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LIBERIA

Model Petroleum Production Sharing Contract

PRODUCTION SHARING CONTRACT

BETWEEN

The Republic of Liberia, (STATE) represented for the purposes of this Contract by the

National Oil Company of Liberia (NOCAL), a company incorporated under the laws of

Liberia;

AND

____________________, a company incorporated under the laws of ____________,

hereinafter referred to as _______________, and represented for the purposes of

this Contract by , ("the Contractor").

WHEREAS

The discovery and exploitation of Petroleum are important for the interest and the

economic development of the country and its people;

NOCAL wishes to undertake operations for exploration

transportation, storage, processing and marketing of Petroleum;



for



exploitation,



NOCAL has the mining rights in respect of Petroleum exploration and exploitation

over the entirety of available areas in Liberia including the Delimited Area defined

hereinafter;

NOCAL wishes to promote the development of the Delimited Area, and the

Contractor wishes to cooperate with NOCAL by assisting it in the exploration for and

production of the potential resources within the Delimited Area, and thereby

encouraging the economic growth of the country;

The company which is a Party to this Contract shall be the Contractor; and

The Contractor represents that it has the financial resources, the technical

competence and the organization capacity necessary to carry out in the Delimited

Area the Petroleum Operations specified hereinafter.

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

ARTICLE 1: DEFINITIONS

The following terms used in this Contract shall have the following meaning:

1.1.

CALENDAR YEAR means a period of twelve (12) consecutive months

beginning on January first (1st) and ending on the following December thirty-first

(31st), according to the Gregorian Calendar.



1.2.

CONTRACT YEAR means a period of twelve (12) consecutive months

beginning on the Effective Date or on the anniversary thereof.

1.3.

FISCAL YEAR means a period of twelve (12) consecutive months beginning on

January first (1st) and ending on the following December thirty-first (31st).

1.4.

BARREL means U.S. barrel, i.e., 42 U.S. gallons measured at a temperature

of 60°F and under an atmospheric pressure.

1.5.

BUDGET means the itemized cost estimates of the Petroleum Operations

described in an Annual Work Program.

1.6.

EFFECTIVE DATE means the date on which this Contract comes into force and

effect, as defined in Article 37.

1.7.

CONTRACTOR means the company that shall be the operator and shall

conduct Petroleum Operations.

1.8.

CONTRACT means this Production Sharing Contract and its appendices

forming an integral part hereof, together with any extension, renewal, replacement

or modification hereto which may be mutually agreed between the Parties.

1.9.

PETROLEUM COSTS means all expenditure actually incurred and paid by the

Contractor for the purposes of the Petroleum Operations under this Contract, and

determined in accordance with the Accounting Procedure attached hereto as

Appendix 2.

1.10. DOLLAR means dollar of the United States of America.

1.11. NATURAL GAS means methane, ethane, propane, butane and dry or wet

gaseous hydrocarbons, whether or not associated with Crude Oil, as well as all

gaseous products extracted in association with Petroleum, such gas, without

limitation, nitrogen, hydrogen sulfide, carbon dioxide, helium and water vapor.

1.12. ASSOCIATED NATURAL GAS means Natural Gas which exists in a reservoir in

solution with Crude Oil which is or could be produced in association with Crude Oil.

1.13. NON-ASSOCIATION NATURAL GAS means Natural Gas other than Associated

Natural Gas.

1.14. FIELD means a commercial accumulation of Petroleum in one or several

overlaying horizons, which has been appraised in accordance with the provisions of

Article 11.

1.15. PETROLEUM means Crude Oil and Natural Gas.

1.16. PETROLEUM OPERATIONS means all the Petroleum exploration, appraisal,

development, production, transportation and marketing operations, and more

generally, any other operations directly associated therewith, carried out under this

Contract.

1.17. PARTIES means NOCAL and the Contractor; and PARTY means either NOCAL

or the Contractor.



1.18. APPRAISAL PERIMETER means any part of the Delimited Area where one or

more Petroleum discoveries have been made, and in respect of which NOCAL has

granted to the Contractor an exclusive appraisal authorization for the purpose of

appraising the extent of said discoveries.

1.19. EXPLOITATION PERIMETER means any part of the Delimited Area in respect of

which NOCAL has granted to the Contractor an exclusive exploitation authorization.

1.20. CRUDE OIL means crude mineral oil, asphalt, ozokerite, and all kinds of

Petroleum and bitumen, either solid or liquid in their natural condition or obtained

from Natural Gas by condensation or extraction, including condensates and Natural

Gas liquids.

