This contract is originally executed in the Albanian language and, subject to the below, such Albanian language version shall govern in all matters relating to this contract.
If, the licensee will be comprised of Albpetrol and a foreign partner, an English language translation of this contract shall be appended to the instrument of transfer (including the government acting in accordance with its authority under this contract to approve such transfer) shall agree that such English language version is an accurate translation of this Albanian language version, and that such English language version shall prevail over the Albanian language version in all matters related to this contract, including any amendments, notices and communications, for so long as Albpetrol includes such foreign partner. In such event, all information, notices and communications to be given or delivered shall be in both the Albanian and the English languages, or accompanied by an English translation.
Unless sooner terminated in accordance with the terms of this contract, this contract shall remain in effect during the the evaluation period of up to 18 months and any extension agreed upon; and any development and production period if entered into, which ends on the 25th anniversary of the effective date of the contract.
In accordance the petroleum law, at the end of any development and production period the government and Albpetrol may agree to further 5 year extensions in accordance with the procedures set forth in this contract.
Environmental impact assessment and management plan
Albpetrol shall as soon as reasonably possible after the effective date submit for the approval from the environmental authority a report on the environmental baseline status of the project area as at the effective date. With each expansion of the project area, Albpetrol shall submit for the approval from the environmental authority a report on the environmental baseline status of the expanded portion of the project area as at the relevant date. Albpetrol shall not then be liable for any environmental damages incurred prior to the effective date of the approved the environmental baseline study, and the National Petroleum Agency shall indemnify and hold harmless Albpetrol from any third-party claims.
Albpetrol shall conduct petroleum operations in a safe and proper manner and in accordance with Albanian law and generally accepted practices of the international petroleum industry. If the National Petroleum Agency reasonably determines that any works or installations erected by Albpetrol or any petroleum operations conducted by Albpetrol endanger or may endanger persons or third party property or cause pollution or harm the environment to an unacceptable degree, the National Petroleum Agency may require Albpetrol to take remedial measures within a reasonable period and to repair any damage to the environment.
The government shall ensure that Albpetrol has use of water and sanitary structures and other infrastructures in Albania, at commercially reasonable rates and on a non-discriminatory basis, so as to be able:
(i) to perform the petroleum operations in compliance with this contract; and
(ii) to produce, transport, export and sell petroleum in or from Albania as provided in this contract and the petroleum law.
At the sole expense and cost of the National Petroleum Agency, the National Petroleum Agency shall have the right to inspect and audit Albpetrol's books of account and accounting records with regard to the petroleum operations, but no more than once in a fiscal year, except as otherwise agreed with operator.
The audit right will cease 3 years after closure of such fiscal year. Any exception to Albpetrol's accounting records shall be communicated to Albpetrol in written form within 3 years from the date on which Albpetrol hands over its accounting records for such fiscal year, otherwise such accounting records shall be deemed to be correct and, thereafter, may not be subject to objection.
Other than those taxes set out in the contract, Albpetrol and its respective affiliates, subcontractors and expatriate personnel shall be exempted from Albanian taxes and duties, with respect to all activities relating to the petroleum operations to the extent so provided in Albanian law. This exemption does not include normal port, warehouse and postal charges and other similar customary charges of general application for actual services rendered.
Albpetrol's foreign contractors will not be responsible for taxes and duties to the extent that they apply, directly or indirectly, to the petroleum operations.
Albpetrol shall be liable to tax on profit in conformity with Law No.7811, dated 12.04,1994 “On approval of decree No.782, dated 22.2.1994 “On the fiscal system in the hydrocarbons sector (exploration-production).”
Production Share - Cost Oil features (basis of calculation, limits on cost recovery - e.g. as % of revenue or production, capex uplift, etc.)
Albpetrol shall recover all petroleum costs under this contract out of 100% of the available petroleum after deducting the Albpetrol share (referred to as “cost recovery petroleum”).
To the extent that, in a fiscal year, costs and expenses recoverable exceed the value of the cost recovery petroleum for such fiscal year, the excess shall be carried forward for recovery in the succeeding fiscal year or fiscal year(s) until fully recovered, but will in no case be carried forward after the termination of this contract.
Albpetrol will select its management and employees according to its discretion, and shall determine the conditions of employment and the number of employees to be used for petroleum operations. However, Albpetrol and its sub-contractors will, to the extent available, employ qualified Albanians to carry out the petroleum operations.
