHORIZATIONS


30.1 The provision of Article 12 shall apply, mutaiis mutandis, to any exclusive


exploitation authorizations. In addition, the following periodic activity reports shall


in respect of each Fiekt





(a) daily protection reports.


(b) monthly reports stating the quantities of Petroleum produced and those sold


during the previous month together with information on such sales.


Unless the Contractor gives Its written consent, the information relating to a Field


under exploitation, except statistical data about activity, shall be considered as


confidential by the Partios during the term of this Contract.


30.2 The Contractor shall forthwith notify the STATE of any material damage whatsoever


caused 10 the Hydrocarbon fields of facilities, and shall take all necessary Heps to


terminate it and carry out the necessary repairs.


30.3 From the year of granting an oxcluiive exploitation authorization, the annual report


referred to in Article 8.2 shall also include the following;


(a) Information on all development and pro.1 jction operations carried out during


the previous Calendar Year, including the quantities of Petrokrm produced


and those sold, if any,


(b) Information on all transportation and sales operations together with the


location of the mala facilities buil. by the Contractor, if an>.





(c) .. A statement specifying the number of employees and workers, their


qualification and their nationality, together with a report on the medical care


























»














58


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ARTICLE 31


ARBITRATION


31.1 In the event of any disputo between the STATE or NOCAL and the Contractor


relating to, or arising out of, the interpretation or execution of the provisions of this


Contract, the parlies shall make their best effort* to settle such dispute amicably.


If within three (3) months from the date of notice of such dispute by either Party to


the other, the Parties have not reached settlement, the dispute shall, at the request of


the most diligent Party, be referred for arbitration to the International Chamber of


Commerce to accordance with Its rules and regulations.


31.2 Die arbitration shall be held in London, England. Die language used during die


procedure stall be the English language. The arbitration shall be determined by three


(3) arbitrators. D»c arbitrators shall not have the same nationality as the Parties.


The arbitration tribunal's award shall be final; it shall be binding on the Parties and


shall be enforceable in any court of appropriate Jurisdiction.


31.3 The expenses of any arbitration stall be borne equally by the Parties, that is to say,


each party shall pay the expenses of hs own arbitrator and the expenses of the tliird


arbitrator to equal shares, and any expenses Imposed by the International Chamber of


Commerce shall be shared equally by the Parties.


The performance by the Parties of their obligations under this Contract shall not be


31.4 A sole expert shall be an independent and impartial person of international standing


with relevant qualifications and experience appointed pursuant to the mutual


agreement of the Parties (“Sole Expert")- Any Sole Expert appointed shall act as an


expert and not aa an arbitrator or mediator and shall be instructed to endeavour to


resolve the dispute referred to him within thirty (30) days of his appointment, but to


any event within sixty (60) days of the appointment. Upoa the selection of the Sole


Expert, the Party receiving the notice of referral above shall submit its own Matemcnt


containing all information it considers relevant with respect to the matter in dilute


Die decision of the Sole Expert shall be final and binding and not subject »o any


appeal, save for fraud, corruption or manifest disregard of applicable procedure of this


Cootract. If the Parties are unable to agree on the appointment of a Sole Expert within


twenty (20) days after a Party has received a notice of referral under this Article the


Sole Expert shall be selected by the ICC Centre for Expertise, and the person so


selected shall be appointed by the Parties.





31.5 The Sola Expert stall decide the manner to which any deterroln^Joo U mode,


including whether the Parties dial] make oral or written submissions and ■ "


and the Parties stall cooperate with the Sole Expert and provide sucfci


and information as the Sole Expert may request AE corrtspoodaoci,


and information provided by a Party to the Sole Expert stall be copied to


Party, and any oral submissions to the Sole Expert shall be made to dM prewnoe








59


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONFIDENTIAL








Panics and each Party shall have a right of response. The Sole Expert may obtain any


independent professional or technical advice as the Sole Expert considers nocessary.


The fees and expenses of a Sole Expert appointed under the provisions of Article 31.4


shall be borne oqually by the Parties.