1.21. DELIVERY POINT means the F.O.B. point connecting the loading facilities to the

vessel then loading Crude Oil in the Republic of Liberia or any other transfer point

mutually agreed between the Parties.

1.22. TOTAL PRODUCTION means the total production of Crude Oil or the total

production of Natural Gas obtained from the whole Delimited Area less the quantities

used for the requirements of the Petroleum Operations and any unavoidable losses.

1.23. ANNUAL WORK PROGRAM means the document describing, item by item, the

Petroleum Operations to be carried out during a Calendar Year within the Delimited

Area and in each Exploitation Perimeter, if any, established in accordance with the

Contract.

1.24. DELIMITED AREA means the area in respect of which NOCAL under this

Contract, grants to the Contractor an exclusive exploration right. The areas

surrendered by the Contractor in accordance with the provisions of Articles 3.5 and

3.6 shall be deemed as excluded from the Delimited Area which shall be reduced

accordingly. Conversely, the Exploitation Perimeter(s) shall be an integral part of the

Delimited Area during the term of the relevant exclusive exploitation authorization.

1.25. AFFILIATED COMPANY means:

-



a company or any other entity which directly or indirectly controls or is

controlled by any entity constituting the Contractor; or



-



a company or any other entity which directly or indirectly controls or is

controlled by a company or entity which itself directly or indirectly controls

any entity constituting the Contractor. Such "control" means direct or indirect

ownership by a company or any other entity of more than fifty percent (50%)

of the shares, conferring voting rights, forming the stock of another company.



1.26. THIRD PARTY means a company or any other entity, other than the

Contractor, which does not come within the foregoing definition.

ARTICLE 2: SCOPE OF THE CONTRACT

2.1.

This Contract is a Production Sharing Contract and includes all the provisions

of the agreement between NOCAL and the Contractor.



2.2.

NOCAL authorizes the Contractor to be the Operator pursuant to the terms

set forth herein and to carry out the useful and necessary Petroleum Operations in

the Delimited Area, on an exclusive basis.

2.3.

The Contractor undertakes, for all the work necessary for carrying out the

Petroleum Operations provided for hereunder, to comply with good international

petroleum industry practice and to be subject to the laws and regulations in force in

Liberia unless otherwise provided under this Contract.

2.4.

The Contractor shall supply all financial and technical means necessary for the

proper performance of the Petroleum Operations.

2.5.

The Contractor shall bear alone the financial risk associated with the

performance of the Petroleum Operations. The Petroleum Costs related thereto shall

be recoverable by the Contractor in accordance with the provisions of Article 16.2.

2.6.

During the term hereof, in the event of production, the Total Production

arising from the Petroleum Operations shall be shared between the Parties according

to the terms set forth in Articles 16.2 and 16.3.

2.7.

On the Effective Date, the Delimited Area shall be the area as defined in

Appendix 1.

2.8.

The Contractor shall furnish NOCAL with all reports, information and data

referred to hereunder, including without limitation any agreement hading on the

entities constituting the Contractor.

ARTICLE 3: DURATION OF EXPLORATION PERIODS AND SURRENDERS

3.1.



Delimited Area.



The exclusive exploration authorization is hereby granted to the Contractor for a first

period of ____________ (_______)

Contractual Years in respect of the entire

Delimited Area.

3.2.

If during the first exploration period set forth above the Contractor has

fulfilled the exploration work commitments defined in Article 4, as ascertained by the

Government, the exclusive exploration authorization shall, at the Contractor's

request, be renewed for a second exploration period of ___________ (______)

Contractual Years.

3.3.

If, at the end or such second exploration period and provided that it has

fulfilled its work commitments as set forth above, the Contractor so requests, a third

exploration period shall be authorized for ___________ (______) Contractual Years.

3.4.

The applications referred to in Articles 3.2 and 3.3 shall be made at least sixty

(60) days prior to the expiration of the current exploration period.

3.5.



The Contractor shall surrender at least the following surfaces:

(a)



twenty-five percent (25%) of the initial surface of the Delimited Area

at the expiration of the first exploration period.



(b)



twenty-five percent (25%) of the initial surface of the Delimited Area

at the expiration of the second exploration period.



Such surrenders shall be constituted of one block of a simple geometrical shape

delimited by north-south, east-west lines or by natural boundaries of the area

concerned.

For the purpose of computing the surface to be surrendered, the surface in respect of

any Exploitation Perimeter shall be deducted from the initial surface of the Delimited

Area. The surfaces previously surrendered pursuant to the provisions of Article 3.6

shall be deducted from the surfaces to be surrendered. Subject to its compliance

with the above-mentioned requirements, the Contractor shall have the right to

determine the area to be surrendered.