Albpetrol and its sub-contractors shall give priority to the goods and materials produced in Albania if these goods and materials are being offered under equally favorable conditions regarding the quality, price and availability, and in the quantities required.
Albpetrol shall give priority to services performed by Albanian sub-contractors if such services are offered under equally favorable conditions regarding quality, price and availability they may be offered by foreign sub-contractor's.
Albpetrol shall be entitled to use free of charge and for the performance of the petroleum operations, all other assets, equipment, means and infrastructure (including roads, electricity power lines and water, oil and gas pipelines) formerly owned or in the possession of AAP and existing on the effective date this contract is signed in the contract area or elsewhere as described in Annex F of the petroleum agreement, on an "as is" basis and available for delivery, but (unless otherwise agreed with the supplier) subject to payment, on a non-discriminatory basis, at reasonable cost for electricity, water, oil and gas used. Albetrol shall also be entitled to use, under commercially reasonable terms and conditions, the pipelines that transport the petroleum produced in the contract area to the ports and refineries in Albania.
The government shall ensure that Albpetrol has use of the railways, roads, highways, water, land surface, timber, electricity,sanitary structures and other infrastructures in Albania, at commercially reasonable rates and on a non-discriminatory basis, so as to be able:
(i) to perform the petroleum operations in compliance with this contract; and
(ii) to produce, transport, export and sell petroleum in or from Albania as provided in this contract and the petroleum
Albpetrol may flare the associated gas which is not required for use in petroleum operations under Art. 11.2:
(i) if, in Albpetrol's opinion, such associated gas production is not economical and commercially viable or
(ii) when it is in accordance with good oilfield practice. However, if the government believes that such associated gas should be utilized, the government may take this associated gas free of charge and use it if the costs, risk and expenses for the installation of equipment, as required in order to deliver associated gas to the government, are borne by the government, and such delivery causes neither an interruption of petroleum operations nor a negative effect on Albpetrol's economic benefit.
Albpetrol will:
(i) select 8 wells from the contract area for reactivation or re-completion in the Driza reservoir;
(ii) select 2 wells from the contract area for reactivation or re-completion in the Marinza reservoir;
(iii) select 2 wells from the contract area for reactivation or re-completion
in the Southern Area Patos Marinza (Driza); and
(iv) maintain the following existing 28 producing wells and disposal well: all Pad D and Pad H wells and pre-existing wells 989, 1317, 2250, 2471, AAP-1,976, 3013, 876 and disposal well 1842. The above wells are the “evaluation wells”. The square area 142.25 m North, East, South and West centred on each evaluation well shall comprise the evaluation area.
The following program of work shall be conducted on the evaluation wells and the evaluation area during the evaluation period:
(i) conduct reactivation or re-completion activity according to a program of
Albpetrol's choosing;
(ii) maintain existing operational and HSE standards in the contract area;
(iii) evaluate performance of the evaluation wells, from an engineering and economic basis;
(iv) evaluate requirements for additional water disposal capacity and increase capacity as required;
(v) prepare a production, reserves and reservoir performance report
Albpetrol commits to expend at least US$ 2 million in capital expenditures conducting the evaluation program and adding the water disposal well. If the cost of the capital expenditures for the evaluation program and the water disposal well are less than US$ 2 million Albpetrol may elect to expand the activities of the evaluation program by selecting additional wells for reactivation or re-completion.
Albpetrol shall also conduct the following activities during the evaluation
period:
(i) carry out an update of the reserves evaluation of the contract area to a level of detail determined by Albpetrol;
(ii) evaluate existing and future infrastructure for development and commercialization of product for internal and export markets;
(iii) review gas conservation and utilization within the evaluation area; and
(iv) increase water disposal capacity in the evaluation area by adding an additional disposal well;
(v) develop truck offloading options at either Fier or Ballsh refineries for crude oil sales delivery of production; and
(vi) review and report on continuous sand extract technology.
