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INDEX
Article Nos Title
Article No: Title
Artiole XXVII Governing Law
Articlo I Grant
Article XXVIII Termination
Article II Definitions
Article XXIX Assignment
Article III Ethiopian Company
Article rv Article XXX Effective Date
Tern
Article V Surrender
Article VI Activities prior to Commercial
Operations
Article VII Management of Operations
Article VIII Financing
Article IX Royalty and Value
Article X Royalty in kind and Government
Purchases of Petroleum
Article XI Taxation
Article XII Bonus Payments and Rent
Article XIII Government Participation
Article xrv . Refinery
Article XV Immigration and Emigration
Article XVI Payments and Foreign Exchange
Article XVII Employment and Training of Ethiopian
Personnel and Employee Benefits
Article XVIII Promotion of National Interests
Article XIX Imports, Disposal and Exports of
Property and Products
Article XX Settlement of Disputes
Article XXI Force Majeure
Article XXII Amendments
Article XXIII Covenant of Peaceful Possession
Article XXIV Controlling Calendar
Article XXV Offices and Notices
Article XXVI Covenant against Payment of Commission
INDEX
Article Nos Title
Article No: Title
Artiole XXVII Governing Law
Articlo I Grant
Article XXVIII Termination
Article II Definitions
Article XXIX Assignment
Article III Ethiopian Company
Article rv Article XXX Effective Date
Tern
Article V Surrender
Article VI Activities prior to Commercial
Operations
Article VII Management of Operations
Article VIII Financing
Article IX Royalty and Value
Article X Royalty in kind and Government
Purchases of Petroleum
Article XI Taxation
Article XII Bonus Payments and Rent
Article XIII Government Participation
Article xrv . Refinery
Article XV Immigration and Emigration
Article XVI Payments and Foreign Exchange
Article XVII Employment and Training of Ethiopian
Personnel and Employee Benefits
Article XVIII Promotion of National Interests
Article XIX Imports, Disposal and Exports of
Property and Products
Article XX Settlement of Disputes
Article XXI Force Majeure
Article XXII Amendments
Article XXIII Covenant of Peaceful Possession
Article XXIV Controlling Calendar
Article XXV Offices and Notices
Article XXVI Covenant against Payment of Commission
ETHIOPIA
Model Petroleum Agreement Issued April 1973 By
Imperial Ethiopian Government, Ministry Of Mines
ETHIOPIA
Model Petroleum Agreement Issued April 1973 By
Imperial Ethiopian Government, Ministry Of Mines
This Agreement (hereinafter Agreement) is made subject to the
Mining Proclamation of 1971 and Regulations issued thereunder on
this • . - day of . 19
by and between:
THE IMPERIAL ETHIOPIAN GOVERNMENT (hereinafter oalled
Government) represented by H.E, Ato Emmanuel Abraham,
Minister of Mines
OP THE FIRST PART
and. ■
(hereinafter the Company) represented by
\ OP THE SECOND PART
WZ\ S S E-,T''H V
WHEREAS, the area;-, described in. Schedule "A” hereto and being
hereinafter called the ’Subjeot\!AreaV'is believed to oontain deposits
of petroleums susceptibl.e'"df\cd'mmeroial exploitation; and
WHEREAS, the Cbmpany’has all the necessary modem technical
skill, experience and financial resources to explore for, develop*
produoe, process, market end sell all such deposits;
NOW THEREFORE, the parties hereto, for and in consideration of
the premises and mutual covenants and agreements herein contained,
do hereby agree as follows:
ARTICLE I
GRANT
(a) The Government hereby grants to the Company the sole and
exclusive right and privilege for the term provided in the present
Agreement and in accordance with the terms hereof to prospect and
explore for, develop and produce petroleum and its derivative
constituent substances (as hereinafter defined) within the Subjeot
Area and to process, market and sell within and outside of the Empire
of Ethiopia all such petroleum produced.
1 9
This Agreement (hereinafter Agreement) is made subject to the
Mining Proclamation of 1971 and Regulations issued thereunder on
this • . - day of . 19
by and between:
THE IMPERIAL ETHIOPIAN GOVERNMENT (hereinafter oalled
Government) represented by H.E, Ato Emmanuel Abraham,
Minister of Mines
OP THE FIRST PART
and. ■
(hereinafter the Company) represented by
\ OP THE SECOND PART
WZ\ S S E-,T''H V
WHEREAS, the area;-, described in. Schedule "A” hereto and being
hereinafter called the ’Subjeot\!AreaV'is believed to oontain deposits
of petroleums susceptibl.e'"df\cd'mmeroial exploitation; and
WHEREAS, the Cbmpany’has all the necessary modem technical
skill, experience and financial resources to explore for, develop*
produoe, process, market end sell all such deposits;
NOW THEREFORE, the parties hereto, for and in consideration of
the premises and mutual covenants and agreements herein contained,
do hereby agree as follows:
ARTICLE I
GRANT
(a) The Government hereby grants to the Company the sole and
exclusive right and privilege for the term provided in the present
Agreement and in accordance with the terms hereof to prospect and
explore for, develop and produce petroleum and its derivative
constituent substances (as hereinafter defined) within the Subjeot
Area and to process, market and sell within and outside of the Empire
of Ethiopia all such petroleum produced.
1 9
Nothing said In the above paragraph in any manner restricts
the Government from granting mining rights for minerals other than
those covered by this Agreement over the same area, provided that
suoh grants shall not prejudice the rights of the Company hereunder*
(b) The Company shall, within ninety (90) days of commencing each
stage of the Exploration Programme outlined in Schedule "B" attaohed
hereto, exeoute and deliver to the Government a performance bond or
bank guarantee ("Performance Bond") substantially in the form
attaohed hereto as Sohedule "C" from a financial institution aooeptable
to the Government for the amount (G*S* dollars) as follows:
& ( ) for Stage 1 $
8 ( ) for Stage 2;
8 ( V' ) for Stage 3»
which Performance Bond..shdli-. secure the ictue. and punctual performance
of all work obligations -contained , in .Schedule ”B" during the stage
involved and the Performance. BQizid for Stage 1 as shown in Sohedule nB"
in the amount of 8 •••'"’• shall be executed and delivered
within ninety (90) days of the Effeotive Bate of this Agreement*
(o) Notwithstanding the provisions hereof, the Company, rather than
deposit a new Performance Bond for a subsequent stage, may deposit
a Performance Bond in an amount equal to the difference between
the Performance Bond required for the stage involved and the
Performance Bond(s) theretofore deposited for a prior stage(s) and
all suoh Performance Bonds shall be applicable to ( and considered
deposited for) such subsequent stage, and so on from time to time*
(d) The Performance Bonds deposited by the Company shall, subjeot
to paragraph (0) above, be released, discharged and returned to the
Company as follows, namely:
Nothing said In the above paragraph in any manner restricts
the Government from granting mining rights for minerals other than
those covered by this Agreement over the same area, provided that
suoh grants shall not prejudice the rights of the Company hereunder*
(b) The Company shall, within ninety (90) days of commencing each
stage of the Exploration Programme outlined in Schedule "B" attaohed
hereto, exeoute and deliver to the Government a performance bond or
bank guarantee ("Performance Bond") substantially in the form
attaohed hereto as Sohedule "C" from a financial institution aooeptable
to the Government for the amount (G*S* dollars) as follows:
& ( ) for Stage 1 $
8 ( ) for Stage 2;
8 ( V' ) for Stage 3»
which Performance Bond..shdli-. secure the ictue. and punctual performance
of all work obligations -contained , in .Schedule ”B" during the stage
involved and the Performance. BQizid for Stage 1 as shown in Sohedule nB"
in the amount of 8 •••'"’• shall be executed and delivered
within ninety (90) days of the Effeotive Bate of this Agreement*
(o) Notwithstanding the provisions hereof, the Company, rather than
deposit a new Performance Bond for a subsequent stage, may deposit
a Performance Bond in an amount equal to the difference between
the Performance Bond required for the stage involved and the
Performance Bond(s) theretofore deposited for a prior stage(s) and
all suoh Performance Bonds shall be applicable to ( and considered
deposited for) such subsequent stage, and so on from time to time*
(d) The Performance Bonds deposited by the Company shall, subjeot
to paragraph (0) above, be released, discharged and returned to the
Company as follows, namely:
<0 The Performanee Bond for Stage 1 as set forth in Schedule
"3" as soon as possible after and in any event within six (6)
months after the date the geologioal report referred to In
Stage 1 of Schedule "B" 1b submitted to the Minister;
(2) The Performance 3on& for Stage £ as- «et -forth, in Schedule
"B" as soon as possible after and in any event within six (6)
months after the date the Evaluation Report referred to in
Stage 2 of Sohedule ”3" is submitted to the Minister; and
(5) The Performance Bond for Stage 3 as set forth in Sohedule
"3" as soon as possible after and in any event within six (6)
months of the date the drilling rigie released from the
initial test well:
Provided that in the event.-or a surreiider twftubnk to Artiole V haneof
or termination before thewdrk and reporton a stage is oaspletad
and delivered, the Government :fceednot release, discharge and return
the performance bond eo. deposited until the provisions of Artiole VI
(b) hereof have be eh complied with by the, Company*
ARTICLE II
BEFIHITIORS
Wherever used herein unless the context shall otherwise
require:
(a) "Affiliate" shall mean:
(1) any corporation in which the Company holds five percent
(3%) or more of the oompany(s shares;
(2) any company which, directly or indirectly, is controlled
by, or oontrols, or is under common oontrol with the
Company; or
(3) any shareholder or group of shareholders of the Company
of any Affiliate and any individual or group of
individuals in the employ of the Company*
Por the purposes of this paragraph "company” shall inolude corporations
partnerships, unincorporated associations, firms and other business
organisations* 21
<0 The Performanee Bond for Stage 1 as set forth in Schedule
"3" as soon as possible after and in any event within six (6)
months after the date the geologioal report referred to In
Stage 1 of Schedule "B" 1b submitted to the Minister;
(2) The Performance 3on& for Stage £ as- «et -forth, in Schedule
"B" as soon as possible after and in any event within six (6)
months after the date the Evaluation Report referred to in
Stage 2 of Sohedule ”3" is submitted to the Minister; and
(5) The Performance Bond for Stage 3 as set forth in Sohedule
"3" as soon as possible after and in any event within six (6)
months of the date the drilling rigie released from the
initial test well:
Provided that in the event.-or a surreiider twftubnk to Artiole V haneof
or termination before thewdrk and reporton a stage is oaspletad
and delivered, the Government :fceednot release, discharge and return
the performance bond eo. deposited until the provisions of Artiole VI
(b) hereof have be eh complied with by the, Company*
ARTICLE II
BEFIHITIORS
Wherever used herein unless the context shall otherwise
require:
(a) "Affiliate" shall mean:
(1) any corporation in which the Company holds five percent
(3%) or more of the oompany(s shares;
(2) any company which, directly or indirectly, is controlled
by, or oontrols, or is under common oontrol with the
Company; or
(3) any shareholder or group of shareholders of the Company
of any Affiliate and any individual or group of
individuals in the employ of the Company*
Por the purposes of this paragraph "company” shall inolude corporations
partnerships, unincorporated associations, firms and other business
organisations* 21
(b) "Control" shall mean the possession, directly or indirectly
of the power to direct or cause the direction of the management and
policies of a company exercised by any other company where a series
of companies can be specified beginning with the parent company or
companies and ending with the particular company, in which each
company of the series, except the parent company or companies, is
directly or indirectly controlled by one or more of the companies
in the series.
(c) "Company" shall mean '
a company incorporated under the laws of . and
shall indicate such an Ethiopian Company as defined in paragraph (d)
below after it has been incorporated; under Ethiopian Law as provided
for in Article III of thi.s\Agreement andshdli thereafter mean such
Ethiopian Company only;-,.
(d) "Ethiopian Company" .shall mean the company incorporated under,
the laws of the Empire., of-Ethiopia,
(e) "Date of CoizflnencSment of Operations" shall mean the date when
the Company shall’liave commenced the regular and recurrent production
of petroleum in the Subject Area in Payable Quantities.
(f) "Government" shall mean the IMPERIAL ETHIOPIA!! GOVERNMENT.
(g) "Bank" shall mean the National Bank of Ethiopia.
(h) "Acceptable Currency" shall mean any foreign currency which
is acceptable to the Bank for the particular purpose in view.
(i) "Gross Income" shall mean the total amount of all gains,
profits and other income received by or accrued to the Company
either directly or indirectly from business operations and activities
of the Company under this Agreement, plus any income from other
sources which forms part of the Company*s earnings, provided,
however, that in computing such Gross Income, sales within and
outside of Ethiopia shall, subject to the provisions of
subparagraph (5) hereunder, be taken into account as follows?
.2 2
(b) "Control" shall mean the possession, directly or indirectly
of the power to direct or cause the direction of the management and
policies of a company exercised by any other company where a series
of companies can be specified beginning with the parent company or
companies and ending with the particular company, in which each
company of the series, except the parent company or companies, is
directly or indirectly controlled by one or more of the companies
in the series.
(c) "Company" shall mean '
a company incorporated under the laws of . and
shall indicate such an Ethiopian Company as defined in paragraph (d)
below after it has been incorporated; under Ethiopian Law as provided
for in Article III of thi.s\Agreement andshdli thereafter mean such
Ethiopian Company only;-,.
(d) "Ethiopian Company" .shall mean the company incorporated under,
the laws of the Empire., of-Ethiopia,
(e) "Date of CoizflnencSment of Operations" shall mean the date when
the Company shall’liave commenced the regular and recurrent production
of petroleum in the Subject Area in Payable Quantities.
(f) "Government" shall mean the IMPERIAL ETHIOPIA!! GOVERNMENT.
(g) "Bank" shall mean the National Bank of Ethiopia.
(h) "Acceptable Currency" shall mean any foreign currency which
is acceptable to the Bank for the particular purpose in view.
(i) "Gross Income" shall mean the total amount of all gains,
profits and other income received by or accrued to the Company
either directly or indirectly from business operations and activities
of the Company under this Agreement, plus any income from other
sources which forms part of the Company*s earnings, provided,
however, that in computing such Gross Income, sales within and
outside of Ethiopia shall, subject to the provisions of
subparagraph (5) hereunder, be taken into account as follows?
.2 2
Sales to independent parties, including sales to Government
under Article X hereof, shall be taken into account at
actual realised prices, provided that such prices are
negotiated on an armfs length basis and with the objective
of maximising profits as set out in Article VII(c) hereof.
Sales to affiliate shall be taken into account-at the Market -
Value of the products sold. As regards sales to affiliates,
it is the intent of the parties that such sales shall be
accounted for at prices at which the sales would have
occurred if the buyer and seller had not been affiliated.
In order to ensure that this inherit is carried out, in all
sales to affiliates the..Go,Eipaiiy will .submit to the Government
the method according.. £o'which th©.;''Market Value above described
was calculated*'>.T-his submission'.will include the published
price used, if any, prices/of sales by the Company to
independent parties-,’where relevant, any adjustment made,
for example ip’>.reflect content of petroleum, and the charges
deducted for the calculation of an f.o.b, price, including
their source. In the event that the Minister so requests,
the Company shall provide evidence of the Market Value for
any sale and, if the Company fails to do so within thirty
(30) days thereafter, the Wellhead Value as provided in
Article IX hereof shall be used in determining tho Market
Value of such sale.
Sales to independent parties and sales to affiliates may be
deemed to have been consummated f.o.b. Ethiopian port of
shipment by the deduction of the following, to the extent
that they are incurred by the Company as evidenced by
invoices s
(i) ocean freight,
(ii) marine insurance,
f S £ £ \ port and handling charges at the port of discharge,
\ J.JLX /
2 3
Sales to independent parties, including sales to Government
under Article X hereof, shall be taken into account at
actual realised prices, provided that such prices are
negotiated on an armfs length basis and with the objective
of maximising profits as set out in Article VII(c) hereof.
Sales to affiliate shall be taken into account-at the Market -
Value of the products sold. As regards sales to affiliates,
it is the intent of the parties that such sales shall be
accounted for at prices at which the sales would have
occurred if the buyer and seller had not been affiliated.
In order to ensure that this inherit is carried out, in all
sales to affiliates the..Go,Eipaiiy will .submit to the Government
the method according.. £o'which th©.;''Market Value above described
was calculated*'>.T-his submission'.will include the published
price used, if any, prices/of sales by the Company to
independent parties-,’where relevant, any adjustment made,
for example ip’>.reflect content of petroleum, and the charges
deducted for the calculation of an f.o.b, price, including
their source. In the event that the Minister so requests,
the Company shall provide evidence of the Market Value for
any sale and, if the Company fails to do so within thirty
(30) days thereafter, the Wellhead Value as provided in
Article IX hereof shall be used in determining tho Market
Value of such sale.
Sales to independent parties and sales to affiliates may be
deemed to have been consummated f.o.b. Ethiopian port of
shipment by the deduction of the following, to the extent
that they are incurred by the Company as evidenced by
invoices s
(i) ocean freight,
(ii) marine insurance,
f S £ £ \ port and handling charges at the port of discharge,
\ J.JLX /
2 3
(iv) other costs properly incurred by the Company in
delivering1 the petroleum from the Ethiopian port
to the buyer, including those costs allowable for
the purpose of computing royalty as specified in
Article IX(c)(4)*
If any of the above payments are made to affiliates, the
deductions thereof shall not be in excess of competitive
rates. The Company shall justify the reasonableness of
such deductions for payments to affiliates by reference to
published freight rates, rate schedules offered by
independent parties, or charges incurred by the Company in
transactions with non-affiliates,
(*) "Market Value" shall mean the '■•market price of the petroleum,
duo consideration being given* to', and appropriate adjustment being
made for differences in'Mhd",- quality," nature and quantity of the
petroleum pro due t$ '•involve d and. the duration of the contract under
which it is sold. Such Market Value shall be determined as of
the effective date of "tire contract under which the sale is made, or
if no such contract; exists, as of the date of shipment from an
Ethiopian port. In the event that a prevailing market price cannot
be established by comparison to prices at which independent sales
have been effected at the actual port or ports of discharge,
comparison shall be made to the port or ports nearest thereto at
which a prevailing market price exists, with due allowance for any
differential attributable to distance or variations in particular
charges for port dues and expenses. In the event that no such
market price exists, references may be made to formulas used by
taxing authorities of other countries which export such petroleum
products, with appropriate adjustments for the quality of petroleum,
length of sale agreement, quantity of petroleum, terms of sale and
cost of delivery. In no case shall the Market Value so established
be less than the price at which the Company sells petroleum products
24
(iv) other costs properly incurred by the Company in
delivering1 the petroleum from the Ethiopian port
to the buyer, including those costs allowable for
the purpose of computing royalty as specified in
Article IX(c)(4)*
If any of the above payments are made to affiliates, the
deductions thereof shall not be in excess of competitive
rates. The Company shall justify the reasonableness of
such deductions for payments to affiliates by reference to
published freight rates, rate schedules offered by
independent parties, or charges incurred by the Company in
transactions with non-affiliates,
(*) "Market Value" shall mean the '■•market price of the petroleum,
duo consideration being given* to', and appropriate adjustment being
made for differences in'Mhd",- quality," nature and quantity of the
petroleum pro due t$ '•involve d and. the duration of the contract under
which it is sold. Such Market Value shall be determined as of
the effective date of "tire contract under which the sale is made, or
if no such contract; exists, as of the date of shipment from an
Ethiopian port. In the event that a prevailing market price cannot
be established by comparison to prices at which independent sales
have been effected at the actual port or ports of discharge,
comparison shall be made to the port or ports nearest thereto at
which a prevailing market price exists, with due allowance for any
differential attributable to distance or variations in particular
charges for port dues and expenses. In the event that no such
market price exists, references may be made to formulas used by
taxing authorities of other countries which export such petroleum
products, with appropriate adjustments for the quality of petroleum,
length of sale agreement, quantity of petroleum, terms of sale and
cost of delivery. In no case shall the Market Value so established
be less than the price at which the Company sells petroleum products
24
to indopendont parties in comparable circumstances as to quantity,
quality, length of sale agreement, terms of sale and cost of
delivery, if the terms of sale are c.i.f. foreign port, the c.i.f.
price may be reduced to an f.o.b. i>rice Ethiopian port of
shipment by the deduction of freight, insurance and other customary
charges as provided in subparagraph (3) of paragraph (i) above.