The Contractor undertakes to furnish NOCAL with a precise description and a map

showing the details of the surrendered areas and those retained, together with a

report specifying the work carried out in the surrendered areas from the Effective

Date and the results obtained.

3.6.

During any exploration period, the Contractor may, at any time, notify NOCAL

that it surrenders on the whole or any part of the Delimited Area the rights granted

to it by giving sixty (60) days' notice to that effect. No surrender during or at the

expiration of any exploration period shall reduce the work commitments and the

investment obligations set forth in Article 4 for the current exploration period. In the

event of surrender, the Contractor shall have the exclusive right to retain, for their

respective term, the surfaces in respect of Appraisal Perimeters and Exploitation

Perimeters which would have been granted and to carry out the Petroleum

Operations therein.

3.7.

At the expiration of the third exploration period set forth in Article 3.3, the

Contractor shall surrender the whole remaining surface of the Delimited Area except

as to any Appraisal Perimeters and Exploitation Perimeters which would have then

been granted.

3.8.

If at the expiration of all the exploration of periods the Contractor has not

obtained an exclusive appraisal authorization or an exclusive exploitation

authorization, this Contract shall terminate.

3.9.

The termination of this Contract, whatever the reason thereof, shall not

relieve the Contractor of any obligations under this Contract incurred prior to, or

arising from, said termination and which shall be fulfilled.

ARTICLE 4: EXPLORATION WORK COMMITMENTS

4.1.

The Contractor shall commence the geological and seismic work within three

months from the Effective Date.

4.2.

The Contractor, during the first exploration period defined in Article 3.1, shall

carry out the following minimum work:

a) ____________ kilometers of seismic survey and

b) ____________ exploratory wells.



4.3.

The Contractor, during the second exploration period defined in Article 3.2,

shall carry out the following minimum work:

-



_________ exploratory wells.



4.4.

The Contractor, during the third exploration period defined in Article 3.3, shall

carry out the following minimum work:

-



_________ exploratory wells.



4.5.

Each of the exploratory wells referred to above shall be drilled to a minimum

depth of ______ meters, after deduction of the water depth, or to a lesser depth if

the continuation of drilling performed in accordance with good international

petroleum industry practice is prevented for any of the following reasons:

(a)



the basement is encountered at a lesser depth than the minimum

contractual depth;



(b)



continuation of drilling presents an obvious danger due to the

existence of abnormal formation pressure;



(c)



rock formations are encountered the hardness of which prevents, in

practice,

the continuation of drilling by the use of appropriate

equipment;



(d)



petroleum formations are encountered the crossing of which requires,

for their protection, the laying of casings preventing the minimum

contractual depth from being reached. In the event that any of the

above reasons occurs, the exploratory well shall be deemed to have

been drilled to the minimum contractual depth.



Notwithstanding any provision in this Article to the contrary, NOCAL and the

Contractor may, at any time, agree to abandon the drilling of a well at a lesser depth

than the minimum contractual depth.

4.6.

In order to carry out the exploration work defined in Articles 4.2 to 4.4 in the

best technical conditions in accordance with good international petroleum industry

practice, the Contractor undertakes to spend the following minimum amounts

determined with minimum expenditure of __________ million Dollars per well:

(e)



_______ million Dollars during the first exploration period defined in

Article 3.1;



(f)



_______ million Dollars during the second exploration period defined

in

Article 3.2;



(g)



_______ million Dollars during the third exploration period defined in

Article 3.3.



If during the exploration period the Contractor has performed its work commitments

for an amount lesser than the amount specified above, it shall be deemed to have

fulfilled its investment obligations relating to that period. Conversely, the Contractor



shall perform the entirety of its work commitments set forth in respect of an

exploration period even if it results in exceeding the amount specified above for that

period.

4.7.

If at the expiration of any of the three (3) exploration periods defined in

Articles 3.1, 3.2 and 3.3 or upon the date of surrender of the whole Delimited Area,

or upon the date of termination of this Contract, the Contractor has not fulfilled its

work commitments set forth in this Article, it shall pay as compensation to NOCAL,

within thirty (30) days after that date of expiration, surrender or termination, the

unspent balance of exploration work commitments above-defined for the current

exploration period.. 13

ARTICLE 5: ESTABLISHMENT AND APPROVAL OF ANNUAL WORK PROGRAMS AND

BUDGETS

5.1.

At least three (3) months before the beginning of each Calendar Year, or for

the first year, within one (1) month from the Effective Date, the Contractor shall

prepare and submit for approval to NOCAL an Annual Work Program together with

the related Budget for the entire Delimited Area, specifying the Petroleum Operations

that the Contractor proposes to perform during that Calendar Year and their cost.