31.6 Sovereign Immunity








Any Party that now or hereafter has a right to claim sovereign immunity for itself or


any of Its assets hereby waives any such immunity to the fullest extent permitted by


the laws of any applicable jurisdiction. This waiver includes immunity from (i) any


expert determination, mediation, or arbitration proceeding consamcei pursuant to


this Contract; (H) any judicial, administrative or other proceedings to aid the expert


determination, mediation, or arbitration commenced pursuant to this Contract; and


(iii) any effort to confirm, enforce, or


judgment, service of |


arbitration or any


judicial or administrative proceedings to this Contract. Each


Party and

















































































































60


 ORANTO BLOCK LB-14 PSC JUNE 10. 2009 CONFIDENTIAL








ARTICLE 32








TERMINATION





32.1 Termination by the Contractor. During the Exploration and Exploitation Periods,


the Contractor may surrender, by not less than sixty (60) days notice to NOCAL all


of its rights and obligations hereunder in respect of all or any part of the Delimited


Area, and the Operator shall be relieved of all obligations to NOCAL in respect of the


area so surrendered except those obligations arising out of a related to the surrender.


32.2 Termination by NOCAL Subject to the provisions of Article 31. NOCAL shall


have the right to terminate this Contract if any of the following events (hereinafter


called “Events of Default”) shall occur and be continuing:


(a) Where the Contractor shall fail to make any of the payments described in this


Contract on the due payment date, and such default is not cured within forty-


five (45) days after notice by NOCAL or within such longer periods as may


be specified in said notice:


(b) Where the Contractor shall materially fail to comply with its work


commitments and other conditions in this Contract and such failure is not


cured within ninety (90) days after notice by NOCAL of within such longer


period as may be specified in the notice;


(c) Where the Contractor shall (i) voluntarily dissolve, liquidate or wind up its


affairs, or make an assignment of all of substantially all of its assets for the


benefit of creditors other than an assignment made to secure indebtedness


incurred in the ordinary course of business; (U) file a petition or application to


any tribunal for the appointment of a trustee or receiver for all or any


substantial part of the Contractor’s assets; (ill) commence any proceedings for


its bankruptcy, reorganization, arrangement, insolvency or readjustment of


debt under the laws of any jurisdiction, whether now or hereafter in effect, or


if any such petition or application is filed, or any such proceedings are


commenced against It, shall indicate its approval thereof, consent thereto or


acquiescence therein, or (iv) If any order Is entered appointing any such trustee


or receiver, or adjudicating the Contractor bankrupt or insolvent, or approving


the petition in any such proceedings, and provided that the Con tractor shall


fail to take corrective mcasurc(s) to have such order removed or lifted within


sixty (60) days;


(d) Where tho Contractor shall fail to carry out Exploration as required by Article


4, or cease Exploration for a period of twelve (12) consocutivo month! or


cease production with respect to all Production Areas for a period of twenty-


four (24) coi»ccutive months, unless such failure or cessation is consented to


by NOCAL or is caused by n state offorce majeurc.





32.3 Opportunity to cure.' In the ease of an alleged Event of Default described above,


NOCAL before taking any further action, shall provide Notice to the Contn


the alleged occurrence of such Event of Default and of NOCAL’s views in tha





61


 ORANTO BLOCK IB-14 PSC JUNE 10.2009 CONFIDENTIAL








and shall offer the Contractor a fair opportunity to consult with NOCAL to resolve


the matter. I& after a reasonable' period of time of consultation, NOCAL is of the


reasonable opinion that the matter cannot be resolved by further consultation.


NOCAL may they send to the Contractor Notice of NOCAL’s intention to terminate


this Contract If the Event of Default is not cured within sixty (60) days after said


Notice, or within such longer period as may be necessary to allow a reasonable period


of time to effect such cure, then this Contract shall be terminated, subject to Article


31. |





32.4 Disputes Regarding Kvcots of Default. Notwithstanding the provision of Article


32.2 if the Contractor disputes whether there has been an Event of Default described


above and, within sixty (60) days after receipt by the Contractor of NOCAL’s Notice


of its intention to terminate this Contract, refers such dispute to arbitration in


accordance with Article 31, then termination of this Contract shaUgoUake effect until


the finality of and in accordance with, an arbitration award, My ’7'




















































































































62


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 a i mAL








ARTICLE 33








FORCE MAJEURE





33.1 No delay or default of a party in performing any of the obligations resulting from this


Contract shall be considered a breach of this Contract if such delay or default is


caused by a case of Force Majeure.


