NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here
PETROLEUM AGREEMENT
. BETWEEN
THE MINISTER RESPONSIBLE FOR
PETROLEUM
REPRESENTING
THE GOVERNMENT OF THE REPUBLIC
OF GUYANA
AND
ON ENERGY INC.
Petroleum Agreement
Government of Guyana- Berbice PA
TABLE OF CONTENTS
Article 1 - Definitions....................................................................................................................3
Article 2 - Agreement, the Operator, Liabilities and Indemnities...........................................9
Article 3 - Petroleum Prospecting Licence and Guarantee.....................................................11
Article 4 - Exploration Programme and Expenditure Obligation..........................................12
Article 5 - Relinquishment of Areas..........................................................................................15
Article 6 - Delegation; Co-operation between Contractor and GGMC.................................17
Article 7 - Annual Work Programme and Budget...................................................................19
Article 8 - Discovery and Development.....................................................................................20
Article 9 - Records, Reports and Information; Confidentiality.............................................22
Article 10 - Annual Licence Rental Charge..............................................................................25
Article 11 - Cost Recovery and Production Sharing................................................................26
Article 12 - Associated and Non - Associated Gas...................................................................28
Article 13 - Valuation of Crude Oil or Natural Gas................................................................32
Article 14 - Disposal of Production............................................................ 35
Article 15 - Taxation and Royalty.............................................................................................37
Article 16 - Contracts and Assignments....................................................................................41
Article 17 - Domestic Supply Obligation..................................................................................42
Article 18 - Guyana Resources...................................................................................................45
Article 19 - Employment and Training.....................................................................................46
Article 20 - Rights to Assets and Insurance..............................................................................47
Article 21 - Import Duties..........................................................................................................52
Article 22 - Foreign Exchange Control.....................................................................................53
Article 23 - Accounting and Audits...........................................................................................54
Article 24 - Force Majeure.........................................................................................................55
Article 25 - Assignment..............................................................................................................57
Article 26 - Sole Expert Determination and Arbitration........................................................58
Article 27 - Applicable Law.......................................................................................................61
Article 28 - Protection of the Environment..............................................................................62
Article 29 - Termination and Cancellation...............................................................................63
Article 30 - Effective Date..........................................................................................................64
Article 31 - Miscellaneous..........................................................................................................65
Article 32 - Stability of Agreement............................................................................................66
Article 33 - Notices......................................................................................................................68
Annex A - Description of Contract Area
Annex B - Map of Contract Area
Annex C - Accounting Procedure
Annex D - Pre-Approved and Certified Petroleum Operations Items
Petroleum Prospecting License
i
R.N.O. 8^^ 5
Art. Fees:
c) \ % Xf-o I ^e9 Fee.- 21=3
Stamp Duty (
PETROLEUM AGREEMENT Copy(s) -
' <=1 foo
This Agreement is made on the .L^xiay of.J^zcss^:^-. , 2013, between the Government
of the Republic of Guyana (the “Government”), represented herein by the Minister Responsible
for Petroleum (hereinafter referred to as the “Minister”) of the One Part
and
ON Energy Inc. (hereinafter referred to as “ON Energy” or “Licensee”) a Company incorporated
in the Bahamas with its registered office at Mareva House, 4 George Street, Nassau, Bahamas
and registered in Guyana under the Companies Act 1991 with its registered address in Guyana
situated at c/o Luckhoo & Luckhoo, 1 Croal Street, Georgetown, Guyana of the Other Part
WHEREAS
(1) By virtue of the Petroleum (Production) Act, Cap. 65:05, Petroleum existing in its natural
condition in strata in Guyana is vested in the State; the Petroleum (Exploration and
Production) Act, No. 3 of 1986 (hereinafter referred to as the “Act” and the Petroleum
(Exploration and Production) Regulations 1986 (hereinafter referred to as the
“Regulations” make provision with respect to prospecting for and production of
Petroleum, and for matters connected therewith;
(2) The Guyana Geology and Mines Commission (hereinafter referred to as “GGMC”) a
body corporate established under the Guyana Geology and Mines Commission Act (No.
9 of 1979) has been seised with the responsibility, inter alia, of planning and securing the
development, exploitation and management of Petroleum, as defined in the Act, in
Guyana so as to ensure for the people of Guyana the maximum benefits therefrom and for
doing such things in relation thereto;
(3) With respect to prospecting for and producing Petroleum and for matters connected
therewith the Act and Regulations, subject to certain limitations and conditions contained
therein authorize the Minister to grant Petroleum Prospecting Licences and Petroleum
Production Licences;
(4) Section 10 of the Act authorizes the Minister to enter into an agreement with any person
with respect to, inter alia, the grant of a Licence, the conditions to be included in a
Licence, the procedure to be followed by the Minister while exercising any discretion
conferred upon him by or under the Act and the manner in which the discretion shall be
exercised and any matter incidental to or connected therewith;
(5) ON Energy has submitted to the delegatee a proposal (“the proposal”) for a Production
Sharing Agreement in respect of a certain offshore area of Guyana, on terms and
conditions specified in the proposal;
(6) GGMC has been authorized by the Minister to negotiate this Agreement su
Page 1
Petroleum Agreement
Government of Guyana - Berbice PA
provisions of the Act and Regulations and to the final written approval of the Minister of
its contents and execution thereof and to assist in the administration and implementation
thereof;
(7) ON Energy will have, or will acquire, the financial resources, the managerial, technical
and industrial competence and the experience to carry out Petroleum Operations and will
provide an affiliate company guarantee, in accordance with section 13 of the Act;
(8) Pursuant to the aforesaid recitals, ON Energy made an application to the Minister for a
Petroleum Prospecting Licence in accordance with regulation 13 of the Regulations (as
hereinafter defined), over the area described in Annex A and shown on the map attached
as Annex B, subject to the terms and conditions herein set forth and subject to the
provisions of the Act and Regulations and ON Energy has agreed by execution of this
Agreement to accept the said Licence on the said terms and conditions and provisions.
NOW, THEREFORE, in consideration of the premises and covenants and conditions herein
contained, IT IS HEREBY AGREED between the Parties as follows:
Page 2
Petroleum Agreement
Government of Guyana - Berbice PA
Article 1 - Definitions
] 1 In this Agreement, unless the context otherwise requires:
“Accounting Procedure” means the procedure set out in Annex C;
“Act” means the Petroleum (Exploration and Production) Act No.3 of 1986;
“Affiliated Company” in relation to the Contractor means, a company or corporation;
(i) which is, directly or indirectly controlled by the Contractor; or
(ii) which directly or indirectly, controls the Contractor; or
(iii) which is, directly or indirectly, controlled by a company or corporation
that also, directly or indirectly, controls the Contractor. For the purpose of this definition
“control” means the right to exercise a vote of fifty per cent (50%) or more of all the
voting shares;
“Agreed Interest Rate” means interest computed on a monthly basis at the rate per annum
equal to the average London Interbank Offer Rate (LIBOR) for six (6) months United
States dollar deposits, as published by the Wall Street Journal, on the first Business Day
of such month being calculated, plus three (3%) percentage points;
“Agreement” means this Agreement and the Annexes hereto attached and made a part
hereof;
“Appraisal Programme” means a programme carried out following a discovery of
Petroleum in the Contract Area for the purpose of delineating the Petroleum Reservoir, as
defined in the Act, to which that discovery relates in terms of thickness and lateral extent
and estimating the quantity of recoverable Petroleum therein prior to declaration of
commerciality;
“Appraisal Well” means a well drilled for the purpose of an Appraisal Programme;
“Article” means an Article of this Agreement;
“Associated Gas” means all Natural Gas produced from any Petroleum Reservoir of
which the predominant production is Crude Oil and includes the gas-cap which overlies
and is in contact with Crude Oil;
“Barrel” means a quantity consisting of forty-two (42) United States gallons, liquid
measure, measured at standard conditions of atmospheric pressure and temperature (14.7
Ibs/sq. inch absolute or 1 Kg/sq. cm. absolute and corrected to a temperature
degrees Fahrenheit or fifteen (15) degrees Celsius);
C?---- -------- X Z --------7 7
Business Day” means a day on which the banks in Georgetown, Guyana ar
Page 3
Petroleum Agreement
Government of Guyana - Berbice PA
open for business.
"‘Calendar Month” or “Month” means any of the twelve months of the Calendar Year;
“Calendar Quarter” or “Quarter” means a period of three (3) consecutive months
beginning on the first day of January, April, July or October;
“Calendar Year” or “Year” means a period of twelve (12) consecutive Months
commencing on January 1 and ending on the succeeding December 31 provided however
that a Year of a term of a Licence shall be the period specified in section 2 (2) (b) of the
Act;
“Commercial Discovery” means any discovery, which the Contractor in its sole
judgement, considers economic to develop and produce pursuant to the terms of the
Agreement;
“Contract Area” means:
(i) on the Effective Date the area described in Annex A and shown on the map in
Annex B and the subject of the Petroleum Prospecting Licence granted to the
Contractor pursuant to Article 3; and
(ii) thereafter any areas which at any particular time are subject to the Petroleum
Prospecting Licence or Petroleum Production Licence(s) granted to the Contractor
under Article 8;
“Contract Costs” means Exploration Costs, Development Costs, Operating Costs, Service
Costs, General and Administrative Costs and Annual Overhead Charge;
“Contractor” means ON Energy and includes its successors and permitted assignees;
“Cost Gas” has the meaning assigned in Article 11;
“Cost Oil” has the meaning assigned in Article 11;
“Crude Oil” or “Oil” means crude mineral oil, asphalt, ozokerite, distillates, condensates
and all kinds of hydrocarbons and bitumens, both in solid and liquid forms, at standard
conditions of temperature and pressure (60 degrees Fahrenheit or 15 degrees Celsius and
14.7 Ibs/sq. in or 1 Kg/sq. cm);
“Delegatee” shall have the meaning as assigned in Article 6.1
“Delivery Point” means in the case of Crude Oil the inlet flange of the L ’
the case of Natural Gas shall be the sales point and the point at which
from seller to buyer. In the case of LNG sales the Delivery Point
Page 4
Petroleum Agreement
Government of Guyana - Berbice PA
$/VAN&
loading flange for the LNG tanker. In the case of pipeline deliveries, the Delivery Point
shall be the inlet flange to buyer's pipeline or distribution system, or the inlet to a third
party's pipeline transporting buyer's Natural Gas. The Delivery Point for LPGs shall be
the sales point and the point at which custody transfers from seller to buyer. In the case
of LPG exports, the Delivery Point shall be the inlet loading flange for the LPG tanker or
truck. In the case of pipeline deliveries of LPGs, the Delivery Point shall be the inlet
flange to buyer's pipeline or distribution system, or the inlet to a third party's pipeline
transporting buyer's LPGs; or in any case, such other economically viable point for
export of Petroleum in the Republic Of Guyana which shall be agreed to by the
Contractor and the Minister;
“Development Costs” means the expenditure so categorized in Annex C;
“Development Plan” means the plan referred to in Article 8.4;
“Development Well” means any well drilled as part of a Development Plan;
“Discovery Area” means an area which is part of a Prospecting Area consisting of a
Discovery Block or Blocks in respect of which the Minister has been informed under
section 30 of the Act;
“Discovery Block” means that as defined in the Act;
“Discovery of Petroleum” means that as defined in the Act;
“Effective Date” means the date on which this Agreement comes into force pursuant to
Article 30;
“Expatriate Employee” means any employee (other than a Guyanese citizen) not
permanently resident in Guyana who is engaged under a contract of service for the
purpose of Petroleum Operations;
“Exploration Costs” means those expenditures so categorized in Annex C;
“Exploration Period” means the initial period, and/or the first renewal period and/or the
second renewal period referred to in Article 4.1, as the case may be;
“Exploration Well” means a well drilled, which is not a Development Well, with the
objective of exploring for Petroleum on a geological entity (be it of structural,
stratigraphic, facies or pressure nature) to a depth or stratigraphic level specified in the
work programme for the exploration work programme;
“Field” means an area within the Contract Area consisting of a Petrole
multiple Petroleum Reservoirs all grouped on, or related to, the
Page 5
Petroleum Agreement
Government of Guyana - Berbice PA
geological structural features or stratigraphic conditions from which Petroleum may be
produced commercially;
“General and Administrative Costs” and “Annual Overhead Charge” means the
expenditures so categorised in Annex C;
“Geologic Basement” means any igneous or metamorphic rock or any stratum in and
below which the geological structure or physical characteristics of the rock sequence do
not have the properties necessary for the accumulation of petroleum in commercial
quantities and which reflects the maximum depth at which any such accumulation can be
reasonably expected;
“Government” means the Government of the Republic of Guyana and its ministries and
agencies;
“GGMC” means the Guyana Geology and Mines Commission, established under section
3 of the Guyana Geology and Mines Commission Act 1979;
“GGMC Act” means the Guyana Geology and Mines Commission Act 1979;
“Licence” means the Petroleum Prospecting Licence and/or the Petroleum Production
Licence(s) or both as the context requires;
“Lifting Entitlement” means the quantity of Crude Oil to which a Party shall be entitled
in any given period pursuant to Article 11;
“MCF” means a thousand (1000) cubic feet of natural gas.
“Minister” means the Minister assigned responsibility for Petroleum or where there is no
such Minister, the President;
“Natural Gas” or “Gas” means all hydrocarbons which at standard conditions of
temperature and pressure (60 degrees Fahrenheit or 15 degrees Celsius and 14.7 Ibs/sq. in
or 1 Kg/sq. cm) is in a gaseous state including but not limited to wet mineral gas, dry-
mineral gas and casing head gas, all substances contained therein including helium,
which are produced from an oil or gas well, in their natural state or residue gas remaining
after extraction of NGLs from wet gas. For purposes of this Agreement, Natural Gas
shall also include liquefiable hydrocarbons obtained from Natural Gas by condensation or
extraction, including ethane, propane, butane, pentanes and heaviers (“Natural Gas
Liquids” or “NGLs”). Liquefied methane shall not be considered an NGL, but rather
Natural Gas in the liquid state.
“Non-Associated Gas” means Natural Gas or Gas other than Associated Gas;
“Non-Resident Sub-Contractor” shall mean a Sub-Contractor
management of whose business are exercised outside Guyana.
Page 6
Petroleum Agreement
Government of Guyana - Berbice PA
“Operating Costs” means those costs so categorized in Annex C;
“Operator” shall have the meaning assigned to it in Article 2.2(a);
“Parties” means the Government, ON Energy and includes its successors and permitted
assignees, and a Party shall mean any of the Parties;
“Petroleum Operations” means Prospecting Operations and/or Production Operations, as
defined in the Act;
“Petroleum Prospecting Licence” means a Licence issued by the Government under the
Act and the Regulations to ON Energy for carrying out Prospecting Operations and set
forth in Form C of the schedule as specified in the Regulations;
“Petroleum Production Licence” means a Licence to be issued by the Government under
the Act and the Regulations to ON Energy for carrying out Production Operations and set
forth in Form D of the schedule as specified in the Regulations;
“Profit Gas” has the meaning assigned in Article 11;
“Profit Oil” has the meaning assigned in Article 11;
“Recoverable Contract Costs” has the meaning assigned in Article 11;
“Regulations” means the Petroleum (Exploration and Production) Regulations 1986;
“Service Costs” means the expenditures so categorized in Annex C;
“Sub-Contractor” means any company or entity which provides services to the
Contractor in connection with Petroleum Operations;
“Third Party Sales” means third party arms length sales made by (i) Contractor or (ii)
Affiliated Company of Contractor to a third party for an arms-length price which is
disclosed to the Minister.
1.2 The words and terms used in this Agreement but not defined herein shall, if meanings
have been assigned to them under section 2 of the Act, have, for the purposes of this
Agreement, the same meanings.
1.3 The provision of this Agreement relating to the Petroleum Prospecting Licence shall be
read as part of the provisions of such Licence.
1.4 The provision of this Agreement relating to any Petroleum Production
read as part of the provisions of such Licence.
Page 7
Petroleum Agreement
Government of Guyana - Berbice PA
1.5 The provisions in the Act and Regulations dealing with rights and obligations of the
Contractor shall be read as part of but not nullify the provisions of this Agreement and
any Licence issued to the Contractor.
Page 8
Petroleum Agreement
Government of Guyana - Berbice PA
Article 2 - Agreement, the Operator, Liabilities and
Indemnities
2.1 Agreement
This Agreement constitutes an agreement made under section 10 of the Act consistent
with the Act and the Regulations, and is a production sharing agreement, the objective of
which is the exploration for development and production of Petroleum in the Contract
Area by the Contractor subject to the terms hereof and the provisions of the Act and
Regulations under which the Contractor shall have an economic interest in the
development of Petroleum from the Contract Area.
2.2 The Operator
(a) ON Energy shall be the Operator charged with conducting the day to day
activities of the Contractor under this Agreement. No transfer of operatorship to
another Party not comprising the Contractor shall take effect unless it has been
approved by the Minister which approval shall not be unreasonably withheld.
The Minister shall be notified of any change of operatorship to another Party
comprising the Contractor in writing.
(b) The Contractor shall provide the Minister with a memorandum summarizing the
operating arrangements between the Operator and the Contractor, including any
Party comprising the Contractor for the conduct of Petroleum Operations which
will include, inter alia, a provision whereby the Operator agrees to conduct the
Petroleum Operations in accordance with this Agreement, the Licences and any
applicable laws of Guyana.
2.3 Liability
The duties, obligations and liabilities of the Parties comprising the Contractor under this
Agreement and under any Licence issued pursuant hereto shall be joint and several.
2.4 Indemnity
The Contractor shall, at all times, keep Government indemnified against all actions,
claims and the demands that may be brought or made against Government by a third
party by reason of negligence (any act or omission or reckless disregard of harmful
consequences which results in damage to a third party) by the Contractor or the Operator
in the exercise or purported exercise of the rights of the Contractor under the Act or the
Licence, provided however, that nothing in this Article shall require the Contractor to
give the said indemnity for any claim or demand in respect of Petroleum
Minister pursuant to Article 11 after title has passed to the Minister at the I
Petroleum Agreement
Government of Guyana - Berbice PA
or in respect of assets acquired by the Minister pursuant to Article 20 from and after the
date of acquisition. Liability by the Contractor to the Government for damages in respect
of Petroleum Operations under this Agreement is limited to insurance required in
accordance with Article 20.2 (a), provided however, that the Contractor shall not be liable
to the Government for indirect, punitive or consequential damages, including but not
limited to, production or loss of profits.
Page 10
Petroleum Agreement
Government of Guyana - Berbice PA
Article 3 - Petroleum Prospecting Licence and Guarantee
3.1 Petroleum Prospecting Licence
(a) On the date of this Agreement, the Minister, in accordance with the Act, the
Regulations and the terms of this Agreement, shall grant to the Contractor the
Petroleum Prospecting Licence for an initial period of four (4) years from the
Effective Date over the area described in Annex A and shown on the map
attached as Annex B hereto.
(b) Subject to Article 4 and the other terms of this Agreement, such Petroleum
Prospecting Licence may be renewed but not more than twice at the election of
the Contractor for consecutive periods of up to three (3) years each in accordance
with the provisions of the Act and the Regulations.
3.2 Guarantee
The Contractor shall on or before the sixtieth (60th) day from the Effective Date during
year one (1) of phase 1 of the initial period in accordance with Article 4.1 (a)(i)
hereunder, and thereafter, no later than ninety (90) days after the commencement of all
subsequent work commitment periods as specified in Article 4.1, provide an Affiliate
Company guarantee or other form of guarantee acceptable to the Minister in the amount
of ten (10%) of the budget submitted by the Contractor, pursuant to Article 7.1, for each
specific work commitment period. Notwithstanding the foregoing, if the Contractor
exceeds its minimum work commitment in any phase specified in Article 4.1, the
completion of such work commitment shall constitute a waiver of such proportion of the
requirement of the guarantee by the Minister which is the equivalent of the excess work
previously completed but which is applicable to the subsequent work commitment phase.
If the guarantees are Affiliate Company guarantees they shall be in lieu of and satisfy any
obligation to provide a guarantee and/or bond pursuant to the Act, Regulations or this
Agreement on the part or on behalf of the Contractor.
Page 11
Petroleum Agreement
Government of Guyana - Berbice PA
Article 4 - Exploration Programme and Expenditure
Obligation
4.1 Exploration Programme
Subject to the provisions of this Agreement, in discharge of its obligations to carry out
Prospecting Operations in the Contract Area, the Contractor shall carry out the minimum
work described herein, during the periods into which Prospecting Operations are divided
hereunder:-
(a) The initial period of four (4) years shall be divided into two (2) phases. Each
phase will consist of twenty-four (24) months duration.