5.2.

If NOCAL wishes to propose any revisions or modifications to the Petroleum

Operations specified in said Annual Work Program, it shall, within thirty (30) days

after receipt of that Program, so notify the Contractor, presenting all justifications

deemed useful. In that event, NOCAL and the Contractor shall meet as soon as

possible to consider the proposed revisions or modifications and to mutually establish

the Annual Work Program and the related Budget in its final form, in accordance with

good international petroleum industry practice.

However, during the Exploration Period, the Annual Work Program and the related

Budget established by the Contractor after the above mentioned meeting shall be

deemed to be approved provided that they comply with the obligations set forth in

Article 4. Each part of the Annual Work Program and Budget in respect of which

NOCAL has not proposed any revision or modification within the period of thirty (30)

days above-mentioned, shall be carried out by the Contractor within the stated time.

Should NOCAL fail to notify the Contractor of its wish for revision or modification

within the period of thirty (30) days above mentioned, such Annual Work Program

and the related Budget submitted by the Contractor shall be deemed to be approved

by NOCAL.

5.3.

It is agreed by NOCAL and the Contractor that the Contractor may acquire

knowledge as and when the work is implemented or certain events may justify

changes to the details of the Annual Work Program. In that event, after notification

to NOCAL, the Contractor may make such changes provided that the basic objectives

of said Annual Work Program are no modified.

ARTICLE 6: CONTRACTOR'S OBLIGATIONS IN RESPECT OF THE EXPLORATION

PERIODS

6.1.

The Contractor shall provide all the necessary funds and purchase or hire all

the equipment, facilities and materials required to carry out the Petroleum

Operations.



6.2.

The Contractor shall provide all technical assistance, including the personnel

required to carry out the Petroleum Operations.

6.3.

The Contractor shall be responsible for the preparation and performance of

the Annual Work Programs which shall be carried out in the most appropriate

manner in observance of good international petroleum industry practice.

6.4.



The Contractor undertakes to take all the reasonable and practical steps to:

(a)



ensure the protection of water-bearing strata encountered during its

work;



(b)



carry out the tests necessary for determining the value of any show

encountered during drilling and the exploitability of any possible

Petroleum discoveries;



(c)



avoid losses and discharges of Petroleum produced as well as losses

and discharges of mud or any other product used in the Petroleum

Operations.



6.5.

All works and facilities erected by the Contractor hereunder shall, according to

their nature and to the circumstances, be built, placed, signaled, marked, fitted and

preserved so as to allow at any time and in safety free passage to navigation within

the Delimited Area, and without prejudice to the foregoing, the Contractor shall, in

order to facilitate navigation, install the sound and optical devices approved or

required by the competent authorities and maintain them in a manner satisfactory to

said authorities..15

6.6.

In the exercise of its rights to build, carry out work and maintain all facilities

necessary for the purposes hereof, the Contractor shall not disturb any existing

graveyard or building used for religious purposes, nor cause a nuisance to any

government or public building, except with the prior consent of NOCAL, and shall

make good the damage caused by it in that event.

6.7.

In its conduct of Petroleum Operations, the Contractor undertakes to take all

necessary precautions to prevent marine pollution in order to prevent pollution,

NOCAL and Contractor agree that the Contractor shall observe all existing

international environmental protocols, regulations and rules as may be applicable to

prevent pollution and preserve the environment. NOCAL and the Contractor shall

meet and consider any measure which may be necessary to preserve the

environment.

6.8.

The Contractor and its Contractors shall be obligated to give preference to

enterprises and goods from Liberia, conditions of price, quality, delivery time and

terms of payment are similar.

ARTICLE 7 CONTRACTOR'S RIGHTS IN RESPECT OF

THE EXPLORATION PERIODS

7.1.

Without prejudice to the provisions hereof, the Contractor shall have the right

to carry out the Petroleum Operations within the Delimited area. Such right includes,

inter alia;



(a)



full responsibility for, management of and control over all the

Petroleum Operations;



(b)



authority to exercise any of the rights conferred hereby through

agents and independent contractors, and to pay accordingly any of

their expenses and costs in the place and in the currency chosen by

the Contractor.



7.2.