If in the event of Force M^jcure the performance of any of the obligations under this


Contract is delayed, that delay extended by the period of time required to repair the


damage caused during such delay and to resume the Petroleum Operations shall be


added to the period provided by this Contract for the performance of .aid obligation,


and the exclusive exploration or exploitation authorizations shall be extended by that


period as regards the area concerned by Force Majeure.








as: earthquake, flood, accident, strike, lockout, riot, delay in obtaining the rights-of-





different from those


already mentioned


333 Where a Party considers it is prevented from performing any of its obligations by the


occurrence of Force Majeure, it shall forthwith notify the other party thereof by


specifying the grounds far establishing Force Majeure, and take all necessary and


useful steps to ensure the normal resumption of the performance of the concerned


obligations upon termination of the event constituting the Force Majeure.





to be performed


 ORANTO BLOCK LB-14 I'SC JUNE 10. 2009 CONFIDENTIAL








ARTICLE 34


JOINT AND SEVERAL OBLIGATIONS AND GUARANTEES








VI I All the clauses, conditions and provisions of this Contract shall be binding on the


Parties and their respective successors and assignees. This Contract constitutes the


only agreement between the Parties and no previous communication, promise or


agreement, whether oral or written, between the Parties, related to the purpose of this


Contract may be asserted to amend the clauses hereof.


The STATE certifies and guarantees that there is no other applicable agreement **iih


respect to the petroleum rights within the Delimited Are*, that it will perform its


obligation in fairness and good faith and that this Contract will not be cancelled,


amended or modified except by agreercat between the Parties.


34.2 Where the Contractor is constituted by several entities, the obligations and liabilities


of those entities under this Contract shall be joint and several.






















































































64


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL





ARTICLE 35


RIGHTS OF ASSIGNMENT


35. I All or part of the rights and obligations arising from this Contract may be ossigned by


any of the entities constituting the Contractor to Tbirtl Parties whose technical and


financial reputation Is well established; the assignees with the other entities


constituting the Contractor shall thereafter be jointly and severally liable for the


obligations arising from this Contract.


The terms of any non-afllliated assignment shall bo subject to the prior written


approval of NOCAL which approval shall not be unreasonably withheld.


If w ,thm sutv (60) days following notification to NOCAL of a projected assignment


accompanied by aU the related information and the draft assignment deed, NOCAL


has not given its decision, that assignment shall be deemed to be approved by


NOCAL


From the date of approval of an assignment, the assignee shall comply with the terms


and conditions of this Contract.


35.2 Subject to the prior written approval of the State through NOCAL all or pan of the


joint and several rights and obligations arising from this Contract moy be freely


assigned at any time by any of the entities constituting the Contractor to one or more


Affiliated Companies or other entities constituting the Contractor.


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





ARTICLE 36


STABILITY OF CONDITIONS


36.1 This Contract is executed and binding between Clio Parties in accordance with the laws


and regulations In force as of the Effective Date and on the basin of the provisions of


all said laws and regulations, as it regards, to , including but not limited to the


economic, petroleum, fiscal and financial provisions of this Contract.


36.2 This Contract may not be amended, cancelled or modified by virtue of the adoption or


amendment of any law, rule, order, decree or regulation by the State of Liberia after


the Effective Date of this Contract This Contract may only be amended or modified


by written agreement of all Parties to this Contract


36.3 Periodic Review: In the event of changes in circumstances from those existing at the


Effective Date, that have a significant material effect on die terms of this Contract,


cither NOCAL or the Contractor shall at the request of the other consult together. If it


mutually established that such Profound Changes in Circumstances have occurred,


then the Parties shall effect such changes in or clarifications to this Contract that they


mutually agree are necessary. The Parties shall meet in good faith to make the


necessary revisions and adjustments to die Contract in order to maintain such


expected economic benefits to each of the Parties, provided that the economic benefits


to the Parties shall not be reduced as a result of exercising the terms of this article. For


the purposes of this Contract the term “Profound Changes in Circumstances" shall


mean such changes in die economic conditions of the petroleum industry world wide


or in Liberia or such changes that result in such a material and fundamental alteration


of the conditions and assumptions relied upon by the Parties at the Effective Date of


this Contract (or the time after any subsequent review under this Article) to the effect


thut the overall balance of equilie*-end benefits reasonably anticipated by the Parties


will no longer be achicvableTX-'/'l-GdL









































i


•i


i











66


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





ARTICLE 37


IMPLEMENTATION OF THE CONTRACT


37.1 The Parties agree to cooperate in every possible manner to achieve the objectives of


this Contract.


NOCAL shall facilitate the Contractor's performance of its activities by granting it


any permits, licenses, access rights necessary for the performance of the Petroleum


Operations and by making available to it any appropriate services and facilities, so


that the Parties can obtain the best benefit from a sincere cooperation- However, the


Contractor shall observe tho applicable procedures and formalities, and shall apply to


the competent Ministries and/or Agencies of the Administration.