(k)(l) "Exploration Operations” shall, subject to the Mining
Proclamation, mean the carrying out of any one or more of
the acts or investments reasonably necessary in exploring
for petroleum, including but not limited to the following:
the exploration of the Sjobjep't Area by use of gravity
meter, magnetometer,---s.dijbniic or qther geological or
geophysical methods.; obtaining. ^nd:..dev'eloping aerial
photographs, ma£pin£''hy use .of aerial photographs or
by other method^ the drilling-..of core holes, strati
graphic ..tesb-.h’oles 5 the-drilling, testing and completion
of 1 oxpiq3?a.ik>ry and development wells of all kinds and
all services with" f-es/p.ect thereto; the study of surface
and subsurface 'geological data; the acquisition by
purchase or..o'£harWise of geological and geophysical
data, photographs or information on the Subject Area
and the ge'ne-ral area around it; the processing, study,
correlation or interpretation of all data obtained;
and ancillary operations carried on either on or off
the Subject Area in building roads, camps and other
facilities; recruiting, maintaining and transporting
employees, their families, contractors and their
personnel, equipment and services; obtaining and
furnishing seismic services, including processing,
correlating, playback or interpretative services;
obtaining and furnishing materials, supplies, equipment,
housing, offices, storage, transportation, insurance,
accounting and supervision and other things useful in
carrying out Exploration Operations on the Subject Area.
(2) "Mining Operations” shall, subject to the Mining Proclamation,
mean all acts or investments reasonably necessary for
producing, working, getting and raising to the surface
the petroleum found on, in or under the Subject Area, and
treating, refining, separating, dehydrating, or otherwise
making the petroleum marketable;storing, loading and
marketing or otherwise disposing thereof; including but
not limited to, the following0
2 5
to indopendont parties in comparable circumstances as to quantity,
quality, length of sale agreement, terms of sale and cost of
delivery, if the terms of sale are c.i.f. foreign port, the c.i.f.
price may be reduced to an f.o.b. i>rice Ethiopian port of
shipment by the deduction of freight, insurance and other customary
charges as provided in subparagraph (3) of paragraph (i) above.
(k)(l) "Exploration Operations” shall, subject to the Mining
Proclamation, mean the carrying out of any one or more of
the acts or investments reasonably necessary in exploring
for petroleum, including but not limited to the following:
the exploration of the Sjobjep't Area by use of gravity
meter, magnetometer,---s.dijbniic or qther geological or
geophysical methods.; obtaining. ^nd:..dev'eloping aerial
photographs, ma£pin£''hy use .of aerial photographs or
by other method^ the drilling-..of core holes, strati
graphic ..tesb-.h’oles 5 the-drilling, testing and completion
of 1 oxpiq3?a.ik>ry and development wells of all kinds and
all services with" f-es/p.ect thereto; the study of surface
and subsurface 'geological data; the acquisition by
purchase or..o'£harWise of geological and geophysical
data, photographs or information on the Subject Area
and the ge'ne-ral area around it; the processing, study,
correlation or interpretation of all data obtained;
and ancillary operations carried on either on or off
the Subject Area in building roads, camps and other
facilities; recruiting, maintaining and transporting
employees, their families, contractors and their
personnel, equipment and services; obtaining and
furnishing seismic services, including processing,
correlating, playback or interpretative services;
obtaining and furnishing materials, supplies, equipment,
housing, offices, storage, transportation, insurance,
accounting and supervision and other things useful in
carrying out Exploration Operations on the Subject Area.
(2) "Mining Operations” shall, subject to the Mining Proclamation,
mean all acts or investments reasonably necessary for
producing, working, getting and raising to the surface
the petroleum found on, in or under the Subject Area, and
treating, refining, separating, dehydrating, or otherwise
making the petroleum marketable;storing, loading and
marketing or otherwise disposing thereof; including but
not limited to, the following0
2 5
the construction, operation or maintenance of
buildings, installations, plants, machinery,
appliances, storage and loading facilities5 obtaining
and furnishing materials, supplies, dams, railways,
roads, pipelines, communication facilities and other
facilities or services, and ancillary operations
carried on either on or off tho Subject Area in
building roads, camps and other facilities? obtaining,
maintaining and transporting employees and their
families, contractors and their personnel, services,
materials, supplies, equipment,, housing, storage, and
transportation, processing, treating, refining and
marketing facilities, insurance, accounting and
supervision and other things useful in carrying out
Mining Operations.
(3) "Operations" shall mean either Exploration Operations or
Mining Operations or both.
(l) "Petroleum" shall mean crupLe. o.i’l, natural gas, natural gas
liquids, tar sands, oil shales and other..hydrocarbons, all before
refining. v. '• \ \
(m) "Natural &as;'r- or "Gas’A s'hkl.1 mean all gaseous substances
(hydrocarbons and non~hy'dr.Oca'rbonn) including sulphur, produced
from wells in a yaporoUd or gaseous form, which existed in a
gaseous form in'-.the reservoir or in solution with the crude oil,
but excluding condensates which by normal field methods of petroleum
gas processing are separated and recovered as liquids.
(n) "Oil" or "Crude Oil" shall mean all liquid petroleum before
refining and excludes Natural Gas but includes condensates which
by normal field methods of petroleum gas processing are separated
and recovered as liquids.
C°)(1) "Exploration Cost" shall mean all reasonable expenditures
wholly, necessarily and exclusively made and obligations
and liabilities incurred by the Company in carrying out
Exploration Operations hereunder including, without
limitation to tho generality of the foregoing, the costs
specified in subparagraph (5) below.
?£
the construction, operation or maintenance of
buildings, installations, plants, machinery,
appliances, storage and loading facilities5 obtaining
and furnishing materials, supplies, dams, railways,
roads, pipelines, communication facilities and other
facilities or services, and ancillary operations
carried on either on or off tho Subject Area in
building roads, camps and other facilities? obtaining,
maintaining and transporting employees and their
families, contractors and their personnel, services,
materials, supplies, equipment,, housing, storage, and
transportation, processing, treating, refining and
marketing facilities, insurance, accounting and
supervision and other things useful in carrying out
Mining Operations.
(3) "Operations" shall mean either Exploration Operations or
Mining Operations or both.
(l) "Petroleum" shall mean crupLe. o.i’l, natural gas, natural gas
liquids, tar sands, oil shales and other..hydrocarbons, all before
refining. v. '• \ \
(m) "Natural &as;'r- or "Gas’A s'hkl.1 mean all gaseous substances
(hydrocarbons and non~hy'dr.Oca'rbonn) including sulphur, produced
from wells in a yaporoUd or gaseous form, which existed in a
gaseous form in'-.the reservoir or in solution with the crude oil,
but excluding condensates which by normal field methods of petroleum
gas processing are separated and recovered as liquids.
(n) "Oil" or "Crude Oil" shall mean all liquid petroleum before
refining and excludes Natural Gas but includes condensates which
by normal field methods of petroleum gas processing are separated
and recovered as liquids.
C°)(1) "Exploration Cost" shall mean all reasonable expenditures
wholly, necessarily and exclusively made and obligations
and liabilities incurred by the Company in carrying out
Exploration Operations hereunder including, without
limitation to tho generality of the foregoing, the costs
specified in subparagraph (5) below.
?£
(2) "Minting Cost* ehai3. mean all reasonable expenditures,
wholly, necessarily and exclusively made and obligations
and liabilities incurred by the Company in carrying out
Mining Operations hereunder including, without limiting
the generality of the foregoing, the costs in sub-paragraph
(3) below.
(3) Such costs shall include all costs incurred for materials,
equipment, supplies, work and services performed by contractors
and sub-contractors, salaries, fees and other compensation
paid to employees of the Company and/or other persons
engaged in carrying out the Operations? building oosts,
maintenance, rentals and'rel'^'ted costs for all offices,
houses, warehouses-, •pipelines, casing* pipe, roads,
production..equai>m6nt and facilities, storage, treating,
loading and shipping’facilities j and such costs of other
facilities and-epst-s.'of equipment, furniture, fixtures,
supplies and - Services necessary for the operation of such
buildings and facilities acquired for the purposes of
gaining or producing income; the coBt of buying, renting,
furnishing or otherwise obtaining, maintaining, supporting,
repairing, transporting, insuring, storing accounting for
the supervising of the use of equipment, materials, services,
supplies and personnel; the cos4, of vehicles, and other
transportation equipment, professional or other outside
services, and other costs and expenses of exploring for
and producing petroleum; and costs in connection with such
operations and all costs incurred in furnishing the facilities
and services required under the provisions of Article XVII
(b) and (c) hereof.
(4) "Operating Costs" shall mean Exploration Costs and Mining Costs,
27
(2) "Minting Cost* ehai3. mean all reasonable expenditures,
wholly, necessarily and exclusively made and obligations
and liabilities incurred by the Company in carrying out
Mining Operations hereunder including, without limiting
the generality of the foregoing, the costs in sub-paragraph
(3) below.
(3) Such costs shall include all costs incurred for materials,
equipment, supplies, work and services performed by contractors
and sub-contractors, salaries, fees and other compensation
paid to employees of the Company and/or other persons
engaged in carrying out the Operations? building oosts,
maintenance, rentals and'rel'^'ted costs for all offices,
houses, warehouses-, •pipelines, casing* pipe, roads,
production..equai>m6nt and facilities, storage, treating,
loading and shipping’facilities j and such costs of other
facilities and-epst-s.'of equipment, furniture, fixtures,
supplies and - Services necessary for the operation of such
buildings and facilities acquired for the purposes of
gaining or producing income; the coBt of buying, renting,
furnishing or otherwise obtaining, maintaining, supporting,
repairing, transporting, insuring, storing accounting for
the supervising of the use of equipment, materials, services,
supplies and personnel; the cos4, of vehicles, and other
transportation equipment, professional or other outside
services, and other costs and expenses of exploring for
and producing petroleum; and costs in connection with such
operations and all costs incurred in furnishing the facilities
and services required under the provisions of Article XVII
(b) and (c) hereof.
(4) "Operating Costs" shall mean Exploration Costs and Mining Costs,
27
(p) "Payable Quantities" shall mean sufficient quantities of
petroleum to enable the Mining Operations to be undertaken or
continued on a profitable basis#
(q) "Mining Proclamation" shall mean the Mining Proclamation
of 1971 and existing regulations passed thereunder and amendments
thereto which qualify under paragraph (a) of Article XX7TI hereof.
(r) "Minister" shall mean the Minister of Mines of the
Government or the person for the time being acting in the place
of such Minister. "Ministry" shall mean the Ministry of Mines
of the Government or such other ministry of the Government authorised
to supervise petroleum exploration and'iaining operations in Ethiopia
by whatever name called. The /’Minister", or* in, i*io absence his
duly authorised repre sen tati-yd, shall b'e\the 'Government * s
representative visra/rvis’ the Company•
(s) "Tax Year" or "Fiscal .Ye.a'r" shall mean a calendar year or
such other fiscal period-.'of‘twelve (12) calendar months according
to the Gregorian ^Calendar as the Company may elect with the
concurrence of the tax authorities.
(t) "Calendar Year" shall mean the period from January 1st through
December 31 ot of the same year according to the Gregorian Calendar
and "Calendar Quarter" and "Calendar Month" shall mean a quarter
of such year or month according to the Gregorian Calendar.
(u) "Contract Year" or "Year", unless the context otherwise
requires, shall mean a period of twelve (12) months according to
the Gregorian Calendar, commencing on the Effective Pate and on each
anniversary of the Effective Pate.
ARTICLE III
ETHIOPIAN COMPANY
(a) In order to carry out the programme properly and effectively,
the Company shall establish before the Pate of Commencement of
Operations an Ethiopian Company, organised and existing under the
2 8 .
(p) "Payable Quantities" shall mean sufficient quantities of
petroleum to enable the Mining Operations to be undertaken or
continued on a profitable basis#
(q) "Mining Proclamation" shall mean the Mining Proclamation
of 1971 and existing regulations passed thereunder and amendments
thereto which qualify under paragraph (a) of Article XX7TI hereof.
(r) "Minister" shall mean the Minister of Mines of the
Government or the person for the time being acting in the place
of such Minister. "Ministry" shall mean the Ministry of Mines
of the Government or such other ministry of the Government authorised
to supervise petroleum exploration and'iaining operations in Ethiopia
by whatever name called. The /’Minister", or* in, i*io absence his
duly authorised repre sen tati-yd, shall b'e\the 'Government * s
representative visra/rvis’ the Company•
(s) "Tax Year" or "Fiscal .Ye.a'r" shall mean a calendar year or
such other fiscal period-.'of‘twelve (12) calendar months according
to the Gregorian ^Calendar as the Company may elect with the
concurrence of the tax authorities.
(t) "Calendar Year" shall mean the period from January 1st through
December 31 ot of the same year according to the Gregorian Calendar
and "Calendar Quarter" and "Calendar Month" shall mean a quarter
of such year or month according to the Gregorian Calendar.
(u) "Contract Year" or "Year", unless the context otherwise
requires, shall mean a period of twelve (12) months according to
the Gregorian Calendar, commencing on the Effective Pate and on each
anniversary of the Effective Pate.
ARTICLE III
ETHIOPIAN COMPANY
(a) In order to carry out the programme properly and effectively,
the Company shall establish before the Pate of Commencement of
Operations an Ethiopian Company, organised and existing under the
2 8 .
laws of tho Empire of Ethiopia and having its registered office
in Ethiopia, which shall be controlled initially by the Company.
It is understood and agreed that, aa soon as the Ethiopian Company
is established, all of the rights and obligations conferred and
imposed by this Agreement to and upon the Company shall be
transferred and assigned to tho Ethiopian Company.
(b) Notwithstanding the provisions of paragraph ($ above,
->>-iii-iishall guarantee the
performance by the Ethiopian Company of all its obligations hereunder
and shall remain liable to the Government therefor.
ARTICLE.. IV\
.♦’-TERM/ V‘
This Agreement '-shall have a •.t.e'rya of thirty (30) years from
the Effeotive Date": he roof, as.;‘def£iied in Article XXX, and is
renewable on fair and jprpjpe'r terms so long as petroleum continues
to be produced or is capable of being produoed in payable quantities
in each year o:f renewal term.
ARTICLE Y
SURRENDER
(a) The Company may at any time before completion of the entire
programme specified in Schedule "B" surrender all of the Subject
Area by giving written notice to the Minister at least ninety (90)
days prior to the date specified in said notice on which suoh
surrender is to become effective and all rights and obligations of
both parties hereunder shall cease on the date specified in suoh
written notioe, except as herein specifically set out, and if a
surrender notioe is given, the Company shall not be obligated to
commence or complete a stage subsequent to the date of the notioe
but must complete tho stage then in progress or make payment in
lieu thorefor as provided in Article VI (b) hereof if it has not
theretofore completed the stage involved.
laws of tho Empire of Ethiopia and having its registered office
in Ethiopia, which shall be controlled initially by the Company.
It is understood and agreed that, aa soon as the Ethiopian Company
is established, all of the rights and obligations conferred and
imposed by this Agreement to and upon the Company shall be
transferred and assigned to tho Ethiopian Company.
(b) Notwithstanding the provisions of paragraph ($ above,
->>-iii-iishall guarantee the
performance by the Ethiopian Company of all its obligations hereunder
and shall remain liable to the Government therefor.
ARTICLE.. IV\
.♦’-TERM/ V‘
This Agreement '-shall have a •.t.e'rya of thirty (30) years from
the Effeotive Date": he roof, as.;‘def£iied in Article XXX, and is
renewable on fair and jprpjpe'r terms so long as petroleum continues
to be produced or is capable of being produoed in payable quantities
in each year o:f renewal term.
ARTICLE Y
SURRENDER
(a) The Company may at any time before completion of the entire
programme specified in Schedule "B" surrender all of the Subject
Area by giving written notice to the Minister at least ninety (90)
days prior to the date specified in said notice on which suoh
surrender is to become effective and all rights and obligations of
both parties hereunder shall cease on the date specified in suoh
written notioe, except as herein specifically set out, and if a
surrender notioe is given, the Company shall not be obligated to
commence or complete a stage subsequent to the date of the notioe
but must complete tho stage then in progress or make payment in
lieu thorefor as provided in Article VI (b) hereof if it has not
theretofore completed the stage involved.
(b) $he Company may at any time and from time to time after
completion of the programme specified in Schedule "B" surrender all
or any part of the Subject Area by giving written notice to the
Minister at least sixty (60) days prior to the date specified in
the said notioe on whioh suoh surrender is to become effective and
all rights and obligations of both parties hereunder in connection
with the surrendered area shall cease on the date speoified in suoh
written notice, except as herein specifically set out.
(o) At the end of the third (jrd) year from the Effective Bate
of this Agreement, the Company shall surrender exploration rights
on sufficient acreage (selected by it) so that) after such surrender
the Company holds exploration rights on:not more .than eighty poroont
(80#) of the area held on the'.'E£f active Bate \of\this Agreement.
The area or areas so retained' shall be. , shown-. ciearly on a map to
be submitted to the Government at' the end of this period.
(d> At the end of the sixth '(’6th) year from the Effective Bate
of this Agreement, the Company shall surrender exploration rights
on sufficient acreage (selected by it) so that, after suoh surrender
the Company holds exploration rights on not more than sixty percent
(60%) of the area held on the Effective Bate of this Agreement. The
area or areas so retained shall be shown clearly on a map to be
submitted to the Government at the end of this period.
(e) Within five (5) yearBafter (1) the end of the sixth (6th)
year from the Effective Bate of this Agreement, or (2) the Bate
of Commencement of Operations, whichever first ocours, the Company
shall surrender exploration rights on sufficient acreage (selected
by it) so that, after such surrender, the Company holds exploration
rights on not more than forty percent (A0%) of the area held on
the Effective Bate of this Agreement. The area or areas so retained
shall be shown dearly on a map to be submitted to the Government at
the end of this period.
(f) It is agreed that areas voluntarily surrendered by the
Company pursuant to paragraph (b) hereof shall be considered In
3 0
(b) $he Company may at any time and from time to time after
completion of the programme specified in Schedule "B" surrender all
or any part of the Subject Area by giving written notice to the
Minister at least sixty (60) days prior to the date specified in
the said notioe on whioh suoh surrender is to become effective and
all rights and obligations of both parties hereunder in connection
with the surrendered area shall cease on the date speoified in suoh
written notice, except as herein specifically set out.