The Contractor shall have the right to clear the ground, dig, perforate, drill,

build, erect, place, supply, operate, manage and maintain ditches, pools, wells,

trenches, excavations, dams, canals, water conduits, plants, tanks, basins, maritime

and other storage facilities, primary distillation units, first-extraction gasoline

separator units, sulfur plants, and other facilities for Petroleum production, together

with the pipelines, pumping stations, generator units, power plants, high voltage

lines, telephone, telegraph, radio and other communication facilities, factories,

warehouses, offices, employees' housing, hospitals, premises, ports, docks, harbors,

dikes, jetties, dredges, sea walls, under water piers and other facilities, ships,

vehicles, railways, warehouses, workshops, foundries, repair shops and all the

auxiliary services which are necessary for or useful to the Petroleum Operations or in

connection therewith; and all additional facilities which are or may become necessary

for or reasonably subsidiary to the carrying out of the Petroleum Operations.

7.3.

The agents, employees and representatives of the Contractor or its

subcontractors shall have the right, for the purposes of the Petroleum Operations to

enter into or leave the Delimited Area and shall have free access to all the facilities

set up by the Contractor.

7.4.

The Contractor shall have the right, subject to the payment of fees applicable

in Liberia, to remove and use the surface soil, mature timber, clay, sand, limestone,

gypsum, stones and other similar materials which may be necessary for the

performance of the Petroleum Operations.

With the consent of the competent administrative services, the Contractor may make

reasonable use of such materials for the performance of the Petroleum Operations,

subject to payment of fees applicable in Liberia,. when they are located on land

owned by the STATE and placed in the vicinity of the land where said Operations are

taking place.

The Contractor may take or use the water necessary for the Petroleum Operations,

provided that existing irrigation or navigation are not impaired and that land, houses

or watering places for livestock are not deprived of a reasonable quantity of water.

ARTICLE 8: ACTIVITY REPORTS DURING THE EXPLORATION PERIODS AND

SUPERVISION OF PETROLEUM OPERATIONS

8.1.

NOCAL shall own and may freely use all the original data and documents

relating to the Petroleum Operations such as out without limitation, records,

samples, geological, geophysical, petrophysical, drilled operating reports.

8.2.

The Contractor undertakes to furnish NOCAL with the following periodic

reports:



(a)



daily reports on drilling operations;



(b)



weekly reports on seismic operations;



(c)



within thirty (30) days after each Calendar quarter, a report on the

Petroleum Operations carried out together with a detailed statement

on Petroleum Costs in respect of the preceding quarter;



(d)



prior to the end of February of each Calendar Year, an annual report

on the Petroleum Operations carried out together with a detailed

statement on Petroleum Costs in respect of the preceding Calendar

Year.



8.3.

In addition, the following reports or documents shall be furnished to NOCAL

as soon as they are prepared or obtained:

(a)



a copy of all geological surveys and syntheses together with the

related

maps;



(b)



a copy of all geophysical surveys, measurement and interpretation

reports, map profiles, sections or other documents related thereto, as

well as, at NOCAL's request, the originals of all recorded seismic

magnetic tapes;



(c)



a copy of the drilling location and completion report for each well

together with a complete set of recorded logs;



(d)



a copy of all drill tests or production tests together with any study

relating to the flow or production of a well;



(e)



a copy of all reports relating to core analyses.



All maps, sections, profiles, logs and all other geological or geophysical documents

shall be supplied on an appropriate transparent support in view of subsequent

reproduction. A representative portion of the cores and cuttings removed from each

well, as well as samples of fluids produced during drill tests or production tests shall

also be supplied to NOCAL within a reasonable period.

Upon expiration or in the event of surrender or termination of this Contract, the

original documents and samples relating to the Petroleum Operations shall be

provided to NOCAL.

8.4.

The Contractor shall keep NOCAL informed of its activities through the duly

designated representative of the latter. In particular, the Contractor shall notify

NOCAL as soon as possible and in any event at least fifteen (15) days in advance of

all projected Petroleum Operations, such as any geological surveys, seismic surveys,

and commencement of drilling and installation of a platform.

In the event the Contractor decides to abandon a drilling it shall notify NOCAL

thereof within at least seventy-two (72) hours prior to such abandonment.

ARTICLE 9: OCCUPATION OF LAND



9.1.

The STATE shall make available to the Contractor, and only for the purposes

of the Petroleum Operations, any land which it owns and which is necessary for said

operations. The Contractor shall have the right to build and the obligation to

maintain, above and below the ground, the facilities necessary for the Petroleum

Operations.

The Contractor shall indemnify the STATE for any damage caused to the land by the

construction, use and maintenance of its facilities on such land. The STATE shall

authorize the Contractor to build, use and maintain telephone, telegraph and piping

systems above and below the ground and along the land not belonging to the STATE,

provided that the Contractor pays to the land-owners, a reasonable compensation

mutually agreed upon.

