The entity acting as “the operator” is different for the exploration and exploitation period. For the exploration period, Verenex Energy Area 47 Libya Limited (Verenex) will serve as the operator on behalf of the parties with responsibility for carrying out exploration and appraisal operations and abandonment. After the first declaration of a commercial discovery, the parties shall form a Joint Operating Company ("JOC") established in terms substantially in the form of Exhibit H. The National Oil Corporation (NOC) will hold 51% of the JOC and Verenex and Medco International Ventures Limited (Medco International) will hold a combined 49% share. The JOC will be managed by the management committee, which is made up of two appointees of the NOC and two appointees of Verenex and Medco International.
Environmental impact assessment and management plan
The operator shall conduct an assessment of the impact of each planned petroleum operation on the environment in the relevant part of the contract area. Prior to the commencement of operations the operator shall submit to the management committee a detailed assessment report containing the measures required to be taken to ensure that the conduct of operations does not cause damage to the environment.
For the exploration period, Verenex Energy Area 47 Libya Limited (Verenex) will serve as the operator on behalf of the parties with responsibility for carrying out exploration and appraisal operations and abandonment. After the first declaration of a commercial discovery, the parties shall form a Joint Operating Company ("JOC") established in terms substantially in the form of Exhibit H. The National Oil Corporation (NOC) will hold 51% of the JOC and Verenex and Medco International Ventures Limited (Medco International) will hold a combined 49% share. The JOC will be managed by the management committee, which is made up of two appointees of the NOC and two appointees of Verenex and Medco International.
The operator shall conduct the petroleum operations diligently and continuously and shall be governed in accordance with the applicable provisions of the petroleum law and all other applicable laws and regulations of Libya, in particular laws and regulations concerning the protection of health, safety and environment.
The entity acting as “the operator” is different for the exploration and exploitation period. For the exploration period, Verenex Energy Area 47 Libya Limited will serve as the operator. After the first declaration of a commercial discovery, the operator shall be a Joint Operating Company formed by the parties.
Each party shall have the right to inspect and audit, at its own cost, the operator's books and accounts relating to this contract for any calendar year within 3 years. Any such audit shall be completed within 12 months from its commencement.
The entity acting as “the operator” is different for the exploration and exploitation period. For the exploration period, Verenex Energy Area 47 Libya Limited will serve as the operator. After the first declaration of a commercial discovery, the operator shall be a Joint Operating Company formed by the parties.
Verenex Energy Arca 47 Libya Limited (Verenex) and Medco International Ventures Limited (Medco International) shall pay to the government, as a signature bonus, a lump sum amount of [redacted]. This signature bonus shall not be considered as petroleum operation expenditures and shall not be recovered under this contract.
Verenex and Medco International shall pay to the government a production bonus as follows:
a) an amount of [reduction] paid in respect of each commercial discovery within 60 days after commercial production start date of the commercial discovery; and
b) an amount of [redacted] upon achieving cumulative production of 100 million barrels of oil equivalent from each commercial discovery and thereafter, an amount of [redacted] achieving each additional 30 million barrels of oil equivalent.
The government agrees to meet and discharge any corporate income tax obligations relating to Verenex and Medco International's share of production as imposed by the Petroleum Law.
Verenex Energy Arca 47 Libya Limited and Medco International Ventures Limited shall be subject to corporate income tax imposed by the Petroleum Law under this contract.
Head office overhead may be charged by Verenex Energy Arca 47 Libya Limited (Verenex) and Medco International Ventures Limited (Medco International) provided, however, that:
(i) the allocation method for such overhead charges is the same as that used for the parent company’s global operations and such allocation method is certified by the parent company's external auditor to be accurate and according to generally accepted accounting principles; and
(ii) such charges do not in any calendar year exceed the lesser of a) [redacted] of the petroleum operations expenditures of the operator for such calendar year or b) the sum of [redacted].
Production Share - "Profit Oil features (triggers for variations in split - IRR, factor, production, etc .)
Verenex Energy Arca 47 Libya Limited (Verenex) and Medco International Ventures Limited (Medco International) shall be allocated excess petroleum as determined by the following formula:
“Base Factor” multiplied by “A Factor” multiplied by “Excess Petroleum”
where
(i) the base factor at the indicated levels of the average total daily production of crude oil and liquid hydrocarbon by-product, in barrels, for the relevant calendar year shall be:
Portion of average total daily production (barrels per day) Base factor
[Redacted] [Redacted]
The base factor for natural gas shall always be equal to 1.