(o) At the end of the third (jrd) year from the Effective Bate
of this Agreement, the Company shall surrender exploration rights
on sufficient acreage (selected by it) so that) after such surrender
the Company holds exploration rights on:not more .than eighty poroont
(80#) of the area held on the'.'E£f active Bate \of\this Agreement.
The area or areas so retained' shall be. , shown-. ciearly on a map to
be submitted to the Government at' the end of this period.
(d> At the end of the sixth '(’6th) year from the Effective Bate
of this Agreement, the Company shall surrender exploration rights
on sufficient acreage (selected by it) so that, after suoh surrender
the Company holds exploration rights on not more than sixty percent
(60%) of the area held on the Effective Bate of this Agreement. The
area or areas so retained shall be shown clearly on a map to be
submitted to the Government at the end of this period.
(e) Within five (5) yearBafter (1) the end of the sixth (6th)
year from the Effective Bate of this Agreement, or (2) the Bate
of Commencement of Operations, whichever first ocours, the Company
shall surrender exploration rights on sufficient acreage (selected
by it) so that, after such surrender, the Company holds exploration
rights on not more than forty percent (A0%) of the area held on
the Effective Bate of this Agreement. The area or areas so retained
shall be shown dearly on a map to be submitted to the Government at
the end of this period.
(f) It is agreed that areas voluntarily surrendered by the
Company pursuant to paragraph (b) hereof shall be considered In
3 0
determining compliance with the surrender obligations of paragraphs
(c), (d) and (e) hereof and further agreed that any one surrender
(voluntary or otherwise) can consist of not more than four (4)
blocks generally of rectangular shape, each block comprised of
at least one thousand (1,000) square kilometres provided that if
more than one block is so surrendered they need not be contiguous
to one another.
(g) On any surrender by the Company or termination by the
Government the Company shall have the right, within a period of
one (1) year from such surrender or termination to remove and dispose
of all movable property located on or .U§ed in connection with the
lands subject to the surrender o«r-te^ination.
article
ACTIVITIES-4rI0R TO 'cb^feciAL OPERATION'S
(a) The Company shal-l'-projiiptly after the Effective Date of this
Agreement and subject". bo-its rights of surrender commence and
diligently pursue the conduct of the Work Programme in the Subject
Area referred to in Schedule The Work Programme and time limits,
mutually drawn up by the parties, are attached hereto as Schedule "B"
and by' reference the same becomes an integral part of this Agreement.
(b) It is agreed and understood that the commitments under
Schedule "B” are firm until surrender of all of the Subject Area or
termination and all commitments thereunder for work to be performed
prior to surrender or termination must, to the extent only of any
deficiency in the Stage involved, be paid by the Company to the
Government or spent elsewhere in Ethiopia where the Company may
be carrying on mining operations or exploration activities if the
Government so agrees.
(c) The Government may, by giving sixty (60) days prior written
notice terminate this Agreement if the Company for reasons other
than Eoree Majeure fails to act within the time limits specified
determining compliance with the surrender obligations of paragraphs
(c), (d) and (e) hereof and further agreed that any one surrender
(voluntary or otherwise) can consist of not more than four (4)
blocks generally of rectangular shape, each block comprised of
at least one thousand (1,000) square kilometres provided that if
more than one block is so surrendered they need not be contiguous
to one another.
(g) On any surrender by the Company or termination by the
Government the Company shall have the right, within a period of
one (1) year from such surrender or termination to remove and dispose
of all movable property located on or .U§ed in connection with the
lands subject to the surrender o«r-te^ination.
article
ACTIVITIES-4rI0R TO 'cb^feciAL OPERATION'S
(a) The Company shal-l'-projiiptly after the Effective Date of this
Agreement and subject". bo-its rights of surrender commence and
diligently pursue the conduct of the Work Programme in the Subject
Area referred to in Schedule The Work Programme and time limits,
mutually drawn up by the parties, are attached hereto as Schedule "B"
and by' reference the same becomes an integral part of this Agreement.
(b) It is agreed and understood that the commitments under
Schedule "B” are firm until surrender of all of the Subject Area or
termination and all commitments thereunder for work to be performed
prior to surrender or termination must, to the extent only of any
deficiency in the Stage involved, be paid by the Company to the
Government or spent elsewhere in Ethiopia where the Company may
be carrying on mining operations or exploration activities if the
Government so agrees.
(c) The Government may, by giving sixty (60) days prior written
notice terminate this Agreement if the Company for reasons other
than Eoree Majeure fails to act within the time limits specified
in Schedule HBMj provided, however, that the Government may at its
own option agree that the Company retain its rights and privileges
under the Agreement, if the Company pays a penalty to the Government
at the following ratess
(1) Twelve percent (12%) of the sum unexpended per month
for the first three (3) months of delay?
(2) Fifteen percent (15%) of the sip unexpended including
the penalty of twelve percent (12%) per month for the
next three (3) months?
(3) Twenty percent (20%) of the su unexpended including the
penalty of fifteen percent (15%) per month thereafter,
unless the Government decides otherwise.
Subject always to the surrender rights., of the Company in accordance
with this Agreement and the Mining proclamation•
V, V’ABTICLE VII..\ \
V;fo&JAGEMEHT •0>--'OPERATIONS
(a) The Compary will. ensdre that a representative of the Govern¬
ment designated in-.waiting may attend meetings of the Board of
Directors of the Ethiopian Company. Such Government representative
shall have no voting rights and shall keep confidential all
information, secrets and data of the Company, its assets, operations
and prospects.
(b) The Company, subject to paragraph (c) hereof, shall have
full and effective control and management of all matters relating
to the operation of the project including the production and
marketing of its products in accordance with sound, long-term policies
and without prejudice to the provisions of the Mining Proclamation.
The Company may make expansions, modifications, improvements and
replacements of the project facilities, and may add new facilities,
as the Company shall consider it necessary for the operation of
the project or to provide services or to carry on activities ancillary
or incidental to the project. All such expansions, modifications,
improvements, replacements and additions shall be considered part
of the project facilities. " *
in Schedule HBMj provided, however, that the Government may at its
own option agree that the Company retain its rights and privileges
under the Agreement, if the Company pays a penalty to the Government
at the following ratess
(1) Twelve percent (12%) of the sum unexpended per month
for the first three (3) months of delay?
(2) Fifteen percent (15%) of the sip unexpended including
the penalty of twelve percent (12%) per month for the
next three (3) months?
(3) Twenty percent (20%) of the su unexpended including the
penalty of fifteen percent (15%) per month thereafter,
unless the Government decides otherwise.
Subject always to the surrender rights., of the Company in accordance
with this Agreement and the Mining proclamation•
V, V’ABTICLE VII..\ \
V;fo&JAGEMEHT •0>--'OPERATIONS
(a) The Compary will. ensdre that a representative of the Govern¬
ment designated in-.waiting may attend meetings of the Board of
Directors of the Ethiopian Company. Such Government representative
shall have no voting rights and shall keep confidential all
information, secrets and data of the Company, its assets, operations
and prospects.
(b) The Company, subject to paragraph (c) hereof, shall have
full and effective control and management of all matters relating
to the operation of the project including the production and
marketing of its products in accordance with sound, long-term policies
and without prejudice to the provisions of the Mining Proclamation.
The Company may make expansions, modifications, improvements and
replacements of the project facilities, and may add new facilities,
as the Company shall consider it necessary for the operation of
the project or to provide services or to carry on activities ancillary
or incidental to the project. All such expansions, modifications,
improvements, replacements and additions shall be considered part
of the project facilities. " *
(o) The Company ehall exorcise these prerogatives in good faith
with the objective of realising the maximum profits consistent
with good production, engineering and business practices. The
Company shall employ in the said operations modem production
techniques and methods determined by the Company to be consistent
with:
(1) the size of the deposits of petroleum discovered, and
(2) the most ooonomical production of the petroleum discovered.
The Company will exercise its best efforts and diligence in the
selection of production techniques and methods to avoid any waste
of petroleum and if, after the Date of Commencement of Operations
production for any year is expected\to .bo less than twenty percent
(20%) of production capacity:fori reasons pther tlmn Force Majeure,
the Company shall infapm; the Government -pf the reasons therefor.
ASt'Elbj.E-VlII
■••-"•••.'••."FINANCIHG
The Company;- shall, subject to the terms hereof, havo the
sole responsibility of financing the Operations and determining
the terms on which the said finanoing shall bo obtained, including
tho extent to which the finanoing shall be accomplished in acoordanoe
with the current money market conditions through the issuance of
shares or through borrowing. It is recognised that it may be
necessary or dosirable to obtain finanoing or finanoing guarantees,
or both, from international and foreign national finanoing
institutions, private finanoial institutions or other enterprises.
The Government undertakes to cooperate with the Company to
facilitate the finanoing of the project insofar nr and provided
that the terms of the finanoing agreement have the consent and
approval of the Government and the Bank. In the event that an
agreement or investment guarantees should be concluded between
the Government of the Empire of Ethiopia and the Government of
t (or other oountry designated by the Company
3 3
(o) The Company ehall exorcise these prerogatives in good faith
with the objective of realising the maximum profits consistent
with good production, engineering and business practices. The
Company shall employ in the said operations modem production
techniques and methods determined by the Company to be consistent
with:
(1) the size of the deposits of petroleum discovered, and
(2) the most ooonomical production of the petroleum discovered.
The Company will exercise its best efforts and diligence in the
selection of production techniques and methods to avoid any waste
of petroleum and if, after the Date of Commencement of Operations
production for any year is expected\to .bo less than twenty percent
(20%) of production capacity:fori reasons pther tlmn Force Majeure,
the Company shall infapm; the Government -pf the reasons therefor.
ASt'Elbj.E-VlII
■••-"•••.'••."FINANCIHG
The Company;- shall, subject to the terms hereof, havo the
sole responsibility of financing the Operations and determining
the terms on which the said finanoing shall bo obtained, including
tho extent to which the finanoing shall be accomplished in acoordanoe
with the current money market conditions through the issuance of
shares or through borrowing. It is recognised that it may be
necessary or dosirable to obtain finanoing or finanoing guarantees,
or both, from international and foreign national finanoing
institutions, private finanoial institutions or other enterprises.
The Government undertakes to cooperate with the Company to
facilitate the finanoing of the project insofar nr and provided
that the terms of the finanoing agreement have the consent and
approval of the Government and the Bank. In the event that an
agreement or investment guarantees should be concluded between
the Government of the Empire of Ethiopia and the Government of
t (or other oountry designated by the Company
3 3
unless the Government on grounds ox national interest objects laieretoy
in the future, the Government shall use its best efforts in good
faith to facilitate obtaining any approval required for such
guarantee* Further the Government shall undertake to facilitate,
in accordance with the Exchange Control Laws of Ethiopia, the
repayment of all loans that the Company may have incurred for the
purpose of financing operations.
ARTICLE XIX
ROYALTY AND VALUE
(a) The Company shall pay to the Government a royalty of twelve
and one half percent (12%$>) of the Wellhead Value of the petroleum
produced, either in kind or in cash,, \atjthe option of the Government.
(b) The "Wellhead Valuq "-.df the petro leuin. :f 6r the purposes of
assessing Government roya.ity'- under this Agreement, whether it is
taken in cash or in‘kind, shali be .computed as follows?
Sales to independent;-"buyers and affiliates shall be
taken into account-'oh the basis of Market Value as
defined in. AiticjLe II (h) hereof.
(c) For the purpose of this Agreements
(1) "Wellhead Value" of natural gas shall mean the gross sales
received by the Company from sales of natural gas delivered
to a plant or other purchaser less Permissive Deductions;
(2) "Wellhead Value" of crude oil shall mean the gross sales
received by the Company from sales of crude oil which shall
be stated in the then effective price notice furnished by
the Company to the Government less Permissive Deductions:
(5) "Posted Price" shall mean the f.o.b. prices published by
the Government in consultation with the Company for each
grade, gravity and quality of petroleum offered for sale
to buyers generally for export at the relevant point of
export in Ethiopia, which price shall be a p^ioe established
with due regard to any other prices for petroleum of
comparable grade, gravity and quality and having regard
to geographical locations: 3 4
unless the Government on grounds ox national interest objects laieretoy
in the future, the Government shall use its best efforts in good
faith to facilitate obtaining any approval required for such
guarantee* Further the Government shall undertake to facilitate,
in accordance with the Exchange Control Laws of Ethiopia, the
repayment of all loans that the Company may have incurred for the
purpose of financing operations.
ARTICLE XIX
ROYALTY AND VALUE
(a) The Company shall pay to the Government a royalty of twelve
and one half percent (12%$>) of the Wellhead Value of the petroleum
produced, either in kind or in cash,, \atjthe option of the Government.
(b) The "Wellhead Valuq "-.df the petro leuin. :f 6r the purposes of
assessing Government roya.ity'- under this Agreement, whether it is
taken in cash or in‘kind, shali be .computed as follows?
Sales to independent;-"buyers and affiliates shall be
taken into account-'oh the basis of Market Value as
defined in. AiticjLe II (h) hereof.
(c) For the purpose of this Agreements
(1) "Wellhead Value" of natural gas shall mean the gross sales
received by the Company from sales of natural gas delivered
to a plant or other purchaser less Permissive Deductions;
(2) "Wellhead Value" of crude oil shall mean the gross sales
received by the Company from sales of crude oil which shall
be stated in the then effective price notice furnished by
the Company to the Government less Permissive Deductions:
(5) "Posted Price" shall mean the f.o.b. prices published by
the Government in consultation with the Company for each
grade, gravity and quality of petroleum offered for sale
to buyers generally for export at the relevant point of
export in Ethiopia, which price shall be a p^ioe established
with due regard to any other prices for petroleum of
comparable grade, gravity and quality and having regard
to geographical locations: 3 4
(4) "Permissive Deduo iaons" snaii mean coats and expenses of
all kinds incurred in transporting petroleum, crude oil or
natural gas from the point of production to the point of
sale? in processing, otherwise treating or making marketable
or storing petroleum, crude oil or natural gas prior to the
point of sale; of the kind referred to in subparagraph (5)
of Article II(i) if terras of sale are c.i.f. foreign ports
or incurred in mining operations after the point of
productions or otherwise incurred prior to the point of
sale, it being the intention that from gross sales received
there be deducted all costs and expenses incurred beyond
the wellhead where produced and'3.rior to sale in arriving at
the true V/ellhead Value
(d) If a difference aridos} between th^'papties concerning the
determination of Postpd 'Fri-ocs or V/ellhead'• Value which cannot bo
solved by mutual Agreement, such prices and/or value shall be
determined by arbitration as; provided for in Article XX hereunder*
(e) Except as otherwise provided in Article X hereof, all
royalty shall be\.payable in cash in acceptable currency and shall
be calculated and paid on a calendar month basis, and payment
thereof shall bo made not later than the first (1st) day of the
eeoond (2nd) calendar month following that during which the
petroleum on which ouch royalty is payable is delivered to the
purchaser or other taker.
(f) The Company shall perform all measurement of petroleum in
such manner, selected by the Company, but always consistent with
sound petroleum industry practices.
(g) In the. event of the Mining Operations under this Agreement
entailing the segregation of petroleum of different quality and/or
grade, and in the event of the Company and the Government not
othorwise agreeing, the Government's royalty shall bo computed
separately on ea'ch grade of petroleum produced and segregated during
the particular period for which the royalty is computed being on
gross sales received less Permissive Deductionst
3 ^
(4) "Permissive Deduo iaons" snaii mean coats and expenses of
all kinds incurred in transporting petroleum, crude oil or
natural gas from the point of production to the point of
sale? in processing, otherwise treating or making marketable
or storing petroleum, crude oil or natural gas prior to the
point of sale; of the kind referred to in subparagraph (5)
of Article II(i) if terras of sale are c.i.f. foreign ports
or incurred in mining operations after the point of
productions or otherwise incurred prior to the point of
sale, it being the intention that from gross sales received
there be deducted all costs and expenses incurred beyond
the wellhead where produced and'3.rior to sale in arriving at
the true V/ellhead Value
(d) If a difference aridos} between th^'papties concerning the
determination of Postpd 'Fri-ocs or V/ellhead'• Value which cannot bo
solved by mutual Agreement, such prices and/or value shall be
determined by arbitration as; provided for in Article XX hereunder*
(e) Except as otherwise provided in Article X hereof, all
royalty shall be\.payable in cash in acceptable currency and shall
be calculated and paid on a calendar month basis, and payment
thereof shall bo made not later than the first (1st) day of the
eeoond (2nd) calendar month following that during which the
petroleum on which ouch royalty is payable is delivered to the
purchaser or other taker.
(f) The Company shall perform all measurement of petroleum in
such manner, selected by the Company, but always consistent with
sound petroleum industry practices.
(g) In the. event of the Mining Operations under this Agreement
entailing the segregation of petroleum of different quality and/or
grade, and in the event of the Company and the Government not
othorwise agreeing, the Government's royalty shall bo computed
separately on ea'ch grade of petroleum produced and segregated during
the particular period for which the royalty is computed being on
gross sales received less Permissive Deductionst
3 ^
(k-> ty s/'t&jU paid with respect to petroleum ueed by
the Company in the course of its operations hereunder or re---introduced
into petroleum deposits or lost or not used in any way*
ABTICLE X
BOYALTY IN KIM) AND GOVERMEIfT PURCHASES OF PETROLEUM
(a) Ninety (90) days prior to the beginning of each calendar
quarter, commencing with the first quarter during which the Company
expects to produce petroleum from the Subject Area, the Company
shall notify the Government in writing (herein called "Quantity
Notices”) of the approximate quantity of petroleum which the Company
intends to produce from the Subject A-rea./during such calendar
quarter. Within th: :iy (30) day's-, after its receipt of each Quantity
Notice, the Government shall-have the right, by notice given to the
Company in writing (herbiif called.."Acceptance Notice") to select
to receive a quantity of petroleum from the Company daring such
calendar quarter0 } ’*
(b) Failure by the-Government to furnish the Company with an
Acceptance Notice with respect to any calendar quarter within the
aforesaid thirty (50) day period, shall constitute a waiver by the
Government of any rights to receive any petroleum produced by the
Company from the Subject Area during such quarter. In such event,
all royalty attributable to such calendar quarter shall be payable
in cash, and shall be paid monthly, as provided in paragraph (e)
of Article IX hereof.
(0) The quantity of petroleum stated, or deemed to be stated, as
provided in paragraph (a) of this Article, in each Acceptance Notice
(hereinafter called "Government Share") shall constitute either
royalty in kind or a combination of royalty in kind and petroleum
purchased for cash from the Company by the Government, depending upon
the total quantity of petroleum actually produced and saved by the
Company from the Subject Area during the calendar quarter to which
(k-> ty s/'t&jU paid with respect to petroleum ueed by
the Company in the course of its operations hereunder or re---introduced
into petroleum deposits or lost or not used in any way*
ABTICLE X
BOYALTY IN KIM) AND GOVERMEIfT PURCHASES OF PETROLEUM
(a) Ninety (90) days prior to the beginning of each calendar
quarter, commencing with the first quarter during which the Company
expects to produce petroleum from the Subject Area, the Company
shall notify the Government in writing (herein called "Quantity
Notices”) of the approximate quantity of petroleum which the Company
intends to produce from the Subject A-rea./during such calendar
quarter. Within th: :iy (30) day's-, after its receipt of each Quantity
Notice, the Government shall-have the right, by notice given to the
Company in writing (herbiif called.."Acceptance Notice") to select
to receive a quantity of petroleum from the Company daring such
calendar quarter0 } ’*
(b) Failure by the-Government to furnish the Company with an
Acceptance Notice with respect to any calendar quarter within the
aforesaid thirty (50) day period, shall constitute a waiver by the
Government of any rights to receive any petroleum produced by the
Company from the Subject Area during such quarter. In such event,
all royalty attributable to such calendar quarter shall be payable
in cash, and shall be paid monthly, as provided in paragraph (e)
of Article IX hereof.