The Parties agree to respect the terms of this Contract and not to unilaterally abrogate


any part of the terms and conditions contained herein.


37.2 Any notices or other communication under this Contract shall be deemed to have been


made when they arc delivered to an authorized representative of the Party coocemcd


at the location of Said Party’s principal office in Liberia, or sent by telegram, cable or


facsimilo with all expenses paid, or deposited as registered kttcre with the Postal


administration of Liberia with postage prepaid in accordance with the contact address


of the Parties provided herein.


Notifications shall be deemed to have been made on the date when the addressee shall


receive them.


Notices to NOCAL should be sent to:


President and CEO


National Oil Company of Liberia


Episcopal Church Plaza, 3rd Floor


1000 Monrovia


10 Liberia


Tel: +231-6512929


E-Mail: fk

Notices to Orsnto Petroleum Limited should be sent to:


Group Managing Director


Plot 8, Water Corporation Way


Off Ligali Ayorindc Street


Oniro Estate, Victoria Island •


Lagos, Nigeria


Tel/Fax: H 234 1 2120p6


E-Mail: orm^il@ms!i^Qm


37.3 If NOCAL considers tljat the Contractor has committed a breach in the performance


of any of its obligations, It shall so notify the Contractor in writing and the Contractor








67


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL








shall have sixty (60) days to remedy the breach or refer the to arbitration in





37.4 The terms and conditions of this Contract may be modified only in writing and by








37.5 Unless otherwise specified in writing, the Ministry and NOCAL shall represent the


STATE under this Contract and is empowered to grant. In the name and on behalf of


the STATE, any consent necessary or useful for the implementation of this <





37.6 Heading in this Contract arc inserted for purposes of convenience and reference and


in no event shall define, restrict or describe the scope of object of the Contract or of


any of its clauses.


37.7 Appendices 1 and 2 attached hereto shnll form and integral part of this Contract.


37.8 Any waiver of the STATE or NOCAL concerning tho performance of any obligation


of the Contractor shall be In writing and signed by the representative of the STATE or


NOCAL, and no waiver shall be implied if the STATE or NOCALdoes not exercise


any of its rights to which H is entitled under this Contract P/Tif


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL





ARTICLE 38








EFFECTIVE DATE





Upon execution by the Parties and when promulgated as the law of the Republic of Liberia,


this Contract shall become effective, the date of ratification and publication of the hand bill


shall be referred to as the Effective Dale, and said Contract shall become binding on the


Parties. In addition to the foregoing, the STATE and/or NOCAL shall take all actions


necessary following the Fixccution Date to give this Contract the full force and effect of law


in the Republic of Liberia





Counterparts. This Contract may be executed in multiple counterparts, and by


dlficrcnt Parties in sopor ale counterparts, and each such counterpart shall be deemed an


original Contract for ull purposes, provided that no Party shall be bound by this Contract


unless and until all parties have executed a counterpart.








IN WITNESS WHEREOF, the Parties have signed this Contract on the date as set forthT^


below.








ON IIEIIALF OF NOCAI. AND THE GOVERNMENT OF LIBERIA:





c - (b ~


D*c


















































Ngafuan


MINISTER OF FINANCE


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL











to - 2-^? 9


Date •





J L* l*J ^0 09








Mr. Date


Oran to Group Managing Director


Oranto Petroleum Limited











yo


Hon. Philip A.Z. Bank Date


MINISTER OF JUSTICE


REPUBLIC OF LIBERIA








Approved:





r-j <





Her Excellent Date


Ellen Johnson Sirlcaf


PRESIDENT OF THE REPUBLIC OF LIBERIA








Ratified:








National Legislature of the Republic of I Jbcria Date























•!











70


 ORANTO BLOCK LB-14 PSC JUNE 10, 2009 CONTIDENTTAL





APPENDIX 1


part of this Contract between the Republic of Liberia and the


Attached to and


Contractor





Pf LIMITED AREA





On the Effective Date, the Delimited Area, designated as Block LB 14. is formed by the area





Ihc geographical coordinates of those points arc the following, with Reference to the


(irecnwich meridian:


Bloch LB-14 Coordmates (WGS84)





Decimal Degrees


Corner labtude 1 iiuUtiMta


A _6 239 . -10723


B 6 201 ^10 645


5 6 191 -10 582


D 6 175 -10 518


re '6 161 -10.464 I


r?~ 6 147 -10426


|Q~ 5 399 -11.019


IH [5 587 -11231





Those coordinates arc only given for purposes of defining the Delimited Area and shall not


be considered as the boundaries of Ihc nnliomil jurisdiction of Liberia.