The A factor at the indicated ratios of the cumulative value of production received by Verenex and Medco International over the cumulative petroleum operations expenditures they incurred shall be:
Ratio A Factor
less than or equal to [redacted] [redacted]
more than [redacted] less than or equal to [redacted] [redacted]
more than [redacted] less than or equal to [redacted] [redacted]
more than [redacted] [redacted]
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Verenex Energy Arca 47 Libya Limited (Verenex) and Medco International Ventures Limited (Medco International) shall be allocated 13.7% of production for cost recovery until the cumulative value of such allocation equals the cumulative petroleum operations expenditures they incurred.
Verenex Energy Arca 47 Libya Limited and Medco International Ventures Limited shall be subject to royalty imposed by the Petroleum Law under this contract. The government agrees to meet and discharge any royalty obligations relating to Verenex and Medco International's share of production as imposed by the Petroleum Law.
The operator shall hire Libyan nationals to carry out petroleum operations in the contract area. In cases where specialized technical personnel or key management positions are required and not available among Libyan personnel, the operator may hire non-Libyan nationals.
The operator shall at all time use Libyan contractors, provided that they are competitive in terms of performance, price and availability.
The entity acting as “the operator” is different for the exploration and exploitation period. For the exploration period, Verenex Energy Area 47 Libya Limited will serve as the operator. After the first declaration of a commercial discovery, the operator shall be a Joint Operating Company formed by the parties.
The operator shall at all times give priority for use of local supplies, equipment and services, provided that they are competitive in terms of performance, price and availability.
The entity acting as “the operator” is different for the exploration and exploitation period. For the exploration period, Verenex Energy Area 47 Libya Limited will serve as the operator. After the first declaration of a commercial discovery, the operator shall be a Joint Operating Company formed by the parties.
The operator shall prepare and submit to the management committee for approval an annual training program. The objective of the training is to enable Libyan personnel to fill posts of higher responsibility and to replace any non-Libyan personnel in the areas of specialization for which such non-Libyan personnel were hired. The annual budget allocated for the training program shall be sufficient to cover all costs associated with [redacted] training per calendar year during the exploration period and shall not be less the [redacted] of the manpower cost during each year of the exploitation period.
The entity acting as “the operator” is different for the exploration and exploitation period. For the exploration period, Verenex Energy Area 47 Libya Limited will serve as the operator. After the first declaration of a commercial discovery, the operator shall be a Joint Operating Company formed by the parties.
The minimum exploration program is set out in Exhibit B.
During the exploration period, Verenex Energy Arca 47 Libya Limited (Verenex) and Medco International Ventures Limited (Medco International) shall, as a minimum, carry out the following exploration program:
1. conduct such number of seismic crew-months as may be necessary to survey 1000 kilometers of 2D seismic lines; and
2. conduct such number of seismic crew-months as may be necessary to survey 200 kilometers of 3D seismic lines; and
3. conduct such number of rig-months as may be necessary to complete the drilling of 3 new-field wildcat well.
Verenex and Medco International shall, as a minimum exploration commitment, complete the exploration program in accordance with good oil field practices.
Any controversy or claim arising out of or relating to this contract shall be finally settled by arbitration, in accordance with the Rules of Arbitration of the International Chamber of Commerce, in Paris, France, in Arabic or English as the Parties may agree.
Verenex Energy Arca 47 Libya Limited (Verenex) and Medco International Ventures Limited (Medco International) acknowledge the proprietary rights of the government in all data and agrees to treat all such data as confidential. Verenex and Medco International may disclose any such information to its employees to the extent required for efficient conduct of petroleum operations, provided such individuals have signed an undertaking relating to confidentiality as part of their employment contract, or to affiliates and consultants, or to bona fide prospective assignees of rights under this contract, or to banks or financial institutions from which finance is sought. This is provided that Verenex and Medco International obtain from such entities a written confidentiality undertaking prior to disclosure. In the case of disclosure to prospective assignees, any disclosure of such information shall require the prior written consent of the government. Verenex and Medco International may disclose information as required by a regulatory or judicial authority having proper jurisdiction.
Verenex and Medco International’s obligation of confidentiality shall be of a continuing nature and shall not be canceled by the expiration, suspension or termination of this contract.
The contract shall be governed by the laws of the General Secretariat of the General People's Congress of the Great Socialist People's Libyan Arab Jamahiriya (GSPLAJ)