(0) The quantity of petroleum stated, or deemed to be stated, as
provided in paragraph (a) of this Article, in each Acceptance Notice
(hereinafter called "Government Share") shall constitute either
royalty in kind or a combination of royalty in kind and petroleum
purchased for cash from the Company by the Government, depending upon
the total quantity of petroleum actually produced and saved by the
Company from the Subject Area during the calendar quarter to which
the said Acceptance Notice related (hereinafter called Total
Production, it being understood that Crude Oil Total Production
means Total Production of crude oil and Natural Gas Total Production
means Total Production of natural gas) as followss
(1) To the extent that the Government Share does not exceed
twelve and one half percent (12-J#) of the Total Production,
such Government Share shall constitute royalty in kind*
(2) If and to the extent that such Government Share exceed
twelve and one half percent (12-g?') of the Total Production,
such excess shall represent the quantity to be purchased
by the Government from the Company for such calendar quarter,
provided, however, that ,the-..dxerdise of such right by the
Government to take, more' than twelye’-and' one half percent
(12jf/o) of the Total "Production.'siiail not prevent the
Company from\pe rformiug.. 'contracts for the sale of petroleum
already coneluded'i;\
(?) If and to the extent that such Government Share is less than
twelve and ohe half percent (12-j^) of the Total Production,
such deficiency shall be payable by the Company to the
Government as a cash royalty, payable within fifteen (15)
days after the end of such calendar quarter.
(4) During each calendar quarter for which the Government has
furnished an Acceptance Notice in accordance with the
provisions of paragraph (a) above, the Company shall deliver
the Government Share to the Government at such reasonably
uniform weekly rate as the Government shall request*
(d) All purchases of petroleum by the Government from the Company
shall be f.o.b. the field of production. The purchase price thereof
shall be in United States dollars or other convertible currency and
in amount equal to the Market Value (as defined in Article II(h)
hereof) of such petroleum and shall be payable within thirty (30) days
of the Company's presentation to the Government of an invoice
37
therefor.
the said Acceptance Notice related (hereinafter called Total
Production, it being understood that Crude Oil Total Production
means Total Production of crude oil and Natural Gas Total Production
means Total Production of natural gas) as followss
(1) To the extent that the Government Share does not exceed
twelve and one half percent (12-J#) of the Total Production,
such Government Share shall constitute royalty in kind*
(2) If and to the extent that such Government Share exceed
twelve and one half percent (12-g?') of the Total Production,
such excess shall represent the quantity to be purchased
by the Government from the Company for such calendar quarter,
provided, however, that ,the-..dxerdise of such right by the
Government to take, more' than twelye’-and' one half percent
(12jf/o) of the Total "Production.'siiail not prevent the
Company from\pe rformiug.. 'contracts for the sale of petroleum
already coneluded'i;\
(?) If and to the extent that such Government Share is less than
twelve and ohe half percent (12-j^) of the Total Production,
such deficiency shall be payable by the Company to the
Government as a cash royalty, payable within fifteen (15)
days after the end of such calendar quarter.
(4) During each calendar quarter for which the Government has
furnished an Acceptance Notice in accordance with the
provisions of paragraph (a) above, the Company shall deliver
the Government Share to the Government at such reasonably
uniform weekly rate as the Government shall request*
(d) All purchases of petroleum by the Government from the Company
shall be f.o.b. the field of production. The purchase price thereof
shall be in United States dollars or other convertible currency and
in amount equal to the Market Value (as defined in Article II(h)
hereof) of such petroleum and shall be payable within thirty (30) days
of the Company's presentation to the Government of an invoice
37
therefor.
(e) The Government may pay the aforesaid purchase price in
Ethiopian currency to the extent that the Company then has need of
such currency to discharge any obligation to the Government under
this Agreement, notwithstanding that the terms hereof would otherwise
contemplate payment to the Government in acceptable currency, it
being agreed that the Company may at any time thereafter (applying
the same rate of exchange as that used by the Government in
effecting each such payment) use such currency to discharge any
obligations to the Government arising under this Agreement,
notwithstanding that the terms hereof would otherwise contemplate
payment in an acceptable currency. .....•.
(f) The Company shall provide’• storage ofvcrude oil constituting
the Government Share. Storage may've'‘-provided at any reasonable
place or places within'Or wit hout:. the-. Sub j e c t Area as may be
selected by the Company. .The •Go.v'ernment shall pay and/or reimburse
the Company for direct"*a’h&":'reasonable indirect costs incurred in such
storage, and the\ transportation of such crude oil from point of
production to such place of storage. Such payment shall be due
thirty (30) days after the presentation of the invoice to the
Government by the Company.
(g) Title and all risk of loss with respect to the Government
Share shall pass to the Government at such time and place as is
designated by the Company in writing to the Government, and delivery
shall be deemed effected at said time and place; provided, however,
that nothing herein shall constitute a waiver by the Government of
any rights which it might otherwise have against the Company in the
event of the Company!s negligent loss o.f the Government Share
subsequent to the time at which title and risk of loss with respect
thereto pass to the Government. In the event that any insurance
coverage maintained by the Company shall cover the Government Share,
proceeds collected by the Company thereunder shall be credited to
(e) The Government may pay the aforesaid purchase price in
Ethiopian currency to the extent that the Company then has need of
such currency to discharge any obligation to the Government under
this Agreement, notwithstanding that the terms hereof would otherwise
contemplate payment to the Government in acceptable currency, it
being agreed that the Company may at any time thereafter (applying
the same rate of exchange as that used by the Government in
effecting each such payment) use such currency to discharge any
obligations to the Government arising under this Agreement,
notwithstanding that the terms hereof would otherwise contemplate
payment in an acceptable currency. .....•.
(f) The Company shall provide’• storage ofvcrude oil constituting
the Government Share. Storage may've'‘-provided at any reasonable
place or places within'Or wit hout:. the-. Sub j e c t Area as may be
selected by the Company. .The •Go.v'ernment shall pay and/or reimburse
the Company for direct"*a’h&":'reasonable indirect costs incurred in such
storage, and the\ transportation of such crude oil from point of
production to such place of storage. Such payment shall be due
thirty (30) days after the presentation of the invoice to the
Government by the Company.
(g) Title and all risk of loss with respect to the Government
Share shall pass to the Government at such time and place as is
designated by the Company in writing to the Government, and delivery
shall be deemed effected at said time and place; provided, however,
that nothing herein shall constitute a waiver by the Government of
any rights which it might otherwise have against the Company in the
event of the Company!s negligent loss o.f the Government Share
subsequent to the time at which title and risk of loss with respect
thereto pass to the Government. In the event that any insurance
coverage maintained by the Company shall cover the Government Share,
proceeds collected by the Company thereunder shall be credited to
the Government to the extent game are payable by reason of or are
attributable to casualty losses suffered by the Government Share.
(h) The Company shall transport the Government Share from the
point or points of storage referred to in paragraph (f) of this
Article (or from the wellhead in case of natural gas) to such other
point or points within the Empire of Ethiopia as the Government may
request, at such transportation charge as may for the purpose of
this paragraph be from time to time agreed in advance by the Company
and the Government, but in no event shall such charge be less than
the Company*s reasonable direct and indirect costs.
(i) Subject to paragraph (f) of this.’.'jbrticle, if at any time
the quantity of Government Share .-then Vbbing stored by the Company is,
in the Company*s opinion, go/laifcgaas to r£sk\dn adverse effect upon
the Company*s orderly..production or expoird. operations, the Company
may notify the Government. and.reqUe&t 'the Government to remove
physically such quantity...o.£.' 'Gqve rnmen t Share as the Company regards
necessary. If the Government shall fail to comply with such request,
the Company shall notwithstanding the other provisions of this
Agreement, be entitled to take such action (including but not
limited to the borrowing of the Government Share, subject only to an
obligation with reasonable promptness to repay in kind or to sell
same and account for royalty on the basis of price received) as may
be necessary or desirable to avoid or reduce the risk of adverse
effect upon the Company*s orderly operations as aforesaid.
ARTICLE XI
TAXATION
(a) Further to the other payments contemplated under Articles
IX, X and XII, the Crmpany shall be liable to pay all income taxes
or taxes imposed on income or measued by income whether presently in
force or hereinafter imposed by law, in the same terms and
conditions as other traders or business organizations.
7 3
the Government to the extent game are payable by reason of or are
attributable to casualty losses suffered by the Government Share.
(h) The Company shall transport the Government Share from the
point or points of storage referred to in paragraph (f) of this
Article (or from the wellhead in case of natural gas) to such other
point or points within the Empire of Ethiopia as the Government may
request, at such transportation charge as may for the purpose of
this paragraph be from time to time agreed in advance by the Company
and the Government, but in no event shall such charge be less than
the Company*s reasonable direct and indirect costs.
(i) Subject to paragraph (f) of this.’.'jbrticle, if at any time
the quantity of Government Share .-then Vbbing stored by the Company is,
in the Company*s opinion, go/laifcgaas to r£sk\dn adverse effect upon
the Company*s orderly..production or expoird. operations, the Company
may notify the Government. and.reqUe&t 'the Government to remove
physically such quantity...o.£.' 'Gqve rnmen t Share as the Company regards
necessary. If the Government shall fail to comply with such request,
the Company shall notwithstanding the other provisions of this
Agreement, be entitled to take such action (including but not
limited to the borrowing of the Government Share, subject only to an
obligation with reasonable promptness to repay in kind or to sell
same and account for royalty on the basis of price received) as may
be necessary or desirable to avoid or reduce the risk of adverse
effect upon the Company*s orderly operations as aforesaid.
ARTICLE XI
TAXATION
(a) Further to the other payments contemplated under Articles
IX, X and XII, the Crmpany shall be liable to pay all income taxes
or taxes imposed on income or measued by income whether presently in
force or hereinafter imposed by law, in the same terms and
conditions as other traders or business organizations.
7 3
(b) The rate of income tax to be assessed and paid in respect
to income derived by the Company from Operations under this
Agreement shall be fifty-one percent (51%) of the Taxable Income
derived therefrom*
(c) (1) Notwithstanding the provisions of paragraph (b) preceding,
if the total of Eligible Taxes as hereinafter prescribed
together vrith income tax payable in any fiscal year, shall
exceed fifty-one percent (51%) of the Taxable Income in
that year, then the amount of income tax so payable shall
be reduced and remitted so that the total of such payments
to the Government shall be fift^-one percent (51%) of
Taxable Income* ... •’ • ' . V.
(2) If, notwithstanding'ihe complete '•remission of income tax
under the 'provisions of •■■the;'previous paragraph, the total
payment to the Government’ by way of income and Eligible
Taxes shall a'tii^L\in any fiscal year exceed fifty-one percent
(51%) of ;t he/Taxable Income, then the amount of such excess
may be carried forward and deducted in any subsequent year
against any future liability of the Company in respect of
income tax or any other Eligible Taxes or indebtedness to
the Government arising in. respect of the said Agreement,
but not against any liability in respect of royalty and rent.
(d) For the purposes of this Article "Eligible Taxes" shall be
any and all taxes and fiscal charges levied on the Company with
the exception ofs
(1) Income taxes as described in paragraph (b) preceding;
(2) Taxes on salaries or other compensation of employees and
which the Company has been required to withhold by law;
(3) Stamp duties and charges, imposts and duties for which
the Company may become liable under Article XIX hereof;
(b) The rate of income tax to be assessed and paid in respect
to income derived by the Company from Operations under this
Agreement shall be fifty-one percent (51%) of the Taxable Income
derived therefrom*
(c) (1) Notwithstanding the provisions of paragraph (b) preceding,
if the total of Eligible Taxes as hereinafter prescribed
together vrith income tax payable in any fiscal year, shall
exceed fifty-one percent (51%) of the Taxable Income in
that year, then the amount of income tax so payable shall
be reduced and remitted so that the total of such payments
to the Government shall be fift^-one percent (51%) of
Taxable Income* ... •’ • ' . V.
(2) If, notwithstanding'ihe complete '•remission of income tax
under the 'provisions of •■■the;'previous paragraph, the total
payment to the Government’ by way of income and Eligible
Taxes shall a'tii^L\in any fiscal year exceed fifty-one percent
(51%) of ;t he/Taxable Income, then the amount of such excess
may be carried forward and deducted in any subsequent year
against any future liability of the Company in respect of
income tax or any other Eligible Taxes or indebtedness to
the Government arising in. respect of the said Agreement,
but not against any liability in respect of royalty and rent.
(d) For the purposes of this Article "Eligible Taxes" shall be
any and all taxes and fiscal charges levied on the Company with
the exception ofs
(1) Income taxes as described in paragraph (b) preceding;
(2) Taxes on salaries or other compensation of employees and
which the Company has been required to withhold by law;
(3) Stamp duties and charges, imposts and duties for which
the Company may become liable under Article XIX hereof;
(4) Visa and other immigration and registration fees?
(5) Taxes, licence fees and other charges pertaining to the
registration or operation of the business organization's
vehicles, aircraft, vessels and such other facilities and
services for which registration or licensing is required by law;
(6) Taxes payable upon the local purchase or acquisition by
tho Company of goods, materials, suppli.es, equipment and
services?
(7) Pees and charges which may be levied by the Government in
accordance with law in respect of the provision or consumption
of any public service or facility; and
(8) Boyalty and rent payable under Articles IX and XII*
Provided always that; •.•*"•. V’’--- ./**••. \:-
(i) the payments*}sqt’'-out in subparagraphs (l) and (2) preceding
shall not bo * consideied-.as-’Deductible Costs;
(ii) the payments ali*d••.Charges set out in subparagraphs (3)
through (8) inclusive preceding shall be considered as
Deductible Costs; but
(iii) in no event shall the payments under paragraphs (2) through
(8) be construed as payments towards the fifty-one percent
(51%)^ payable by the Company to the Government as provided herein
(e) Por purposes of assessing the liability of the Company to
income tax pursuant to paragraph (b) above, the Taxable Income of
the Company shall be the Gross Income accruing to the Company in
that year less the following deductions, all determined in accordance
with generally accepted accounting principles applied on a consistent
basis;
(1) Deductible Costs as hereinafter specified in paragraph (f)
for such fiscal year;
(2) Deductions due in respect of such fiscal year by way of
depreciation or amortisation of cfapital or p re commencement
expenditure as hereinafter specified in paragraph Cg) *
41
(4) Visa and other immigration and registration fees?
(5) Taxes, licence fees and other charges pertaining to the
registration or operation of the business organization's
vehicles, aircraft, vessels and such other facilities and
services for which registration or licensing is required by law;
(6) Taxes payable upon the local purchase or acquisition by
tho Company of goods, materials, suppli.es, equipment and
services?
(7) Pees and charges which may be levied by the Government in
accordance with law in respect of the provision or consumption
of any public service or facility; and
(8) Boyalty and rent payable under Articles IX and XII*
Provided always that; •.•*"•. V’’--- ./**••. \:-
(i) the payments*}sqt’'-out in subparagraphs (l) and (2) preceding
shall not bo * consideied-.as-’Deductible Costs;
(ii) the payments ali*d••.Charges set out in subparagraphs (3)
through (8) inclusive preceding shall be considered as
Deductible Costs; but
(iii) in no event shall the payments under paragraphs (2) through
(8) be construed as payments towards the fifty-one percent
(51%)^ payable by the Company to the Government as provided herein
(e) Por purposes of assessing the liability of the Company to
income tax pursuant to paragraph (b) above, the Taxable Income of
the Company shall be the Gross Income accruing to the Company in
that year less the following deductions, all determined in accordance
with generally accepted accounting principles applied on a consistent
basis;
(1) Deductible Costs as hereinafter specified in paragraph (f)
for such fiscal year;
(2) Deductions due in respect of such fiscal year by way of
depreciation or amortisation of cfapital or p re commencement
expenditure as hereinafter specified in paragraph Cg) *
41
always provided that the same are in lieu of and not in addition
to the deductions allowed to corporations under Ethiopian Income
Tax Laws and Regulations issued thereunder as supplemented and/or
amended, and further provided that in no event shall deductions
be greater than costs actually incurred and that*
(i) all deductions are fairly, properly, exclusively and
necessarily incurred and directed towards or attributable
to the earning of Gross Income;
(ii) all activities with affiliates p,re conducted at arm^s
length as defined in Article II hereof; and
(iii) no item or expense is deducted*-from Gross Income more than once*
(f) Deductible Costs in any fi.sca,l -year shall include the
following, being attributab*l*e\to /that year;
(1) All Operating .{Exploration and.’Miriing) Costs as defined
herein including for this purpose the cost of equipment or
machinery used therefor ’‘which has an estimated useful life
of less than. |wo;(’2) years or costs less than five thousand
Ethiopian ■dollars (Eth.$5>000) (the costs of other equipment
and machinery so used shall be recovered through depreciation
as provided in paragraph (g));
(2) All losses actually sustained and charged off during the
fiscal year (including but not limited to casualty losses,
losses upon the sale or other disposition of property and
losses on account of bad debts) to the extent that they are
not compensated by insurance or otherwise;
(5) All costs of transporting the petroleum from the Subject
Area to the processing plant or refinery and/or the place. Qf sale;
(4) All security and communication coots including, without
limitation to, police and other security charges, postal
charges,.cable charges, radiogram charges, telegram and
tele-typewriter' charges incurred solely in connection with
always provided that the same are in lieu of and not in addition
to the deductions allowed to corporations under Ethiopian Income
Tax Laws and Regulations issued thereunder as supplemented and/or
amended, and further provided that in no event shall deductions
be greater than costs actually incurred and that*
(i) all deductions are fairly, properly, exclusively and
necessarily incurred and directed towards or attributable
to the earning of Gross Income;
(ii) all activities with affiliates p,re conducted at arm^s
length as defined in Article II hereof; and
(iii) no item or expense is deducted*-from Gross Income more than once*
(f) Deductible Costs in any fi.sca,l -year shall include the
following, being attributab*l*e\to /that year;
(1) All Operating .{Exploration and.’Miriing) Costs as defined
herein including for this purpose the cost of equipment or
machinery used therefor ’‘which has an estimated useful life
of less than. |wo;(’2) years or costs less than five thousand
Ethiopian ■dollars (Eth.$5>000) (the costs of other equipment
and machinery so used shall be recovered through depreciation
as provided in paragraph (g));
(2) All losses actually sustained and charged off during the
fiscal year (including but not limited to casualty losses,
losses upon the sale or other disposition of property and
losses on account of bad debts) to the extent that they are
not compensated by insurance or otherwise;
(5) All costs of transporting the petroleum from the Subject
Area to the processing plant or refinery and/or the place. Qf sale;
(4) All security and communication coots including, without
limitation to, police and other security charges, postal
charges,.cable charges, radiogram charges, telegram and
tele-typewriter' charges incurred solely in connection with
(5) Interest paid on loan funds borrowed from abroad provided
that the loan agreement has been submitted to and approved
by the Government;
(6) Interest paid on loan funds borrowed in Ethiopia to the
extent and subject to the conditions prescribed in the
Income Tax Proclamation and Regulations;
(7) Losses incurred during any of the five (5) preceding years
(such losses being i,n excess of the deductions specified
herein and in xmrag^aph (g) over Gross Income) to the extent
that such losses have not been deducted in any prior year
or years; \'.....•.