H»c surface of the Delimited Area above-defined is deemed to be equal to 3.l2lsq km


MAP OK BLOCK LB-14


















































71


 ORANTO BI.OCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL








APPENDIX 2





Attached to and part the Republic of Liberia and the











Article I Garni Provisions


LI Object





This Accounting Procedure shall be followed and observed in the performance of the


obligations under the Contract to which this Appendix la attached.


The purpose of this Accounting Procedure la to establish the principles of accounting


which shall reflect the Operators actual costs relating to Joint Operations to the end


tliut the Operator shall subject to the processes of the Contract neither gain nor lose by


reason of the fact that it acts as Operator.


1.2 Acconnts and Statements ''





The registers and accounting books of the Contractor shall be In conformity with


accounting rules and regulations for business applicable in Liberia. However, the


Contractor may apply the accounting rules and procedures in conformity with the


Revenue Code of Liberia


In accordance with the provisions of Article 25 of the Contract, accounts, books and


registers shall be maintained and recorded in Dollars. These accounts shall be used,


inter alia, to determine the aroosmtof Petroleum Costs, therecoveryofsaid Costs, the





TV Contractor shall record all operations connected with the Petroleum Operations in


accounts separate from those relating to any other activities which it may carry out in


the Republic of Liberia.


All accounts, books, records and statements, together with documents supporting


expenses iraaared. such as invoices and service contracts, shall be kept in the


Republic of Liberia in order to be provided at the request of the competent authorities


of Liberia.





In the event of any conflict between the provisions of this Accounting Procedure and





the Contract, tba provisions of the Revenue Code of lAeria shall prevail.


1.4 TV definitions contained in Article 1 of the Contract shall apply to this Accounting


Procedure and shall have the same meanings when used herein. In addition certain


terms used herein are defined as follows: /"











72


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL





Exclusive Operation Account dial! mean the accounts maimained by Operator to


record all expenditures, receipts and other transactions of Parties participating in


Operations by less than all parties.


Material shall mean the personal property, including but not limited to equipment


and supplies, acquired and held for use in tbc Petroleum Operations. .





15 Modifications





The provisions of this Accounting Procedure may be modified by mutual agreement


between the Parties.





'la 'V »*


The Parties agree that if any provision of the Accounting Procedure proves


inequitable to either Party, such provision shall be modified in good faith by the


Parties.








Article D - Petroleum Coats


II.1 Petroleum Costs Account


The Contractor shall maintain a “Petroleum Costs Account” which will record in


detail the expenses incurred by tbc Contractor directly relating to the Petroleum


Operations earned out under this Contract, and which will be recoverable in


accordance with the provisions of Article 16 of the Contract


The Petroleum Costs Account shall, inter alia, record separately, by Appraisal


Perimeter or Exploitation Perimeter if any, the following expenses:





(a) exploration expenditures;


(b) appraisal expenditures;...,


(c) development expenditures;


(d) exploitation expenses;





(c) financial costs;


(f) overhead costs in Liberia;





(g) overhead costs abroad.





The Petroleum Costs Account shall enable, inter alia, to identify at any time:


(a) the total amount of Petroleum Costs since die Effective Date;





(b) the total amount of Petroleum Costs recovered;








73


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 »y ?131a







(c) the total amount credited to the Petroleum Cotta Account pursuant to Article


11.4(b) below:

















For the purposes of Article 16 of the Cootrct. Petroleum Cotta shall be recovered in


the following sequence:


(a) exploitation expenses in respect of a Field incurred and paid from the date of








(b) financial costs;











In addition, within each of the foregoing categories, the costs shall be recovered in the


sequence in which they are incurred.








not to duplicate any item of the credit or debit of the accounts maintained under the


Contract.


11.2 Items debited to the Petroleum Costs Accoant


The following expenses and costs shall be debited to the Petroleum Costs Account


and also be deductible for income tax return purposes, according to Article 17:


IL2.1 Personnel Kipci.se*


All payments and costs in respect to Contractor's employees will be those


costs directly or indirectly assigned to the Petroleum Operations carried out


under this Contract. The precise amounts of expenses will be reviewed in the


Aiture and will be in agreement with accepted human resource procedures


adopted by the Contractor that are generally applicable in the international oil


and gas industry. The expenses allowed will be the actual expenses incurred


as permitted by such human resource procedures.