(i) Phase One - (24 months)
During phase one (1) of the initial period, the Contractor shall acquire a
minimum of one thousand (1,000) kilometers of airborne geophysical data,
process and interpret same. At the end of phase one of the initial period, the
Contractor shall elect either to relinquish the entire Contract Area except for
any Discovery Area of which the Minister is informed under section 30 of the
Act and the area contained in any Petroleum Production License or commit to
the work programme in phase two (2).
(ii) Phase Two - (24 months)
During phase two of the initial period, the Contractor shall acquire a minimum
of one hundred (100) line kilometers of 2D seismic, process and interpret
same; or commence to drill one (1) Exploration Well in accordance with
Article 4.2.
At the end of the initial period of four (4) years, the Contractor shall elect either to
relinquish the entire Contract Area or subject to Article 5 relinquish fifteen (15%)
percent of the Contract Area and renew the Petroleum Prospecting Licence for a
further period of up to three (3) years.
(b) The first renewal period of three (3) years shall be divided into two (2) phases.
Each phase will consist of eighteen (18) months duration.
(i) Phase One -(18 months)
During phase one of the first renewal period, the Contractor shall commence
to drill one (1) Exploration Well in accordance with Article 4.2.
At the end of phase one of the first renewal period, the Contract<^Mptffl^^c!
Page 12
Petroleum Agreement
Government of Guyana - Berbice PA
either to relinquish the entire Contract Area except for any Discovery Area in
respect of which the Minister is informed under section 30 of the Act and the area
contained in any Petroleum Production Licence or commit to the work
programme in phase 2.
(ii) Phase Two - (18 months)
During phase two of the first renewal period, the Contractor shall drill one (1)
Exploration Well in accordance with Article 4.2.
At the end of the first renewal period of three (3) years, the Contractor shall elect
either to relinquish the entire Contract Area except for any Discovery Area in
respect of which the Minister is informed under section 30 of the Act and the area
contained in any Petroleum Production Licence or subject to Article 5, relinquish
twenty-five (25%) of the Contract Area and renew the Petroleum Prospecting
Licence for a second period of three (3) years.
(c) The second renewal period of three (3) years shall be divided into two (2) phases.
Each phase will consist of eighteen (18) months duration.
(i) Phase One - (18 months)
During phase one (1) of the second renewal period, the Contractor shall
commence to drill one (1) Exploration Well in accordance with Article 4.2.
At the end of phase one (1) of the second renewal period, the Contractor shall
elect either to relinquish the entire Contract Area except for any Discovery Area
in respect of which the Minister is informed under section 30 of the Act and the
area contained in any Petroleum Production Licence or commit to the work
programme in phase two (2).
(ii) Phase Two - (18 months)
During phase two (2) of the second renewal period, the Contractor shall drill
one (1) Exploration Well in accordance with Article 4.2.
At the end of the second renewal period of three (3) years, the Contractor shall
j relinquish the entire Contract Area except for any Discovery Area in respect of
which the Minister is informed under section 30 of the Act, the area contained in
any Petroleum Production Licence and any other portion of the Contract Area on
which the Minister agrees to permit the Contractor to conduct further exploration
activities.
(d) The minimum work commitment for a given phase or period referred to ii
Page 13
Petroleum Agreement
Government of Guyana - Berbice PA
3
4.1(a), (b) and (c) may be undertaken in an earlier phase or period in whole or in
part and in such a case the work commitment with respect to the subsequent
period shall be deemed to be satisfied accordingly in whole or in part as the case
may be. Contractor may conduct additional work beyond the minimum work
commitment in accordance with the terms and conditions of this Agreement,
which shall be subject to Cost Recovery.
(e) Subject to Article 24 herein and section 43 of the Act, the Minister may extend
any Exploration Period pursuant to a showing of good cause by the Contractor.
4.2 No Exploration Well drilled by the Contractor shall be treated as discharging any
obligation of the Contractor to drill such Exploration Well unless either it has been drilled
to the depth or formation agreed with the Minister and specified in the annual work
programme, or before reaching such depth or formation:
(a) the Contractor has expended on such well and any substitute well drilled pursuant
to Article 4.2 (d) below the amount for such work commitment in the budget
submitted by the Contractor and approved by the Minister as specified in Article
7.1; or
(b) the Geologic Basement is encountered; or
(c) a Discovery is made and the Minister is informed thereof; or
(d) insurmountable technical problems are encountered which, in accordance with
good oilfield practice, make further drilling impractical, provided that if the said
Well is abandoned owing to the said problems before reaching the Geologic
Basement, the Contractor shall drill a substitute well in the Contract Area to the
same minimum depth as aforesaid unless otherwise agreed with the Minister or
until the amount in Article 4.2 (a) less any amounts actually expended on the
abandoned well is reached or one of the criteria listed at Articles 4.2 (b) to (d) is
satisfied.
4.3 Expenditure Obligation
The sum actually spent in fulfillment of the work obligation in a specific phase or period
shall be deemed to have satisfied the Contractor's minimum expenditure obligation for
that phase or period. For the avoidance of doubt, in the event the Contractor has
performed its work obligation(s) for an amount less than the amount specified in an
annual work programme and budget submitted under Article 7, Contractor shall be
deemed to have fulfilled its expenditure obligation for that phase or period
Page 14
Petroleum Agreement
Government of Guyana - Berbice PA
Article 5 - Relinquishment of Areas
5.1 If prior to the end of the initial period of the Petroleum Prospecting Licence issued to the
Contractor under Article 3.1, an application is made by the Contractor for renewal of the
Licence under section 24 (1) of the Act, the Contractor shall relinquish at the end of the
initial period an area equal to at least fifteen percent (15%) of the original Contract Area
less the exclusions provided for in Article 5.
5.2 If prior to the end of the first renewal period of the Petroleum Prospecting Licence an
application is made by the Contractor for a second renewal of the Licence under section
24(1) of the Act, the Contractor shall then relinquish at the end of this first renewal
period an area equal to at least twenty-five percent (25%) of the original Contract Area
less the exclusions provided for in Articles 5.3
5.3 The areas to be relinquished pursuant to Articles 5.1 and 5.2 shall:
(a) comprise Blocks, as defined in the Act;
(b) exclude any Discovery Area together with a reasonable area of protective acreage
surrounding the Discovery Area;
(c) exclude any Production Area;
(d) be selected by Contractor so that:
(i) the area relinquished shall comprise one (1) discrete area, subject to
Minister’s discretion with respect to location, shape and size;
(ii) the Blocks to be retained for and during the first renewal period pursuant
to Articles 5.1 and 5.2 shall constitute one (1) discrete area unless
otherwise agreed to by the Minister.
5.4 In the event that an area or areas cannot be identified for relinquishment in accordance
with this Article without including in such area or areas in whole or in part a subsisting
Discovery Area or Production Area or the Minister is of the opinion that the area(s) to be
relinquished will not enable licensing separately or jointly with contiguous unlicensed
areas then the Minister and Contractor shall consult together with a view to agreeing on
the area(s) to be relinquished in the light of the circumstances then prevailing. If after
sixty (60) days from receiving notice of the Contractor’s proposed relinquishments the
Parties cannot agree on a proposed relinquishment, the Parties shall refer the matter to a
sole expert pursuant to Article 26.
5.5 For the purpose of this Article, a Discovery Area shall not include any
which relates to a Discovery in respect of which the Contractor has noti
Page 15
Petroleum Agreement
Government of Guyana - Berbice PA
Guyana
that the Discovery is not of potential commercial interest pursuant to section 31 (1) of the
Act, unless such Discovery Block forms a part (and only to that extent) of another
subsisting Discovery Area.
5.6 If a Petroleum Prospecting Licence ceases to have effect with respect to Discovery
Blocks pursuant to section 32 (1) of the Act, such reduction in size of the Contract Area
shall be treated as an advance relinquishment under this Article and shall reduce the area
next required to be relinquished accordingly.
5.7 Without prejudice to the obligations undertaken in Article 4, the Contractor may at any
time during the period of the Petroleum Prospecting Licence, on giving the Minister no
less than three (3) months notice in writing of its intention to do so, relinquish any Block
or Blocks in the Contract Area pursuant to section 28 of the Act and in accordance with
Articles 5.4 and 5.5. Any such relinquishment shall count towards any subsequent
mandatory relinquishments required under Articles 5.1, 5.2 or 5.3 above as the case may
be.
Page 16
Petroleum Agreement
Government of Guyana - Berbice PA
Article 6 - Delegation; Co-operation between Contractor and
GGMC
6.1 For the purposes of this Agreement, the Delegatee of the Minister shall be GGMC. The
Minister may, however, subject to the provisions of the Act, or any other law, delegate
any person to exercise and perform any of his functions under this Agreement and
anything done by the delegate in pursuance of the delegation shall have the same validity
and effect as it would have if done by the Minister.
6.2 The Minister also hereby authorizes GGMC to perform, inter alia the following
functions:
(a) to monitor the Petroleum Operations carried out by the Contractor;
(b) to review any proposed exploration work programme and budgets presented by
Contractor under Article 7 and any Appraisal Programme presented by the
Contractor under Article 8;
(c) to review any Development Plan submitted by the Contractor in connection with
an application for a Petroleum Production Licence pursuant to section 34 of the
Act;
(d) to ensure the maintenance and availability for inspection of operating records and
reports for Petroleum Operations in accordance with this Agreement;
(e) to ensure the accounting procedures specified in Annex C of this Agreement are
followed;
(f) to ensure compliance with the provisions of this Agreement, Petroleum Act and
Regulations.
6.3 The Contractor and the delegate shall co-operate in good faith in the exercise of the
Minister’s functions delegated pursuant to this Article and the Contractor shall keep the
delegate advised of all activities taking place during the course of Petroleum Operations
and shall provide the delegate with all available information relating to Petroleum
Operations as the Minister or the delegate may reasonably require. Towards this end the
delegate and the Contractor shall meet at regular intervals, but at least once every six
months, to review the progress and results of the Petroleum Operations and to discuss the
work programme and other activities to be undertaken in the ensuing months.
6.4 With respect to the matters to be reviewed pursuant to Article 6.2, should the dele;
wish to make any specific proposals or revisions thereto, the delegate shall so
Contractor specifying its reasons therefor; within reasonable time tho^
HI)
Page 17
Petroleum Agreement
Government of Guyana - Berbice PA
Contractor and the delegate shall meet and endeavour to agree on the proposals or
revisions. The Contractor shall consider and take into account the proposals of the
delegate and shall attempt in good faith to reach agreement on such proposals. If the
Contractor and the delegate fail to agree within sixty (60) days of submission by the
Contractor, the exploration work programme and budget (including as appropriate any
minimum work programme to be undertaken pursuant to Article 4) submitted pursuant to
Article 7 and the Appraisal Programme (except in the case of Gas to which the provision
of Article 12 shall apply) submitted pursuant to Article 8 (revised in accordance with any
amendments or additions thereto agreed by the delegate and the Contractor) shall be
deemed adopted.
6.5 Nothing herein above provided shall preclude the right of the Minister to delegate any
additional function to the delegate or subject to Article 6.1 to delegate from time to time
any functions, including those herein contained, to any other agency of Government. A
delegation shall not increase the obligations or liabilities of the Contractor and notice of
any delegation shall be given promptly to the Contractor.
6.6 Any approvals required by the Minister or delegates of the Minister shall not be
unreasonably withheld. If the Contractor requests required approval from the Minister or
delegates of the Minister, such approval shall be deemed as granted if no response is
provided within sixty (60) days of the request.
6.7 The Minister and the delegate shall, upon request, either provide to the Contractor or
assist the Contractor in obtaining the assistance required for Contractor to fulfill
requirements of the contract including but not limited to the following:
(a) approvals issued by Government agencies or local government institutions which
are required to conduct hydrocarbon operations, including approvals necessary to
import goods and services free from duties and taxes;
(b) approvals for easements and right-of-way to enable Contractors to conduct
operations;
(c) approvals for security for field operations and personnel;
(d) permission for entry and exit visas and working permits for Contractor's
employees, subcontractors and their dependents;
(e) supply reports, analyses, samples, geological, geophysical and production data
necessary to Contractor from areas inside and outside the Contract Area;
(f) approvals to export hydrocarbons, and use essential infrastructi
the economic export of hydrocarbons at normal commercial term
Page 18
Petroleum Agreement
Government of Guyana - Berbice PA
Article 7 - Annual Work Programme and Budget
7.1 Within sixty (60) days after the Effective Date, the Contractor shall prepare and submit to
the Minister in detail a work programme and budget, setting forth the Prospecting
Operations, which the Contractor proposes to carry out (including, as appropriate, any
minimum work obligations to be undertaken pursuant to Article 4) during the remaining
portion of the Calendar Year. In subsequent years no less than one (1) month before the
beginning of the Calendar Year, the Contractor shall prepare and submit to the Minister a
work programme and budget setting forth Petroleum Operations which the Contractor
proposes to conduct during the upcoming Calendar Year.
7.2 The Contractor may, for good cause, amend the details of any work programme or budget
submitted to the Minister pursuant to Article 7.1 provided that:
(a) notice of the details of the reasons for the amendments is given to the Minister;
(b) such amendments shall not have the effect of reducing the minimum work
obligations undertaken under Article 4 without the prior consent in writing of the
Minister;
(c) any proposed amendment shall be subject to review pursuant to Article 6.
Page 19
Petroleum Agreement
Government of Guyana - Berbice PA
Article 8 - Discovery and Development
8.1 Where, pursuant to section 30 of the Act, notice has been given to the Minister of a
Discovery in the Contract Area, the Contractor shall forthwith inform the Minister of the
steps it proposes to take to satisfy the requirements of section 30 (1) (a) (iii) of the Act.
8.2 Where the Contractor, pursuant to section 31 (1) of the Act, has informed the Minister
that, in its opinion, the Discovery is of potential commercial interest, the Contractor shall,
as soon as practicable thereafter, submit, for the consideration of the Minister, its
proposals for an Appraisal Programme to meet the requirements of section 30 (1) (b) of
the Act.
8.3 Where an Appraisal Programme has been adopted by the Contractor pursuant to Article
8.2, the Minister may, on application by the Contractor pursuant to section 31 (2) of the
Act, stating reasons therefor, extend the period within which application may be made by
the Contractor for a Petroleum Production License.
8.4 Where the Contractor has made an application to the Minister for a Petroleum Production
Licence in respect of any part of the Contract Area in accordance with section 34 (1) of
the Act, such application shall be accompanied by the proposals required under section
34 (3) of the Act (hereinafter referred to as “the Development Plan”) and shall satisfy the
provisions of section 36 of the Act and the Regulations. The Development Plan shall
provide that not later than six (6) months after the grant of the first Petroleum Production
Licence, the Contractor shall in consultation with GGMC, prepare and implement a
programme for training and employment of Guyanese nationals in each phase and level
of Petroleum Operations and for the development of management and technical skills for
the safe and efficient conduct of Petroleum Operations.
8.5 Where the Minister considers that the application has not met the requirements of Article
8.4, he shall so notify the Contractor within sixty (60) days of receipt of the application,
and GGMC and Contractor shall meet to discuss the application with a view to ensuring
that the requirements of Article 8.4 are met. In the event that the Parties are unable to
agree on amendments to the application to meet such requirements within sixty (60) days
from the date of aforesaid application (or such longer period as the Parties shall agree),
or where the Minister fails to respond to or act on the aforesaid application within sixty
(60) days, the Contractor may refer the matter to a sole expert pursuant to Article 26 for
determination within sixty (60) days of appointment of such expert or such other time
period as may be agreed between the Contractor and the Minister.
8.6 Where the Minister considers that the aforesaid application has met the requirements of
Article 8.4 he shall, within sixty (60) days of receipt thereof, so notify the ConJraC(oi^7iJn^
such event or where in the event of a dispute it is determined by the sole ey^Mitrsuan^:
to Article 26 that the Contractor has made an application which meets tl^
Page 20
Petroleum Agreement
Government of Guyana - Berbice PA
of Article 8.4, provided the Contractor is not in default under this Agreement, the
Minister shall grant, within sixty (60) days of such notification or determination as the
case may be, to Contractor, a Petroleum Production Licence (in the Form D of the
schedule as specified in the Regulations) over the area for which the application has been
made on terms and conditions consistent with this Agreement and the Act and
Regulations which will enable the Contractor to carry on Petroleum Operations in the
Production Area in accordance with the Development Plan wherein the level of
production set shall be consistent with the maximum efficient rate of production which
conforms to sound reservoir engineering principles in accordance with good
international petroleum industry practice. In the event the Minister imposes policy-based
production limits on production below those consistent with maximum efficiency rates
for the field or fields, any such production limits will be imposed countrywide and shall
be allocated proportionately based upon demonstrable, verifiable field production
capacities.
8.7 While the Contractor holds a Petroleum Prospecting Licence or has made an application
pursuant to Article 8.4 and in accordance with section 34 (1) of the Act, the Minister shall
not grant a Petroleum Production Licence in respect of all or part of the Contract Area or
area covered by such application (whether on a geographical or geological basis) to any
third party.
8.8 Where the Contractor pursuant to section 31 (1) of the Act has served notice on the
Minister that in its opinion a Discovery made in the Contract Area is not of potential
commercial interest, the provisions of section 32 (1) of the Act shall apply.
8.9 The Contractor may apply for a renewal of a Petroleum Production Licence for a
maximum ten (10) years. The application for renewal shall be granted as long as the
Contractor is in good standing under the Licence.
(a) Natural Gas. In the event of any Non-Associated Gas discovery within the
Contract Area, in recognition of the fact that Natural Gas projects generally have
much longer lead times from discovery to first commercial production than is the
case for Crude Oil projects, the Minister shall grant Contractor’s request for the
maximum ten (10) year Petroleum Production License renewal so long as
Contractor is in good standing under the Licence.
(b) The Minister shall not refuse to grant the renewal of a Petroleum Production
Licence under section 40(1) of the Act without first providing the Contractor;
(i) Notice stating the grounds of the intended refusal; and
(ii) Ninety (90) calendar days following the date of the notice re
Article 8.9(b)(1) to respond to or remedy the stated grounds fj
Page 21
Petroleum Agreement
Government of Guyana - Berbice PA
Article 9 - Records, Reports and Information; Confidentiality
9.1 Records, Reports and Information
(a) The Contractor shall, at all times while this Agreement is in force, maintain and
submit to the Minister in accordance with the provisions of the Act and the
Regulations, the Petroleum Production Licence and this Agreement, full and
accurate reports, records, returns and accounts of Petroleum Operations in the
Contract Area.
(b) All data, well logs, maps, magnetic tapes, cuts of cores and cutting samples and
all other geological and geophysical information obtained by the Contractor in the
course of carrying out Petroleum Operations hereunder and all geological,
r technical, financial and economic reports, studies and analyses generated in
relation thereto (hereinafter referred to as “Petroleum Data”) shall be submitted to
the Minister in accordance with the Regulations.
r (c) The Contractor may freely export for processing or laboratory examination or
analysis samples or other original materials constituting Petroleum Data, provided
that samples equivalent in size and quality or, where such material is capable of
reproduction, copies of equivalent quality have first been delivered to the
Minister.
(d) Petroleum Data shall be the joint property of the Minister and the Contractor but
shall become the sole property of the Minister with respect to any area which
ceases to be part of the Contract Area, whether as result of relinquishment, or
L expiry, surrender or termination of a Licence or otherwise in accordance with the
Act, from the date on which such area ceases to be part of the Contract Area.
(e) The Minister, through duly appointed representatives, upon providing the
Contractor with at least seven (7) days notice, shall be entitled to observe the
Petroleum Operations conducted by the Contractor at his sole cost and expense
and at all reasonable times to inspect all assets, records and data kept by the
i Contractor relating to such Petroleum Operations. In the exercise of such rights
under this paragraph the Minister shall not unduly interfere with the Contractor's
Petroleum Operations under this Agreement.
i
(f) Nothing in this Article shall be construed as requiring the Contractor or any of the
Parties comprising the Contractor to disclose any of its proprietary technology or
E that of its Affiliated Companies which is not acquired in the course of Pet
Operations under this Agreement.
s
Page 22
Petroleum Agreement
Government of Guyana - Berbice PA
9.2 Confidentiality
(a) All Petroleum Data, information and reports obtained or prepared by the
Contractor hereunder shall, so long as they relate to any part of the Contract Area,
be treated as confidential and each of the Parties undertakes not to publish,
reproduce or otherwise deal with such Petroleum Data or to disclose the same or
the contents thereof to any other person without the consent in writing of the other
Parties, such consent not to be unreasonably withheld, provided however, that
subject to Article 9.2 (b), this Article shall not:
(i) prevent disclosure by the Contractor:
(aa) to an Affiliated Company or employees of an Affiliated Company;
(bb) to consultants, professional advisers, data processing centres,
laboratories and Sub-Contractors where disclosure is essential to
work for Contractor;
(cc) to a bank or other financial institution where disclosure is essential
to work or financing for Contractor or Affiliated Company of
Contractor;
(dd) to the extent required by any applicable law or the regulations of
any stock exchange upon which the shares of the Contractor or an
Affiliated Company are quoted, or by governmental order, decree,
regulation or rule, or to the extent required under any legal
proceeding or any court order binding on Contractor or Affiliated
Company of Contractor;
(ee) to bona fide prospective assignees or transferees of an interest
hereunder of the Contractor or in connection with merger,
, consolidation, or a sale of stock of the Contractor or an Affiliated
Company thereof;
(ff) in connection with data trades;
(gg) of data information and reports already known to the Contractor or
Affiliated Company prior to the Effective Date; or
(hh) of data, information and reports acquired independently from a
third party that represents that it has the right to dissemi
data at the time it is acquired by the Contractory^^^j^fi^
Company;
Page 23
Petroleum Agreement
Government of Guyana - Berbice PA Guyana
(ii) prevent disclosure pursuant to section 4 of the Act, provided however that
neither the Minister nor Contractor shall disclose Petroleum Data relating
to any area subject to a Licence to a competitor of the Contractor, without
the prior written consent of the other Party; or
(iii) be construed as imposing on any Party any obligation hereunder with
respect to any petroleum data, information or reports which are, without
disclosure by such Party, generally known to the public.