(8) Taxes, r*nt and roya,lty'paidAby the Gompany within the
Tax Year to the Government or ahyvpolitical subdivision
thereof (othQ.r ythah income-taxes "and Eligible Taxes, as
described in paragraphs\(a-)» (b) and (d) of this Article,
and any ponaltle's'-azid interest on taxes) including, but
not limited tp,*‘"all charges referred to in subparagraphs
(5) through (8) of paragraph (d) above, as well as levies
of any nature whatsoever for highways, development,
education, health, water or utilities as may be provided
from time to time.
(g) Depreciation and amortisation shall include eligible
deductions duo in any fiscal year on account of the depreciation
or writing off of cp.pital or expenditures previously incurred by
the Company, until the same have been fully depreciated and
amortisaa, as proa^ided below, viss
(1) On all Exploration Costs incurred after the Effective Date
and prior to the seventh (7th) year following the Date
of Commencement of Operations at such rate as the Company
may from time to time choose, not exceeding the followings
(5) Interest paid on loan funds borrowed from abroad provided
that the loan agreement has been submitted to and approved
by the Government;
(6) Interest paid on loan funds borrowed in Ethiopia to the
extent and subject to the conditions prescribed in the
Income Tax Proclamation and Regulations;
(7) Losses incurred during any of the five (5) preceding years
(such losses being i,n excess of the deductions specified
herein and in xmrag^aph (g) over Gross Income) to the extent
that such losses have not been deducted in any prior year
or years; \'.....•.
(8) Taxes, r*nt and roya,lty'paidAby the Gompany within the
Tax Year to the Government or ahyvpolitical subdivision
thereof (othQ.r ythah income-taxes "and Eligible Taxes, as
described in paragraphs\(a-)» (b) and (d) of this Article,
and any ponaltle's'-azid interest on taxes) including, but
not limited tp,*‘"all charges referred to in subparagraphs
(5) through (8) of paragraph (d) above, as well as levies
of any nature whatsoever for highways, development,
education, health, water or utilities as may be provided
from time to time.
(g) Depreciation and amortisation shall include eligible
deductions duo in any fiscal year on account of the depreciation
or writing off of cp.pital or expenditures previously incurred by
the Company, until the same have been fully depreciated and
amortisaa, as proa^ided below, viss
(1) On all Exploration Costs incurred after the Effective Date
and prior to the seventh (7th) year following the Date
of Commencement of Operations at such rate as the Company
may from time to time choose, not exceeding the followings
(i) in tho first (1st) year following the Date of
Commencement of Operations twenty percent (20%)
of such coots incurred prior to the end of such yearj
(ii) in the second (2nd) year following the Date of
Commencement of Operations that amount of such costs
which results when the sum of all such' costs
incurred prior to such year and not theretofore
deducted and all such costs incurred in that year
is divided by six (6);
(iii) in the third (3rd) year following the Date of
Commencement of Operations that amount of such costs
which results wfien‘‘4£e sum of all such costs incurred
prior to - such'-year and. riot theretofore deducted and
all' s deh'-- Costs incurred‘in that year is divided by
five" (5)5
(iv) in the”‘fourt-h’ (4th) year following the Date of
Ciommencement of Operations that amount of such
costs which results when the sum of all such costs
incurred prior to such year and not theretofore
deducted and all such costs incurred in that year
is divided by four (4)5
(v) in the fifth (5th) year following the Date of
Commencement of Operations that amount of such costs
which results when the sum of all such costs incurred
prior to such year and not theretofore deducted
and all such costs incurred in that year is divided
by three (3)»
(vi) in the sixth (6th) year following the Dn,te of
Conmencoment of Operations that amount of such costs
which results when the sum of all such costs incurred
prior to such year and not theretofore deducted and
all s ich costs incurred in that year is divided
4 4
by two (2)s
(i) in tho first (1st) year following the Date of
Commencement of Operations twenty percent (20%)
of such coots incurred prior to the end of such yearj
(ii) in the second (2nd) year following the Date of
Commencement of Operations that amount of such costs
which results when the sum of all such' costs
incurred prior to such year and not theretofore
deducted and all such costs incurred in that year
is divided by six (6);
(iii) in the third (3rd) year following the Date of
Commencement of Operations that amount of such costs
which results wfien‘‘4£e sum of all such costs incurred
prior to - such'-year and. riot theretofore deducted and
all' s deh'-- Costs incurred‘in that year is divided by
five" (5)5
(iv) in the”‘fourt-h’ (4th) year following the Date of
Ciommencement of Operations that amount of such
costs which results when the sum of all such costs
incurred prior to such year and not theretofore
deducted and all such costs incurred in that year
is divided by four (4)5
(v) in the fifth (5th) year following the Date of
Commencement of Operations that amount of such costs
which results when the sum of all such costs incurred
prior to such year and not theretofore deducted
and all such costs incurred in that year is divided
by three (3)»
(vi) in the sixth (6th) year following the Dn,te of
Conmencoment of Operations that amount of such costs
which results when the sum of all such costs incurred
prior to such year and not theretofore deducted and
all s ich costs incurred in that year is divided
4 4
by two (2)s
In the seventh (7th) year following the Date of Commencement
of Operations and all years subsequent thereto all
Exploration Costs incurred during the tax year involved
and all Exploration Costs incurred in year prior to the
tax year involved not theretofore deducted, or such parts
thereof as the Company may chooses
On expenditure incurred by the Company for the extension,
prolongation or improvement of the life of an existing
Mining Operation at the rate of fifteen percent (15%)
of cost per annum, provided always that such expenditure
has obtained the prior writ ten., approval of the Government
and provided further tfcst?"../^
(i) the criui.pme'nt''..ahd/or machinery acquired is not a
secondhand asset, aini'ess- otherwise agreed by the
parties;
(ii) the equipment and/or machinery is not disposed
af in"the next five (5) years from the date it is
brought into use in the Subject Area;
(in) the equipment and/or machinery does not become
obsolete or useless for the next three (3) years
from the date that such equipment or machinery is
brought into use; and
(iv) the funds for the acquisition of the machinery
and/or equipment are not borrowed funds unless the
Minister otherwise agrees;
for the purpose of this subparagraph "Existing Mining
Operations" shall mean any Mining Operation after operations
have been commenced thereat - the depreciation or writing
off of any expenditure inourred prior to that date shall
begin on the date that such Mining Operation commencess
On all plant and machinery an annual rate of sixteen percent
(16%) for the first year and twelve percent (12%) for the
4 5
following yearss
In the seventh (7th) year following the Date of Commencement
of Operations and all years subsequent thereto all
Exploration Costs incurred during the tax year involved
and all Exploration Costs incurred in year prior to the
tax year involved not theretofore deducted, or such parts
thereof as the Company may chooses
On expenditure incurred by the Company for the extension,
prolongation or improvement of the life of an existing
Mining Operation at the rate of fifteen percent (15%)
of cost per annum, provided always that such expenditure
has obtained the prior writ ten., approval of the Government
and provided further tfcst?"../^
(i) the criui.pme'nt''..ahd/or machinery acquired is not a
secondhand asset, aini'ess- otherwise agreed by the
parties;
(ii) the equipment and/or machinery is not disposed
af in"the next five (5) years from the date it is
brought into use in the Subject Area;
(in) the equipment and/or machinery does not become
obsolete or useless for the next three (3) years
from the date that such equipment or machinery is
brought into use; and
(iv) the funds for the acquisition of the machinery
and/or equipment are not borrowed funds unless the
Minister otherwise agrees;
for the purpose of this subparagraph "Existing Mining
Operations" shall mean any Mining Operation after operations
have been commenced thereat - the depreciation or writing
off of any expenditure inourred prior to that date shall
begin on the date that such Mining Operation commencess
On all plant and machinery an annual rate of sixteen percent
(16%) for the first year and twelve percent (12%) for the
4 5
following yearss
(5) On buildings and facilities therein (other than plant
and machinery) an annual rate of five percent (5%)i
(6) On aircraft, vessels and motor vehicles an a,nnual rate
of twenty percent (20%)%
(7) On all other physical assets an annual rate in accordance
with the provisions of the Ethiopian Income Tax Regulations,
unless a special rate of depreciation is mutually agreed
upon.
GO Notwithstanding the provisions of the preceding sections,
if the Company shall at any time recover by way of compensation,
insurance money, sale or otherwise, afty part or the whole of any
expenditure which has been deduc-tedy-\depreciated or written off
for tax purposes, the ajpoukt..-.of• such redovb.D^r shall be brought to-
account and treated-, as>ihcome for-.-tax purposes in the year in
which it accrues. \ \
(i) Any deduot’ions-fbr payments to affiliates shall be shown
to the satisfaction of the Government to be fair and reasonable
and not greater than the amount that would have been paid to an
independent party.
(j) Nothing in this Article shall be taken as permitting the
deduction of the following items of expenditure in determining the
Company*s net profits?
(1) Penalties paid or any sum forfeited under this Agreement
or any law from time to time in force in the Empire of
Ethiopia, or any political subdivision thereof;
(2) Foreign taxa-tion paid on income from sources within Ethiopia;
(5) Rents or leasing charges paid to affiliates for properties
or facilities located in or outside the Empire of Ethiopia
unless previously approved by the Minister;
46
(5) On buildings and facilities therein (other than plant
and machinery) an annual rate of five percent (5%)i
(6) On aircraft, vessels and motor vehicles an a,nnual rate
of twenty percent (20%)%
(7) On all other physical assets an annual rate in accordance
with the provisions of the Ethiopian Income Tax Regulations,
unless a special rate of depreciation is mutually agreed
upon.
GO Notwithstanding the provisions of the preceding sections,
if the Company shall at any time recover by way of compensation,
insurance money, sale or otherwise, afty part or the whole of any
expenditure which has been deduc-tedy-\depreciated or written off
for tax purposes, the ajpoukt..-.of• such redovb.D^r shall be brought to-
account and treated-, as>ihcome for-.-tax purposes in the year in
which it accrues. \ \
(i) Any deduot’ions-fbr payments to affiliates shall be shown
to the satisfaction of the Government to be fair and reasonable
and not greater than the amount that would have been paid to an
independent party.
(j) Nothing in this Article shall be taken as permitting the
deduction of the following items of expenditure in determining the
Company*s net profits?
(1) Penalties paid or any sum forfeited under this Agreement
or any law from time to time in force in the Empire of
Ethiopia, or any political subdivision thereof;
(2) Foreign taxa-tion paid on income from sources within Ethiopia;
(5) Rents or leasing charges paid to affiliates for properties
or facilities located in or outside the Empire of Ethiopia
unless previously approved by the Minister;
46
(4) Sales commissions or other payments of a similar nature
to an affiliate for the sale of the petroleum to other
affiliates*
(k) Uo withholding or other taxes shall be levied on the following
payments effected by the Ethiopian Company to the Company or
other persons, firms or corporations resident abroad in respect ofs
(l) Interest and amortisation of loans approved under
Article VIII?
(2) Dividends on shares of the Ethiopian Company incorporated
tinder Article III.
AS'nijRT.W'xif*
BOITO--PAlkEltTS AND -iSMS \
(a) The Company .sball"* pay to the 'Government in United States
dollars or other aCceptable currency after the Date of Commencement
of Operations a single■.j^i&ent by way of production bonus on the
following rates {
(1) When daily production during the preceding month averages
nineteen thousand (19,000) barrels, a bonus of United States
dollars ;
(2) When daily production during the preceding month averages
thirty-eight thousand (38,000) barrels a bonus of United
States dollars s
(3) When daily production during the preceding month averages
seventy-five thousand barrels a bonus of United States
dollars ___ *
The amount thereof shall not be a Deductible Cost for the purpose
of calculating the Taxable Income of the Company.
(4) Sales commissions or other payments of a similar nature
to an affiliate for the sale of the petroleum to other
affiliates*
(k) Uo withholding or other taxes shall be levied on the following
payments effected by the Ethiopian Company to the Company or
other persons, firms or corporations resident abroad in respect ofs
(l) Interest and amortisation of loans approved under
Article VIII?
(2) Dividends on shares of the Ethiopian Company incorporated
tinder Article III.
AS'nijRT.W'xif*
BOITO--PAlkEltTS AND -iSMS \
(a) The Company .sball"* pay to the 'Government in United States
dollars or other aCceptable currency after the Date of Commencement
of Operations a single■.j^i&ent by way of production bonus on the
following rates {
(1) When daily production during the preceding month averages
nineteen thousand (19,000) barrels, a bonus of United States
dollars ;
(2) When daily production during the preceding month averages
thirty-eight thousand (38,000) barrels a bonus of United
States dollars s
(3) When daily production during the preceding month averages
seventy-five thousand barrels a bonus of United States
dollars ___ *
The amount thereof shall not be a Deductible Cost for the purpose
of calculating the Taxable Income of the Company.
(b) The Company shall pay to the Government in United States
dollars or other acceptable currency during each year as hereinafter
provided starting from the first (1st) anniversary of the Effective
Date of this Agreement an annual rent payable in advance in
respect of the Subject Area held from time to time by the Company
at the following rates?
(1) During the second (2nd) year after the Effective Date
of this Agreement at the rate of United States dollars
for each square kilometre then
held by the Company;
(2) During the third (3rd) year after the Effective Date of
this Agreement at the rate': of United \Sta.t90 dollars
__ %' ; % " for each square kilometre then
held by the'..dompahy; . - '
(3) During the fourth (4th)-year after the Effective Date of
this Agreement’ ah ’-the rate of United States dollars
_'v _ for each square kilometre then
held by the Company;
(4) During the fifth (5th) year after the Effective Date of
this Agreement at the rate of United States dollars
__for each square kilometre then
held by the Company;
(5) During the sixth (6th) year after the Effective Date Of
this Agreement at the rate of United States dollars
for each square kilometre then
held by the Company;
(6) During the seventh(7th) and each subsequent year after the
Effective Date of this Agreement at the rate of United States
dollars __ for each square
kilometre then held by the Company.
48
(b) The Company shall pay to the Government in United States
dollars or other acceptable currency during each year as hereinafter
provided starting from the first (1st) anniversary of the Effective
Date of this Agreement an annual rent payable in advance in
respect of the Subject Area held from time to time by the Company
at the following rates?
(1) During the second (2nd) year after the Effective Date
of this Agreement at the rate of United States dollars
for each square kilometre then
held by the Company;
(2) During the third (3rd) year after the Effective Date of
this Agreement at the rate': of United \Sta.t90 dollars
__ %' ; % " for each square kilometre then
held by the'..dompahy; . - '
(3) During the fourth (4th)-year after the Effective Date of
this Agreement’ ah ’-the rate of United States dollars
_'v _ for each square kilometre then
held by the Company;
(4) During the fifth (5th) year after the Effective Date of
this Agreement at the rate of United States dollars
__for each square kilometre then
held by the Company;
(5) During the sixth (6th) year after the Effective Date Of
this Agreement at the rate of United States dollars
for each square kilometre then
held by the Company;
(6) During the seventh(7th) and each subsequent year after the
Effective Date of this Agreement at the rate of United States
dollars __ for each square
kilometre then held by the Company.
48
If prior to the commencement of any of the foregoing years, the
Company has drilled at least three (5) wells in the Subjeot Area,
no further rental shall be due under this Agreement* If, prior
to the commencement of the eighth (8th) year (i) the Company has
not drilled at least three (3) wells in the Subject Area, or (ii)
the Date of Commencement of Operations has not occurred, the annual
rental shall continue at the rate of United States dollars
. ' ' for each square kilometre then held by the
Company*
A&CIC^E XIII , •, \>.y*
QQTO^i^’-PARTICIFA^Iofe. '
(a) Commencing with the -first issue, of. any voting shares of the
Ethiopian Company to any person'-,.;’ firm or corporation other than
• ; and/or its
respective affiliates,, .and continuing thereafter with respect to
all subsequent issues of such shares, twenty-five percent (25%)
of each issue of such shares issued or proposed to be issued by
the Company shall first be offered in Ethiopian dollars to the
Government and/or its agents for subscription by the Government and/or
its agents for a period of four (4) months from the date of the
offering of such particular issue* The purchase price of the voting
shares subscribed to by the Government and/or its agents shall be
met out of:
4 9
If prior to the commencement of any of the foregoing years, the
Company has drilled at least three (5) wells in the Subjeot Area,
no further rental shall be due under this Agreement* If, prior
to the commencement of the eighth (8th) year (i) the Company has
not drilled at least three (3) wells in the Subject Area, or (ii)
the Date of Commencement of Operations has not occurred, the annual
rental shall continue at the rate of United States dollars
. ' ' for each square kilometre then held by the
Company*
A&CIC^E XIII , •, \>.y*
QQTO^i^’-PARTICIFA^Iofe. '
(a) Commencing with the -first issue, of. any voting shares of the
Ethiopian Company to any person'-,.;’ firm or corporation other than
• ; and/or its
respective affiliates,, .and continuing thereafter with respect to
all subsequent issues of such shares, twenty-five percent (25%)
of each issue of such shares issued or proposed to be issued by
the Company shall first be offered in Ethiopian dollars to the
Government and/or its agents for subscription by the Government and/or
its agents for a period of four (4) months from the date of the
offering of such particular issue* The purchase price of the voting
shares subscribed to by the Government and/or its agents shall be
met out of:
4 9
(1) that part of the Company* s profits to which the Government
would be entitled as a shareholder;
(2) royalties (in cash or in kind) accruing to the Government
after subscription;
(3) bonus and other amounts of all kinds accruing to the Government
he reminder;
(4) income and other taxes payable by the Company after suoh
subscription by the Government;
and the Company may apply such amounts or proceeds realised therefrom
against such liability until fully satisfied,
(b) The obligation to keep available twenty-five peroent (25%)
of eaoh successive issue of votiug'Shaie's for subscription by the
Government and/or its agents-vfer-.the corresponding four (4) month
period shall not be minimised or affected by the fact that at the
date of any particular'issue of’ suoh share the Government and/or its
agents are already shareholder’s of the Company, The Company shall
submit quarterly reports' irb the Ministry of Mines of the number of
voting shares of each issue which initially were made available to
the Government and/or its agents, the number of voting shares subscribed
by the Government and/or its agents, the number of voting share
remaining unsubscribed at the end of the corresponding four (4) month
period and the number subsequently disposed of,
(o) Nothing herein shall:
(1) prohibit issuance of non-voting shares with preferences as
to dividends and capital, always provided that suoh non-voting
preferred shares are redeemable for cash at the sole election
of the Company; or
(1) that part of the Company* s profits to which the Government
would be entitled as a shareholder;
(2) royalties (in cash or in kind) accruing to the Government
after subscription;
(3) bonus and other amounts of all kinds accruing to the Government
he reminder;
(4) income and other taxes payable by the Company after suoh
subscription by the Government;
and the Company may apply such amounts or proceeds realised therefrom
against such liability until fully satisfied,
(b) The obligation to keep available twenty-five peroent (25%)
of eaoh successive issue of votiug'Shaie's for subscription by the
Government and/or its agents-vfer-.the corresponding four (4) month
period shall not be minimised or affected by the fact that at the
date of any particular'issue of’ suoh share the Government and/or its
agents are already shareholder’s of the Company, The Company shall
submit quarterly reports' irb the Ministry of Mines of the number of
voting shares of each issue which initially were made available to
the Government and/or its agents, the number of voting shares subscribed
by the Government and/or its agents, the number of voting share
remaining unsubscribed at the end of the corresponding four (4) month
period and the number subsequently disposed of,
(o) Nothing herein shall:
(1) prohibit issuance of non-voting shares with preferences as
to dividends and capital, always provided that suoh non-voting
preferred shares are redeemable for cash at the sole election
of the Company; or
(2) limit the type and number of authorised shares of the
Company? or
(5) limit the transferability of issued shares.