II.2.2 Overhead Costs In Liberia


Wages and salaries of the Contractor'* personnel directly engaged in the


Petroleum Operations in the Republic of Liberia, whose work time is not


directly allocated to the programs, as well as costs of maintaining and


operating. In Liberia a main and administrative office and sub-offices


necessary for the Petroleum Operations.

















74


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL





The Contractor shall chargo costa paid abroad, connected to the carrying out of


the Petroleum Operations by the Contractor or its Affiliated Companies. The


amounts charged shall be the actual costs borne by the Contractor. These


costs, including a detailed breakdown of the costs, will be provided to the JOC


for its review and written approval.


11.2.4 Buildings





Construction, maintenance expenses, we well as rents paid for all offices,


houses, warehouses and buildings of other types, including housing for


employees, and cost of equipment, furniture, and fittings necessary foe the


operation of those buildings directly required for the performance of the


Petroleum Operations.





11.2.5 Damage* and Louc*





All costs and expenses necessary for the repair or replacement of Joint


Property resulting from damages and losses incurred by fire, flood, storm,


theft, accident, or any other cause. Operator shall furnish Noo-Operatora


written notice of damages and losses incurred in excess of one hundred


thousand U.S. dollars (IJS 100.000) for each incident as soon as practicable


after a report thereof has been received by the Operator. The Operator shall


furnish to any Non-Operator, in respect of any damage and loss, such


information and documentation as may be reasonably requested





II.2.6 Materials, Equipment and Rentals





Costs of equipment, materials, machinery, and facilities purchased or provided


for use in the Petroleum Operations, as well as rentals or compensations paid


or incurred for the use of any equipment of facilities required directly for the


performance of the Petroleum Operations.


11.2.7 Services





Costs of services directly related to Petroleum operations rendered by


subcontractors und consultants, as well as any costs directly related to services


rendered by the STATE or NOCAL or any other authorities of the Republic of


Liberia.





Costs of services directly elated to Petroleum Operations rendered by


Affiliated Companies, provided that such costs shall not exceed those


normally charged by independent companies for an identical or similar


service.








Premiums paid. Including those paid to Affiliated Companies, for Insurances


customarily taken out for the Petroleum Operations to be carried out by the


Contractor. Losses not covered by the applicable insurance provisions*


including the relevant deductible amounts will also be debited to till* Account/^--








75


 ORANTO BLOCK LB-14 PSC JUNB 10.2009 CONFIDENTIAL





11.2.9 l.cgal Expenses ....





All expenses of handling, investigation defending, protecting or recovering


Joint Property and settlement of litigation or claims directly arising by reason


of the Petroleum Operations.


n.2.10 Financial Coats


All interests paid by the Contractor in respect of the loans from Third parlies


and advances obtained from Affiliated Companies, provided that those loans


and advances shall be for the purpose of the financing of Petroleum Costs


related only to the development of Petroleum Operations in respect of a field.


In the event such financing is provided by Affiliated Companies, the allowable


interest rates shall not exceed the rates customarily used in the International


financial market for loans of a similar nature.


11.2.11 Other Expenses





Any other expenses incurred and paid by the Contractor for the purposes of


the necessary and proper conduce of the Petroleum Operations under Ihc


approved annual Work Programs and Budgets, other than the expenses


covered and dealt with by the Foregoing provisions of this Article and other


than the expenses excluded from the Petroleum Costs.


11.2.12 Ecological and Environmental Charges





All costs incurred for the benefit of the Joint Property and ©Acr Property


under the Contract as a result of governmental or regulatory requirements


and/or Operator's policies to comply with environmental rules applicable to


Operations. These costs may include periodic environmental audits,


ecological or archaeological surveys and pollution control procedures required


by the applicable laws and regulations.


IL3 Expense* not chargeable to the Petroleum Costs Account





The expenses which are not directly necessary* for the performance of the Petroleum


Operations, and the expenses excluded by the provisions of the Contract or this


Accounting Procedure as well as by the regulations in force in Liberia, are not


chargeable to the Petroleum Costs Account and shall therefore not be recoverable.





Such expenses shall be:


(a) expenses relating to the period before the Effective Date;





(b) i out beyond the Delivery Point,














76 i














 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL





(c) financial costs relating to the financing of exploration Petroleum Operations,


and those relating to the share of financing of development Petroleum


Operations; .