(b) Any petroleum data, information or reports disclosed by the Contractor pursuant
to this Article shall be disclosed on terms which ensure that the data, information
or reports aforesaid are treated as confidential by the recipient (except for
disclosures made pursuant to Article 9.2 (a) (i) (dd) and prompt notice of all
disclosures shall be given to the Minister.
(c) All petroleum data which becomes the sole property of the Minister pursuant to
Article 9.1 (d) shall continue to be treated as confidential by the Contractor for a
period of one (1) year from the date on which it became the sole property of the
Minister, but may be used by the Contractor in connection with data trades with
the prior written consent of the Minister, such consent not to be unreasonably
withheld subject however to Article 9.2 (b).
(d) Where a Licence ceases to be in force with respect to any area, the Contractor
shall deliver to the Minister originals of all petroleum data and other information
relating to such area pursuant to regulation 26 of the Regulations provided
however that, on application duly made to him pursuant to regulation 28 of the
Regulations, the Minister shall permit the Contractor to retain copies of petroleum
data and information relating to the Contract Area subject to Article 9.2 (b).
(e) Notwithstanding the provisions of Article 9.1 (d), all the Contractor’s proprietary
technology, except technology for which the cost of development has been
approved as Recoverable Contract Cost under this Agreement, shall remain the
Page 24
Petroleum Agreement
Government of Guyana - Berbice PA
Article 10 - Annual Licence Rental Charge
The Contractor shall on the Effective Date of the Petroleum Prospecting Licence or the date of
grant of any Petroleum Production Licence as the case may be and, thereafter, so long as the
said Licence remains in force, on each anniversary date thereof, pay without demand to the
Government an annual Licence rental charge in respect of the Contract Area for the entire
Exploration Period and such payments shall apply to those areas remaining after taking into
account any relinquishments pursuant to Article 5 as specified below. Payments under this
Article 10 shall be paid directly into bank accounts held and controlled by GGMC. Contractor
shall verify such bank accounts and GGMC agrees to cooperate, assist and provide Contractor
any information it requires to conduct such verification.
Initial Period: US$25,000
First Renewal Period: US$25,000
Second Renewal Period: US$25,000
Page 25
Petroleum Agreement
Government of Guyana - Berbice PA
Article 11 - Cost Recovery and Production Sharing
11.1 Subject to the terms and conditions of this Agreement, the Contractor shall bear and pay
all Contract Costs incurred in carrying out Petroleum Operations and shall recover
Contract Costs only from Cost Oil and/or Cost Gas as herein provided.
11.2 All Recoverable Contract Costs incurred by the Contractor shall, subject to the terms and
conditions of any agreement relating to Non-Associated Gas made pursuant to Article 12,
be recovered from the value, determined in accordance with Article 13, of a volume of
Crude Oil (hereinafter referred to as “Cost Oil”) and/or Natural Gas (“Cost Gas”)
produced and sold from the Contract Area and limited in any Month to an amount which
equals seventy-five percent (75%) of the total production from the Contract Area for such
Month excluding any Crude Oil and/or Natural Gas used in Petroleum Operations or
which is lost.
“Recoverable Contract Costs” means such costs as the Contractor is permitted to recover,
as from the date they have been incurred, pursuant to the provisions of Annex C.
11.3 To the extent that in any Month, Recoverable Contract Costs exceed the value of Cost Oil
and/or Cost Gas determined in accordance with Article 13 and/or Article 12, the
unrecoverable amount shall be carried forward and, subject to the limitation stipulated in
Article 11.2, shall be recoverable in the immediately succeeding Month, and to the extent
not then recovered, in the subsequent Month or Months.
11.4 The balance of Crude Oil and/or Natural Gas available in any Month after Recoverable
Contract Costs have been satisfied to the extent aforesaid (hereinafter referred to as
“Profit Oil” and/or “Profit Gas” as the case may be) shall be shared between the
Government and the Contractor for each Field in the following proportions: Profit Oil,
Minister fifty-three (53%) and Contractor forty-seven percent (47%) and; Profit Gas,
Minister fifty-three (53%) and Contractor forty-seven (47%) or as otherwise negotiated
pursuant to Article 12
11.5 The quantity of Cost Oil and/or Cost Gas actually utilized in satisfying the Recoverable
Contract Costs may be allocated by the Contractor to production from any Field or
Fields.
11.6 Subject to the provision of Article 14, the Profit Oil and/or Profit Gas shall be shared
between the Government and Contractor on a Monthly basis according to their respective
entitlements as set out in Article 11.4.
11.7 To the extent that the actual quantities and costs required to determine Cost Oil j
Cost Gas and Profit Oil and/or Profit Gas for the Month in question are not know
Oil and/or Natural Gas sharing shall be calculated on an interim basis each M
Page 26
Petroleum Agreement
Government of Guyana - Berbice PA
the following:
(a) unrecovered Recoverable Contract Cost;
(b) estimated current Recoverable Contract Cost by reference to the agreed work
r programme and budget supplemented by any other relevant documents or
information which are accepted by Contractor and Minister as being reliable
indicators of the actual position for the Month in question;
r (c) estimated production for the Month in question;
(d) Crude Oil and/or Natural Gas price from the previous Month calculated.
r 11.8 Retroactive adjustments shall be made to the Crude Oil and/or Natural Gas entitlements
and shall be agreed with the Minister based on recalculations utilizing actual quantities of
Crude Oil and/or Natural Gas produced and saved and Recoverable Contract Costs. Any
r revised entitlements shall be made, subject to any applicable lifting agreements, as soon
as practicable after such elements have definitely been determined.
11.9 The Contractor shall have the right to use in any Petroleum Operations as much of the
r production as may reasonably be required by it therefor and the quantities so used or lost
shall be excluded from any calculations of Cost Oil and/or Cost Gas and Profit Oil and/or
r Profit Gas entitlement.
J
L
L
Page 27
L
Petroleum Agreement
Government of Guyana - Berbice PA
Article 12 - Associated and Non - Associated Gas.
12.1 Associated Gas
(a) The Associated Gas produced from any Oil Field within the Contract Area shall
be with priority used for the purposes related to the operations of production and
production enhancement of Oil Fields, such as Gas injection, Gas Lifting and
power generation.
(b) Based on the principle of full utilisation of the Associated Gas, and with no
impediment to normal production of Crude Oil, a plan of utilisation of the
Associated Gas shall be included in the Development Plan of each Oil Field. If
there is any excess Associated Gas in the Oil Field after utilisation pursuant to
Article 12.1 (a) the Contractor shall carry out a feasibility study regarding the
utilisation of such excess Associated Gas of such Oil Field. Such feasibility
study, if carried out before submission of the Development Plan of an Oil Field,
shall be included in the Development Plan. In the event that the Contractor
conducts a further feasibility study of the utilisation of the excess Associated Gas
of such Oil Field, such further feasibility study shall be submitted to the GGMC
for review and discussion. If the excess Associated Gas in any Oil Field is
utilized, the construction of facilities for such utilisation and the production of
excess Associated Gas shall be carried out while a Petroleum Production Licence
continues in force.
(c) If the Contractor believes that excess Associated Gas of an Oil Field has
commercial value, the Contractor shall be entitled, but not required, to make
further investment to utilise such excess Associated Gas subject to terms at least
as attractive as those established for Crude Oil in Article 11 including, but not
limited to, cost recovery for such further investment. If the Contractor believes
improved terms are necessary, the Parties shall carry out friendly negotiations in a
timely manner to find a new solution to the utilisation of the said excess
Associated Gas and reach an agreement in writing.
(d) If the Contractor does not believe that the Associated Gas has commercial value,
but the Minister believes the Associated Gas does have commercial value, the
Government may utilize the Associated Gas provided there is no impediment to
normal production of Crude Oil. All handling from the point of separation of
Crude Oil shall be at the sole risk and expense of the Government and will not
affect the amount of Cost Oil and Profit Oil due to Contractor.
(e) Expenses incurred by the Contractor in the production and use of the Associates.
Gas of an Oil Field as stipulated in Article 12.1 and those incurred in ca
any feasibility study on the utilisation of the excess Associated
Page 28
Petroleum Agreement
Government of Guyana - Berbice PA
Bl charged to the development cost of the Oil Field and shall be cost recoverable.
(f) If the Parties agree that the excess Associated Gas of an Oil Field has no
commercial value, then such Gas shall be disposed of by the Contractor, provided
that there is no impediment to normal production of the Crude Oil, in the most
DI economic manner consistent with good international petroleum industry practice.
12.2 Non - Associated Gas
p
(a) When the Contractor in accordance with Article 8.2 has informed the Minister of
any Non - Associated Gas discovery within the Contract Area that is of potential
0 commercial interest, the Contractor shall inform the Minister whether Contractor
believes such discovery is potentially commercial under the current Agreement
terms. If the Contractor believes that the fiscal terms will have to be revised in
order to economically commercialize the Non-Associated Gas discovery, the
L Contractor shall propose revisions to the fiscal terms as the basis for entering into
good faith negotiations to reach mutually acceptable terms for developing the
Non-Associated Natural Gas discovery. The agreement, which shall form an
annex to this Agreement, shall be based on and include the following principles:
(i) For a period of six (6) months from the date of the notice delivered to the
Minister under Article 8.2, the Contractor and the Minister shall engage in
good faith negotiations of such revisions to Article 11 that would be
L necessary in order to provide the Contractor with project economics that
will provide the Contractor with a rate of return of not less than sixteen
percent (16%). The Parties recognize that in order to achieve an
economically viable development of Non-Associated Natural Gas,
different fiscal regimes may have to be considered. In the event the
Parties cannot agree upon the necessary revisions to Article 11, a sole
expert shall be engaged pursuant to Article 26.3. Once the sole expert
renders its decision, the Contractor shall review the decision and shall
notify the Minister as to whether it shall proceed with the development of
the Non-Associated Gas discovery under the terms of the sole expert
decision. In the event the Contractor elects not to proceed, the Contractor
shall relinquish the non-Associated Gas discovery to the Government.
The time period between the notice of discovery provided for in section
31(1) of the Act and the application for grant of a Petroleum Production
Licence shall be extended pursuant to section 31(2) of the Act, if
necessary, to provide reasonable time, as agreed between the Parties, to
conduct an Appraisal Programme, develop a Gas market, and desj
construct facilities necessary to commercialize the Natural Gas. 9
Page 29
Petroleum Agreement
Government of Guyana - Berbice PA
(b) Following the signature of the agreement herein the Contractor shall work out an
Appraisal Programme for the discovered Gas Field according to the terms and
conditions determined in the said agreement and submit it to the GGMC for
review pursuant to Article 6.4. The Contractor shall carry out the Appraisal
Programme which was reviewed and agreed upon with GGMC. The expenses
incurred in carrying out the said Appraisal Programme by the Contractor shall be
charged to the Exploration Costs of the Contract Area and shall be cost
recoverable as permitted under the terms of Annex C.
(c) After completion of the Appraisal Programme of a Gas Field, the Contractor shall
submit a report on the Appraisal Programme to GGMC for its review and
discussion.
(d) If the Contractor retains a Gas Field beyond the expiration of the Exploration
Period pursuant to Article 12.2, the Contractor shall pay to the Minister at the
commencement of each year of the retention period an annual rental to be arrived
at through friendly negotiations but which shall be no less than two hundred
thousand United States Dollars (US$200,000). The holding fee shall be refunded
to Contractor on a pro rata daily basis in the event the Contractor relinquishes the
Gas Field or declares such Gas discovery to be a commercial discovery prior to
the end of such year.
12.3 General Conditions Applicable to Natural Gas
(a) Subject to the Government’s election to take its production in kind and reserving
its rights to market its own production, the Contractor shall have the sole
responsibility for marketing all the available Natural Gas from the Contract Area
and for negotiating for the sale thereof on a joint basis at fair market prices and
terms common to both the Minister and the Contractor in accordance with Third
Party Sales principles. The Contractor will pursue markets both within and
outside Guyana and seek to market Natural Gas to the highest realization outlets
after deduction of transportation costs. The Contractor will seek to recognize
Natural Gas’ potential value at the international value of alternative fuels in the
end user market of the buyers.
(b) The Contractor shall have the right, but not the obligation, to process Natural Gas
for conversion to liquids, chemicals or similar Gas utilisation projects and
Contractor shall have the right to dispose of the liquids or products therefrom.
The Contractor shall have the right to process Natural Gas for recovery of the
liquids contained therein. Natural Gas Liquids (NGLs) recovered and sold shall
be valued based upon the international value of such products as published in
Platts and adjusted to reflect the fair market value of such products FOB Guyana.
In addition, the Contractor shall have the right to liquefy the Natural Gas fj
as LNG and/or the right to compress the Natural Gas to accommoda
Page 30
Petroleum Agreement
Government of Guyana -- Berbice PA
compressed natural gas (CNG).
(c) The Contractor shall have the right to use Natural Gas, both Associated Gas and
Non-Associated Gas, as may be required for Oil Field and Gas Field operations,
including the right to re-inject for pressure maintenance and enhanced recovery
without charge, fee or royalty.
12.4 General Conditions Related to Petroleum Operations
(a) Subject to the approvals of appropriate governmental authorities, which approvals
shall not be unreasonably withheld, the Contractor shall have the right to
construct, operate and maintain roads, drill water wells and to place and/or
construct fixtures and installations necessary to conduct the Petroleum
Operations, including but not limited to, storage tanks, trunk pipelines, shipment
installations, pipelines, cables or similar lines, liquefaction, processing and
compression, located inside or outside the Contract Area, as well as construct,
operate and maintain or lease facilities for the transportation of Crude Oil and
Natural Gas from the Contract Area. Any required governmental approvals may
be conditional on the use by other producers of the excess capacity, if any, of
those facilities. Where the Minister and Contractor agree that a mutual economic
benefit can be achieved by constructing and operating common facilities, the
Contractor shall use its reasonable efforts to reach agreement with other producers
on the construction and operation of such common facilities.
(b) Subject to negotiations on a reasonable price and available capacity rights, the
Contractor may have access to and use of any export facility or pipeline or other
facilities or infrastructure built by the Government or by any wholly or partially
owned Guyana state enterprises on terms no less favorable than those of any other
party having access or use of such facility.
(c) Subject to negotiations as to a reasonable price and ownership interest in the
facilities, the Contractor may have the right to participate in the construction,
ownership and operation of any of the types of facilities described in sub-clause
12.4(a) above that are built by the Government or by any wholly or partially
owned state enterprises or by any third parties on terms no less favorable than
those of any other party participating therein.
Page 31
Petroleum Agreement
Government of Guyana - Berbice PA
Error in processing: ProcessingFailed!
low FOB price or prices for each day of those crude oils as quoted
in Platts Crude Oil Market Wire daily publication. In the event
that Platt's ceases to be published or is not published for a period of
thirty (30) consecutive days then the Parties shall agree on an
appropriate alternative publication.
In determining the final price, account shall be taken of any
differences between the Crude Oil and the crude oils quoted in
Platt's, for quality, API gravity, sulphur, pour point, product yield
as well as differences in quantity, delivery time, payment and other
contract terms to the extent known. Allowance will also be made
. to take account of the market area into which the Crude Oil is sold
should it be different from the area used for Platt's.
The selected crude oils will be agreed between Contractor and the
Minister in advance for each Calendar Year and in making the
selection preference will be given to crude oils of similar quality to
Crude Oil from the relevant Field.
The arithmetic average aforesaid will be determined by the
percentage volume of total sales of Crude Oil by Contractor that
are, and that are not, as the case may be, Third Party Sales during
the Calendar Month in question.
(cc) In the case of Natural Gas, the Contractor and the Minister shall
agree on a methodology for valuation of Natural Gas under this
Article I3.1(b)(ii) which represents the fair market value of such
Natural Gas FOB Guyana, taking into account composition of the
Natural Gas. This methodology will be reviewed annually and
modified if necessary.
(iii) all such prices will be adjusted to FOB Delivery Point.
(iv) for the purposes of this Article Third Party Sales of Crude Oil or Natural
Gas made by the Contractor shall include any Third Party Sales made by
the Contractor or an Affiliated Company of Contractor on the Minister's
behalf pursuant to Article 14 but shall exclude:
(aa) sales, whether direct or indirect through brokers or otherwise, of
any seller to any Affiliated Company of such seller, unless at
demonstrably arms length price (for example where an Affiliate
Company of Contractor buys and then resells to a third ]
arms-length price which is disclosed to the Minister);
Page 33
J Petroleum Agreement
Government of Guyana - Berbice PA
(bb) Crude Oil or Natural Gas exchanges, barter deals or restricted or
distress transactions, or any Crude Oil or Natural Gas transaction
which is motivated in whole or in part by considerations other than
the usual economic incentives for commercial arms length crude
oil or natural gas sales; and
(cc) Government to government sales.
13.2 Contractor shall be responsible for determining the relevant prices in accordance with this
Article. The calculation, basis of calculation and the price arrived at, shall be supplied to
the Minister and shall be subjected to agreement by the Minister before it is finally
determined. Pending final determination the last established average Crude Oil or
Natural Gas price shall be used.
13.3 During the first Calendar Year of production from the Contract Area the Contractor and
the Minister will meet in order to establish a provisional selection of the crude oils and an
appropriate mechanism for the purposes of giving effect to Article 13.1 (b)(ii) above.
This selection will be reviewed annually and modified if necessary.
13.4 In the event of any difference or dispute between the Contractor and the Minister
concerning selection of the crude oils or natural gas, the calculation or the basis of
calculation of the prices and the prices arrived at or generally about the manner in which
the prices are determined according to the provisions of this Article, the matter or matters
in issue shall finally be resolved by a sole expert appointed pursuant to Article 26.3.
13.5 For the purposes of this Article, in determining the “quality” of a Crude Oil regard shall
be given to all relevant characteristics including but not limited to gravity, sulphur and
metal content, pour point and product yield. In the case of Natural Gas, quality of the
Natural Gas shall be determined based on its composition.
Page 34
Petroleum Agreement
Government of Guyana - Berbice PA
Article 14 - Disposal of Production
14.1 Each of the Parties shall have the right to take in kind at the Delivery Point and separately
dispose of its share of the total quantities of production available under this Agreement.
The Contractor shall have the right to use as much production as may be needed in any
Petroleum Operations within the Contract Area and also within the transportation and
terminal system. In the event of third party usage of the transportation terminal systems
the quantities so used or lost outside the Contract Area shall be proportionate to aggregate
use of that transportation and terminal system. All quantities so used or lost shall be
excluded from any calculations of entitlement pursuant to Article 11. The quantity of
production to which the Government is entitled pursuant to Article 11 shall be measured
and delivered to the Government at the Delivery Point and the Government shall be
responsible for all costs and risks associated with the Government's Lifting Entitlement
from and after the Delivery Point.
14.2 Within twelve (12) months after the Minister's approval of a Development Plan, or within
a later period as may be agreed between the Parties but in any event no longer than three
(3) months before the first scheduled lifting of Crude Oil, the Contractor shall propose to
the Minister offtaking procedures to govern the method whereby the Parties will
nominate and lift their respective shares of Crude Oil. The details of such procedures
shall be discussed and agreed upon between Minister and Contractor. The major
principles of such procedures shall include the following:
(a) Lifting shall be carried out so as to avoid interference with Petroleum Operations.
(b) In the event that any Party shall find itself unable for any reason to lift such
quantities of Crude Oil as are to be lifted in accordance with procedures it shall
forthwith notify the other Parties to that effect. Such procedures shall include
such deterrents as the Parties may agree, to prevent a Party from delaying the
lifting of any quantities of Crude Oil not so lifted, to a later period.