(d) The price at which voting shares shall be offered for sale
to the Government and/or its agents shall be the book value of
the shares and Ethiopian dollars received in respect of .sales
hereunder shall be convertible into United States dollars or other
acceptable convertible currencies for repatriation.
(e) When twenty-five percent (23%) of the voting shares of the
Ethiopian Company outstanding have been transferred to the Government
and/or its agents as provided in this Article, the Government and/or
its agents shall have the right sa.'lphg as such percentage is so
held to nominate one quarter \o£ the’ members efVthe Board of Directors
of the Ethiopian Company;;^n.d "affiliates,-o;£ the Ethiopian Company
who are shareholders 'will vote in, favour of such nominees.
Each holder of y.oting, shares of the Ethiopian Company shall
have the right to cast' -one vote for each share held on all matters
submitted to a vote of shareholders.
ARTICLE XIV
REFINERY
After the Date of Commencement of Operations the Company,
if requested by the Government, shall effect feasibility studies and,
if favourable, construct or cause to be constructed a refinery in
Ethiopia, provided that the Company need not construct a refinery
if the local regional market conditions and prices, supply conditions
and prices, cost of labour, equipment and materials, cost and
availability of financing or any other factor or matter would not
make the refinery operation a profitable and economic refinery
operation or investment.
c 1
w* I
(2) limit the type and number of authorised shares of the
Company? or
(5) limit the transferability of issued shares.
(d) The price at which voting shares shall be offered for sale
to the Government and/or its agents shall be the book value of
the shares and Ethiopian dollars received in respect of .sales
hereunder shall be convertible into United States dollars or other
acceptable convertible currencies for repatriation.
(e) When twenty-five percent (23%) of the voting shares of the
Ethiopian Company outstanding have been transferred to the Government
and/or its agents as provided in this Article, the Government and/or
its agents shall have the right sa.'lphg as such percentage is so
held to nominate one quarter \o£ the’ members efVthe Board of Directors
of the Ethiopian Company;;^n.d "affiliates,-o;£ the Ethiopian Company
who are shareholders 'will vote in, favour of such nominees.
Each holder of y.oting, shares of the Ethiopian Company shall
have the right to cast' -one vote for each share held on all matters
submitted to a vote of shareholders.
ARTICLE XIV
REFINERY
After the Date of Commencement of Operations the Company,
if requested by the Government, shall effect feasibility studies and,
if favourable, construct or cause to be constructed a refinery in
Ethiopia, provided that the Company need not construct a refinery
if the local regional market conditions and prices, supply conditions
and prices, cost of labour, equipment and materials, cost and
availability of financing or any other factor or matter would not
make the refinery operation a profitable and economic refinery
operation or investment.
c 1
w* I
Aiii'jLOiiJJi aV
IMMIGRATION AND EMIGRATION
The Government shall, in accordance with law, cause to be
issued to persons designated by the Company for the performance
of Operations contemplated or permitted by this Agreement, and to
their dependents, such visas, work permits and other documentation
as may be required for free access to and exist from the Empire
of Ethiopia and for the performance of such Operations under
this Agreement.
ARTICLE XVI ....
PAYMENTS AMD, P0-BEI.GH- -jfeXCHAHGE
(a) It is contemplated --that-..the foreign, exchange requirements
to establish and ope the Operatip-np. will require little or no
need to transfer Ethiopian dollars'-into foreign currency and that
generally all of the do^reatic costs of the operations will be
met through conve^&i',o^i..-into Ethiopian dollars of freely oonverticle
foreign currency obtained by the Company from sources outside of
Ethiopia.
(b) In order to keep the Government and the Exchange Control
authorities informed of its prospective and actual foreign exchange
transactions the Company shall inform the Government and the Bank
in writing and in such form and detail as the Government or the
Bank may requests
(1) Of the location of the Company*s bank accounts in
Ethiopia and abroad, which latter (that is external)
accounts shall be opened in banks approved by the
National Bank of Ethiopia;
(2) Annually, before the commencement of each fiscal year,
of the Company*s estimated receipts and disbursements
of foreign exchange by principal headings during that
year (which statement nay be amended from time to time
N 52
if this appears necessary);
Aiii'jLOiiJJi aV
IMMIGRATION AND EMIGRATION
The Government shall, in accordance with law, cause to be
issued to persons designated by the Company for the performance
of Operations contemplated or permitted by this Agreement, and to
their dependents, such visas, work permits and other documentation
as may be required for free access to and exist from the Empire
of Ethiopia and for the performance of such Operations under
this Agreement.
ARTICLE XVI ....
PAYMENTS AMD, P0-BEI.GH- -jfeXCHAHGE
(a) It is contemplated --that-..the foreign, exchange requirements
to establish and ope the Operatip-np. will require little or no
need to transfer Ethiopian dollars'-into foreign currency and that
generally all of the do^reatic costs of the operations will be
met through conve^&i',o^i..-into Ethiopian dollars of freely oonverticle
foreign currency obtained by the Company from sources outside of
Ethiopia.
(b) In order to keep the Government and the Exchange Control
authorities informed of its prospective and actual foreign exchange
transactions the Company shall inform the Government and the Bank
in writing and in such form and detail as the Government or the
Bank may requests
(1) Of the location of the Company*s bank accounts in
Ethiopia and abroad, which latter (that is external)
accounts shall be opened in banks approved by the
National Bank of Ethiopia;
(2) Annually, before the commencement of each fiscal year,
of the Company*s estimated receipts and disbursements
of foreign exchange by principal headings during that
year (which statement nay be amended from time to time
N 52
if this appears necessary);
(3) Quarterly, within thirty (30) days of the end of each
quarter, of the Company*s actual receipts and disbursements
of foreign exchange by principal headings during the
preceding quarter.
(c) Subject to compliance with paragraph (b) and all relevant
foreign exchange regulations, and to the deposit with-the Bank
of copies of this Agreement and all foreign loan contracts as
approved by the Government and the Bank, the Company shall be
entitled to purchase for payment abroad, to the same that same
cannot be covered by or purchased with its current and prospective
resources of foreign exchange, the foxeign currencies needed in
pursuance of the Operations under‘t]iis Agreement and to pay for
goods and services acquirei.-abr'dad, service £interest and amortisation)
of external debt, ..and-.dividends payable-on the Ethiopian Company*s
shares held abroad. '' .•••' \
(d) Subject 16 the’-Company making payments to the Government
when due for royalty, rent, income and other taxes as well as other
payments contemplated by this Agreement, and subject to compliance
with paragraphs (b) and (c) above, the Company may retain abroad
temporarily the proceeds of foreign capital raised by my of
equity shares or loans borrowed abroad, and of foreign sales of
petroleum, to the extent that those are foreseen to be required
to meet its current obligations under paragraph (c) above.
(e) All payments contemplated under this Agreement shall be
made in acceptable currency, unless the Government consents
otherwise* Payments shall be effected by the Company depositing
the same in the Bank (or such other bank within the Empire of
Ethiopia as the Government may designate) for the account of the
Government.
(3) Quarterly, within thirty (30) days of the end of each
quarter, of the Company*s actual receipts and disbursements
of foreign exchange by principal headings during the
preceding quarter.
(c) Subject to compliance with paragraph (b) and all relevant
foreign exchange regulations, and to the deposit with-the Bank
of copies of this Agreement and all foreign loan contracts as
approved by the Government and the Bank, the Company shall be
entitled to purchase for payment abroad, to the same that same
cannot be covered by or purchased with its current and prospective
resources of foreign exchange, the foxeign currencies needed in
pursuance of the Operations under‘t]iis Agreement and to pay for
goods and services acquirei.-abr'dad, service £interest and amortisation)
of external debt, ..and-.dividends payable-on the Ethiopian Company*s
shares held abroad. '' .•••' \
(d) Subject 16 the’-Company making payments to the Government
when due for royalty, rent, income and other taxes as well as other
payments contemplated by this Agreement, and subject to compliance
with paragraphs (b) and (c) above, the Company may retain abroad
temporarily the proceeds of foreign capital raised by my of
equity shares or loans borrowed abroad, and of foreign sales of
petroleum, to the extent that those are foreseen to be required
to meet its current obligations under paragraph (c) above.
(e) All payments contemplated under this Agreement shall be
made in acceptable currency, unless the Government consents
otherwise* Payments shall be effected by the Company depositing
the same in the Bank (or such other bank within the Empire of
Ethiopia as the Government may designate) for the account of the
Government.
(f) Every expatriate employee of the Company, being employed
and residing in Ethiopia in pursuance of the provisions of this
Agreement, shall be entitled to remit to his home country or the
country of which he is a citizens
d) Up to thirty-five percent (35%) each month of the net
salary after tax received by him in Ethiopia? plus
(2) On approval by the Bank any additional sumo payable out
of his salary received in Ethiopia, as may be required
to meet insurance premia, maintenance of dependents,
tuition and other costs for his children incurred abroad?
(5) On termination of his employment, in Ethiopia such stuns as
he can show to have be an-reasonably accumulated by way
of savings from h±p\aaf&ry received\in Ethiopia or from
the disposal-, (subject to the provisions of this Agreement)
of movable property ..owned In Ethiopia,
(g) Except as otherwi's’e-.-.p'rovided herein, the Exchange Control
Laws and Regulations’normally applicable in the Empire of Ethiopia
shall apply to the Company’s Operations hereunder* In any foreign
exchange transaction arising out of this Agreement the Company
and its employees shall be entitled to the relevent exchange
facilities, rates and charges on no less favourable terms than
those which are currently applied in respect of similar transactions
with other mining operations or the general public*
ARTICLE TTTi'.t
EMPLOYMENT AND TRAINING OF ETHIOPIAN PERSONNEL ART) EMPLOYEE BENEFITS
(a) The Company shall employ Ethiopian Nationals in the various
phases of its activities to the maximum extent possible and shall
to this end educate, train and give experience to same in the
various branches (both technical and administrative) of the
petroleum industry, it being understood that the Company shalls
5 4
(f) Every expatriate employee of the Company, being employed
and residing in Ethiopia in pursuance of the provisions of this
Agreement, shall be entitled to remit to his home country or the
country of which he is a citizens
d) Up to thirty-five percent (35%) each month of the net
salary after tax received by him in Ethiopia? plus
(2) On approval by the Bank any additional sumo payable out
of his salary received in Ethiopia, as may be required
to meet insurance premia, maintenance of dependents,
tuition and other costs for his children incurred abroad?
(5) On termination of his employment, in Ethiopia such stuns as
he can show to have be an-reasonably accumulated by way
of savings from h±p\aaf&ry received\in Ethiopia or from
the disposal-, (subject to the provisions of this Agreement)
of movable property ..owned In Ethiopia,
(g) Except as otherwi's’e-.-.p'rovided herein, the Exchange Control
Laws and Regulations’normally applicable in the Empire of Ethiopia
shall apply to the Company’s Operations hereunder* In any foreign
exchange transaction arising out of this Agreement the Company
and its employees shall be entitled to the relevent exchange
facilities, rates and charges on no less favourable terms than
those which are currently applied in respect of similar transactions
with other mining operations or the general public*
ARTICLE TTTi'.t
EMPLOYMENT AND TRAINING OF ETHIOPIAN PERSONNEL ART) EMPLOYEE BENEFITS
(a) The Company shall employ Ethiopian Nationals in the various
phases of its activities to the maximum extent possible and shall
to this end educate, train and give experience to same in the
various branches (both technical and administrative) of the
petroleum industry, it being understood that the Company shalls
5 4
(1) Always give priority in employment to Ethiopian Nationals
possessing the requisite qualifications?
(2) Give equal treatment, facilities and opportunities to all
employees in the same job classification regardless of
'nationality;
(5) Cooperate in programmes of grants to educational institutions
in Ethiopia, after the Date of Commencement of Operations.
(b) The Compt?,ny shall furnish such free medical care to all its
employees and all Government officials employed in the Operations
Area as is reasonably adequate and after the Date of Commencement
of Opera-tions shall establish, staff: (and maintain a dispensary,
clinic or hospital which shall*’'be‘'3?e'&sonably adequate under the
circumstances» Provided',", however, tha t \wh"'eiie ver the Company
employs more than •two.--iiundred and;' fifty- (250) employees in any
one region, it shall maintaih-.a-. dispensary or hospital headed by
a medical director.
(c) After the;' Date""of Commencement of Operations, the Company
shall provide, free of charge, primary and secondary school
education for children of all employees residing in or around
the Subject Area, if and when there is no school or a shortage of
schools. Rules, regulations and standards established by the
Ministry of Education shall be strictly observed.
ARTICLE XVIII
PROMOTION OF NATIONAL INTERESTS
(a) In the conduct of its activities under this Agreement the
Company and its contractors and subcontractors shall utilise
Ethiopian services, materials produced from Ethiopian sources,
and products manufactured in Ethiopia to the extent that such
services, materials and products are available on competitive
terms, delivery, availability of parts and quantity bdsis.
(1) Always give priority in employment to Ethiopian Nationals
possessing the requisite qualifications?
(2) Give equal treatment, facilities and opportunities to all
employees in the same job classification regardless of
'nationality;
(5) Cooperate in programmes of grants to educational institutions
in Ethiopia, after the Date of Commencement of Operations.
(b) The Compt?,ny shall furnish such free medical care to all its
employees and all Government officials employed in the Operations
Area as is reasonably adequate and after the Date of Commencement
of Opera-tions shall establish, staff: (and maintain a dispensary,
clinic or hospital which shall*’'be‘'3?e'&sonably adequate under the
circumstances» Provided',", however, tha t \wh"'eiie ver the Company
employs more than •two.--iiundred and;' fifty- (250) employees in any
one region, it shall maintaih-.a-. dispensary or hospital headed by
a medical director.
(c) After the;' Date""of Commencement of Operations, the Company
shall provide, free of charge, primary and secondary school
education for children of all employees residing in or around
the Subject Area, if and when there is no school or a shortage of
schools. Rules, regulations and standards established by the
Ministry of Education shall be strictly observed.
ARTICLE XVIII
PROMOTION OF NATIONAL INTERESTS
(a) In the conduct of its activities under this Agreement the
Company and its contractors and subcontractors shall utilise
Ethiopian services, materials produced from Ethiopian sources,
and products manufactured in Ethiopia to the extent that such
services, materials and products are available on competitive
terms, delivery, availability of parts and quantity bdsis.
(b) To maximise the regional economic aid and social benefits
which the Operations can generate, the Company will also;
(1) Coordinate all of its studies of the Operations1 infra¬
structure requirements with local and regional infrastructur
studies undertaken by the Government and interested local,
foreign and international public and private entities,
with a view towards the integration of the infrastructure
of the Company with that of the region;
(2) Assist and advise the Government in its planning of the
infrastructure and regional development which the Company
may deem useful to the Operations and to the existing and
future industries and activities in the region of the
Operations* V''- . \ •
pTlC^E..-' XIX
IMPORTS t IISPOSA-hCAirO'EXPHTS OF PROPERTY AlTD PRODUCTS
(a) Tho Corapahy,-for itself, its contractors and subcontractors,
shall be entitled to import into the Empire of Ethiopia any and
all drilling, geological, geophysical, production, refining,
processing, transportation and other machinery and equipment
useful in the Mining or Exploration Operations, including aircraft,
vessels, vehicles and other transportation equipment and parts
therefor (other than sedan cars, and fuel therefor), fuels,
chemicals, lubricants, films, seismic tapes, house-trailors,
office-trailers, disassembled prefabricated structures and other
property of any kind or nature free of import taxes, charges,
duties, levies and imposts of any kind, provided always thats
(’]) i)ll the items are wholly and exclusively destined for
use in tho Operations hereunder and are imported into
Ethiopia in the name of or consigned to the Company?
(2) That similar goods of fairly equal quality, delivery,
parts availability and price are not being produced in
5 6
Ethiopia;
(b) To maximise the regional economic aid and social benefits
which the Operations can generate, the Company will also;
(1) Coordinate all of its studies of the Operations1 infra¬
structure requirements with local and regional infrastructur
studies undertaken by the Government and interested local,
foreign and international public and private entities,
with a view towards the integration of the infrastructure
of the Company with that of the region;
(2) Assist and advise the Government in its planning of the
infrastructure and regional development which the Company
may deem useful to the Operations and to the existing and
future industries and activities in the region of the
Operations* V''- . \ •
pTlC^E..-' XIX
IMPORTS t IISPOSA-hCAirO'EXPHTS OF PROPERTY AlTD PRODUCTS
(a) Tho Corapahy,-for itself, its contractors and subcontractors,
shall be entitled to import into the Empire of Ethiopia any and
all drilling, geological, geophysical, production, refining,
processing, transportation and other machinery and equipment
useful in the Mining or Exploration Operations, including aircraft,
vessels, vehicles and other transportation equipment and parts
therefor (other than sedan cars, and fuel therefor), fuels,
chemicals, lubricants, films, seismic tapes, house-trailors,
office-trailers, disassembled prefabricated structures and other
property of any kind or nature free of import taxes, charges,
duties, levies and imposts of any kind, provided always thats
(’]) i)ll the items are wholly and exclusively destined for
use in tho Operations hereunder and are imported into
Ethiopia in the name of or consigned to the Company?
(2) That similar goods of fairly equal quality, delivery,
parts availability and price are not being produced in
5 6
Ethiopia;
Ho ‘building w-bxvto-bvtxoa o* o-tehea? ©omrtvuo tion materials
may bo imported for use in the construction of offioee
or living quarters except prefabricated struoturos, or
suoh other materials as are not included in the preceding
subparagraph;
(4) Foodstuffs, beverages, tobaoco products, toilet articles,
and clothing, imported by the Company and destined for
personal use and consumption by its personnal, shall not
be exempted fxoa any duty except, as regards clothing and
similar goods, wheat© the principal use of suoh items shall
be of a specialised character relevant to the Mining
Operations and which have been': apjocovod as Buoh for duty-free
importation by the Governments
(b) The Government shall'-..have' the right to -verify that any items
imported meet the . conditions set forth' in paragraph (a) above.