All disputes arising in connection with this contract between the National Petroleum Agency (NPA) and Albpetrol alone shall be finally settled by binding arbitration taking place in Tirana in accordance with Albanian legislation. Notwithstanding the foregoing, in the event Albpetrol consists of Albpetrol and a foreign partner and such foreign partner gives notice in writing to the NPA and to Albpetrol that, in its reasonable judgment, a dispute between Albpetrol and NPA affects such foreign partner’s interests under this provision, any such dispute, whether having just arisen or already the subject of pending arbitration under this provision shall be resolved in accordance with Art. 25.3. In such event, at the request of either Albpetrol or the NPA the arbitration under Art. 25.3 shall include a determination of whether the foreign partner was reasonable in its assertion that the dispute affected its interests. If it is determined that such assertion was not reasonable, the arbitrage award shall include a determination of the costs of the arbitration which are in excess of those which would have been incurred by Albpetrol and the NPA had such arbitration taken place or been concluded under Art. 25.2. and the foreign partner shall be responsible for the payment of all such excess costs.
Disputes arising in connection with this contract between the NPA, Albpetrol and foreign partner(s) shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce (“ICC”). The arbitration shall be carried out by, in the case of mere technical matters, 1 arbitrator and, in the case of all other disputes, 3 arbitrators, appointed by the ICC Court of Arbitration in accordance with said rules and their interpretation by said court. The parties waive the right each to nominate arbitrator and as of now accept the appointment made by the ICC court as it deems best.
The arbitration proceeding shall take place in Zurich, Switzerland and shall be conducted in the English language. All documents submitted and the award of the arbitral panel shall also be in English. Clauses of this contract related to arbitration will continue to be in force despite the termination of this contract.
The Ministry of Industry and Energy (for itself and the Albanian government) and NPA irrevocably waive any right of immunity or any right to object to this arbitration agreement, any arbitration award, any judgment regarding the enforcement of an arbitration award of the execution of any arbitration.
The party that loses an arbitration decision shall pay all expenses incurred in connection with such arbitration, including, but not limited to, the fees and expenses of the arbitrators. All such costs and expenditures shall not be considered petroleum costs and shall not be recoverable under this contract.
The terms and conditions in this contract are strictly confidential. During the term of this contract and for 5 years thereafter, the Albpetrol will never and in no circumstance render public the terms and conditions of this contract or any data or information obtained in compliance with this contract to a third party without the prior written approval of the National Petroleum Agency (NPA), which approval will not be unreasonably withheld.
The above will not be applied:
(a) to the extent that a party that constitutes Albpetrol is required by the laws, rules and regulations of a government or a government department or agency or stock market which has jurisdiction over this party or its affiliates, to disclose this information or data;
(b) to disclose to an affiliate of a party that constitutes Albpetrol, provided that such affiliate shall agree that this confidentiality clause is binding before such disclosure is made;
(c) in case of a party that constitutes Albpetrol, concerning disclosure to a financial institution, bank, audit, auditing company, legal adviser, consultant or sub-contractor in the ordinary course of business of the parties, including financing purposes, as long as the said financial institution, bank, audit, auditing company, legal adviser, consultant or sub-contractor submits, in writing, in a similar way, to maintain such information and data as confidential;
(d) to a bona fide prospective assignee of Albpetrol, on the condition that the prospective assignee similarly undertakes in writing to keep confidential the information and data disclosed;
(e) for purposes of enforcement of any provision of this contract or;
(f) in the case of the NPA, to disclosure of the data related only to parts of the contract area which the Albpetrol has relinquished before such disclosure.
The activities of Albpetrol in performing the petroleum operations shall be governed by and conducted in accordance with the requirements of the Albanian law.
All questions with respect to the interpretation or enforcement of, or the rights and obligations of the parties under, this contract and which are the subject of arbitration in accordance with Art. 25:
(i) shall be governed by the laws of the Republic of Albania if they relate to arbitration between Albpetrol and the National Petroleum Agency alone or
(ii) shall be governed by the laws of England if they relate to arbitration between Albpetrol, the National Petroleum Agency, and foreign partners.
To the extent that any provision of Albanian law (whether existing before, on or after the effective date) conflicts or is inconsistent with a provision of this contract, the provision of the Albanian law shall prevail. If any right or benefit granted (or which is intended to be granted) to Albpetrol under this contract is infringed in some way, a greater obligation or responsibility shall be imposed onto Albpetrol or, in whatever other way the economic benefits accruing to Albpetrol or, in whatever other way the economic benefits accruing to Albpetrol from this contract are negatively influenced by existing or new provisions of Albanian law, and such an event is not provided for under this contract, the government and the Ministry of Economy,Trade and Energy will immediately undertake other necessary actions to eliminate the negative economic effect on Albpetrol.