(c) In the absence of any agreement to the contrary between the Parties, the
Contractor and the Minister shall share in each type of grade of Crude Oil in
proportion to their respective Lifting Entitlement.
14.3 The Contractor shall, if requested by the Minister, use reasonable efforts to market
abroad on competitive terms all or part of the Minister's Lifting Entitlement subject to
payment by Minister of costs normally bome by a seller in such transactions and on other
terms to be agreed including an agreed marketing fee in respect thereof. The Minister
shall provide the Contractor with at least six (6) months notice before changing between
receiving payments in kind as provided under Article 14.1 and seeking the Contractor to
market the Minister’s Lifting Entitlement under this Article.
Page 35
Petroleum Agreement
Government of Guyana - Berbice PA
Guyana
14.4 Subject to the provisions of Article 17 hereof, the Contractor shall have the right to
export at the export point chosen for this purpose all Petroleum to which it is entitled
under this Agreement free of any duty, tax or other financial impost, and to receive and
retain abroad all proceeds from the sale of such Petroleum.
14.5 The Contractor agrees to abide by the laws, regulations, orders, directives and
notifications of Guyana which shall also apply to its Affiliated Companies engaged in
Petroleum Operations in Guyana.
Page 36
Petroleum Agreement
Government of Guyana - Berbice PA
Article 15 - Taxation and Royalty
15.1 Subject to Article 32, and except as provided in Article 15.2, 15.8, and except as
otherwise set forth in this Article 15.1, no tax, value-added tax, excise tax, duty, fee,
charge or other impost shall be levied at the date hereof or from time to time thereafter on
the Contractor or Affiliated Companies in respect of income derived from Petroleum
Operations or in respect of any property held, transactions undertaken or activities
performed for any purpose authorised or contemplated hereunder other than:
(a) subject to the provisions of Article 21, import duties at the rates specified from
time to time in the Customs Act (Cap. 82:01);
(b) taxes, duties, fees or other imposts for income derived from specific services
performed by the Contractor for the public or commercial enterprises and which is
unrelated to income derived from Petroleum Operations under this Agreement;
(c) rent due to Government in respect of any land rights granted or assigned to the
Contractor;
(d) annual licence rental charges due under Article 10;
(e) subject to Article 15.7, local government rates or taxes (being rates or taxes not
calculated by reference to income) under laws of general application and which
are non-discriminatory, are commercially reasonable, and do not result in a rate or
tax to Contractor in excess of those generally applicable in Guyana;
(f) (i) stamp duties, (ii) registration fees, (iii) licence fees, and (iv) any other similar
duty, fee or other impost of a minor nature, provided the above-referenced
categories are imposed under laws of general application.
15.2 Except as provided in this Article 15, Contractor, Affiliated Companies, Sub-Contractors
and individuals who are expatriates shall be subject to the income tax laws of Guyana,
including, the Income Tax Act of Guyana (Cap. 81:01) and the Corporation Tax Act of
Guyana (Cap. 81:03) and shall separately comply with the requirements of those laws, in
particular with respect to filing returns, assessment of tax, and keeping and showing of
books and records.
15.3 The taxable income of the Contractor arising in each year of assessment under this
Agreement for purposes of the income tax laws of Guyana, (including the Income Tax
Act and the Corporation Tax Act referred to in Article 15.2) shall include the amounts of
Contractor's income tax and corporation tax paid pursuant to Article 15.4.
Page 37
Petroleum Agreement
Government of Guyana - Berbice PA
15.4 The Minister hereby agrees:
(a) that a sum equivalent to the tax assessed pursuant to Article 15.2 and 15.3 will be
paid by the Minister to the Commissioner General, Guyana Revenue Authority on
behalf of the Contractor and that the amount of such sum will be considered
income of the Contractor; and
(b) that the appropriate portion of the Government's share of Profit Oil delivered in
accordance with the provisions of this Agreement shall be accepted by the
Minister as payment in full by the Contractor of Contractor's share of each of the
following levies, whatsoever the applicable rate of such levies may be, which the
Minister shall then pay on behalf of the Contractor under Article 15.4 (a) to the
Commissioner General, Guyana Revenue Authority:
(i) the share of royalty payable by Contractor pursuant to Article 15.6;
(ii) the Contractor's share of the income taxes imposed by the laws of Guyana,
including, but not limited to, income tax imposed by the Income Tax Act
and corporation tax imposed by the Corporation Tax Act and payable at
the date hereof, or from time to time thereafter, and any other levy or
charge on income or profits which may become payable from time to time
under any laws, acts, statutes, regulations or orders by the Government;
and
(iii) any other similar charge imposed and payable in respect of Petroleum
Operations at the date hereof, or from time to time hereafter, except
charges of the type specified in Article 15.1 (a-b).
15.5 The Contractor shall provide the Minister with the Contractor’s income tax returns to be
submitted by the Minister to the Commissioner General, Guyana Revenue Authority so
the Minister can pay income tax on behalf of the Contractor as provided under Article
15.4 (a). On such returns, the Minister shall note that he is paying the income taxes on
behalf of the Contractor, so that the Commissioner General, Guyana Revenue Authority
can properly prepare the receipts required under this Article 15.5. Within one hundred
and eighty (180) days following the end of each year of assessment, the Minister shall
furnish to Contractor proper tax certificates in Contractor's name from the Commissioner
General, Guyana Revenue Authority evidencing the payment of the Contractor's income
tax under the Income Tax Act and corporation tax under the Corporation Tax Act. Such
certificates shall state the amount of tax paid individually on behalf of Contractor or
parties comprising the Contractor and other particulars customary for such certificates.
15.6 The Government's share of Profit Oil specified in Article 11 includes royalty payable b
the Contractor at the rate of one percent (1%) of Crude Oil produced and sold,
delivery to the Minister, pursuant to Article 14 of his share of Profit Oil equiva
Page 38
Petroleum Agreement
Government of Guyana - Berbice PA
royalty shall constitute payment of such royalty in kind. Within one hundred and eighty
(180) days following the end of each year of assessment receipts evidencing payment of
Contractor's royalty shall be furnished by the Minister to the Contractor stating the
amount and other particulars customary for such receipts.
15.7 Subject to the conditions of section 49 of the Act, the Minister may remit in whole or in
part, or defer payment of any royalties payable by Contractor.
15.8 Nothing in this Agreement shall be construed to place an obligation on the Government
to file a tax return declaring its share of production or profit share or to regard such profit
share as income within the meaning of section 5 of the Income Tax Act (Cap 81:01) or
section 4 of the Corporation Tax Act (Cap 81:03)
15.9 The Minister hereby agrees that the Contractor shall be exempted from the Property Tax
Act pursuant to section 51 of the Act and any other act which amends or replaces in part
or in whole the Property Tax Act.
15.10 Notwithstanding any provision to the contrary in this Article, Contractor, Affiliated
Companies or Non-Resident Sub-Contractors shall be exempt from VAT during the
Exploration Period oh services rendered.
15.11 Notwithstanding any provision to the contrary in this Article, the Government warrants
and agrees with the Contractor that it will procure from the Guyana Revenue Authority
(GRA) the granting of assurances in respect to the Value Added Tax Act for;
(i) The Contractor and Sub-Contractors of the company to be registered in
accordance with the relevant sections of the Value Added Tax Act; and
(ii) Upon the submission and fling of the appropriate Value Added Tax Return within
the prescribed timeframe Contractor and Sub-Contractors shall have the right to
obtain Value Added Tax refunds according to the applicable Value Added Tax
Regulations.
15.12 The Minister agrees that for the duration of the Exploration Period, and for any area
within the Contract Area where exploration activity is in progress, the provisions of
section 10(b) of the Corporation Tax Act (Cap 81:03), including any successor provisions
to section 10(b) of the Corporation Tax Act (Cap 81:03), shall not apply to the
Contractor, with respect to any payments made to any Affiliated Companies or Sub-
Contractors.
Notwithstanding any provision to the contrary in this Article, Affiliated Companies or
Non-Resident Sub-Contractors shall not be subject to the provisions of the Income Tax
Act of Guyana (Cap. 81.01) and the Corporation Tax Act of Guyana (Cap 81:03) djjriag.
the Exploration Period on income earned in Guyana for any given tax
Page 39
Petroleum Agreement
Government of Guyana - Berbice PA
Affiliated Company or Non-Resident Sub-Contractor has conducted business in Guyana
for one hundred eighty three (183) days or less on a cumulative basis in the tax year of
assessment.
15.13 There shall be no tax, duty, fee, withholding, charge or other impost applicable on
interest payments, dividends, deemed dividends, transfer of profits or deemed remittance
of profits from Contractor’s, Affiliated Companies’ or Non-Resident Sub-Contractors’
branch in Guyana to its foreign or head office or to Affiliated Companies.
15.14 The Minister agrees that for the duration of the Exploration Period, and for any area
within the Contract Area where exploration activity is in progress, the provision of
section 18(h) of the Income Tax Act (Cap. 81:01) including any successor provisions to
section 18 (h) of the Income Tax Act (Cap.81:01) shall not apply to Contractor or parties
comprising the Contractor, with respect to head office expenses paid to any Affiliate
Companies.
15.15 The Expatriate Employee of the Contractor, Affiliate companies and the Subcontractor
shall be liable to pay personal income tax in Guyana on income earned in Guyana.
Guyana (represented herein by the Minister) shall cause the proper authorities to issue
appropriate tax certificates to expatriate employees when required.
(i) If an Expatriate Employee is liable to pay income tax in Guyana on income
earned in Guyana, such expatriate employee shall pay such income tax at a rate
equal to the current income tax rate of Guyana;
(ii) Notwithstanding any provision to the contrary in this Article, Expatriate
Employees of Contractor, Affiliated Companies or Non-Resident Sub-Contractors
shall not be subject to the provisions of the Income Tax Act of Guyana (Cap.
81.01) and shall not be liable for personal income tax in Guyana on income
earned in Guyana for any given tax year if the expatriate is physically present in
Guyana for one hundred eighty three (183) days or less on a cumulative basis in
the tax year of assessment.
15.16 Notwithstanding any provision to the contrary in this Article, assignments of any kind
between Contractor and Affiliated Companies, as well as any assignment of any kind
made in accordance with this Agreement (even to an unrelated party) a sum of
US$100,000 shall be paid to the GGMC. The transaction related to any assignment
hereunder shall be exempt from any duties or taxes, including income tax, capital gains
tax and withholding tax, payable in respect of the assignment.
15.17 An Order shall be made giving effect to the provisions of this Article in statutory form
and language as specified in section 51 of the Act.
Page 40
Petroleum Agreement
Government of Guyana - Berbice PA
Article 16 - Contracts and Assignments
16.1 The Contractor shall, upon request, provide to the Minister copies of:
(a) contracts with respect to the sale or disposal of Petroleum (including invoices
issued thereunder);
(b) any deed of assignment of an interest of the Contractor under this Agreement
pursuant to Article 25;
(c) any instrument by which the Contractor pledges, mortgages, encumbers or
hypothecates its interest under this Agreement or the Contract Area,
16.2 Assignments of any kind between one party comprising Contractor and its Affiliated
Company, as well as any assignment of any kind made in accordance with this
Agreement (including one to an unrelated party) shall be exempted from any duties or
taxes, including income tax, capital gains taxes and withholding tax payable in such
respect but shall be subject to a fee payable to GGMC upon approval of the assignment
for the amount of one hundred thousand United States Dollars (US$100,000).
Page 41
Petroleum Agreement
Government of Guyana - Berbice PA
Article 17 - Domestic Supply Obligation
17.1 Terms for Crude Oil.
(a) If the Crude Oil requirements of the domestic market in Guyana (the “Crude Oil
Domestic Demand”) exceed the Minister's total entitlement from all Crude Oil
production in Guyana, then the Contractor shall be obliged together with any third
parties which produce Crude Oil in Guyana, to supply and sell a volume of Crude
Oil to be used for such Crude Oil requirements in Guyana, calculated on the basis
of the ratio which the Contractor's Lifting Entitlement to Crude Oil bears to the
sum of Contractor's Lifting entitlement plus the total entitlement of all other
producers in Guyana subject to Article 17.1(c). The volume of Crude Oil which
the Contractor shall be required to sell under this Article shall not exceed the
Contractor's share of Profit Oil. The Minister shall give the Contractor notice on
or prior to April 1 of the year preceding the Calendar Year in which the
Government will have the said requirement and the term of the supply shall be on
a Calendar Year basis unless otherwise agreed.
For the purpose of this Agreement, Crude Oil Domestic Demand shall consist of
those quantities of Crude Oil (i) used to produce refined products or
petrochemicals in Guyana for end use by business and residential consumers in
Guyana, or (ii) used to produce power in Guyana for end use by business and
residential customers in Guyana, the amounts for which shall be based upon
independent, verifiable government statistics. Crude Oil, refined products,
petrochemicals or fuel for power generation that are exported from Guyana shall
not be considered part of Crude Oil Domestic Demand.
(b) The Contractor shall, in any Year, have a right to supply out of Contractor's
Lifting Entitlement the proportion of the Crude Oil requirements of Guyana that
the quantity produced from the Contract Area bears to the total production at the
time in Guyana to the extent that such requirement is not satisfied from any
contract entered into prior to the date of commencement of production from the
Contract Area. For the purpose of this paragraph, the term “the Crude Oil
requirements of Guyana” means the amount by which, in any Year, Crude Oil
Domestic Demand exceeds the Minister's total entitlement to all Crude Oil
produced in Guyana. The Contractor shall give the Minister notice on or prior to
April 1 of the Calendar Year preceding the Calendar Year in respect of which
Contractor wishes to exercise the aforesaid right and the term of the supply shall
be on a Calendar Year basis unless otherwise agreed. Notwithstanding the
foregoing the Contractor shall have the right to supply the total amount calculated
pursuant to the foregoing provisions.
Page 42
Petroleum Agreement
Government of Guyana - Berbice PA
Gt/YAHfr
(C) The price payable for the sale of Crude Oil pursuant to this Article shall be paid in
United States dollars (or other currency as may be agreed) al a place specified by
the Contractor within thirty (30) days of receipt of the Contractor's invoice by the
Minister, and shall be determined in accordance with Article 13, failing which
Contractor’s obligations in respect of the Domestic Supply Obligations of this
Article 17 shall be suspended until payment is made good, at which time
deliveries shall be resumed subject to any alternative commitments that may have
been reasonably entered into by Contractor to dispose of the Crude Oil during the
period of default in payment. Contractor shall recover any amount due and
unpaid by the Government, plus interest at the Agreed Interest Rate, from the
Governments Lifting Entitlement of Crude Oil.
(d) Any sale of Crude Oil as provided for in Article 17.1(a) - (c) shall occur at the
Delivery Point or such other point as the Minister and the Contractor may
mutually agree.
(e) All terms and conditions for the sale of Crude Oil pursuant to this Article, shall be
specified in a contract of sale entered into between the Minister and Contractor.
17.2 Terms for Natural Gas.
(a) If the Natural Gas requirements of the domestic market in Guyana (the “Natural
Gas Domestic Demand”) exceed the Minister's total entitlement from all Natural
Gas production in Guyana, then the Contractor shall be obliged together with any
third parties which produce Natural Gas in Guyana, to supply and sell a volume of
Natural Gas to be used for such Natural Gas Domestic Demand in Guyana,
calculated ori the basis of the ratio which the Contractor's Lifting Entitlement to
Natural Gas bears to the sum of Contractor's Lifting entitlement plus the total
entitlement of all other producers in Guyana subject to Article 17.2(c). The
volume of Natural Gas which the Contractor shall be required to sell under this
Article shall not exceed the Contractor's share of Profit Gas. The Minister shall
give the Contractor notice on or prior to April 1 of the year preceding the
Calendar Year in which the Government will have the said requirement and the
term of the supply shall be on a Calendar Year basis unless otherwise agreed.
For the purpose of this Agreement, Natural Gas Domestic Demand shall consist
of those quantities of Natural Gas used for domestic residential, commercial and
industrial consumption, including fuel used for domestic power generation.
Natural Gas liquefied or compressed in Guyana for export or used as feedstock
for petrochemical exports, such as methanol and fertilizer, shall not be considered
part of Natural Gas Domestic Demand.
Any sales of Natural Gas to the domestic market shall be priced at eighty
(80%) of No. 6, 1% low sulphur fuel oil price per MMBtu as published b s
Page 43
Petroleum Agreement
Government of Guyana - Berbice PA
for U.S. Gulf Coast FOB cargoes, plus freight to Georgetown. In the event of a
failure to reach agreement on the price, volume and/or terms of sale, either Party
may submit the dispute for sole expert determination pursuant to Article 26.3.
(b) The Contractor shall, in any Year, have a right to supply out of Contractor's
Lifting Entitlement the proportion of the Natural Gas requirements of Guyana that
the quantity produced from the Contract Area bears to the total production at the
time in Guyana to the extent that such requirement is not satisfied from any
contract entered into prior to the date of commencement of production from the
Contract Area. For the purpose of this paragraph, the term “the Natural Gas
requirements of Guyana” means the amount by which, in any Year, Domestic
Demand exceeds the Minister's total entitlement to all Natural Gas produced in
Guyana. The Contractor shall give the Minister notice on or prior to April 1 of
the Calendar Year preceding the Calendar Year in respect of which Contractor
wishes to exercise the aforesaid right and the term of the supply shall be on a
Calendar Year basis unless otherwise agreed. Notwithstanding the foregoing the
Contractor shall have the right to supply the total amount calculated pursuant to
the foregoing provisions.
(c) The price payable for the sale of Natural Gas pursuant to this Article shall be paid
in United States dollars (or other currency as may be agreed) at a place specified
by the Contractor within thirty (30) days of receipt of the Contractor's invoice by
the Minister,’and shall be determined in accordance with Article 17.2(a), failing
which Contractor’s obligations in respect of the Domestic Supply Obligations of
this Article 17 shall be suspended until payment is made good, at which time
deliveries shall be resumed subject to any alternative commitments that may have
been reasonably entered into by Contractor to dispose of the Natural Gas during
the period of default in payment. Contractor shall recover any amount due and
unpaid by the Government, plus interest at the Agreed Interest Rate, from the
Governments Lifting Entitlement of Natural Gas.
(d) Any sale of Natural Gas as provided for in Article 17.2(a) - (c) shall occur at the
Delivery Point or such other point as the Minister and the Contractor may
mutually agree.
(e) All terms and conditions for the sale of Natural Gas pursuant to this Article, shall
be specified in a contract of sale entered into between the Minister and
Contractor.
Page 44
Petroleum Agreement
Government of Guyana - Berbice PA
Article 18 - Guyana Resources
18.1 In the conduct of Petroleum Operations pursuant to this Agreement the Contractor shall
require that the Operator give preference to:
(a) the purchase of Guyanese goods and materials, provided that such goods and
materials are available on a timely basis of the quality and in the quantity required
by Operator at competitive prices; and
(b) the employment of Guyanese Sub-Contractors in so far as they are commercially
competitive and satisfy the Operator's financial and technical requirements and
meet the requirements of Article 18.1 (a).
18.2 The Contractor shall establish appropriate tender procedures for the acquisition of goods,
materials and services which shall ensure that Guyanese suppliers and Sub-Contractors
are given adequate opportunity to compete for the supply of goods and services.
18.3 Within ninety (90) days after the end of each Calendar Year the Contractor shall provide
the Minister with a report outlining its achievements in utilising Guyanese resources
during that Calendar Year.
Page 45
Petroleum Agreement
Government of Guyana - Berbice PA
Article 19 - Employment and Training
19.1 Subject to the requirements of any law relating to immigration, Government shall provide
the necessary work permits and other approvals required by the Contractor for
employment of Expatriate Employees in Guyana for the purpose of Petroleum
Operations.
19.2 Without prejudice to the right of the Contractor to select employees and determine the
number thereof in the conduct of Petroleum Operations, the Contractor shall, require the
Operator to employ and encourage Sub-Contractors to employ Guyanese citizens having
appropriate qualifications and experience whenever and wherever possible,.
19.3 During each year of the term of the Petroleum Prospecting License, or any renewal
thereafter the Contractor shall pay to GGMC the amounts of:
Initial Period: US$25,000
First Renewal Period: US$25,000
Second Renewal Period: US$25,000
for one or more of the purposes mentioned in Article 19.3 (a-d). Payments under this
Article 19.3 shall be paid directly into bank accounts held and controlled by the GGMC.
Contractor shall verify such bank accounts and GGMC agrees to cooperate, assist and
provide Contractor any information it requires to conduct such verification.
(a) to provide Guyanese personnel nominated by GGMC with on-the-job training in
Contractor's operations in Guyana and overseas and/or practical training at
institutions abroad, particularly in the areas of logistical planning for undertaking
Petroleum Operations, seismic acquisition and interpretation, economic analysis,
petroleum accounting and contract administration;
(b) to send qualified Guyanese personnel selected by GGMC on courses at
universities, colleges or other training institutions selected by GGMC;
(c) to send Guyanese personnel selected by GGMC to conferences and seminars
related to the petroleum industry;
(d) to purchase for GGMC advanced technical books, professional publications,
scientific instruments or other equipment required by GGMC.
