The Arabic version of this contract shall be referred to in construing or interpreting this contract in the courts of Egypt. In any arbitration, however, the English and Arabic versions shall both be referred to as having equal force in construing or interpreting this contract.
Nom et/ou composition de la société du projet crée
On commercial discovery, Ganoub El-Wadi and Quadra Egypt may form in Egypt an operating company pursuant to this article and the charter which shall be named by mutual agreement between Ganoub El-Wadi and Quadra Egypt. A joint stock company having the nationality of Egypt shall be formed with the authorization of the government in accordance with the provisions of this contract and of this charter. The operating company shall be subject to all laws and regulations in force in Egypt to the extent that such laws and regulations are not inconsistent with this contract. The name of the operating company shall be mutually agreed upon between Ganoub El-Wadi and Quadra Egypt on the date of the commercial discovery and shall be subject to the approval of the Minister of Petroleum. The head office of the operating company shall be in Cairo.
Books of account and other books and records shall be available at all reasonable times for inspection by duly authorized representatives of the government.
Quadra shall pay to Ganoub El-Wadi:
- The sum of USD $2,500,000 as a production bonus when the daily production rate from the contract area first reaches the rate 25,000 barrels of oil or 150 MMSCF per day.
- The additional sum of USD $5,000,000 as a production bonus when the daily production rate from the contract area first reaches the rate of 50,000 barrels of oil or 250 MMSCF per day.
- As a bonus the sum of USD $5,000,000 upon approval to enter into 5 years extension period.
Ganoub El-Wadi shall assume, pay and discharge, in the name and on behalf of Quadra, Quadra’s Egyptian income tax out of Ganoub El-Wadi's share of the petroleum produced and saved and not used in operations. All taxes paid by Ganoub El-Wadi in the name and on behalf of Quadra shall be considered income of Quadra.
Except for income taxes, Ganoub El-Wadi and Quadra shall be exempted from all taxes and duties, whether imposed by the government or municipalities including sales tax, value added tax and taxes on the exploration, development, extracting, producing, exporting or transporting
of petroleum and LPG as well as any and all withholding taxes that might otherwise be imposed on dividends, interest, technical service fees, patent and trademark royalties, and similar items.
Partage de production - Eléments de "Profit Oil" (critères pour la modification du partage, - TRI, facteur "r", niveau de production, etc.)
The remaining 60% of the petroleum shall be divided between Ganoub El-Wadi and the Quadra according to the following shares:
Crude Oil
Less than 25,000 BOPD: Ganoub El-Wadi 70%; Quadra 30%
25,000 BOPD and above: Ganoub El-Wadi 80%; Quadra 20%
Gas and LPG
Less than 150 MMSCF/day: Ganoub El-Wadi 65%; Quadra 35%
150 MMSCF/day and above: Ganoub El-Wadi 75%; Quadra 25%
Partage de production - Eléments de "Cost Oil" (base de calcul, limites sur le recouvrement des coûts, e.g. comme % des revenues ou de la production, crédit d'investissement, etc.)
Quadra shall recover quarterly all costs, expenses and expenditures in respect of all the exploration, development and related operations up to 40% of all petroleum produced and saved from all development leases within the contract area.
Exploration expenditures shall be recoverable at the rate of 25% per annum starting either in the tax year in which such expenditures are incurred and paid or the tax year in which initial commercial production commences, whichever is later.
Development expenditures shall be recoverable at the rate of 25% per annum starting either in the tax year in which such expenditures are incurred and paid or the tax year in which initial commercial production commences, whichever is later.
Quadra Egypt or the operating company created by the parties to this contract (“the operating company”) shall each select their employees and determine the number thereof, to be used for operations the contract. Quadra Egypt and the operating company undertake to replace gradually their non-executive expatriate staff by qualified nationals as they are available.
Quadra Egypt, shall after consultation with Ganope, prepare and carry out specialized training programs for all its A.R.E. employees engaged in operations under the contract with respect to applicable aspects of the petroleum industry.
Quadra shall:
- Give priority to local contractors and sub-contractors, as long as their performance is comparable with international performance and the prices of their services are not higher than the prices of other contractors and sub-contractors by more than 10%.
- Give preference to locally manufactured material, equipment, machinery and consumables so long as their quality and time of delivery are comparable to those available internationally. However, such material, equipment, machinery and consumables may be imported for operations conducted hereunder if the local price of such items at Quadra’s operating base is more than 10% higher than the price of such imported items before customs duties, but after transportation and insurance costs have been added.
Quadra shall commence exploration operations not later than 6 months after the effective date. Quadra shall spend a rninimum of USD $2,000,000 on exploration operations and activities related thereto during the initial 2 years. Quadra shall also acquire geophysical survey, processing, reprocessing and evaluation studies. For the first 3 year extension period that Quadra elects to extend beyond the initial exploration period, Quadra shall spend a minimum of USD $4,000,000) and for the second 3 year extension period 'Quadra shall also spend a minimum of USD $5,000,000. Quadra shall drill 2 wells during each of the first and second extension periods that Quadra elects to extend beyond the initial exploration period.
Any dispute, controversy or claim arising out of or relating to this contract, or breach, termination or invalidity thereof between Ganoub El-Wadi and Quadra shall be settled by arbitration in accordance with the Arbitration Rules of the Cairo Regional Center for International Commercial Arbitration in effect on the date of this contract. The award of the arbitrators shall be final and binding on the parties.
The number of arbitrators shall be 3. Each party shall appoint one arbitrator. The two arbitrators thus appointed shall choose the third arbitrator. The arbitration shall take place in Cairo. Egyptian Law shall apply to the dispute, except in the event of any conflict between Egyptian Laws and this contract, the provisions of this contract shall prevail. The arbitration shall be conducted in both English and Arabic languages.
In case of changes in existing legislation or regulations which take place after the effective date, and which significantly affect the economic interest of this contract to the detriment of Quadra, Quadra shall notify Ganoub El-Wadi of thet legislative or regulatory measure. In such case, the parties shall negotiate possible modifications to this contract designed to restore the economic balance which existed on the effective date. These amendments to this contract shall not in any event diminish or increase the rights and obligations of Quadra as these were agreed on the effective date.