The Government shall' ensure ..ah. adejixidte procedure to expedite the
admission and olearano.e. 'by.i'Guotoms of all imports destined exclusively
for use in the Operations hereunder and Governmental verification
of suoh use#
(0) It is agreed and understood by the parties hereto that,
subject to the provisions of paragraph (e) hereunder, none of items
which have been imported free of taxes, ohargos, duties, levies
and imposts pursuant to paragraph (a) above shall be used in
operations other than those permitted or contomplated by this
Agreement,
(d) The Company, for itself, its contractors and subcontractors,
shall have the right to re-export free of all taxes, oharges,
duties, levies or imposts of any kind or nature imposed in oonneotion
with or collected at tho time of export, property whioh is no longer
required for use in the Operations carried out hereunder whioh was
originally imported free of oharges, taxes, duties, levies and
imposts as provided in paragraph (a) above, as well as their other
property on whioh duty was paid at the time of import, and shall
5 7
Ho ‘building w-bxvto-bvtxoa o* o-tehea? ©omrtvuo tion materials
may bo imported for use in the construction of offioee
or living quarters except prefabricated struoturos, or
suoh other materials as are not included in the preceding
subparagraph;
(4) Foodstuffs, beverages, tobaoco products, toilet articles,
and clothing, imported by the Company and destined for
personal use and consumption by its personnal, shall not
be exempted fxoa any duty except, as regards clothing and
similar goods, wheat© the principal use of suoh items shall
be of a specialised character relevant to the Mining
Operations and which have been': apjocovod as Buoh for duty-free
importation by the Governments
(b) The Government shall'-..have' the right to -verify that any items
imported meet the . conditions set forth' in paragraph (a) above.
The Government shall' ensure ..ah. adejixidte procedure to expedite the
admission and olearano.e. 'by.i'Guotoms of all imports destined exclusively
for use in the Operations hereunder and Governmental verification
of suoh use#
(0) It is agreed and understood by the parties hereto that,
subject to the provisions of paragraph (e) hereunder, none of items
which have been imported free of taxes, ohargos, duties, levies
and imposts pursuant to paragraph (a) above shall be used in
operations other than those permitted or contomplated by this
Agreement,
(d) The Company, for itself, its contractors and subcontractors,
shall have the right to re-export free of all taxes, oharges,
duties, levies or imposts of any kind or nature imposed in oonneotion
with or collected at tho time of export, property whioh is no longer
required for use in the Operations carried out hereunder whioh was
originally imported free of oharges, taxes, duties, levies and
imposts as provided in paragraph (a) above, as well as their other
property on whioh duty was paid at the time of import, and shall
5 7
■fitjLoO' have the right to dispose within the Empire of Ethiopia of
any property provided that, in the case of property imported under
import duty privileges as provided in paragraph (a), all taxes,
charges, duties, levies and imposts due thereupon in accordance
with the law then in force shall first he paid.
(e) The Company, for itself, its contractors and subcontractors, .
shall have the right at any time, with the approval of the Minister,
to remove from the Subject Area and transfer to any other area or
zone in which it may be carrying on operations pursuant to any
agreement with the Government or any subdivision thereof, any or
all of its installations, machinery, .equipment and facilities
without loss of rights granted .b^-..this'’’Articlo.
(f) The Company shall h4ye‘the’right..;to\ekp'ort from the Empire
of Ethiopia, without restriction rmd-'.'freo'of taxes, duties or other
charges on such exports, all. of. the-'Company*s petroleum produced
under this Agreement. The./Government shall ensure an adequate
procedure to expedite., thb clearance by Customs and the shipment of
♦all petroleum so exported.
(g) The Company may, for itself, its contractors and subcontractors
import personal and household goods and effects of employees and
their families taking up residence in Ethiopia, within six (6)
months of their arrival, free of all taxes, charges, duties, levies
and imposts. Such employees shall have, in addition to all other
rights reoognioed in Ethiopia with respect to such property, the
right to export same as well as any other property on which duty
was paid at the time of import, without payment of any taxes,
charges, duties, levies or imposts.
ARTICLE XX
SETTLEMENT OF DISPUTES
(a) If at any time during the continuance of this Agreement or
thereafter, there shall be any question or dispute with respect to
the construction, meaning or effect of this Agreement or arising
out of this Agreement or concerning the rights and obligations
■fitjLoO' have the right to dispose within the Empire of Ethiopia of
any property provided that, in the case of property imported under
import duty privileges as provided in paragraph (a), all taxes,
charges, duties, levies and imposts due thereupon in accordance
with the law then in force shall first he paid.
(e) The Company, for itself, its contractors and subcontractors, .
shall have the right at any time, with the approval of the Minister,
to remove from the Subject Area and transfer to any other area or
zone in which it may be carrying on operations pursuant to any
agreement with the Government or any subdivision thereof, any or
all of its installations, machinery, .equipment and facilities
without loss of rights granted .b^-..this'’’Articlo.
(f) The Company shall h4ye‘the’right..;to\ekp'ort from the Empire
of Ethiopia, without restriction rmd-'.'freo'of taxes, duties or other
charges on such exports, all. of. the-'Company*s petroleum produced
under this Agreement. The./Government shall ensure an adequate
procedure to expedite., thb clearance by Customs and the shipment of
♦all petroleum so exported.
(g) The Company may, for itself, its contractors and subcontractors
import personal and household goods and effects of employees and
their families taking up residence in Ethiopia, within six (6)
months of their arrival, free of all taxes, charges, duties, levies
and imposts. Such employees shall have, in addition to all other
rights reoognioed in Ethiopia with respect to such property, the
right to export same as well as any other property on which duty
was paid at the time of import, without payment of any taxes,
charges, duties, levies or imposts.
ARTICLE XX
SETTLEMENT OF DISPUTES
(a) If at any time during the continuance of this Agreement or
thereafter, there shall be any question or dispute with respect to
the construction, meaning or effect of this Agreement or arising
out of this Agreement or concerning the rights and obligations
hereunder, whioh cannot oe mutually resolved by the parties within
sixty (60) days, either party shall have the right to refer the
dispute to the International Centre for the Settlement of
Investment Disputes by Conoiliation and Arbitration as hereinafter
provided* Any of the parties to such dispute may oommenoe
conciliation or arbitration proceedings by giving notice to the
other party and to the Secretary General, International Centre for
the Settlement of Investment Disputes (inoluding in such notice a
statement of the question or dispute and of the olaim or contention
of the person giving notice).
(b) Ethiopian Law shall govern the conciliation and arbitration*
The place of conciliation and arbitration shall be in Addis Ababa
(Ethiopia) or such other place as thp parties may mutually agree*
(o) Pending the issue of., ei. decision or .avra,r.df..-tho operations or
activities that shall #avo’••given rise-.to \the'arbitration need not
be discontinued, •/b&t.Vlf' tho decision 'or award recognises that a
complaint was justified, .provision may be made in tho award for
suoh reparation or compensation in .vmpoct of suoh continued
operations and aotiyi-ties as shall be decided by tho arbitrator
to be appropriate. In the event of a dispute as to the Market Value
of petroleum (as definod in Artiole Il(j)) for the purpose of
taxation or payment by the Government for petroleum purchased by it,
the Market Value ponding the arbitration determination shall be tho
Posted Price (as defined in Artiole IX hereof) of the petroleum
involved, and if tho arbitration award fixes a different value,
appropriate reparation or compensation in respeot thereof shall
forthwith bo made, done or effected by the parties hereto and
provision thorofor may bo made in tho award*
(d) The decision of the award of the arbitrator shall be final
and binding upon the parties to this Agreement and upon any person
who participated as a party in such arbitration proceedings, and
such a person shall complay in good faith with tho decision*
(e) Should the International Centre for tho Settlement of
Investment Disputes be replaoed by, or its functions substantially
5 9
hereunder, whioh cannot oe mutually resolved by the parties within
sixty (60) days, either party shall have the right to refer the
dispute to the International Centre for the Settlement of
Investment Disputes by Conoiliation and Arbitration as hereinafter
provided* Any of the parties to such dispute may oommenoe
conciliation or arbitration proceedings by giving notice to the
other party and to the Secretary General, International Centre for
the Settlement of Investment Disputes (inoluding in such notice a
statement of the question or dispute and of the olaim or contention
of the person giving notice).
(b) Ethiopian Law shall govern the conciliation and arbitration*
The place of conciliation and arbitration shall be in Addis Ababa
(Ethiopia) or such other place as thp parties may mutually agree*
(o) Pending the issue of., ei. decision or .avra,r.df..-tho operations or
activities that shall #avo’••given rise-.to \the'arbitration need not
be discontinued, •/b&t.Vlf' tho decision 'or award recognises that a
complaint was justified, .provision may be made in tho award for
suoh reparation or compensation in .vmpoct of suoh continued
operations and aotiyi-ties as shall be decided by tho arbitrator
to be appropriate. In the event of a dispute as to the Market Value
of petroleum (as definod in Artiole Il(j)) for the purpose of
taxation or payment by the Government for petroleum purchased by it,
the Market Value ponding the arbitration determination shall be tho
Posted Price (as defined in Artiole IX hereof) of the petroleum
involved, and if tho arbitration award fixes a different value,
appropriate reparation or compensation in respeot thereof shall
forthwith bo made, done or effected by the parties hereto and
provision thorofor may bo made in tho award*
(d) The decision of the award of the arbitrator shall be final
and binding upon the parties to this Agreement and upon any person
who participated as a party in such arbitration proceedings, and
such a person shall complay in good faith with tho decision*
(e) Should the International Centre for tho Settlement of
Investment Disputes be replaoed by, or its functions substantially
5 9
»pon oar be transj crred to any new international body of
similar type and competence, the function of the Arbitration
Tribunal of the International Centre for the Settlement of
Investment Disputes provided by this Article shall be exercised
by the chief officer of such international body without' further
agreement among the parties*
(f) For the purposoo of such convention, the parties to this
Agreement hereby agree that the Company shall be troatec as a
national of ’ or of such other country designated
by the Company, unless the Government on grounds of Hatioj^al Interest
objects thereto*
(g) If the services of tho Centi;p\ are unavailable to tie parties
to this Agreement, then suph.. imsettled dispnteS--bhall be referred to
the International Chamb'an'.pf Commerco ’-to'-be settled under tl© rules
of nrooedure of tiie 'said Chambef -.df ..Commerce •
. ARTICLE y&X
.... frOR&B- MAJEURE
M The partie'n'heroto shall be excused from performance hereunder
if and so long as and to the extent that failure or delay in
perfomrnaoo is duo to fires, flood, general strike or a lookout*,
accident, epidemic, act of God, war, insurrection, riot, hostile acts;:
inability or delay in obtaining or transporting materials, equipment
or supplies; acts, orders, rules or regulations of governments other
than the Government of Ethiopia; proven technical and commercial
limitations of a nature of being insurmountable by the application
of reasonable diligence; or any other cause whether similar,
dissimilar, foreseen or unforeseen, which a party, having taken due
care, is unable to overcome by the exercise of reasonable diligence
and at a reasonable cost; and further without limitation, but applying
only to the Company, acts, rules or regulations or orders of the
Government or any public authority in Ethiopia or court which may
create delay despite good faith attempts to comply, which causes are
referred to in this Agreement as causes or reasons of Force Eajeure*
6 0
»pon oar be transj crred to any new international body of
similar type and competence, the function of the Arbitration
Tribunal of the International Centre for the Settlement of
Investment Disputes provided by this Article shall be exercised
by the chief officer of such international body without' further
agreement among the parties*
(f) For the purposoo of such convention, the parties to this
Agreement hereby agree that the Company shall be troatec as a
national of ’ or of such other country designated
by the Company, unless the Government on grounds of Hatioj^al Interest
objects thereto*
(g) If the services of tho Centi;p\ are unavailable to tie parties
to this Agreement, then suph.. imsettled dispnteS--bhall be referred to
the International Chamb'an'.pf Commerco ’-to'-be settled under tl© rules
of nrooedure of tiie 'said Chambef -.df ..Commerce •
. ARTICLE y&X
.... frOR&B- MAJEURE
M The partie'n'heroto shall be excused from performance hereunder
if and so long as and to the extent that failure or delay in
perfomrnaoo is duo to fires, flood, general strike or a lookout*,
accident, epidemic, act of God, war, insurrection, riot, hostile acts;:
inability or delay in obtaining or transporting materials, equipment
or supplies; acts, orders, rules or regulations of governments other
than the Government of Ethiopia; proven technical and commercial
limitations of a nature of being insurmountable by the application
of reasonable diligence; or any other cause whether similar,
dissimilar, foreseen or unforeseen, which a party, having taken due
care, is unable to overcome by the exercise of reasonable diligence
and at a reasonable cost; and further without limitation, but applying
only to the Company, acts, rules or regulations or orders of the
Government or any public authority in Ethiopia or court which may
create delay despite good faith attempts to comply, which causes are
referred to in this Agreement as causes or reasons of Force Eajeure*
6 0
The time within which the party affected may do or perform any act
or thing shall be extended for a period equivalent to the period
during which any of such Force Majeure causes-shall exist#
(b) Promptly, and in no event later than forty (40) days, after
any of the said causes shall have commenced to Operate and within
forty (40) days after any of the said causes shall have ceased to
operate, the party claiming benefit from this Article shall give the
other party notice of the fact that such cause has commenced to
operate and the date of such commencement, or such cessation, as the
case may be, unless .by reason of the existence of such cause the
said party is unable with reasonable ..diligence to do so, in which
event the said notioe shall be..glydi£ as' soon as is permitted by the
exercise of reasonable dil^gehc.©■;
(c) The existence Vof"cause specified in this Article shall not
constitute excuse for failure, of ^performance unless said notice is
given as provided he re in-..above.
(d) The party .claiming suspension or excuse from performance of
its obligations as'aforesaid shall promptly take appropriate measures
and precautions to remedy the cause and effect of Force Majeure
described in the said notice insofar as it is reasonably able to do
so at no increased costs with a view to restoration of normal
conditions with a minimum of delay? provided that the terms, of
settlement of any strike, lockout or other industrial disturbance
shall be wholly in the discretion of tho party claiming suspension
or excuse hereunder by reason thereof? and that party shall not be
required to accede to the demands of its opponents in any strike,
lockout, or industrial disturbance solely to remedy promptly the
Force Majeure theregy constituted.
(e) No delay, omission or course of dealing by either party
shall be interpreted or construed without that party*s oonsent to
be a waiver of any right or acquiesence in any default.
61
The time within which the party affected may do or perform any act
or thing shall be extended for a period equivalent to the period
during which any of such Force Majeure causes-shall exist#
(b) Promptly, and in no event later than forty (40) days, after
any of the said causes shall have commenced to Operate and within
forty (40) days after any of the said causes shall have ceased to
operate, the party claiming benefit from this Article shall give the
other party notice of the fact that such cause has commenced to
operate and the date of such commencement, or such cessation, as the
case may be, unless .by reason of the existence of such cause the
said party is unable with reasonable ..diligence to do so, in which
event the said notioe shall be..glydi£ as' soon as is permitted by the
exercise of reasonable dil^gehc.©■;
(c) The existence Vof"cause specified in this Article shall not
constitute excuse for failure, of ^performance unless said notice is
given as provided he re in-..above.
(d) The party .claiming suspension or excuse from performance of
its obligations as'aforesaid shall promptly take appropriate measures
and precautions to remedy the cause and effect of Force Majeure
described in the said notice insofar as it is reasonably able to do
so at no increased costs with a view to restoration of normal
conditions with a minimum of delay? provided that the terms, of
settlement of any strike, lockout or other industrial disturbance
shall be wholly in the discretion of tho party claiming suspension
or excuse hereunder by reason thereof? and that party shall not be
required to accede to the demands of its opponents in any strike,
lockout, or industrial disturbance solely to remedy promptly the
Force Majeure theregy constituted.
(e) No delay, omission or course of dealing by either party
shall be interpreted or construed without that party*s oonsent to
be a waiver of any right or acquiesence in any default.
61
AATlCLfi xxu
AMENDMENTS
(a) except as is specifically provided in Article XXV hereof,
this Agreement may not be modified or amended except by written
agreement between the parties hereto.
(b) It is agreed and understood that the titles of the various
Articles of the present Agreement are for reasons of convenience only
and shall, therefore, in no way affect the construetionthereof.
ARTICLE XXIII
COVENANT Off PEACEFUL POSSESSION
The Government warrants that it has full ownership and property
rights in the Subject Area for the granting of this Agreement and
for the exploration and produc^ijdn. petroleun, and shall protect
the rights of the Company t‘o ':*tihe- peaceful possession and quiet
enjoyment thereof. .. \ ’
y:S'V* 'articlexfiflr, ’*■
CONTRG-LLiN'G CALENDAR
The Gregorian{Calendar shall be used and shall be the
Controlling Calendar-*’for the purposes of this Agreement.
ARTICLE XXV
OFFICES AND NOTICES
(a) The Company shall establish and maintain an office in the
Empire of Ethiopia as may be necessary or convenient for carrying
out the Operations hereunder.
(b) All communications and notices required to be sent by one
party hereto to the other shall be in writing in the English language
and shall be delivered in person or sent by mail (registered mail,
if available, with return receipt requested) with postage thereon
duly prepaid, or by telegraph or cable, to the address of such other
party as hereinafter is set out and shall be effective upon receipt;
provided, however, that any such communication or notice sent from
Ethiopia to a location in another country or from a location in
another country to Ethiopia sh&ll be sent by cable and confirmed
by airmail letter. All noticed shall be addressed to the Government
62
AATlCLfi xxu
AMENDMENTS
(a) except as is specifically provided in Article XXV hereof,
this Agreement may not be modified or amended except by written
agreement between the parties hereto.
(b) It is agreed and understood that the titles of the various
Articles of the present Agreement are for reasons of convenience only
and shall, therefore, in no way affect the construetionthereof.
ARTICLE XXIII
COVENANT Off PEACEFUL POSSESSION
The Government warrants that it has full ownership and property
rights in the Subject Area for the granting of this Agreement and
for the exploration and produc^ijdn. petroleun, and shall protect
the rights of the Company t‘o ':*tihe- peaceful possession and quiet
enjoyment thereof. .. \ ’
y:S'V* 'articlexfiflr, ’*■
CONTRG-LLiN'G CALENDAR
The Gregorian{Calendar shall be used and shall be the
Controlling Calendar-*’for the purposes of this Agreement.
ARTICLE XXV
OFFICES AND NOTICES
(a) The Company shall establish and maintain an office in the
Empire of Ethiopia as may be necessary or convenient for carrying
out the Operations hereunder.
(b) All communications and notices required to be sent by one
party hereto to the other shall be in writing in the English language
and shall be delivered in person or sent by mail (registered mail,
if available, with return receipt requested) with postage thereon
duly prepaid, or by telegraph or cable, to the address of such other
party as hereinafter is set out and shall be effective upon receipt;
provided, however, that any such communication or notice sent from
Ethiopia to a location in another country or from a location in
another country to Ethiopia sh&ll be sent by cable and confirmed
by airmail letter. All noticed shall be addressed to the Government
62
ox* "Vtifi Oorox>aiiy* ao the case uiay b© at "til© addresses shown helow
or to such other addresses as the addressee shall from time to time
specify by giving thirty (30) days prior notice thereof to the
other party, in which case the Agreement shall be deemed amended
accordingly.
TOs (GOVERNMENT)
H.E. the Minister of Mines,
Ministry of Mines of the Imperial Ethiopian Government,
P,0. Box /j.86,
Addis Ababa, Ethiopia.
TO: (COMPANY)
ARTICLE XXVlC...