Page 46
Petroleum Agreement
Government of Guyana -- Berbice PA
Article 20 - Rights to Assets and Insurance
20.1 Rights to Assets
(a) The Contractor shall have the right to use free of charge assets previously
installed by the Contractor in relinquished areas which are required for its
operations in the remaining portion of the Contract Area provided that in the
event of re-licencing of the relinquished area, such licence shall exclude the
aforesaid assets.
(b) Subject to Article 20.1 (c) upon expiry or termination of this Agreement in
accordance with the provisions hereof, the Contractor shall upon notification by
GGMC pursuant to Article 20.1 (d) (i):
(i) deliver to the Minister, free of charge, in good order and condition, (fair
wear and tear excepted) all installations, works, pipelines, pumps, casings,
tubings, engines and other equipment, machinery or assets of a fixed or
permanent nature constructed, used or employed by the Contractor or the
Operator in the Contract Area;
(ii) deliver to the Minister, free of charge, any fixed assets relating to
Petroleum Operations outside the Contract Area and movable assets
owned by the Contractor or Operator and used or employed in connection
with Petroleum Operations and located in Guyana for which costs have
been fully recovered in accordance with Annex C herein; where costs have
not been fully recovered the provisions of Article 20.1 (b)(iii) shall apply;
(iii) sell to the Minister any other assets owned by the Contractor or Operator
and used or employed by the Contractor or Operator in the Contract Area
or elsewhere in Guyana in connection with Petroleum Operations at a
price equivalent to the unrecovered cost of the assets.
(c) The above provisions of Article 20.1 (b) shall not apply to:
(i) assets which are still required by the Contractor or Operator for use in
respect of an area in Guyana subject to another petroleum agreement at the
time of expiry or termination of this Agreement;
(ii) equipment and other assets rented or leased by Contractor in Guyana;
(iii) equipment and other assets rented or leased by Contractor and imported in
Guyana for use in Petroleum Operations and si
therefrom;
Page 47
Petroleum Agreement
Government of Guyana - Berbice PA
3/YAN&
(iv) equipment and any other assets owned or leased by a Sub-Contractor;
(v) household goods and vehicles which are the personal property of
employees of the Contractor and Sub-Contractor;
(vi) equipment and assets otherwise not owned by Contractor or Operator.
(d) The Contractor shall notify the Minister of all assets acquired as provided in
section 4 of Annex C to this Agreement.
(i) At least six (6) Calendar Months before expiry of the term of this
Agreement, within three (3) Calendar Months following notice of
termination of this Agreement or promptly following cancellation of all
Licences, GGMC shall notify the Contractor of the assets to be delivered
or sold to the Government.
(ii) Subject to the terms and the provisions of this Article, the Contractor shall
not, within one (1) year of the date upon which it estimates that
termination of this Agreement will occur, remove from the Contract Area
or sell any assets of a fixed or permanent nature which might be
deliverable to the Government under this Article without the consent of
the Minister, such consent not to be unreasonably withheld.
(iii) Abandonment Programme and Budget
(aa) Within sixty (60) days after the expiration of the term of this
Agreement or the sooner relinquishment of some or all of the
Contract Area, the Contractor shall carry out to the Minister’s
satisfaction an abandonment programme agreed with the Minister
for all installations and pipelines provided by Contractor under this
Agreement that the Minister elects not to have delivered up to him
in accordance with Article 20.1(b). With respect to the area being
relinquished and/or facilities thereon, such abandonment
programme shall comply with and be limited to internationally
accepted standards prevailing at the time of abandonment.
(bb) Concurrent with the submission of a Development Plan as
provided in Article 8.4, the Contractor shall submit for the
Minister’s approval a proposed abandonment programme and
budget covering all such installations and pipelines provided by
Contractor under this Agreement. The abandonment programme
and budget may be revised from time to time wit ^agfeSm^nt of
the Minister to account for any changes in the pmentlPlan.
B
Page 48
Petroleum Agreement
Government of Guyana - Berbice PA
(cc) The Minister shall act without unreasonable delay in reaching a
decision on the Contractor’s proposal under Article 20.1 (d)(iii)(bb)
and may approve or modify or impose conditions thereon. Before
modifying or imposing conditions on the proposal, the Minister
shall notify the Contractor of the proposed modification or
conditions and give the Contractor the opportunity to make written
representations within sixty (60) days thereafter about the proposed
modifications or conditions. After taking into consideration such
representations the Minister and the Contractor shall make their
best efforts to mutually agree on the proposed modifications or
conditions of the abandonment programme and budget. In the
event that the Minister and Contractor cannot mutually agree on
the proposed abandonment programme and budget, either Party
may by written notice to the other Party propose that the dispute be
referred for determination in accordance with the provisions of
Article 26.
(dd) In the event that the Contractor does not present a timely proposal
to the Minister under Article 20.1 (d)(iii)(bb) the Minister after
giving thirty (30) days notice to the Contractor of his intention to
do so, may prepare an abandonment programme and budget for the
Contract Area if the Contractor does not present a proposal by the
end of the thirty (30) day period. When the Minister has so
prepared the abandonment programme and budget, it shall have the
same effect as if it had been submitted by the Contractor and
approved by the Minister.
(ee) Contractor shall have the right on an annual basis to propose a
revised abandonment programme and budget. Such proposal shall
be subject to the approval process in Article 20.1(d) (iii) (cc). Any
revisions to the abandonment programme and budget shall result in
a revision to the guarantee referred to in Article 20.1(d) (iii) (hh).
(ff) All funds required to carry out the approved abandonment
programme shall be made available by Contractor when the costs
for abandonment are incurred.
(gg) All costs included in the approved abandonment programme and
budget shall be recoverable as operating costs on a unit of
production basis commencing during the period when the
abandonment programme and budget is approved. The amount to
be recovered in a respective period shall be calculated by dividing
the approved abandonment budget by the estimated
recoverable reserves, which may be revised from ti
based upon the actual performance of the Field(s) an
Page 49
Petroleum Agreement
Government of Guyana - Berbice PA
the result by the units produced in the period.
(hh) Contractor shall deliver to the Minister within seven (7) days after
the date the abandonment programme and budget are approved an
undertaking from Contractor’s immediate parent company stating
that such parent company shall ensure provision of financial and
technical resources necessary to conduct the approved
abandonment programme. The amount of the financial
undertaking shall be equal to the amount recovered under Article
20.1 (d)(iii)(gg) less any amounts spent under the approved
abandonment programme.
(ii) Notwithstanding the provisions of Article 20.1(d)(iii)(ff), in the
event the Minister elects to have all or a portion of the facilities
delivered up to him in accordance with Article 20.1(b), the
Contractor shall pay the Minister at the time of transfer the
amounts stipulated in the latest approved abandonment budget for
the transferred facilities. Upon transfer and receipt of the funds,
the Minister shall assume all responsibilities for the transferred
facilities and their abandonment and shall hold the Contractor
harmless against any liability with respect thereto accruing after
the date of such transfer to the Minister.
Subject to Article 20.1 (c), in the event that the Government acquires any
assets pursuant to this Article, the Government shall assume all liabilities,
with respect to such assets, arising from and after the date of acquisition
and shall not direct the Contractor to remove or abandon any such assets
pursuant to regulation 9 (l)(a) of the Regulations. The Government shall
indemnify and hold Contractor harmless for any and all costs and claims
which may arise from the use or abandonment of any asset from and after
the date of acquisition by the Government.
(V) Assets not acquired by the Government pursuant to this Article may be
sold or otherwise freely disposed of by the Contractor subject to Article
20.2 Insurance 21.2 and the Regulations.
(a) The Contractor shall effect at all times during the term of this Agreement,
insurance as required by applicable laws, rules, and regulations and of such type
and in such amount as is customary in the international petroleum industry in
accordance with good oil field practice appropriate for Petroleum Operations in
progress in respect of but not limited to:
(i) loss or damage to all assets used in Petroleum Operations;
Page 50
Petroleum Agreement
Government of Guyana - Berbice PA
(ii) pollution caused in the course of Petroleum Operations for which the
Contractor or the Operator may be held responsible;
(iii) loss or damage to property or bodily injury suffered by any third party in
the course of Petroleum Operations for which the Contractor may be liable
to provide an indemnity pursuant to Article 2.4;
(iv) the Contractor's and/or Operator's liability to its employees engaged in
Petroleum Operations.
To the extent permitted by applicable laws, rules and regulations, such
insurance may be provided through Contractor’s affiliate insurance
company.
(b) Subject to the Minister’s approval, which shall not be unreasonably withheld, the
Contractor, notwithstanding the provisions of Article 20.2(a), shall have the right
to self-insure’all or part of the aforementioned insurances in Article 20.2(a).
(c) The Contractor shall require the Operator to carry and to endeavour to have its
Sub-Contractors carry insurance of such type and in such amount as is customary
in the international petroleum industry in accordance with good oil field practices.
Page 51
Petroleum Agreement
Government of Guyana - Berbice PA
Article 21 - Import Duties
21.1 The Contractor, and the Sub-Contractors engaged in Petroleum Operations shall be
permitted to import, free of duty, VAT or all or any other duties, taxes, levies or imposts,
all equipment and supplies required for Petroleum Operations including but not limited to
drillships, platforms, vessels, geophysical tools, communications equipment, explosives,
radioactive sources, vehicles, oilfield supplies, lubricants, consumable items (other than
foodstuffs or alcoholic beverages or fuel), as well as all items listed on Annex D. The
aforementioned items, including but not limited to the items listed on Annex D, shall be
deemed approved and certified by the Chief Inspector to be for use solely in carrying out
Petroleum Operations. The Contractor shall give prior notification to the Minister of
Sub-Contractors engaged in Petroleum Operations.
(a) Subject to Article 21.1, and for as long as this Petroleum Agreement remains in
force the Contractor and Sub-Contractors engaged in Petroleum Operations
hereunder shall be required to pay to the relevant authority excise tax on any fuel
imports, where such imports have been certified by the Chief Inspector to be used
solely in carrying out Petroleum Operations in any area within the Contract Area,
at a rate of ten percent (10%) or the prevailing rate, whichever is lesser.
21.2 Subject to Article 20, any of the items imported into Guyana may, if no longer required
for Petroleum Operations hereunder, be freely exported at any time by the importing
party, without the payment of any export duty or impost; provided, however, that on the
sale or transfer by the importer of any such item to any person in Guyana (other than the
Government) import duty shall be payable by the importer on the value thereof at the date
of such sale or transfer as determined by the Customs and Excise Department in
accordance with their applicable rules.
21.3 Each Expatriate Employee of the Contractor (including any Affiliated Company) and of
Sub-Contractors, who have been assigned to work in Guyana for the Contractor or its
Sub-Contractors shall be permitted, subject to the limitations and conditions set out in the
Customs Act, to import into Guyana free of import duty and taxes within six (6) months
on first arrival his personal and household effects including one (1) motor vehicle
provided, however, that no property so imported by the employee shall be sold by him in
Guyana except in accordance with Government regulations and upon the payment of the
prescribed customs duties. Any importation or replacement of motor vehicles by
Expatriate Employees of the Contractor (including any Affiliated Company) and of Sub-
contractors, shall be a matter for consultation with the Minister.
21.4 Each Expatriate Employee of the Contractor (including any Affiliated Company) and of
Sub-Contractors shall have the right to export from Guyana, free of all duties and taxes,
and at any time, all of the items imported under Article 21.3.
Page 52
Petroleum Agreement
Government of Guyana - Berbice PA
Article 22 - Foreign Exchange Control
22.1 The Contractor shall, during the term of this Agreement have the right:
(a) to retain abroad all foreign exchange obtained from the export sales of
Contractor's Petroleum and to remit and retain abroad all foreign exchange earned
from sales of Petroleum or assets in Guyana;
(b) to finance Petroleum Operations hereunder in any currency through any
combination of equity, inter-affiliate or third party loans, inter-company open
accounts, or production payments but no payments of principal or interest in
respect thereof shall be made from any source in Guyana other than the bank
accounts referred to in Article 22.1 (c);
(c) to open and maintain bank accounts denominated in Guyanese dollars and/or
United States dollars in Guyana and freely dispose of the sums deposited therein
without any restriction; provided the said accounts are credited only with sums
deposited in foreign currency or with the proceeds of the sale of foreign currency
being credits relating to or derived from Petroleum Operations;
(d) to open and maintain bank accounts in any foreign currency outside Guyana
which may be credited without restriction and freely dispose of any sums
deposited therein without restriction and without any obligation to convert into
Guyana currency any part of the said amounts, save that such accounts shall not
be credited with the proceeds of the sale of any Guyanese currency without the
consent of the Bank of Guyana;
(e) to purchase and, with the approval of the Bank of Guyana, to sell Guyanese
currency, through the authorized banks, without discrimination, at the rate of
exchange determined by the Bank of Guyana for authorized banks at the time of
purchase or sale.
22.2 Expatriate Employees of the Contractor or of Affiliated Companies and of
Sub-Contractors engaged in Petroleum Operations shall be subjected to all Exchange
Control Regulations that may be in effect from time to time. Expatriate Employees of the
Contractor and Sub-Contractors shall be entitled to remit freely abroad any portion of
their salaries paid in Guyana and any investment income that may be earned on the
portion of their salaries paid in Guyana.
22.3 Where Contractor, Affiliated Company or Sub-Contractor by notice in writing to the
Commissioner General, Guyana Revenue Authority has guaranteed the full and proper
discharge by an Expatriate Employee engaged in Petroleum Operations of his liability to
income tax under the laws of Guyana, that Expatriate Employee shall be entitled to
receive payment of the whole or any part of his remuneration in the country
is normally resident.
•»
Page 53 i <
Petroleum Agreement
Government of Guyana -- Berbice PA
^ANA
Article 23 - Accounting and Audits
23.1 The Contractor shall be responsible for maintaining accounting records relating to
Petroleum Operations under this Agreement in accordance with the Accounting
Procedures set out in Annex C hereto.
23.2 The Minister shall have the right to audit the accounting records of the Contractor in
respect of Petroleum Operations in accordance with Accounting Procedure.
23.3 Nothing in this Article shall be construed as limiting the right of Government or any
officer of Government pursuant to any statutory power to audit or cause to be audited the
books of the Contractor.
Page 54
Petroleum Agreement
Government of Guyana - Berbice PA
Article 24 - Force Majeure
24.1 Any non-performance or delay in performance, wholly or in part, by any Party hereto or
any of its obligations under this Agreement or in fulfilling any condition of any Licence
granted to such Party or in meeting any requirement of the Act or Regulations and any
Licence issued thereunder, shall, except for the payment of monies due by Government to
Contractor or monies due to Government under section 43 (4) of the Act (unless such
failure to pay is prevented by any action of the Government), not be a breach of this
Agreement, the Licence or the Act and Regulations if and to the extent that such
non-performance or delay, wholly or in part, is caused by Force Majeure as defined in
this Article.
24.2 In this Article, the term “Force Majeure” shall mean any event beyond the reasonable
control of the Party claiming to be affected by such event which has not been brought
about at its instance and which has caused such non-performance or delay in performance
and, without limitation to the generality of the foregoing, includes acts of God, natural
phenomena or calamities, earthquakes, floods, tsunamis, epidemics, quarantines, fires,
wars declared, or undeclared, hostilities, invasions, blockades, riots, strikes, insurrection,
civil disturbances, mining of the seas, piracy, international disputes affecting the extent of
the Contract Area and any governmental action or inaction, that would prevent the
performance of an obligation or ability of the Contractor to export Petroleum (except as
provided in Article 14.5).
24.3 Where any Party is claiming suspension of its obligations on account of Force Majeure,
such Party shall promptly notify the other Parties in writing of the occurrence thereof
giving particulars of the Force Majeure and obligations affected. Each Party shall
promptly notify the other Parties as soon as the Force Majeure has been removed or no
longer prevents it from carrying out its obligations hereunder.
24.4 Where a Party is prevented from exercising any rights or performing any obligations
under this Agreement due to a Force Majeure, the Minister hereby agrees pursuant to
section 43 (3) of the Act, subject to the proviso therein, that a period of additional time
necessary for restoration of damages caused during a Force Majeure delay shall be added
to the time allowed under this Agreement for the performance of such obligation and for
the performance of any obligation or the exercise of any right dependent thereon and to
the term of any Licence issued pursuant to this Agreement. In the event the Parties
cannot agree on whether the occurrence of the event in question is considered a “force
majeure” event, or if the Minister does not agree an additional time period should be
added, pursuant to section 43(3) of the Act, then a Party may refer the dispute to
Arbitration pursuant to Article 26, to determine the nature of the “force majeure” event
and its influence on the contractual obligations of the Party concerned. The Contractor
shall have the option of terminating this Agreement without any further obligation if
Force Majeure exceeds one (1) year.
Page 55
Petroleum Agreement
Government of Guyana - Berbice PA
24.5 Without prejudice to the other provisions of this Article, the Parties shall meet to discuss
the consequences of the Force Majeure and the course of action to be adopted in the
circumstances.
24.6 The Government shall not invoke Force Majeure due to any order, regulation or written
directive of the Government which affects the Government’s performance of its
obligations under this Agreement.
Page 56
Petroleum Agreement
Government of Guyana - Berbice PA
Article 25 - Assignment
25.1 Subject to the regulation 20 of the Regulations, the Contractor shall not assign, or transfer
in whole or in part, any of its rights, privileges, duties or obligations under this
Agreement, or any Licence issued pursuant to this Agreement, to any person, firm or
corporation, without the prior written consent of the Minister.
25.2 The Minister shall give his consent under Article 25.1 where:
(a) the assignment or transfer will not adversely affect the performance or obligations
under this Agreement;
(b) the assignment is not contrary to the interests of Guyana; or
(c) subject to (a) above, the assignment or transfer is to an Affiliated Company.
25.3 In the event that the Minister does not give his consent or does not refuse a request for an
assignment or transfer by Contractor within sixty (60) days of receipt of such request,
consent shall be deemed to have been given by the Minister.
25.4 Any assignment made pursuant to this Article shall bind the assignee to all the terms and
conditions hereof and the terms and conditions of any Licence issued pursuant to this
Agreement unless otherwise agreed, and as a condition to any assignment, the assignee
shall provide an unconditional undertaking to the Minister to assume all obligations by
the Contractor under this Agreement or any Licence issued pursuant to this Agreement.
25.5 An application for assignment or transfer of a Licence shall be made in accordance with
Form E of the schedule specified in the Regulations. The applicant shall submit such
additional information relating to the intended assignee which the Minister may
reasonably require to enable him to dispose of the application.
Page 57
Petroleum Agreement
Government of Guyana - Berbice PA
Article 26 - Sole Expert Determination and Arbitration
26.1 The Parties shall make reasonable efforts to resolve amicably all Disputes by negotiation.
A notice of the existence of a Dispute shall be given by a Party to another Party in
accordance with Article 33. In the event that no agreement is reached within sixty (60)
days after the date on which a Party notifies the other that a Dispute exists, or such longer
period as specifically agreed by the Parties, any Party shall have the right to have such
Dispute determined by arbitration or a sole expert as provided for in this Article 26.
26.2 Any claim, demand, cause of action, dispute, or controversy arising out of or in
connection with this Agreement, including any question regarding its formation,
existence, validity, enforceability, performance, termination, or alleged breach
(“Dispute”) which cannot be settled amicably by negotiation shall be resolved by binding
arbitration or by a sole expert pursuant to Article 26.3, Article 26.4 or Article 26.6,
whichever applies.
26.3 Any matter required to be referred to a sole expert for determination under this
Agreement, including under Articles 5.4, 8.5, 12.2(a)(i), 13.4, and any other matter which
the Parties expressly agree in writing to refer to a sole expert, shall be referred to a sole
expert for determination, by a Party giving notice to such effect pursuant to Article 33.
The sole expert shall be appointed by agreement between the Parties, and in the event the
Parties fail to agree on the sole expert within thirty (30) days after receipt of the written
notice from any Party proposing the appointment of a sole expert, such expert shall be
appointed by the International Centre for Expertise of the International Chamber of
Commerce (“ICC”). A sole expert shall be an independent and impartial person of
international standing with relevant qualifications and experience. The expert, once
appointed, shall have no ex parte communications with any of the parties to the Dispute
concerning the expert determination or the underlying Dispute. The Parties shall
cooperate fully in the expeditious conduct of such expert determination and to provide
the expert with access to all facilities, books, records, documents, information and
personnel necessary to make a fully informed decision in an expeditious manner. The
sole expert shall act as an expert and not as an arbitrator or mediator, and shall endeavor
to resolve the Dispute within thirty (30) days of his appointment, but no later than sixty
(60) days after his appointment. The sole expert shall decide the manner in which any
determination is made, but in any event shall accept oral and/or written submissions and
arguments from the Parties. All correspondence, documentation and information
provided by a Party to the sole expert shall be copied to the other Party, and any oral
submissions to the sole expert shall be made in the presence of all Parties and each Party
shall have a right of response. The decision of the sole expert on matters referred to him
shall be final and binding on the Parties. The Parties shall refer any Dispute arising out
of or relating to such expert decision, including enforcement
pursuant to Article 26.4 or Article 26.6, whichever applies.