9.2.

The rights on land owned by private persons, which would be necessary for

the carrying out of the Petroleum Operations, shall be acquired by direct agreement

between the Contractor and the private person concerned.

In the event of disagreement, the Contractor shall notify the STATE thereof, and the

latter shall proceed to expropriation for a public purpose, at Contractor's expenses.

When determining the value of those property rights, no consideration shall be given

to the Contractor's purpose for acquiring them and the STATE agrees that no law or

procedure for said acquisition shall have the effect of giving them an excessive value

or a confiscation value. Those rights acquired by the ST ATE shall be registered in its

name, but the Contractor shall be entitled to benefit therefrom for the purposes of

the Petroleum Operations. During the entire term of this Contract, the STATE

guarantees that the Contractor shall be protected in the use and occupation of such

land just as if it owns the property rights thereto.

ARTICLE 10: USE OF FACILITIES

10.1. For the purposes of the Petroleum Operations, the Contractor shall have the

right to use, in accordance with the applicable laws, any railroad, tramway, road,

airport, landing strip, canal, river, bridge, waterway and any telephone or telegraph

network in Liberia whether owned by the STATE or by any private enterprise, subject

to the payment of fees then in effect or mutually agreed upon which will not be in

excess of the prices and tariffs charged to Third Parties for similar services.

The Contractor shall also have the right to use for the purposes of the Petroleum

Operations any land, sea or air transportation means for the transportation of its

employees or equipment, subject to compliance with the laws and regulations which

generally govern the use of such means of transportation.

10.2. The STATE shall have the right to use for exceptional matters any

transportation and communication facility installed by the Contractor, subject to a

fair compensation mutually agreed upon which will not be in excess of the prices and

tariffs charged to Third Parties for similar services.

10.3. Nothing in this Contract shall limit the STATE's right to build, operate and

maintain on, under and along the land made available to the Contractor for the

purposes of the Petroleum Operations, roads, railroads, airports, landing strips,

canals, bridges, pipelines, useful telephone and telegraph lines, provided that such

right is not exercised in a manner which restricts or hinders the Contractor's rights

hereunder, or the Petroleum Operations.



ARTICLE 11: APPRAISAL OF A PETROLEUM DISCOVERY

11.1. In the event the Contractor discovers Petroleum, it shall, as promptly as

possible, notify NOCAL thereof and submit to it, within thirty (30) days after the date

of the temporary plugging or abandonment of the discovery well, a report including

all information relating to said discovery.

11.2. If the Contractor wishes to undertake appraisal work relating to the abovementioned Petroleum discovery, it shall submit for approval to NOCAL, within six (6)

months after the date of notification of said discovery, the appraisal work program

and the estimate of the related Budget.

The provisions of Article 5 shall be applicable, mutatis mutandis to said program as

regards its approval and performance, it being understood that the submitted

program shall comply with good international petroleum industry practice.

11.3. If the Contractor meets the conditions referred to in Article 11.2 and on

request to NOCAL, the latter shall grant to it an exclusive appraisal authorization for

duration of two (2) years from the date of approval of the appraisal work program

and the related Budget, in respect of the Appraisal Perimeter specified in said

program. Except otherwise provided by this Article, the Contractor shall, during the

term of said exclusive appraisal authorization, be subject to the same regime as that

applicable to the exclusive exploration authorization.

11.3.1. The Contractor shall then diligently carry out the appraisal work program for

the discovery in question; in particular it shall drill the appraisal wells and carry out

the production tests specified in said program.

At the Contractor's request, notified at least thirty (30) days prior to the expiration of

the appraisal period above-defined, the duration of said period may be extended by

a maximum of six (6) months, provided that such extension is justified by the

continuation of the drilling and production tests specified in the appraisal program.

11.3.2.

Within three (3) months after the completion of appraisal work, and no

later than thirty (30) days prior to the expiration of the appraisal period, the

Contractor shall provide NOCAL with a detailed report giving all the information

relating to the discovery and the appraisal thereof.

11.3.3.

If, after having carried out the appraisal work, the Contractor

considers that the Field corresponding to the Petroleum discovery is commercial, it

shall submit to NOCAL, together with the previous report, an application for an

exclusive exploitation authorization accompanied by a detailed development and

production plan for said Field, specifying inter alia;

(a)



the planned delimitation of the Exploitation Perimeter applied for by the

Contractor, so that it covers the area defined by the seismic closure of the

Field concerned, together with all the technical justifications with respect to

the extent of said Field;



(b)



an estimate of the reserves in place; the proven and probable recoverable

reserves and the corresponding annual productions, together with a study on



the methods of recovery and the possible valorization of the products

associated with Crude Oil, such as any Associated Natural Gas;

(c)



item by item, the description of equipment and work necessary for

production, such as the number of development wells, the number of

platforms, pipelines, production, processing, storage and loading facilities

together with their specifications;



(d)



the estimated schedule for its implementation and the projected date of

production start-up;



(e)



the estimates of investments and exploitation costs together with an

economic evaluation demonstrating the commercial nature of the discovery in

question.