COVENANT AGAINST• -PAYMENT OP .COMMISSION
The Company and ..thd-vdp:v,ei;nment .respectively covenant and
warrant the one to..t^d-..o'ther that;' tile:y':-have not paid, caused or
permitted to be paid, or promised to pay, and will not pay, cause
or permit to be paid..or\pfrhinise to pay any commission or fee of
any nature whatsdevoiv-’whether in cash or in kind, or any person or
entity other than persons in its full-time employ for services
rendered as agent, representative or intermediary in connection with
the negotiations and conclusion of the making of this Agreement#
ARTICLE XXVII
GOVERNING LAVj
(a) This Agreement shall be governed by the laws of the Empire
of Ethiopia, including the Mining Proclamation of 1971 and Regulations
issued thereunder, as such laws are set forth in duly adopted and
published legislation, and the Company shall in all its Operations
hereunder be entitled to the benefit of such laws; provided that
the rights and obligations of the parties specified herein shall
not be enlarged, reduced or otherwise modified by any future laws or
ox* "Vtifi Oorox>aiiy* ao the case uiay b© at "til© addresses shown helow
or to such other addresses as the addressee shall from time to time
specify by giving thirty (30) days prior notice thereof to the
other party, in which case the Agreement shall be deemed amended
accordingly.
TOs (GOVERNMENT)
H.E. the Minister of Mines,
Ministry of Mines of the Imperial Ethiopian Government,
P,0. Box /j.86,
Addis Ababa, Ethiopia.
TO: (COMPANY)
ARTICLE XXVlC...
COVENANT AGAINST• -PAYMENT OP .COMMISSION
The Company and ..thd-vdp:v,ei;nment .respectively covenant and
warrant the one to..t^d-..o'ther that;' tile:y':-have not paid, caused or
permitted to be paid, or promised to pay, and will not pay, cause
or permit to be paid..or\pfrhinise to pay any commission or fee of
any nature whatsdevoiv-’whether in cash or in kind, or any person or
entity other than persons in its full-time employ for services
rendered as agent, representative or intermediary in connection with
the negotiations and conclusion of the making of this Agreement#
ARTICLE XXVII
GOVERNING LAVj
(a) This Agreement shall be governed by the laws of the Empire
of Ethiopia, including the Mining Proclamation of 1971 and Regulations
issued thereunder, as such laws are set forth in duly adopted and
published legislation, and the Company shall in all its Operations
hereunder be entitled to the benefit of such laws; provided that
the rights and obligations of the parties specified herein shall
not be enlarged, reduced or otherwise modified by any future laws or
regulations in force in the Empire of Ethiopia, unless such future
laws are laws or regulations relating to conservation or ecology?,
or standards of safety and working- conditions of a type a,nd kind
consistent with those then in force in the mining industry
throughout the world,
(b) Notwithstanding anything herein to the contrary, reference
in this Agreement to the Mining Proclamation shall mean the law
(including regulations) as it exists on the Effective Date of this
Agreement with such future laws or regulations as quality Under
paragraph (a) above.
ARTICLE XXVIII
TERMINATION-.
If during any consecutive-, five (5) year period after the
third (3rd) year from the. f.ffeetive D.a't'e of'• this Agreement and
prior to the Date.; 'Cf.:-€’caLinencem^nt ..of- Operations a well has not
been drilled on the Subject ..Area-'held by the Company, the
Government may deliybr\tp'the Company a request to drill a well
on lands in the(Subject Area selected by the Company within a one
(l) year period commencing with the da,te on which such request is
given, and if the drilling of a well is not commenced within such
one (1) year period and such delay is not occasioned by anything
included in Eorce Majeure, the Government may terminate this
Agreement on the first day following the oxpiration of such year
by giving written notice of such termination to the Company.
ARTICLE XXIX
ASSIGNMENT
The Company has the right from time to time, this Agreement
constituting all required consent thereto, tos
(a) Assign from time to time to third persons, firms or
corporation an undivided interest in and to its rights,
privileges and obligations hereunder covering all or a
portion of the lands from time to time subject thereto?
64
regulations in force in the Empire of Ethiopia, unless such future
laws are laws or regulations relating to conservation or ecology?,
or standards of safety and working- conditions of a type a,nd kind
consistent with those then in force in the mining industry
throughout the world,
(b) Notwithstanding anything herein to the contrary, reference
in this Agreement to the Mining Proclamation shall mean the law
(including regulations) as it exists on the Effective Date of this
Agreement with such future laws or regulations as quality Under
paragraph (a) above.
ARTICLE XXVIII
TERMINATION-.
If during any consecutive-, five (5) year period after the
third (3rd) year from the. f.ffeetive D.a't'e of'• this Agreement and
prior to the Date.; 'Cf.:-€’caLinencem^nt ..of- Operations a well has not
been drilled on the Subject ..Area-'held by the Company, the
Government may deliybr\tp'the Company a request to drill a well
on lands in the(Subject Area selected by the Company within a one
(l) year period commencing with the da,te on which such request is
given, and if the drilling of a well is not commenced within such
one (1) year period and such delay is not occasioned by anything
included in Eorce Majeure, the Government may terminate this
Agreement on the first day following the oxpiration of such year
by giving written notice of such termination to the Company.
ARTICLE XXIX
ASSIGNMENT
The Company has the right from time to time, this Agreement
constituting all required consent thereto, tos
(a) Assign from time to time to third persons, firms or
corporation an undivided interest in and to its rights,
privileges and obligations hereunder covering all or a
portion of the lands from time to time subject thereto?
64
Sell, assign, transfer, mortgage or otherwise dispose of
its rights, privileges and obligations hereunder to all
or any part of the Subject Area to any person, firm or
corporation? and
Permit the sale, assignment or other transfer of ail or
a portion of the shares of capital stock of the Ethiopian
Company, provided that;
(1) The Company shall .remain responsible for its
obligations hereunder (including under the Mining
Proclamation) on any such sale, assignment, transfer
mortgage or other disposition unless the Minister
consents thereto or such-.consent is unreasonably
withheld? \
(2) The consent. df:the Minist:e.r\referred to in paragraph
(1) hereof'cannot be unreasonably withheld?
(3) If the MinisConsents thereto (or withholds consent
unreasonably.) ‘the assignee shall be solely responsible
for the-••Company*s obligations hereunder (including
those under the Mining Proclamation) involving that
part of the Subject Area included in such sale,
assignment, transfer or other disposition and, if
requested by the Company, such assignee and the
Government shall enter into an agreement covering
such area on the terns hereof and such area shall,
for all purposes, be deleted from Schedule "A”
hereto and the Subject Area covered hereby reduced
accordingly.
(4) The Minister may refuse consent to any sale,
assignment, transfer or other disposition if
recognition of such Assignee would be contrary to
the national interests of Ethiopia? and provided further
that 65
Sell, assign, transfer, mortgage or otherwise dispose of
its rights, privileges and obligations hereunder to all
or any part of the Subject Area to any person, firm or
corporation? and
Permit the sale, assignment or other transfer of ail or
a portion of the shares of capital stock of the Ethiopian
Company, provided that;
(1) The Company shall .remain responsible for its
obligations hereunder (including under the Mining
Proclamation) on any such sale, assignment, transfer
mortgage or other disposition unless the Minister
consents thereto or such-.consent is unreasonably
withheld? \
(2) The consent. df:the Minist:e.r\referred to in paragraph
(1) hereof'cannot be unreasonably withheld?
(3) If the MinisConsents thereto (or withholds consent
unreasonably.) ‘the assignee shall be solely responsible
for the-••Company*s obligations hereunder (including
those under the Mining Proclamation) involving that
part of the Subject Area included in such sale,
assignment, transfer or other disposition and, if
requested by the Company, such assignee and the
Government shall enter into an agreement covering
such area on the terns hereof and such area shall,
for all purposes, be deleted from Schedule "A”
hereto and the Subject Area covered hereby reduced
accordingly.
(4) The Minister may refuse consent to any sale,
assignment, transfer or other disposition if
recognition of such Assignee would be contrary to
the national interests of Ethiopia? and provided further
that 65
(3) Ho such consent shall be required in the event of a sale,
reorganization or merger affecting all or substantially
all of the shares or assets of _____
(d) Assign its obligations under Article XIV hereof to any person
firm or corporation upon receipt, if the Minister consents thereto,
which consent cannot be unreasonably withheld, and if the Minister
consents thereto or unreasonably withholds such consent, the
Assignee shall be solely responsible for the Company*s obligations
hereunder, and if the Company requests the Government, it shall
enter into an Agreement with such assignee on the terms of
Article XIV hereof. ’
V';.-...’'ARTICLE XXX*
V; * -EFFECTIVE BATE
This Agreement*., paving been initialled by representatives
of the Government and...the Company, shall be subject to the approval
of the Council of Ministers of the Government, and the Effective
Date of this Agreement shall be the date on which it has been signed
by the duly authorised representatives of the parties hereto.
IN VJTTNTSS WHEREOF the party of the first part has executed
these presents at the hand of the Minister and the party of the
second party has affixed its corporate seal hereto and the
authorised officer thereof has. set his hand in the presence of the
respective subscribing witnesses#
IMPERIAL ETHIOPIAN GOVERNMENT
Witnesses
(3) Ho such consent shall be required in the event of a sale,
reorganization or merger affecting all or substantially
all of the shares or assets of _____
(d) Assign its obligations under Article XIV hereof to any person
firm or corporation upon receipt, if the Minister consents thereto,
which consent cannot be unreasonably withheld, and if the Minister
consents thereto or unreasonably withholds such consent, the
Assignee shall be solely responsible for the Company*s obligations
hereunder, and if the Company requests the Government, it shall
enter into an Agreement with such assignee on the terms of
Article XIV hereof. ’
V';.-...’'ARTICLE XXX*
V; * -EFFECTIVE BATE
This Agreement*., paving been initialled by representatives
of the Government and...the Company, shall be subject to the approval
of the Council of Ministers of the Government, and the Effective
Date of this Agreement shall be the date on which it has been signed
by the duly authorised representatives of the parties hereto.
IN VJTTNTSS WHEREOF the party of the first part has executed
these presents at the hand of the Minister and the party of the
second party has affixed its corporate seal hereto and the
authorised officer thereof has. set his hand in the presence of the
respective subscribing witnesses#
IMPERIAL ETHIOPIAN GOVERNMENT
Witnesses
SCHEDULE "B"
WORK PROGRAMME
Stage 1s Preliminary geological and geophysical work
Stage 2 s Geophysical and seismic work to establish the
structure pattern in the Subject Area
Stage 3 s Drilling of a first test well and detailed seismic
work
Stage 4s
Additional exploration work subsequent to the sixth
year and prior to the Date of Commencement of
Operations
Stage 1 s Start to eighteen (18) months from the Effective Date
Within thirty (30) days of the Effective Date, the Company shall
send a senior geologist to Addis Ababa to collect, collate and evaluate
all existing available data which is on’’op.e'nA file inythe Ministry of
Mines, and also obtain all other/dhta* from oth^f'*eodrCes to the extent
available to the Company, -Following on from this preliminary work,
field parties will be sent into the-^Subject Area for further detailed
exploration and mapping by use"frf\a e'r ia 1 photographs, air or landbome
magnetometer surveys or by other methods. A complete report covering
all work done during this first stage shall be submitted to the Minister
of Mines by the Company before the end of the twenty-first (21st)
month from the Effective Date. Necessary preparation for work in the
second stage shall be commenced before the end of the twenty-first(21st) mpnth
Stage 2; Twenty-one (21) months to thirty-three (33) months from the
Effective Date ......... • - - -.............
fromfsing areas indicated by work done during Stage 1 shall be
cohered by other geophysical means, either gravity and/or seismic
methods. The geophysical interpretation should be carried on as the
work progresses to the extent possible to the Company, including
geological interpretation of the geophysical data. From the preceding
work it is expected that promising targets for drilling will be
delineated. A complete report covering all work done to the end of
Stage 2 shall be submitted to the Minister by the Company before the
end of the thirty-fifth (35th) month,
67
SCHEDULE "B"
WORK PROGRAMME
Stage 1s Preliminary geological and geophysical work
Stage 2 s Geophysical and seismic work to establish the
structure pattern in the Subject Area
Stage 3 s Drilling of a first test well and detailed seismic
work
Stage 4s
Additional exploration work subsequent to the sixth
year and prior to the Date of Commencement of
Operations
Stage 1 s Start to eighteen (18) months from the Effective Date
Within thirty (30) days of the Effective Date, the Company shall
send a senior geologist to Addis Ababa to collect, collate and evaluate
all existing available data which is on’’op.e'nA file inythe Ministry of
Mines, and also obtain all other/dhta* from oth^f'*eodrCes to the extent
available to the Company, -Following on from this preliminary work,
field parties will be sent into the-^Subject Area for further detailed
exploration and mapping by use"frf\a e'r ia 1 photographs, air or landbome
magnetometer surveys or by other methods. A complete report covering
all work done during this first stage shall be submitted to the Minister
of Mines by the Company before the end of the twenty-first (21st)
month from the Effective Date. Necessary preparation for work in the
second stage shall be commenced before the end of the twenty-first(21st) mpnth
Stage 2; Twenty-one (21) months to thirty-three (33) months from the
Effective Date ......... • - - -.............
fromfsing areas indicated by work done during Stage 1 shall be
cohered by other geophysical means, either gravity and/or seismic
methods. The geophysical interpretation should be carried on as the
work progresses to the extent possible to the Company, including
geological interpretation of the geophysical data. From the preceding
work it is expected that promising targets for drilling will be
delineated. A complete report covering all work done to the end of
Stage 2 shall be submitted to the Minister by the Company before the
end of the thirty-fifth (35th) month,
67
Stage, 5: After the thirty-fifth' ('35 H*) from the Effective Date
On the assumption that the work in Stage 2 has delineated a
prospective area then the Company shall mobilise a suitable drilling
rig to oommenoe drilling the first test well before the end of the
forty-first (41st) month. Such test well shall be drilled to
"Contract Depth” in order, to fully test all formations. For the
purposes of this Schedule "Contract Depth" shall mean a depth of
ten thousand (10,000) feet or such lesser depth if Pre-Cambrian
basement or other unfavourable lithological conditions are encountered,
which in the opinion of the Company do not geologically or economically
warrant further drilling.
If the first test well strikes apparently economic hydrocarbons,
then the Company shall commence., within a peri oh. .of. • • t hre e (3) months
the drilling of such additional wells as 'may be necessary to test
the field# In the event that the first teot well does not strike
apparently economic hydrooa.rbdnsthen the Company may commence a
second test well on., another‘site of the Company^ choosing within a
period of twelve (12)-months, unless otherwise agreed. During the
drilling of the first, and subsequent, test wells the Company shall
submit to the Minister of Mines copies of the "Morning Report" at
intervals not exceeding one (1) week.
Stage 4: Additional exploration work subsequent to the sixth (6th)
year and prior to the Date of Commencement of Operations
During each two (2) year period following the sixth (6th) year
and prior to the Date of Commencement of Operations, the Company shall
expend not less than one million United States dollars (US$1,000,000)
for exploration provided the conditions envisaged in Article XII B
of this Agreement have not then occurred, in which event, the Government
shall charge annual rentals of not more than five United States dollars
(US$5) per square kilometre unless otherwise agreed to by both parties
after review of the results of the exploration operations to date.
Stage, 5: After the thirty-fifth' ('35 H*) from the Effective Date
On the assumption that the work in Stage 2 has delineated a
prospective area then the Company shall mobilise a suitable drilling
rig to oommenoe drilling the first test well before the end of the
forty-first (41st) month. Such test well shall be drilled to
"Contract Depth” in order, to fully test all formations. For the
purposes of this Schedule "Contract Depth" shall mean a depth of
ten thousand (10,000) feet or such lesser depth if Pre-Cambrian
basement or other unfavourable lithological conditions are encountered,
which in the opinion of the Company do not geologically or economically
warrant further drilling.
If the first test well strikes apparently economic hydrocarbons,
then the Company shall commence., within a peri oh. .of. • • t hre e (3) months
the drilling of such additional wells as 'may be necessary to test
the field# In the event that the first teot well does not strike
apparently economic hydrooa.rbdnsthen the Company may commence a
second test well on., another‘site of the Company^ choosing within a
period of twelve (12)-months, unless otherwise agreed. During the
drilling of the first, and subsequent, test wells the Company shall
submit to the Minister of Mines copies of the "Morning Report" at
intervals not exceeding one (1) week.
Stage 4: Additional exploration work subsequent to the sixth (6th)
year and prior to the Date of Commencement of Operations
During each two (2) year period following the sixth (6th) year
and prior to the Date of Commencement of Operations, the Company shall
expend not less than one million United States dollars (US$1,000,000)
for exploration provided the conditions envisaged in Article XII B
of this Agreement have not then occurred, in which event, the Government
shall charge annual rentals of not more than five United States dollars
(US$5) per square kilometre unless otherwise agreed to by both parties
after review of the results of the exploration operations to date.
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS: that "W*
•and. . hereinafter oalled Principal,
__aa Surety,
hereinafter called Surety, are held and firmly hound unto the Ministry
of Mines, Imperial Ethiopian Government, Addis Ahaha, as Obligee, in
the amount of
for the payment whereof Principal and Surety bind themselves, their
heirs, exeoutors, administrators, successors and assigns, jointly and
severally, firmly by these presents.
WHEREAS, Principal did under date -of \ ‘ ••. . enter
into a Petroleum Agreement granted by the Imperial Ethiopian Government
and in aooordanoe wi th the'' term s of ..the said Agreement, Principal is
obligated to expend on operations as. defined in Article II, sub-article
(i) of the Petroleum Agreement the sum of Petroleum Agreement the
sum of US9x : ♦"" during Stage
as described in Schedule "B” of the said Agreement:
NOW THEREFORE, the condition of this obligation is such, that if the
above bounden Principal shall expend the sum of OS3
under and subject to the terms of the Petroleum Agreement, then this
obligation shall be null and void, otherwise to remain in full force
and effect.
WHEREAS, this bond shall run for a term of two years from the effective
date, any claim under this bond must be instituted within 120 days
of the completion of Stage of the Petroleum Agreement,
Signed, sealed and dated this day of
~n the presence of:
Principal
Surety 6.9
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS: that "W*
•and. . hereinafter oalled Principal,
__aa Surety,
hereinafter called Surety, are held and firmly hound unto the Ministry
of Mines, Imperial Ethiopian Government, Addis Ahaha, as Obligee, in
the amount of
for the payment whereof Principal and Surety bind themselves, their
heirs, exeoutors, administrators, successors and assigns, jointly and
severally, firmly by these presents.
WHEREAS, Principal did under date -of \ ‘ ••. . enter
into a Petroleum Agreement granted by the Imperial Ethiopian Government
and in aooordanoe wi th the'' term s of ..the said Agreement, Principal is
obligated to expend on operations as. defined in Article II, sub-article
(i) of the Petroleum Agreement the sum of Petroleum Agreement the
sum of US9x : ♦"" during Stage
as described in Schedule "B” of the said Agreement:
NOW THEREFORE, the condition of this obligation is such, that if the
above bounden Principal shall expend the sum of OS3
under and subject to the terms of the Petroleum Agreement, then this
obligation shall be null and void, otherwise to remain in full force
and effect.
WHEREAS, this bond shall run for a term of two years from the effective
date, any claim under this bond must be instituted within 120 days
of the completion of Stage of the Petroleum Agreement,
Signed, sealed and dated this day of
~n the presence of:
Principal
Surety 6.9