(d) bonuses defined in Article 18.9 and in Article 19.1 of this Contract;


II.4 Items credited to the Petroleum Coals Account


The following incomes and proceeds shall, inter alia, be credited to the Petroleum


Costa Account:


(a) Income arising from the marketing of the quantity of Crude Oil to which the


Contractor Is entitled under Article 16 of the Contract for the purpose of


recovery of the Petroleum Costs;


(b) any other incomes or proceeds misted to the Petroleum Operations


specifically those arising frexn:


• Sales of related substances;


• Any services rendered to Third Parties using the facilities dedicated to the


Petroleum Operations, including, but not limited to, processing


transportation and storage of products for Third Parties in those facilities /




































































77


 ORANTO BLOCK LB-14 PSC JUNE 10.2009 CONFIDENTIAL














I1I.I Technical Services *


A reasonable rate shall be charged for the technical services rendered by the





Contractor or its Affiliated Companies for the direct benefit of the Petroleum


Operations carried out under the Contract, such as gas. water, core analyses and any


other nalysea and tests, provided that web charges shall not exceed those normally


charged by independent technical service companies and laboratories for similar








III.2 Purchase of Materials and Kqaipmeat


Materials and equipment purchase from third Parties and directly necessary for the


performance of the petroleum Operations carried out under the Contract shall be








“Net CosT shall include such items at taxes, shipping agent fees, transportation,


loading and unloading costs, license fees, related to the supply of materials and


equipment, as well as transit kam oot recovered through inwrance.


HU Use of Eqaipment and FadlHire EiclusivcJy by the Contractor


Equipment and facilities owned by the Contractor and used directly for the Petroleum


Operations shall be charged to the Petroleum Costs Account at a rental rate which


shall be sufficient to com maintenance, repairs, depreciation and services required


ft* the performance of the Petroleum Operations.


Maintenance, repairs, and services required for the performance of the Petroleum


Operations shall bo charged to the Petroleum Cos's Accounts as operating expenses


III.4 Valuation of Materials


All materials transferred to Liberia from the Contractor’s warehouses, or from those


of any entity constituting the Contractor or their Affiliated Companies, shall be valued


as follows:


(•) New Material....... .......


' • ' * ‘ ''njj, , ..... . |


New material (condition “A") means new material which litui never been used;


one hundred percent (100%) of the current market price, which corresponds to


the price normally charged for similar supplies in arm’s length transactions


between buyer and seller.


Material in fcood condition (condition "B") means material in good condition


which is still usable for its original purpose without repajr, at a maximum of


seventy-five percent (75%) of the price of new material IT. ,








78


 ORANTO BLOCK LB-14 PSC JUNB 10,2009 CONFIDENTIAL





(b) Other Used Material


Other used material (condition “C") means material still usable for its original


purpose, but only after repairs and Reconditioning: at a maximum of fifty


percent (50%) of the price of new material.


(c) Material In Poor Condition


Material in poor condition (condition “D") means material no longer usable


for its original purpose but still usable for other purposes: at a maximum of


twenty-five percent (25%) of the price of new material.


(d) Scrap Material


Scrap material (condition "E") means material beyond usage and repair,


prevailing price of scrap material.


III.5 Warranty of Material |


The Operator docs not warrant the material charged to tiie Joint Account beyond the


manufacture's or supplier's guarantee, express or implied.





III. 6 Materials a ad Equipment Disposed By the Contractor


Material and equipment purchased by all the entities constituting the Contractor shall


be valued in accordance with the principles defined in Article III.4 above.


Materials and equipment purchased by any entity constituting the Contractor or by


Third Parties shall be valued at the received sale price, which shall in no event be less


than the price determined in accordance with the principles defined in Article III.4


above.


The corresponding amounts shall be credited to the Petroleum Costs Account.


Article IV - Inventories


IV. 1 Period


The Contractor shall keep a permanent inventory both in quantity and value of all


normally controllable materials used for the Petroleum Operations and shall proceed


at reasonable intervals with the physical inventories as required by the Parlies.


IV.2 Notice


A written notice of intention to take an inventory shall bo send by the Contractor at


least ninety (90) daf s prior to the commencement of said Inventory so that the STATE


and the entitles constituting the rmay be represented at their own expenses


during the inventory Operations.











79


 ORANTO BLOCK LB-14 PSC JUNE 10,2009 CONFIDENTIAL











IV. 3 Information


In the event the STATE or any entity commuting the Contractor shall not be


represented at an inventory, such Party or Parties shall be board to accept the


inventory taken by the Contractor which shall furnish to such Party or Parties a copy


of said inventory.