11.3.4. The commercial nature of one or more Petroleum Fields shall be determined

by the Contractor, provided that it shall, at the end of appraisal work, submit to

NOCAL the economic study referred to in Article 11.3.3.(e) demonstrating the

commercial nature of said Field or Fields.

A Field may be declared commercial by the Contractor if, after taking into account

the provisions of this Contract and the submitted development and production plan,

the projected incomes and expenses determined in accordance with good

international petroleum industry practice confirm the commercial nature of said Field.

11.3.5. For the purposes of evaluating the commercial nature of said Field or Fields,

NOCAL and the Contractor shall meet within thirty (30) days after the submission of

the development and production plan accompanied by the economic evaluation.

11.3.6. The development and production plan submitted by the Contractor shall be

subject to the approval of NOCAL. Within ninety (90) days after the submission of

said plan, NOCAL may propose revisions or modifications hereto by notifying the

Contractor thereof with all the useful justifications. In that event, the Parties shall

meet as soon as possible in order to consider the proposed revisions or modifications

and establish by mutual agreement the plan in its final form; the plan shall be

deemed to be approved by NOCAL upon the date of such Agreement.

Should NOCAL fail to notify the Contractor of its wish for revision or modification

within the above-mentioned ninety (90) day period, the plan submitted by the

Contractor shall be deemed to be approved by NOCAL at the expiration of said

period.

11.4. If for reasons not technically justified, the Contractor, within twelve (12)

months after notification to NOCAL of a Petroleum discovery, has not applied for an

exclusive appraisal authorization or if, after its granting it has not commenced the

appraisal work in respect of said discovery, or if the Contractor, within eighteen (18)

months after completion of the appraisal work, does. not declare the discovery as

commercial, NOCAL may require that the Contractor surrenders all its rights in

respect of the area deemed to encompass said discovery without any compensation

for the Contractor. If, within sixty (60) days after NOCAL's request, the Contractor

has not notified its decision, it shall surrender said area and will forfeit all its rights

on Petroleum which could be produced from said discovery, and any area so

surrendered shall be deducted from the surfaces to be surrendered under Article 3.5.



ARTICLE 12: GRANT OF AN EXCLUSIVE EXPLOITATION AUTHORIZATION

12.1. A commercial Petroleum discovery shall entitle the Contractor to an exclusive

right, if it so requests pursuant to the conditions set forth in Article 11.3.3., to

obtain, in respect of the Field concerned, an exclusive exploitation authorization

covering the related Exploitation Perimeter. Said authorization shall be granted by

NOCAL as soon as possible.

12.2. If the Contractor makes several commercial discoveries in the Delimited Area,

each such discovery shall, in accordance with the provisions of Article 12.1 give rise

to an exclusive exploitation authorization each corresponding to an Exploitation

Perimeter. The number of exclusive exploitation authorizations and related

Exploitation Perimeters within the Delimited Area shall not be limited.

12.3. If in the course of work carried out after the grant of an exclusive exploitation

authorization, it appears that the area defined by the seismic closure of the Field

concerned is larger than originally estimated pursuant to Article 11.3.3., NOCAL shall

grant to the Contractor, as part of the exclusive exploitation authorization already

granted, an additional area so that the entirety of said Field is included in the

Exploitation Perimeter, provided, however, that the Contractor supplies NOCAL,

together with its application with the technical evidence of the extension so required

and provided, further, that the above mentioned extension is an integral part of the

Delimited Area as defined at the time of said application.

12.4. Where a Field extends beyond the boundaries of the Delimited Area, NOCAL

may require the Contractor to exploit said Field in association with the right holder of

the adjacent area under the provisions of a unitization agreement.

Within six (6) months after NOCAL has notified its request, the Contractor shall

submit to its approval the development and production plan of the Field concerned

which shall be prepared in agreement with the right holder of the adjacent area.