Page 58
Petroleum Agreement
Government of Guyana - Berbice PA
26.4 Subject to the provisions herein, the Parties hereby consent to submit to the International
Centre for the Settlement of Investment Disputes (ICSID) any Dispute relating to or
arising out of this Agreement to arbitration pursuant to the rules of the Convention on the
Settlement of Investment Disputes between States and Nationals of Other States
(hereinafter referred to as the “Convention”). It is hereby stipulated that the transaction
to which this Agreement relates is an investment within the meaning of the Convention.
The Government hereby irrevocably waives any claim to immunity for itself, its agencies,
its enterprises, and any of its assets with regard to any sole expert determination or
arbitration pursuant to this Article 26 and to any proceedings to recognise or to enforce
this Article 26 or any proceeding to recognise or enforce a sole expert determination, or
an arbitral award rendered in an arbitration thereunder. Without prejudice to the
generality of the foregoing, the waiver of immunity shall include immunity from service
of process and immunity from jurisdiction of any competent court or any arbitration
tribunal, and immunity of any of the Government’s, its agencies’, or its enterprises’
property from execution of any sole expert determination or arbitration award or
judgment entered thereon.
26.5 If the Secretary-General of ICSID refuses to register a request for arbitration or if a
tribunal of arbitrators constituted pursuant to Article 26.4 above determines that a dispute
is outside of ICSID’s jurisdiction, either Party may request arbitration of the dispute
before three arbitrators pursuant to the Arbitration Rules of the United Nations
Commission on International Trade Law (UNCITRAL). The American Arbitration
Association shall administer the arbitration under the UNCITRAL Arbitration Rules and
shall act as the appointing authority when the UNCITRAL Arbitration Rules call for an
appointing authority.
26.6 The seat of the arbitration proceedings pursuant to this Article 26 shall be Washington
DC, United States of America, however, hearings may be held at such other place as the
Parties may agree to in writing. The arbitration proceedings shall be conducted in the
English language.
26.7 The fees and expenses of a sole expert (as well as the charges for the use of ICSID or
other facilities) shall be borne equally by the Contractor and the Government. Each Party
shall bear any other expenses it incurs in connection with expert or conciliation
proceedings. In the case of arbitration proceedings, the arbitrators shall assess the
expenses incurred by the Parties, the fees and expenses of the arbitrators, the charges for
the use of the facilities and any other costs related to the arbitration and shall decide by
whom such costs shall be paid in their award. The arbitral award shall be made and
payable in dollars of the United States of America, free of any tax or other deduction.
The award shall include interest, unless the arbitration tribunal determines that it is not
appropriate. Interest shall run from the date of any breach or violation of this Agreement.
Interest shall continue to run from the date of award until the award is paid in full.
Interest shall be calculated at the Agreed Interest Rate. The arbitrator(s) sh
decision within six (6) months after having been confirmed, or such ot
Page 59
Petroleum Agreement
Government of Guyana - Berbice PA
Parties may agree.
26.8 The decision of a majority of the arbitrators shall be final and binding on all the Parties
and judgment on the award may be entered by any court of competent jurisdiction.
Page 60
Petroleum Agreement
Government of Guyana - Berbice PA
Article 27 - Applicable Law
27.1 This Agreement shall be governed by, interpreted and construed in accordance with the
laws of the Republic of Guyana, and, consistent with such rules of international law as
may be applicable or appropriate, including the generally accepted customs and usages of
the international petroleum industry.
Page 61
Petroleum Agreement
Government of Guyana - Berbice PA
Article 28 - Protection of the Environment
28.1 In accordance with the Environmental Protection Act, 1996, the Contractor shall obtain
an environmental authorization as required from the Environmental Protection Agency
and comply with the provisions of that Environmental Protection Act in relation to any
activity of this Agreement that is governed by that Environmental Protection Act.
28.2 The Contractor is precluded from initiating any exploration or development activity on
those areas outside of the Contract Area which the Environmental Protection Agency
may determine to be sensitive or protected.
28.3 In furtherance of regulation 6 of the Regulations in the conduct of Petroleum Operations
the Contractor shall take necessary and adequate precautions, in accordance with good
international petroleum industry practice, against pollution and for the protection of the
environment and the living resources of the rivers and sea.
28.4 If the Contractor's failure to comply with the provisions of Article 28.1 results in
pollution or damage to the environment, riverain or marine life or otherwise, the
Contractor shall take all reasonable measures in accordance with good international
petroleum industry practice to remedy the failure and the effects thereof and shall where
pollution occurs treat or disperse it in an environmentally acceptable manner. The
Contractor shall not be obligated to remedy or clean up pollution or environmental
damage of any type that existed prior to the commencement of Petroleum Operations by
the Contractor or arises as a consequence of pre-existing environmental conditions.
28.5 The Contractor shall notify the Minister forthwith in the event of any emergency or
accident arising from Petroleum Operations affecting the environment and shall take such
action as may be prudent and necessary in accordance with good international petroleum
industry practice in such circumstances.
28.6 If the Contractor does not act promptly pursuant to Article 28.4 so as to control or clean
up any pollution within a reasonable period specified by the Minister, the Minister may,
after giving the Contractor reasonable notice in the circumstances, take any actions which
are necessary in accordance with good international petroleum industry practice and the
reasonable costs and expenses of such actions shall be borne by the Contractor.
Page 62
Petroleum Agreement
Government of Guyana - Berbice PA
Article 29 - Termination and Cancellation
29.1 This Agreement shall be deemed to have been terminated if the Petroleum Prospecting
Licence granted to the Contractor pursuant to Article 3 and every Petroleum Production
Licence granted to the Contractor under Article 8 has either expired or, under and in
accordance with the Act and any relevant provision of this Agreement, been surrendered
by the Contractor or lawfully cancelled by the Minister pursuant to section 42 of the Act
but save as aforesaid, shall continue in full force and effect so long as the Contractor
continues to hold any of the said Licences.
29.2 Should any issue arise between the Parties as to whether the Contractor is in default and
such issue cannot be amicably settled by consultation between the Parties and a dispute
thereon is referred for resolution pursuant to Article 26, this Agreement and the said
Licences shall continue in force pending resolution of such dispute.
29.3 Pursuant to section 42 of the Act, the Minister shall not cancel a Licence on the basis of
default unless the Minister has, by notice served on the licensee, given not less than thirty
(30) days notice of such intention and the basis of default. In the notice the Minister shall
specify a reasonable date, not less than sixty (60) Business Days, before which the
licensee may submit a written response or remedy the default.
29.4 On termination of this Agreement, or cancellation of any Licence as aforesaid, the rights
and obligations of the Parties shall cease by the termination or cancellation, but such
termination, or cancellation shall not affect any right of action existing or liabilities
incurred by a Party before the date of termination or cancellation, and any legal
proceedings that might have been commenced or continued against a Party may be
commenced or continued against it.
Page 63
Petroleum Agreement
Government of Guyana - Berbice PA
Article 30 - Effective Date
30.1 The Effective Date shall be the date on which this Agreement is duly signed.
Page 64
Petroleum Agreement
Government of Guyana - Berbice PA
Article 31 - Miscellaneous
31.1 The Government assures the Contractor that the Contract Area lies entirely within the
territorial limits of Guyana and that Guyana has sovereignty over such area. The
Government shall continue to assert its right to the entire Contract Area and seek to
resolve current or future claims, if any, by other States that impugn any portion of the
Contract Area. The Government shall also use its best efforts to permit due observance of
the terms and conditions of this Agreement by both Parties. Both Parties undertake not to
take any action inconsistent with the terms and conditions of the Agreement
31.2 This Agreement shall not be amended or modified in any respect except by written
agreement entered into by all the Parties which shall state the date upon which the
amendment or modification shall become effective.
31.3 In the event of any conflict between any provisions in the main body of this Agreement
and any provisions in the Annexes, the provision in the main body shall prevail.
31.4 The headings of this Agreement are for convenience of reference only and shall not be
taken into account in interpreting the terms of this Agreement.
31.5 A reference to the singular in this Agreement includes a reference to the plural and vice
versa.
31.6 The provisions of this Agreement shall inure to the benefit of and be binding upon the
Parties and their permitted assignees and successors in interest.
31.7 No waiver by any Party of any one or more obligations or defaults by any other Party
shall be construed aS a waiver of any other obligations or defaults whether of a like or of
a different character.
31.8 This Agreement supersedes and replaces any previous Agreement or understanding
between the Parties whether oral or written on the subject matter hereof, prior to the date
of this Agreement.
Page 65
Petroleum Agreement
Government of Guyana - Berbice PA
Article 32 - Stability of Agreement
32.1 Except as may be expressly provided herein, the Government shall not amend, modify,
rescind, terminate, declare invalid or unenforceable, require renegotiation of, compel
replacement or substitution, or otherwise seek to avoid, alter, or limit this Agreement
without the prior written consent of Contractor.
32.2 After the signing of this Agreement and in conformance with Article 15, the Government
shall not increase the economic burdens of Contractor under this Agreement by applying
to this Agreement or the operations conducted thereunder any increase of or any new
petroleum related fiscal obligation, including, but not limited to, any new taxes
whatsoever, any new royalty, duties, fees, charges, value-added tax (VAT) or other
imposts.
32.3 If at any time after the signing of this Agreement there is a change in the laws of Guyana
whether through the amendment of existing laws (including the hydrocarbons law, the
customs code or tax code) or the enactment of new laws or a change having the force of
law in the interpretation, implementation or application thereof (whether the change is
specific to the Agreement, the Contractor or of general application) and such change has
a materially adverse effect on the economic benefits, including those resulting from the
fiscal regime provided by this Agreement, accruing to the Contractor hereunder during
the term of this Agreement, the Government shall promptly take any and all affirmative
actions to restore the lost or impaired economic benefits to Contractor, so that Contractor
receives the same economic benefit under the Agreement that it would have received
prior to the change in law or its interpretation, application, or implementation. The
foregoing obligation shall include the obligation to resolve promptly by whatever means
may be necessary any conflict or anomaly between this Agreement and any such new or
amended legislation, including by way of exemption, legislation, decree and/or other
authoritative acts.
32.4 In the event that Contractor’s overall economic benefits have been materially and
adversely affected by actions or changes as set forth above in Section 32.3, whether
directly or indirectly, Contractor may notify the Government in writing. The Parties
shall then meet within thirty (30) days after such notification with the objective of
reaching agreement on a remedial action to be taken by the Government, whether by
exemption, legislation, decree and/or other authoritative acts or by amendment to the
terms of the Agreement. If the Parties are unable to resolve their differences within one
hundred twenty (120) days after Contractor has issued the aforementioned notification,
then the Contractor may refer the matter to arbitration in accordance with Article 26. In
such case, the arbitral tribunal is authorized to modify the Agreement to re-establish the
economic benefits under the Agreement to Contractor described in Article 32.3, or in the
event this is not possible, including for example where such dispute wc
constitute a legal dispute under Article 25 of the ICSID Convention, to
Page 66
Petroleum Agreement
Government of Guyana - Berbice PA
Contractor that fully compensate it for the loss of economic benefits under the
Agreement, both historical and future losses.
Page 67
Petroleum Agreement
Government of Guyana - Berbice PA
Article 33 - Notices
33.1 All notices and other communications to be given under this Agreement shall be deemed
to have been made properly if delivered in person in writing, mailed with charges prepaid
or sent by facsimile, by one Party to the other at their respective addresses in Guyana as
set forth below and copied to their overseas addresses. Any such notice or
communication given as aforesaid shall be deemed to have been given and received at the
time of delivery (if delivered by hand or by courier) or at the time of receipt (if
transmitted by facsimile):
The Minister Responsible for Petroleum
c/o Guyana Geology And Mines Commission
Upper Brickdam, Stabroek,
P.O. BOX 1028, Georgetown, GUYANA.
Attention: Commissioner, GGMC
Telephone 592-225-3047
Facsimile: 592-227-0084
The Company Secretary/Director
ON Energy Inc.
Mareva House
4 George Street
Nassau, Bahamas
c/o Luckhoo & Luckhoo
1 Croal Street
Georgetown, GUYANA
Attention: Director, ON Energy Inc.
Telephone: 416-364-5569
Facsimile: 416-364-5400
33.2 Any Party may, by notice as provided hereunder to the other Parties and GGMC change
its address and other particulars for notice purposes.
Page 68
Petroleum Agreement
Government of Guyana - Berbice PA
IN WITNESS whereof the Parties have caused their duly authorised representatives to set their
hands at the City of Georgetown, in the Republic of Guyana in the presence of one another the
day and year first above written.
Signed by The Minister Responsible For Petroleum
Representing the Government of the Republic of Guyana.
His Excellency Donald Ramotar
President of the Republic of Guyana
Signed by Director of ON Energy Inc.
Dr. Edris K. Dookie
ON Energy Inc.
a T^UE COPY of the which
*as registered In the Deeds Re8lstry
Georgetown, Demerara, Guyana on the
Day o
istant Sworn Clerk
Page 69
Petroleum Agreement
Government of Guyana - Berbice PA
ANNEX A - DESCRIPTION OF PROSPECTING AREA
Description of area being applied for under a petroleum prospecting license
The area comprises approximately 3,300 square kilometres described herein consisting
of graticular blocks as shown on Block Reference Map attached
Latitude and Longitude Measurements are North and West respectively.
Point No. LATITUDE LONGITUDE
1 6° 20.00' N 57° 45.00' W
2 6° 20.00’ N 57° 20.00' W
3 6° 15.00'N 57° 20.00’ W
4 6° 15.00'N 57° 10.00' W
Then south to 5 at Guyana/Suriname
Border then south along
Guyana/Suriname Border to intersect
on-
6 5° 45.00'N
7 5° 45.00'N 57° 25.00' W
8 5° 50.00' N 57° 25.00' W
9 5° 50.00'N 57° 30.00' W
10 5° 55.00'N ____57° 30.00' W
11 5° 55.00' N 57° 40.00' W
12 6° 05.00' N __57° 40.00’ W
13 6° 05.00' N 57° 45.00’ W
Annex A Page 1
Petroleum Agreement
Government of Guyana - Berbice PA
Description of Area
The following five (5) minute by five (5) minute square graticular blocks are shown on
the Block Reference Map attached
Block X 100-104, 112-118,124-130,137-142,143*
Block DD 5-10,11*,19-22,23*,32-34,35*
.* denotes part block
Annex A Page 1
Petroleum Agreement
Government of Guyana - Berbice PA
ANNEX B - MAP OF CONTRACT AREA
Annex A Page 1
Petroleum Agreement
Government of Guyana - Berbice PA
ANNEX C - ACCOUNTING PROCEDURE
This Annex is part of this Petroleum Agreement (hereinafter referred to as "the Agreement")
Annex C Page 1
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 1 - GENERAL PROVISIONS
1.1 Definitions
For the purpose of this Accounting Procedure the terms used herein which are defined in
the Agreement or in the Act shall have the same meaning when used in this Accounting
Procedure.
1.2 Documentation Required to be Submitted by the Contractor
(a) The Contractor shall keep the accounts, operating records, reports and statements
relating to the Petroleum Operations:
(i) in accordance with the terms of the Agreement and this Accounting
Procedure; and
(ii) in such form as may be agreed from time to time between the Parties
which shall identify the categories of costs, expenses, expenditures and
credits classified in Sections 2 and 3 of this Annex.
(b) Pursuant to (a) above, the Contractor shall make quarterly Statements relating to
the Petroleum Operations including:
(i) Production Statement (see Section 5 of this Annex).
(ii) Value of Production and Pricing Statement (see Section 6 of this Annex).
(iii) Statement of Expenditures and Receipts (see Section 7 of this Annex).
(iv) Cost Recovery Statement (see Section 8 of this Annex).
(v) End-of-Year Statement (see Section 9 of this Annex).
(vi) Budget Statement (see Section 10 of this Annex).
1.3 Language, Units of Account and Exchange Rates
(a) Accounts shall be maintained in Guyanese dollars and United States dollars;
however, the United States dollars accounts will prevail in case of conflict.
Barrels shall be employed for measurements of production of Crude Oil required
under the Agreement and this Annex. Standard cubic feet (scf) shall be employed
for measurements of production of Natural Gas required u
this Annex. The language employed shall be English.
Annex C Page 2
Petroleum Agreement
Government of Guyana - Berbice PA
(b) Should there be any gain or loss from exchange of currency, it will be credited or
charged to the accounts under the Agreement.
(c)
(i) Amounts received and costs, expenses and expenditures made in
currencies other than United States dollars or Guyanese dollars shall be
converted into United States dollars by using the relevant foreign
exchange rate published in the Wall Street Journal on the first business
day following the Month in which the relevant transaction occurred.
(ii) Amounts received and costs, expenses and expenditures made in
Guyanese dollars or in United States dollars shall be converted from
Guyanese dollars into United States dollars or from United States dollars
into Guyanese dollars on the basis of the average of the buying and
selling exchange rates between the currencies in question as determined
and published by the Bank of Guyana, prevailing on the last Business Day
of the Calendar Month preceding the Calendar Month that the relevant
transaction occurred.
(iii) The actual exchange rates applied in accordance with sub-section 1.3 (c)
(ii) above and, where relevant, sub-section 1.3 (c) (i) above, shall be
identified in the relevant Statements required under sub-Section 1.2 (a) of
this Annex.
1.4 Payments
(a) All payments between the Parties under the Agreement shall, unless otherwise
agreed, be made in United States dollars and through a bank designated by the
receiving Party.
(b) All sums due under the Agreement during any Calendar Month shall, for each day
such sums are overdue bear interest at the Agreed Interest Rate.
1.5 Audit and Inspection Rights of Government
(a) The Minister shall have the right to audit upon ninety (90) days written notice, at
his sole cost and expense, accounts and records of the Contractor, maintained
hereunder with respect to each Calendar Year within two (2) years from the end
of each such Year. For purposes of auditing, the Minister may audit, examine and
verify, at reasonable times during normal business hours but not more than once
per Calendar Year, all charges and credits relating to the Contractor's activities
under the Agreement and all books of accounts, account] material
records and inventories, vouchers, payrolls, invoices a ents.
correspondence and records necessary to audit and ver/fsb
Annex C Page 3
Petroleum Agreement
Government of Guyana - Berbice PA
During such annual audit, examination and verification in respect of each
Calendar Year the Minister may review items previously subjected to audit in
earlier Years but such review shall:
(i) only be carried out in conjunction with the annual audit for any given
year; and
(ii) subject to Section 1.5 (b), no sooner than twelve (12) months following
the previous audit thereof; and
(iii) only be for the purposes of verifying a matter arising in a later period,
which relates to the earlier Year(s) in question or as specified in Section
1.5(b).
In conducting such audits, the auditors may physically examine at the sole cost
and expense of the Minister, property, facilities and stocks used in Petroleum
Operations wherever located. Such examinations shall take place at reasonable
times during normal business hours upon fifteen (15) days prior notice.
(b) At the conclusion of each audit, the Parties shall endeavour to settle outstanding
matters and a written report will be issued to the Contractor within sixty (60) days
of the conclusion of such audit. The report shall include all claims arising from
such audit.
The Contractor shall reply to the report in writing as soon as possible and in any
event not later than sixty (60) days following receipt of the report indicating
acceptance or rejection of the audit claim and in the case of a rejection showing
explanations thereof.
Should the Minister consider that the report or reply requires further investigation
on any item therein, the Minister shall have the right to conduct further
investigation in relation to such matter within sixty (60) days of its receipt of
Contractor's reply. If within sixty (60) days of the Minister's further investigation,
the Parties are unable to agree to the disposition of the Minister's audit claim, the
claim shall be submitted to arbitration in accordance with Article 26 of the
Agreement.
All adjustments resulting from an audit agreed to by the Contractor and the
Minister conducting the audit shall be reflected promptly in the accounts by the
Contractor and any consequential adjustments in Crude Oil entitlements shall also
be made promptly.
In the event that an audit claim by the Minister is not settled to the spti
the Contractor's reply as provided for above, the Contractor sh^ifbf;
Annex C Page 4
Petroleum Agreement
Government of Guyana - Berbice PA
recover any disputed amounts pending final resolution of the claim. However,
any subsequent adjustments in the Minister's share of Profit Oil following
resolution of the claim shall be repaid with interest, at the Agreed Interest Rate as
a first claim from Contractor's share of future Profit Oil. In the event that the
Contractor's share of Profit Oil is insufficient to provide for the Minister's extra
entitlement including interest, the Contractor shall promptly make an equivalent
payment in United States dollars to the Minister.