Article V - Fiaancial and Accounting Statements


The Contractor shall furnish the STATE and NOCAL with all the reports, records and


statements provided by the provisions of the Contract and the applicable regulations


and, inter alia, the following financial and accounting statements:


V. 1 State of Exploration Work Obligations


Such annual statement shall be submitted not later than one (I) month after the end of


each Contractual Year in respect of the exploratkm periods.


It shall present with details the exploration work and expenditures carried out by the


Contractor to fulfill its obligations act forth Article 4 of the Contract, «c: «fin|


specifically appraisal wells and related appraisal expenditures as w^Il as development


expenditures, exploitation expenses, overhead costa and bonuses.


V.2 Statement of Recovery of Petroleum Coats





A quarterly statement shall be submitted not later than ooo (1) month after the end of


each Calendar Quarter. It shall present the following items of the Petroleum Coats


Account





of the quarter,


(c) the quantity and the value of the production of Petroleum taken by the











Contract of during the quarter for the purpose of recovery of the Petroleum


Costs;





(d) the amount of incomes or Proceeds credited fix the purpose of Article II.5 (b)


above during the quarter;


(e) the amount of Petroleum Costs which remain to be recovered «


the end ofthe quarter





Costs shall be

















80


 2009














ATTESTATION TO:








“AN ACT TO RATIFY THE PRODUCTION SHARING CONTRACT BETWEEN


THE NATIONAL OIL COMPANY OF LIBERIA REPRESENTING THE


REPUBLIC OF LIBERIA AND ORANTO PETROLEUM LIMITED FOR


OFFSHORE BLOCK LB 14."








































































































RESENTATIVES, R.L.


 2009


2009





FOURTH SESSION OF THE FIFTY SECOND


LEGISLATURE OF THE REPUBLIC OF LIBERIA FOURTH SESSION OF THE . FIFTY SECOND


HOUSE'S ENGROSSED BILL NO.16 ENTITLED: LEGISLATURE OF THE REPUBLIC OF LIBERIA


HOUSE’S ENGROSSED BILL NO.16 ENTITLED:


-AN ACT TO RATIFY THE PRODUCTION SHARING


CONTRACT BETWEEN THE NATIONAL OIL “AN ACT TO RATIFY' THE PRODUCTION SHARING


COMPANY OF LIBERIA REPRESENTING THE CONTRACT BETWEEN THE NATIONAL OIL


REPUBLIC OF LIBERIA AND ORANTO PETROLEUM COMPANY OF LIBERIA REPRESENTING THE


LIMITED FOR OFFSHORE BLOCK LB 14.” REPUBLIC OF LIBERIA AND ORANTO PETROLEUM


On motion. Bill read. On motion, the Bill was adopted on its LIMITED FOR OFFSHORE BLOCK LB 14.”


first reading and sent to Committee room on TJun-sday. July 16. On motion. Bill read. On motion, the Bill was adopted on its


2009 @ 12:25 GMT. first reading and sent to Committee room on Tnursday, Julv 23,


On motion. Bill taken from committee room for its second 2009 @11:05 GMT.


reading. On motion, under the suspension of the rule, the On motion. Bill taken from committee room for its second


second reading of the Bill constituted the third reading and the reading. On motion, under the suspension of the mle. the


Bill was adopted, passed into the full force of law. and ordered second reading of the Bill constituted the third-reading and the


engrossed today Tuesday. July 21,2009 @ 16:00 GMT. Bill was adopted, passed into the full force*of law, and ordered


 REPUBLIC OF LIBERIA


THE HONORABLE HOUSE OF REPRESENTATIVES


Capitol Building


PO Box 9005


Monrovia. Libena











2009





FOURTH SESSION OF THE FI KI*Y-SECOND LEGISLATURE OF


THE REPUBLIC OF LIBERIA





SCHEDULE OF THE HOUSE’S ENROLLED BILL NO. 15 ENTITLED:








AN AC r TO RATH Y THE PRODUCTION SHARING CONTRACT BETWEEN


NATIONAL OIL COMPANY OF LIBERIA REPRESENTING THE REPUBLIC


OF LIBERIA AND ORANTO PETROLEUM LIMITED FOR OFFSHORE


BLOCK LB 14."

















PRESENTED TO THE PRESIDENT OF THE REPUBLIC OF LIBERIA


FOR EXECUTIVE APPROVAL











RECEIVED THIS ^ DAY OF _A.D. 2009











AT THE HOUR OF ///* •














Ic.


THE P OFTHE REPUBLIC OF LIBERIA