(c) Without prejudice to the finality of matters as described in sub-sections 1.5 (a)
and 1.5 (b) all documents referred to in those sub-sections shall be maintained and
made available for inspection by the Minister for two (2) years following their
date of issue providing, however, that where issues are outstanding with respect to
an audit, the Contractor shall maintain documents for a longer period until the
issues are resolved.
(d) The Contractor may require that audits hereunder of accounts and records
maintained by Affiliated Companies of the Operator, other than any Affiliated
Company of the Operator which is conducting a substantial part of the Petroleum
Operations on behalf of the Contractor be conducted either by the Operator's
statutory auditors working under the instruction of the Minister (provided such
appointment is accepted by the statutory auditors), failing which, by an
independent firm of auditors of international standing to be approved by the
Minister.
(e) Nothing herein above provided shall entitle the Minister or his auditors to have
access to data and records which:
(i) are subject to statutory restrictions on disclosure; or
(ii) do not relate to Petroleum Operations; or
(iii) are not customarily disclosed in auditing practice in the international
petroleum industry; provided however, that where the Minister or his
auditors seek confirmation that charges subject to restricted access under
(a), (b) and (c) above have been properly charged under this Agreement
and Accounting Procedure, they shall be entitled to seek (at their sole cost)
from the statutory auditors of the Contractor or its Affiliated Companies,
as the case may be, certification that such charges have been levied on a
fair and reasonable basis.
Annex C Page 5
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 2 - CLASSIFICATION, DEFINITION AND ALLOCATION OF COSTS,
EXPENSES AND EXPENDITURES
All costs, expenses and expenditures relating to the Petroleum Operations referred to in Section 3
shall be classified, defined and allocated as follows:
2.1 Exploration Costs are all direct and allocated indirect expenditures incurred in the search
for Petroleum in an area which is or was, at the time when such costs were incurred, in
the Contract Area, including:
(a) Aerial, geophysical, geochemical, paleontological, geological, topographical and
seismic surveys and studies and their interpretation provided the data relates to the
Contract Area.
(b) Core hole drilling and water well drilling.
(c) Labour, materials or equipment, and services used in drilling Exploration and
Appraisal Wells with the object of finding Petroleum or for the purposes of
appraising the extent of producible reservoirs already discovered provided such
wells are not completed as producing wells.
(d) Facilities or allocated portions thereof used solely in support of the purposes
described in (a) (b) and (c) above.
(e) All General and Administrative Costs, Annual Overhead Charges and all Service
Costs allocated to Exploration Costs.
(f) Any other Contract Costs incurred in the search for and appraisal of Petroleum
after the Effective Date.
(g) Annual amounts set forth and paid to GGMC pursuant to Article 19.3 of the
Agreement.
(h) Rentals.
(i) Licenses and other fees.
2.2 Development Costs shall consist of all expenditures incurred in:
(a) Drilling wells, which are completed as producing wells and drilling wells for
purposes of producing from a producible reservoir whether these wells are dry or
producing, and drilling wells for the injection of water or gas to enhance recovery
of Petroleum.
(b)
Annex C Page 6
Petroleum Agreement
Government of Guyana - Berbice PA
a well has been drilled for the purpose of bringing the well into use as a producer
or as a well for the injection of water or gas to enhance recovery of petroleum.
(c) Intangible drilling costs such as labour, consumable material and services having
no salvage value which are incurred in drilling and deepening of wells for
production purposes.
(d) The costs of field facilities such as pipelines, flow lines, production and treatment
units, wellhead equipment subsurface equipment, enhanced recovery systems,
offshore platforms, petroleum storage facilities, export terminals and piers,
harbours and related facilities and access roads for production activities.
(e) Engineering and design studies for field facilities.
(f) All General and Administrative Costs, Annual Overhead Charges and all Service
Costs allocated to Development Costs.
2.3 Operating Costs are all expenditures incurred in the Petroleum Operations, which are
other than Exploration Costs, Development Costs, General and Administrative Costs and
Annual Overhead Charge and Service Costs. The balance of General and Administrative
Costs and Service Costs not allocated to Exploration Costs or Development Costs shall
be allocated to Operating Costs.
2.4 Service Costs
(a) These are direct and indirect expenditures in support of the Petroleum Operations
including but not limited to warehouses, piers, marine vessels, vehicles, motorised
rolling equipment, aircraft, fire and security stations, workshops, water and
sewage plants, power plants, housing, community and recreational facilities and
furniture, tools and equipment used in these activities and safety and security
services. Service Costs in any Calendar Year shall include the total costs incurred
in such Year to purchase and/or construct said facilities as well as the annual costs
to maintain and operate the same.
(b) All Service Costs will be allocated to Exploration Costs, Development Costs and
Operating Costs in accordance with standard industry accounting practice or on
an equitable basis otherwise agreed between the Minister and the Contractor.
2.5 General and Administrative Costs and Annual Overhead Charge
(a) General and Administrative Costs are all general and administrative costs in
respect of the local office or offices including but not limited to supervisory,
accounting and employee relations services, but which are not otherwise
recovered.
(b) An Annual Overhead Charge for services rendered oi
otherwise charged under this Accounting Procedur
Annex C Page 7
Petroleum Agreement
Government of Guyana - Berbice PA
Contractor's activities under the Agreement and for staff advice and assistance
including but not limited to financial, legal, accounting and employee relations
services. For the period from the Effective Date until the date on which the first
Petroleum Production Licence under the Agreement is granted by the Minister
this annual charge shall be three percent (3%) of the Contract Costs including
those covered in sub-sections 2.1 through 2.5(a), incurred during the Calendar
Year. From the date of grant of the Petroleum Production Licence the Annual
Overhead Charge will be:
First US$10,000,000 of Contract Costs: 5%
Next US$20,000,000 of Contract Costs: 3%
In excess of US$30,000,000 of Contract Costs: 1%
(c) All General and Administrative Costs and Annual Overhead Charge will be
allocated to Exploration Costs, Development Costs and Operating Costs in
accordance with standard industry accounting practice or on an equitable basis
otherwise agreed between the Minister and the Contractor.
Annex C Page 8
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 3 - COSTS, EXPENSES, EXPENDITURES AND CREDITS OF THE
CONTRACTOR
3.1 Costs Recoverable Without Further Approval of the Minister
Subject to the provisions of the Agreement, the Contractor shall bear and pay the
following costs and expenses in respect of the Petroleum Operations. These costs and
expenses will be classified under the headings referred to in Section 2. They are all
recoverable as Contract Costs by the Contractor under the Agreement.
(a) Surface Rights
This covers all costs attributable to the acquisition, renewal or relinquishment of
surface rights acquired and maintained in force for the Contract Area including
any amounts payable pursuant to Article 10 of the Agreement.
(b) Labour and Associated Labour Costs
(i) Gross salaries and wages including bonuses of the employees of the
Parties comprising the Contractor directly engaged in the Petroleum
Operations, irrespective of the location of such employees, it being
understood that in the case of those personnel only a portion of whose
time is wholly dedicated to Petroleum Operations, only that pro-rata
portion of applicable wages and salaries will be charged.
(ii) Costs regarding holiday, vacation, sickness and disability payments
applicable to the salaries and wages chargeable under (i) above.
(iii) Expenses or contributions made pursuant to assessments or obligations
imposed under the laws of the Republic of Guyana which are applicable to
cost of salaries and wages chargeable under (i) above.
(iv) Cost of established plans for employees' life insurance, hospitalisation,
pensions, and other benefits of a similar nature customarily granted to the
employees of the Parties comprising the Contractor.
(v) Reasonable travel and personal expenses of such employees including
those made for travel and relocation of the Expatriate Employees assigned
to the Republic of Guyana all of which shall be in accordance with the
normal practice of the Parties comprising the Contractor.
(vi) Any personal income taxes owing to the Republic of Guyana by
employees of the Parties comprising Contractor and
a Party comprising the Contractor.
Annex C Page 9
Petroleum Agreement
Government of Guyana - Berbice PA
(c) Transportation
The cost of transportation of employees, equipment, materials and supplies
necessary for the conduct of the Petroleum Operations.
(d) Charges for Services
(i) Third Party Contracts
The actual costs of contracts for technical and other services entered into
by the Contractor for the Petroleum Operations, made with third parties
other than Affiliated Companies of the Contractor are recoverable;
provided that the prices paid by the Contractor are competitive with those
generally charged by other international or domestic suppliers for
comparable work and services.
(ii) Affiliated Companies
Without prejudice to the charges to be made in accordance with
sub-section 2.5, in the case of services rendered to the Petroleum
Operations by an Affiliated Company, the charges will be based on actual
costs without profits. The charges will be no higher than the usual prices
charged by the Affiliated Company to third parties for comparable
services under similar terms and conditions elsewhere and will be fair and
reasonable in the light of prevailing international oil industry practice and
conditions.
The salaries, wages and related costs of employees of an Affiliated
Company that are temporarily or permanently assigned in Guyana and are
directly engaged in Petroleum Operations shall be chargeable to the
project at their actual documented cost. The salaries, wages and related
costs of employees of an Affiliated Company that are temporarily or
permanently outside of Guyana and are directly engaged in Petroleum
Operations shall be chargeable to the project at their actual documented
cost. Costs for salaries, wages and related costs shall be charged to the
project on an actual basis or at a rate based upon the average cost in
accordance with the Affiliated Company’s usual practice. The
methodology of determining rates based on average cost shall be provided
to the Government upon their request. Such rates may be reviewed at least
annually with the Minister. Reasonable actual documented expenses
(including travel costs) of those employees whose salaries and wages are
chargeable to the project and are reimbursed by t their -
usual practice shall also be charged to the project
Annex C Page 10
Petroleum Agreement
Government of Guyana - Berbice PA
(e) Material
(i) So far as is practicable and consistent with efficient and economical
operation, only such material or equipment shall be purchased or furnished
by the Contractor for use in the Petroleum Operations as may be required
for use in the reasonably foreseeable future and the accumulation of
surplus stocks shall be minimized.
(ii) The Contractor does not warrant material beyond the supplier's or
manufacturer’s guarantee express or implied, and in case of defective
material or equipment, any adjustment received by the Contractor from the
suppliers/manufacturers or their agents will be credited to the accounts
under the Agreement.
(iii)
(a) Except as provided in (b) below, material purchased by the
Contractor for use in the Petroleum Operations shall be valued to
include invoice price less trade and cash discounts (if any),
purchase and procurement fees plus freight and forwarding charges
between point of supply and point of shipment, freight to port of
destination, insurance, taxes, custom duties, consular fees, other
items chargeable against imported material and, where applicable,
handling and transportation expenses from point of importation to
warehouse or operating site, and cost of the material in question
should not exceed those prevailing in normal arms length
transactions on the open market for material of similar quality and
supplied on similar terms at the time of procurement.
(b) Material purchased from Affiliated Companies of the Parties
comprising Contractor shall be charged at the prices specified at
(1) and (2) hereof.
(1) New Material (Condition "A")
Shall be valued and invoiced at a price, which should not
exceed the price prevailing in normal arms length
transactions on the open market at the time of procurement.
(2) Used Material (Conditions "B" and "C")
(i) Material which is in sound and serviceable
condition and is suitable for reuse without
reconditioning shall be classified as Condition "B"
and priced at not more than seventy-fi vs-pgrcent
(75%) of the price of new materffi^&Q&l
above.
Annex C Page 11
Petroleum Agreement
Government of Guyana - Berbice PA
Material, which cannot be classified as Condition
"B" but which:
(a) after reconditioning will be further
serviceable for original function as good
second-hand material (Condition "B"), or
(b) is serviceable for original function but not
suitable for reconditioning; shall be
classified as Condition "C" and priced at not
more than fifty percent (50%) of the current
price of new material (Condition "A") as
defined in (1) above. The cost of
reconditioning shall be charged to the
reconditioned material provided that the
Condition "C" material value plus the cost
of reconditioning does not exceed the value
of Condition "B" material.
Material, which cannot be classified as Condition
“B” or Condition “C”, shall be priced at a value
commensurate with its use.
When the use of material is temporary and its
service to the Petroleum Operations does not justify
the reduction in price as provided for in (2) (ii)
hereof, such material shall be priced on a basis that
will result in a net charge to the accounts under the
Agreement consistent with the value of the service
rendered.
(f) Rentals, Duties and Other Assessments
All rentals, taxes, levies, charges, fees, contributions and any other assessments
and charges levied by the Government in connection with the Petroleum
Operations and paid directly by the Contractor.
(g) Insurance and Losses
Insurance premium and cost incurred for insurance pursuant to Article 20
provided that if such insurance is wholly or partly placed with an Affiliated
Company of the Parties comprising the Contractor, such premium stsyshall
be recoverable only to the extent generally charged by co
companies other than an Affiliated Company of a Pa
Annex C Page 12
Petroleum Agreement
Government of Guyana - Berbice PA
Contractor. Costs, losses and damages incurred to the extent not made good by
insurance, are recoverable, including costs, losses or damages resulting from the
indemnities in Article 2 of the Agreement, unless such costs, losses or damages
have resulted solely from an act of willful misconduct or gross negligence of the
Contractor.
(h) Legal Expenses
All costs and expenses of litigation and legal or related services necessary or
expedient for the procuring, perfecting, retention and protection of the Contract
Area and in defending or prosecuting lawsuits involving the Contract Area or any
third party claim arising out of activities under the Agreement or sums paid in
respect of legal services necessary or expedient for the protection of the interest of
the Parties are recoverable. Where legal services are rendered in such matters by
salaried or regularly retained lawyers of the Contractor or an Affiliated Company
of the Parties comprising Contractor, such compensation will be included instead
under sub-section 3.1(b) or 3.1(d) above as applicable.
(i) Training Costs
All costs and expenses incurred by the Contractor in training of Guyanese
personnel and such other amounts as may be expended on training under Article
19 of the Agreement.
(j) General and Administrative Costs and Annual Overhead Charge
The costs described in sub-section 2.5(a) and the charge described in sub-section
2.5(b).
(k) Pre-Contract Costs
The sum of five hundred thousand United States of America dollars
(US$500,000) in respect of all costs incurred by Contractor prior to the Effective
Date.
(l) Interest and Financing Costs
Interest, expenses and related fees incurred on loans raised by the Parties
comprising the Contractor for Petroleum Operations and other financing costs
provided that such expenses, fees and costs are consistent with market rates.
(m) Abandonment Costs
Amortized abandonment costs calculated pursuant to
Annex C Page 13
Petroleum Agreement
Government of Guyana - Berbice PA
3.2 Costs Recoverable only with Approval of the Minister
(a) Donations and contributions to organisations in Guyana.
(b) Expenditure on research into and development of new equipment, material and
techniques for use in searching for developing and producing petroleum which
will be of benefit to Petroleum Operations.
3 3 Costs not Recoverable under the Agreement
(a) With the exception of the sum specified in sub-section 3.1(k), costs incurred
before the Effective Date.
(b) Petroleum marketing or transportation costs of Petroleum beyond the Delivery
Point.
(c) Amounts paid under Article 3.2 of the Agreement, if any, and, other amounts paid
with regard to non-fulfillment of contractual obligations, subject to Section 3.1(g).
(d) Costs of arbitration and the sole expert in respect of any dispute under the
Agreement.
(e) Fines and penalties imposed by Courts of Laws of the Co-operative Republic of
Guyana.
(f) Payments made in accordance with Article 15.4 of the Agreement.
(g) Costs incurred as a result of willful misconduct or gross negligence of the
Contractor or failure to insure where insurance is required pursuant to Article
20.2(a) of the Agreement.
3.4 Other Costs and Expenses
Other costs and expenses not covered or dealt with in the provisions of this Section 3 and
which are incurred by the Contractor in the conduct of the Petroleum Operations are
recoverable subject to the approval of the Minister.
3.5 Credits under the Agreement
The net proceeds of the following transactions will be credited to the Accounts under the
Agreement and shall reduce the amount of Contract Costs, which the Contractor is
entitled to recover from Cost Oil, by a corresponding amount:
(a) The net proceeds of any insurance or claim in connectic ,e Eeti
Operations or any assets charged to the accounts under the
Annex C Page 14
Petroleum Agreement
Government of Guyana - Berbice PA Guyana
operation or assets were insured and the premium charged to the accounts under
the Agreement.
(b) Revenue received from third parties for the use of property or assets the cost of
which has been charged to the accounts under the Agreement.
(c) Any adjustment received by the Contractor from the suppliers/manufacturers or
their agents in connection with defective material the cost of which was
previously charged to the accounts under the Agreement.
(d) Rentals, refunds or other credits received by the Contractor which apply to any
charge which has been made to the accounts under the Agreement, including any
costs and expenses previously charged to the accounts pursuant to sub-section
3.1(h) and which have been successfully recouped from legal proceedings but
excluding any award granted to the Contractor under arbitration or sole expert
proceedings referred to in sub-section 3.3(d) above.
(e) The value at the time of export of inventory materials subsequently exported from
the Co-operative Republic of Guyana without being used in the Petroleum
Operations, the acquisition costs of which have been charged to the accounts
under the Agreement.
(f) The proceeds from the sale or exchange by the Contractor of materials,
equipment, plant or facilities, the acquisition costs of which have been charged to
the accounts under the Agreement, including such items sold to the Government;
(g) The proceeds from the sale of Petroleum Data which relates to the Contract Area
provided that the acquisition costs of such rights and information have been
charged to the accounts under the Agreement;
(h) The proceeds derived from the sale or licence of any intellectual property the
development costs of which have been charged to the accounts under the
Agreement.
3.6 Duplication of Charges and Credits
Notwithstanding any provision to the contrary in this Accounting Procedure, it is the
intention that there shall be no duplication of charges or credits to the accounts under the
Agreement.
Annex C Page 15
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 4 - RECORDS AND VALUATION OF ASSETS
The Contractor shall maintain detailed records of property in use for the Petroleum Operations in
accordance with normal practice in exploration and production activities of the international
petroleum industry. The Contractor shall notify the Minister annually in writing of all assets
acquired and all assets disposed of during the preceding twelve (12) months. At reasonable
intervals but at least once a year with respect to moveable assets and once every three (3) years
with respect to immovable assets, inventories of the property under the Agreement shall be taken
by the Contractor. The Contractor shall give the Minister at least thirty (30) days written notice
of its intention to take such inventory and the Minister shall have the right to be represented
when such inventory is taken. The Contractor will state clearly the principles upon which
valuation of the inventory has been based. When an assignment of rights under the Agreement
takes place a special inventory may be taken by the Contractor at the request of the assignee
provided that the costs of such inventory are borne by the assignee.
Annex C Page 16
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 5 - PRODUCTION STATEMENT
5.1 Upon commencement of production of Petroleum from the Contract Area, the Contractor
shall submit a monthly Production Statement to the Minister showing the following
information separately for each Field and in aggregate for the Contract Area.
(a) The gross quantity of Crude Oil and Natural Gas produced.
(b) The quantities of Crude Oil and Natural Gas used for the purpose of carrying on
Petroleum Operations including drilling and Production Operations and pumping
to Field storage.
(c) Quantities of Crude Oil and Natural Gas lost.
(d) The quantities of Natural Gas flared.
(e) The quantity of Crude Oil produced and saved.
(f) The quantity of Natural Gas produced and saved.
(g) The quantity of stocks of Crude Oil held at the beginning of the Calendar Month
in question.
(h) The quantity of stocks of Crude Oil held at the end of the Calendar Month in
question.
(i) The number of days in the Month during which Petroleum was produced from
each Field.
(j) The average daily production rate for each Field, calculated in accordance with
Article 11.6 of the Agreement.
5.2 The Production Statement for each Calendar Month shall be submitted to the Minister not
later than sixty (60) days after the end of such Calendar Month.
Annex C Page 17
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 6- VALUE OF PRODUCTION AND PRICING STATEMENT
6.1 The Contractor shall, for the purposes of Article 13 of the Agreement prepare a statement
providing calculations of the value of Crude Oil and the value of the Natural Gas
produced and saved during each Calendar Month for each Field. This statement, which
shall be prepared for each quality of Crude Oil and the Natural Gas produced from the
Contract Area, shall contain the following information:
(a) The quantities, prices and receipts realised therefor by the Contractor as a result of
Third Party Sales of Crude Oil and the Natural Gas made during the Calendar
Month in question.
(b) The quantities, prices and receipts realised therefor by the Contractor as a result of
sales of Crude Oil and the Natural Gas made during the Calendar Month in
question, other than Third Party Sales.
(c) The percentage of total volume of Crude Oil sales which were Third Party Sales.
(d) Tire percentage of total volume of Natural Gas sales which were Third Party
Sales.
(e) Information supplied to the Minister by Contractor for the purposes of Article
13.2 of the Agreement.
6.2 The Value of Production and Pricing Statement for each Calendar Month shall be
submitted to the Minister not later than thirty (30) days after the end of such Calendar
Month.
Annex C Page 18
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 7 - STATEMENT OF EXPENDITURE AND RECEIPTS
7.1 The Contractor shall prepare with respect to each Calendar Quarter, or on a monthly basis
if requested by the Minister in writing, a Statement of Expenditure and Receipts under
the Agreement. The Statement will distinguish between Exploration Costs, Development
Costs and Operating Costs consistent with the individual categories specified in Sections
2 and 3 herein and will separately identify major items of expenditures within these
categories. The statement will show the following:
(a) Actual expenditures and receipts on a monthly basis for the period in question.
(b) Cumulative expenditure and receipts for the budget year in question.
(c) Cumulative expenditures and receipts since the Effective Date.
(d) Latest forecast of cumulative expenditures to year end.
(e) Variations between budget forecast and latest forecast, with explanations thereof.
7.2 Subject to 7.1, the Statement of Expenditure and Receipts shall be submitted to the
Minister no later than thirty (30) days after the end of such Calendar Quarter or Month as
the case may be.
Annex C Page 19
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 8- COST RECOVERY STATEMENT
8.1 The Contractor shall prepare with respect to each Calendar Month a Cost Recovery
Statement containing the following information:
(a) Recoverable Contract Costs carried forward from the previous Month, if any.
(b) Recoverable Contract Costs for the Month in question.
(c) Total Recoverable Contract Costs, which is that cost at sub-section 8.1 (a) plus
that cost at sub-section 8.1 (b).
(d) Quantity and value of Cost Oil taken and disposed of by the Contractor for the
Month in question.
(e) Contract Costs recovered for the Month in question.
(f) Total cumulative amount of Contract Costs to be carried forward into the next
Month.
8.2 The information to be submitted under Section 8.1 (d) and (e) above shall be given in
separate statements for each Field, so as to indicate together, the Contractor's total
allocation of Cost Oil as required under Article 11 of the Agreement.
8.3 The Cost Recovery Statement to be submitted under sub-section 8.1 shall identify the
unrecovered cost of assets for the purpose of Article 20.1 (b)(iii) of the Agreement.
8.4 The Cost Recovery Statement for each Month shall be submitted to the Minister no later
than thirty (30) days after the end of such Month.
Annex C Page 20
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 9 - END-OF-YEAR STATEMENT
9.1 The Contractor shall prepare an End-of-Year Statement. The Statement will contain
aggregated information for the Year in the same format as required in the Value of
Production and Pricing Statement, Cost Recovery Statement and Statement of
Expenditures and Receipts but will be based on actual quantities of Petroleum produced
and expenses incurred. The End-of-Year Statement for each Calendar Year shall be
submitted to the Minister within one hundred and twenty (120) days of the end of such
Calendar Y ear.
(a) Crude Oil
(i) In the event the domestic supply obligations under Article 17 are effected
by the Government as to Crude Oil, not later than one hundred and twenty
(120) days after the end of each Calendar Year, the Minister, acting on
behalf of the Government, shall make available to Contractor an annual
summary (the “Domestic Supply Report”) describing (a) the
Government's total entitlement from all Crude Oil production in Guyana
during the prior Calendar Year, (b) the quantity of Crude Oil actually
provided to the Government by Contractor and all third parties which
produce Crude Oil in Guyana during the prior Calendar Year, and (c) a
description of the quantities and use of all Crude Oil provided to the
Government by Contractor and all third parties which produce Crude Oil
in Guyana, including without limitation, domestic power supply from
power plant facilities, refined products for domestic consumption from
refineries, etc., and any quantities of Crude Oil, refined products,
petrochemicals or fuel for power generation that are exported from
Guyana.
(b) Natural Gas
In the event the domestic supply obligations under Article 17 have been
effected by the Government as to Natural Gas, not later than one hundred
and twenty (120) days after the end of each Calendar Year, the Minister,
acting on behalf of the Government, shall make available to Contractor an
annual summary (the “Domestic Supply Report”) describing (a) the
Government's total entitlement from all Natural Gas production in Guyana
during the prior Calendar Year, (b) the quantity of Natural Gas actually
provided to the Government by Contractor and all third parties which
produce Natural Gas in Guyana during the prior Calendar Year, and (c) a
description of the quantities and use of all Natural Gas provided to the
Government by Contractor and all third parties which produce Natural Gas
in Guyana, including without limitation, domestic residential, corljiaeixuaT
and industrial consumption, fuel used for domestic power ge^urixm/etV?'
7 /
Annex C Page 21
Petroleum Agreement
Government of Guyana - Berbice PA
or, and any quantities of Natural Gas liquefied or compressed in Guyana
for export or used as feedstock for petrochemical exports, such as
methanol and fertilizer.
Annex C Page 22
Petroleum Agreement
Government of Guyana - Berbice PA
SECTION 10 - BUDGET STATEMENT
10.1 The Contractor shall prepare an annual budget pursuant to Article 7 of the Agreement
(the “Budget Statement”). The Budget Statement will distinguish between Exploration
Costs, Development Costs and Operating Costs consistent with the individual categories
specified in Sections 2 and 3 and will show the following:
(a) Forecast expenditures and receipts under the Agreement for the Calendar Year.
(b) Cumulative expenditures and receipts to the end of the said Year.
Annex C Page 23
Petroleum Agreement
Government of Guyana - Berbice PA
ANNEX D - Pre-Approved and Certified Petroleum Operations Items
A
Acids (stimulation) - chemicals used downhole or injected in oil/gas formations
Acoustical survey equipment - including sonar, side scanning sonar, full wave form sonic loggers
Aeromagnetic recording survey systems
Air slips also known as tubing slips
All terrain vehicles (ATVs)
Automated equipment at the well head, processing plant or refinery used to monitor and control
production
B
Bags (cloth) with printed tags - used in well testing
Bails (links)
Barrel - chemical mixing when used at the well head
Batteries - for production machinery and equipment
Batteries - geophysical when used exclusively for seismic prospecting in blasting and recording systems
Bits - drill includes PDCs, tricones
Blasting systems - used for seismic prospecting
Blowout ignition system
Blowout preventers (BOPs)
Boxes - shipping (used in well testing), core
Building - portable
Building - support - when used as weather-related protective covering for equipment such as electrical
generators or instrumentation
Buildings - that provide office or dwelling space; geologist lab trailers; skid-mounted living trailers
Bulldozers - earth moving equipment
C
Cable - electrical
Cable - wire rope
Cables - electrical (integrated into machinery)
Cables used for seismic prospecting
Calibration gas-for H2S monitors and H2S analyzers
Casing
Casing accessories
Catwalks - see Scaffolding
Cement - oilwell
Cementing equipment
Centralizers - casing attachment
Centrifuge - used to remove fine drill solids from mud systems
Chemical mixing barrel - when used at the well head
Chemical storage drums - when used at the manufacturing or processing site
Chemicals used in drilling and production operations
Chemicals used in refining operations
Choke manifold and valves
Circulating system - includes discharge and return lines
Circulating systems - includes mud tanks, mud mixers, discharge and return lines and separators
Cleaners/degreasers - includes oilfield equipment
Cloth bags with printed tags - used in well testing
Coil tubing
Coil tubing reel
Collars - drilling
Annex D Page 1
Petroleum Agreement
Government of Guyana - Berbice PA
Communication equipment - includes satellite communications equipment
Compressors - for compression of air or natural gas
Computers - to monitor production/drilling machinery and equipment
Consumables - consumable equipment used in drilling and production operations
Control panels - used to run generators at a well head
Core boxes
Corrosion inhibitors - added to upstream installations for preventative maintenance
Couplings
Custom software - designed for and integrated into drilling and production machinery or equipment
D
Data processing units used for seismic prospecting
DC electric motors (integrated) used to drive the drawworks mud pumps, or top drives, also commonly
called traction motors
Deflocculants - used in fresh water mud systems
Dehydration chemicals
Dehydrators - including mole sieve used at the well head; used during the production testing phase
Demulsifiers - used in production operations to remove water from crude oil
Density counters - spectral gamma-gamma
Detectors - flame, when used during the production testing phase as an alternative to a flare stack
Diesel power generating systems
Discharge and return lines
Dispersants - production chemicals
Distribution panel - electrical that controls the electrical distribution for the entire rig package
Dope - pipe
Drifts-for casing, tubing, and line pipe
Drill bits, includes tricone, PDCs (Polycrystaliine Diamond Compact)
Drill collar handling equipment
Drill collars - used in exploration and development drilling
Drill line spool - wire rope
Drill pipe - used in exploration and development drilling
Drill pipe handling equipment
Drill stem testing equipment - includes instrumentation
Drilling - detergent; muds; surfactants
Drilling Rigs and associated equipment - Onshore and Offshore
Drilling fluid - chemicals used to create drilling fluid (see mud)
Drills - all drills used exclusively for seismic prospecting includes heli, enviro, LIS, track, truck, buggy
Drives - top, rotary and pump
Drums - for chemical storage when used at the manufacturing or processing site
E
EDR system (only an EDR and the embedded dedicated computer equipment that is integrated into the
unit) used at the drilling site
Electric generators and alternators
Electric logging equipment
Electrical cable - distribution panel, electrical generating systems
Electrical distribution panel
Electrical generating systems (integrated)
Electrical submersible pumps - ESP - for artificial lift of petroleum
Electrical surveying equipment
Electrical thermostats
Electromagnetic surveying equipment - includes time and frequency domain induced polarization
equipment
Annex D Page 2
Petroleum Agreement
Government of Guyana - Berbice PA
Emergency gas shut off devices
Engine oils
Engines - used for oilfield service
Equipment - hoisting
Explosives - includes those used in seismic, coring, construction
F
Field potentiometers
Filter bags - for the production machinery and equipment
Fishing tools for retrieving tools lost downhole
Fittings - includes those used in the transportation and distribution system, for example, on gathering
lines
Flame detectors - when used during the production testing phase as an alternative to a flare stack
Flare stacks - includes mobile flare stacks used during the production testing phase
Flare tank systems, located at the wellsite, that are directly connected to the drilling rig and are used to
control polluting emissions
Flare tanks and lines
Float equipment
Fluids-fracturing, stimulating, well servicing
Foamers - used downhole to enhance production
Forklifts / / \ I
Fracturing chemicals I I ) I
Fracturing equipment I I / /
Fuel gas lines - for oil and gas production machinery \>\* 1
Fuel storage tanks - see Tanks \ /
Full wave form sonic loggers
G
Gamma-ray spectrometers
Gas - welding, acetylene, argon - when used as an inert welding gas or in repair jobs; calibration gas for
H2S monitors and H2S analyzers
Gas dehydration equipment used in processing plants or refineries up to the point where the petroleum or
natural gas is a marketable product
Gas detection monitors that detect hazardous gas and provide a warning
Gas flow equipment - when used downhole to monitor gas flow
Gas lift lines - located at a production wellsite to encourage the flow or transport of gas from the reservoir
to the surface
Gas shut off devices (emergency) - that are attached to a gas line and automatically shut off gas supply
Gauges - engine
Generating systems - diesel power, electrical
Gensets/generators - portable, mobile or standby alternators generators/gensets)
Geophones
Geophysical batteries - when used exclusively for seismic prospecting in blasting and recording systems
Geronimo and escape lines
Global positioning systems used for seismic prospecting; used for creating stakeless surveys
Graders
Gradiometers - includes potassium gradiometers for radioactive methods of geophysical prospecting
Gravel - for well pads, processing plant on-site roads
Gravitational recording survey systems
Gravity meters
Grease
Ground penetrating radar equipment
Gunny sacks
Annex D Page 3
Petroleum Agreement
Government of Guyana - Berbice PA
Guns - perforating that are used during the production testing phase
H
Hammer wrenches
Hand held tools
Heat exchangers
Heaters - line, located at the well head to preheat gas but not line heaters on pipeline; used during the
production testing phase
Heli-drills for seismic prospecting
Hoisting equipment
Hooks and swivels - drill pipe handling equipment
Hydraulic tank
Hydraulic winches
Hydrogen sulfide - used for gas scrubbing
Hyperspectral spectrometers used for remote sensing
I
Imaging equipment - seismic
Incinerator - when used during the production testing phase in place of a flare stack to burn off excess
natural gas
Indicator - weight
Inductive conductivity probes used for electrical or electromagnetic surveying
infrared and hyperspectral spectrometers
Infrared spectrometers used for remote sensing
Inhibitors - corrosion added to upstream installations for preventative maintenance
Injector head that runs or retrieves the coil tubing
Instruments -
instruments or equipment for seismic prospecting
Integrated diesel power generating systems
Integrated electrical operating systems
Integrated fuel tanks - see Tanks
Integrated navigation systems used for seismic prospecting
Integrated pump units
Integrated steam heaters
L
Lab testing equipment - used for testing drilling fluids
Lab testing equipment - used for testing production fluids
Labels - for vials used in well testing
Laptop computers (see entry u,nder Computers)
LIDAR (Light Detection and Ranging) mapping equipment used for remote sensing
Light towers or light plants
Lighting - industrial explosion proof
Lights
Lignite - drilling mud or fluid
Line heaters - located at the well head to preheat gas, but not line heaters on the pipeline
Line heaters - used on pipelines, but not line heaters located at the well head for preheating gas Industry)
Line pipe
Liners used on the ground
Lines - catline, drill, flare, loadline, geronimo and escape, sandline, spool, tong
Lines - discharge, return, flare
Links (bales)
Annex D Page 4
Petroleum Agreement
Government of Guyana - Berbice PA
Liquefaction equipment - used in a processing plant or refinery to liquefy CO2 so that it can be
transported and marketed
Liquid viscosifiers
Loaders - includes loaders used to move drill pipe to and from the drilling rig
Logging equipment - electric wireline
Lubricants - specialty
M
Machinery and equipment used to inject substances into a reservoir
Magnetic susceptibility meters
Magnetometers
Main - drum (also known as a drill drum)
Main drum also known as drill drum - part of the drawworks
Maintenance tools - includes cheater bars
Manifold - choke, valve that is an integral piece of the high pressure pumping system
Manifold - choke; mud
Manufactured proppant
Measurement while drilling equipment (MWD) - used to monitor the drill bit's downhole position
Meter skids - used in the transportation of natural gas or petroleum from the well head as they are part of
the distribution system
Mobile radios
Molecular sieve (Mole sieve pellets) - when used as a part of exempt dehydrator equipment
Monitoring equipment - that monitors or controls the operation of machinery and equipment
Monitors - hazardous gas detection monitors that provide a warning
Mooring systems - for storage vessels
Motors - includes mud motors
Motors - traction, mud
Motors - used in the production testing phase; mud motors used downhole in the drilling process
Mud - chemicals used in the creation of drilling fluid
Mud - mixers, tank, manifold, motors
Mud logging equipment and supplies
MWD (Measurement While Drilling) equipment and supplies
N
Navigation systems used for seismic prospecting; used for creating stakeless surveys
Nitrogen - used to stimulate production
Non-polarizing electrodes used for making measurements in drill holes
Optical sensors
P
Packers
Paint supplies
Perforating guns - used during the production testing phase
Pipe dope
Pipeline installation equipment
Pipeline coatings - cement or otherwise
Piping systems - used downhole in the production and testing phase
Pit volume totalizer (PVT) - used for monitoring the bore hole
Polarization equipment - time and frequency domain induced
Portable building
Potentiometers - field
Annex D Page 5
Petroleum Agreement
Government of Guyana - Berbice PA
Power - tongs and jaws (also see Tongs)
Power plants - includes diesel, electrical
Power tongs
Power washers
Pressure piping systems and its components - used during the production testing phase
Preventers - blowout (BOP)
Probes - inductive conductivity used for electrical or electromagnetic surveying
Production processing equipment - includes separators, compressors, tanks, flow lines, pumps and
valves
Prospecting, seismic - see seismic prospecting
Protectors - thread
Pump lines and valves that run from the mud pump to well
Pump units - includes submersible trash or sump
Pumpjacks
Pumps - explosion proof
Pumps and motors - used in the production testing phase /
R 11
Racks - pipe used in the drilling process \ \
Radar equipment - ground penetrating, side looking aperture ---
Radio - phone, mobile, VHF, two-way \. ---
Radio antenna - MDS
Radioactive prospecting - scintillometers, spectral gamma-gamma density counters, geiger muller
counters, gamma-ray spectrometers, potassium gradiometers
Radioactive sources - used in wireline logging
Ram thread protectors - telescoping
Reactive welding gases - when used in a repair service
Recorder box used for seismic prospecting
Recording system used for seismic prospecting
Reel for coil tubing
Reflectance equipment used for remote sensing
Regulators - includes when used in the transportation and distribution system, for example, gathering
lines
Remote sensing equipment - includes ultraviolet lamps and reflectance, infrared and hyperspectral
spectrometers
Resistivity survey equipment used for electrical or electromagnetic surveying
Return and discharge lines of a circulating system
Rod basket
Rotary and pump drives
Rotary and pump drives
Rotary table
S
Safety valves - used for well control that are a part of the equipment on the service rig
Sand - includes sand used to stimulate well production
Satellite communications equipment
SCADA equipment - (Supervisory Control and Data Acquisition) used at the well head, processing plant
or refinery
Scintillometers
Seismic - instrumentation, drilling equipment, imaging equipment
Seismic explosives
Seismic prospecting - recording system, seismic instrumentation, geophones, cables, data processing
units
Annex D Page 6
Petroleum Agreement
Government of Guyana - Berbice PA
Seismic vessels and associated equipment
Self-potential meters used for electrical or electromagnetic surveying
Sensors - optical
Separator vessels - used during the production testing phase
Snubbing unit - composed of a blowout preventer stack, a hydraulic jack and a power unit to run the
hydraulics
Solids control equipment
Sonar - includes side scanning
Sonic Joggers - full wave form
Spectral gamma-gamma density counters
Spectrometers - infrared or hyperspectral used for remote sensing, gamma ray
Spools - includes drill line spool
Spools (specialized pieces that adapt tubing to BOPs or for spacing requirements between BOP and
wellhead)
Stabbing guides - used in the drilling process
Stimulating fluids
Stimulation acids - chemicals used downhole or injected in oil/gas formations
Storage tanks - (see Tanks)
Submersible trash pump unit - used to pump drilling fluids, mud/water
Sulphur recovery equipment - used in processing plants and refineries
Survey equipment (see Global positioning systems and Navigation systems)
T
Tank battery
Tanks - flare, integrated fuel, mud or water, stand alone fuel tank fully integrated with drilling rig that
serves as the direct fuel supply for the rig
Tanks - storage - used at a refinery or processing plant
Tanks - water storage
Telecommunication equipment
Thermostats - electrical designed for use with any of the machinery or equipment on this list
Thread protectors - used in the drilling process
Time and frequency domain induced polarization equipment used for electrical or electromagnetic
surveying
Tongs - backup and integral tongs, power tongs and jaws
Tongs - power also called rotary or casing tongs, power tongs and jaws, backup and integral tongs
Tools - fishing tools for retrieving tools lost downhole
Tools - hand
Top drives - Drill Rig
Torque gauges - used in the drilling process
Towers - light
Traction motors
Travelling blocks
Tricones - drill bits
Tubing - includes coil
Tubing slips also known as air slips
Two-way radios
U
Ultraviolet lamps used for remote sensing
V
Vacuum and wash pump used to clean up around rig and wash equipment
Vacuum tanks or systems - truck- or trailer-mounted
Annex D Page 7
Petroleum Agreement
Government of Guyana - Berbice PA
Vacuum units
Valve - outlet, manifold (integral part of the high pressure pumping system)
Valve manifold (integral part of the high pressure pumping system)
Valves - includes those used in the transportation and distribution system, for example, gathering lines
Valves - safety - used for well logging, drill stem testing or the production testing phase
Vehicles
Vessels - separator - used during the production testing phase
Vessels - supply and anchor handling for offshore petroleum operations
Vessels - for storage of crude oil (FPSO)
Vessels - Mobile Offshore Drilling Units
Vibrators used for seismic prospecting
Viscosifiers - liquid; dry polymer; concentrated
W
Walkways - see Scaffolding
Waste gas transmission - see Pipes
Waste management bins
Waste water treatment units - mobile
Water clarifiers - used to remove residual oil in produced water prior to disposal or re-use
Water disposal lines - includes associated machinery and equipment that are located within the
processing plant
Water storage tanks
Welding equipment and supplies
Well flow lines transporting raw product from a well to a satellite, battery, line pipe or processing plant
Well logging equipment - includes surface and downhole tools
Well testing equipment - includes surface and downhole tools
Wellhead equipment
Winches
Wireline (or slickline) unit - skid- or truck-mounted
Annex D Page 8
Petroleum Agreement
Government of Guyana - Berbice PA