ARTICLE 13: DURATION OF THE EXPLOITATION PERIOD

13.1. The duration of an exclusive exploitation authorization during which the

Contractor is authorized to carry out the exploitation of a Field declared commercial

is set at twenty-five (25) years from its date of issue. If upon expiration of the

exploitation period of twenty-five (25) years above-defined, a commercial

exploitation of a Field remains possible NOCAL may authorize the Contractor, at the

latter's request submitted at least twelve (12) months prior to said expiration, to

continue under this Contract the exploitation of said Field during an additional period

of no more than ten (10) years, provided that the Contractor has fulfilled all its

obligations during the current exploitation period. If, upon expiration of that

additional exploitation period, a commercial exploitation of said Field remains

possible, the Contractor may request NOCAL, at least twelve (12) months prior to

said expiration that it be authorized to continue the exploitation of said Field under

this Contractor during an additional period to be agreed upon.

13.2. The Contractor may, at any time, fully or partially surrender any exclusive

exploitation authorization by giving at least twelve (12) months' prior notices which

may be reduced with NOCAL's consent. That notice shall be accompanied by the list



of steps which the surrendering Contractor undertakes to take, in accordance with

good international petroleum industry practices arising out of its surrender.

13.3. Interruption of development work or production of a Field declared

commercial, for a consecutive period of at least six (6) months, decided by the

Contractor without NOCAL's consent, or abandonment of the exploitation of a Field,

may give rise to the withdrawal of the exclusive exploitation authorization concerned

together with the termination of this Contract.

13.4. Upon expiration surrender or withdrawal of the .last exclusive exploitation

authorization granted to the Contractor, this Contract shall terminate.

13.5. The termination of this Contract, whatever the reason thereof, shall not

relieve the Contractor of any obligations incurred prior to, or arising from, said

expiration or termination and which shall be fulfilled.

ARTICLE 14: EXPLOITATION OBLIGATION

14.1. For any Field in respect of which an exclusive exploitation authorization has

been granted, the Contractor undertakes to perform, at its sole cost and its own

financial risk, all the Petroleum Operations useful and necessary for the exploitation

of said Field.

ARTICLE 15: CONTRACTOR'S OBLIGATIONS AND RIGHTS IN RESPECT OF

EXCLUSIVE EXPLOITATION AUTHORIZATIONS

14.2. However, if the Contractor can provide accounting evidence, during either the

development period or the production period, that the exploitation of a Field cannot

be commercially profitable, notwithstanding that an exclusive exploitation

authorization has been granted in accordance with the provisions of Article 12.1,

NOCAL agrees not to force the Contractor to continue the exploitation of such Field.

In that event, NOCAL, in its discretion, may withdraw the exclusive exploitation

authorization concerned from the Contractor without any compensation for the latter,

by giving- a sixty (60) days' prior notice.

15.1. The Contractor shall commence development work not later than six (6)

months after approval of the development and production plan referred to in Article

11.3.6 and shall continue it with the maximum diligence.

15.2. The provisions of Articles 5, 6, 7, 8, 9, and 10 are also applicable, mutatis

mutandis, in respect of any exclusive exploitation authorization.

15.3. The Contractor shall have the right to build, use, operate and maintain all the

Petroleum storage and transportation facilities which are necessary for the

production transportation and sale of Petroleum produced, pursuant to the conditions

specified in this Contract.

The Contractor may determine the route and location of any pipeline inside Liberia

which is necessary for the Petroleum Operations, provided that it shall submit plans

to NOCAL for approval prior to the commencement of work; any pipeline crossing or

running alongside roads or passageways (other than those used exclusively by the



Contractor) shall be built so as not to hinder the passage on those roads or

passageways.

15.4. The Contractor may, to the extent and for the duration of the excess capacity

of a pipeline or processing, transportation or storage facility built for the purposes of

the Petroleum Operations, be obligated to accept the flow of Petroleum coming from

exploitations other than that of the Contractor, provided that such flow shall not

cause prejudice to the Petroleum Operations, and provided, further, that a

reasonable tariff covering a normal remuneration for capital invested in respect of

the pipeline or facility concerned shall be paid by the user.

15.5. Following the grant of an exclusive exploitation authorization, the Contractor

undertakes to proceed diligently with the carrying out of development wells, spacing

them in a manner so as to ensure, in accordance with good international petroleum

industry practice, the maximum economic recovery of the Petroleum contained in the

Field in question.

15.6. The Contractor shall, in the conduct of development and production

operations, comply with all good international petroleum industry practice which in

particular ensures the good conservation of Fields and maximum economic recovery

of Petroleum.

The Contractor shall, inter alia, carry out enhanced recovery studies and use such

recovery processes if they may lead to an increase in Petroleum recovery rate under

economic conditions.

15.7. The Contractor shall provide NOCAL with all the reports, studies,

measurement results, tests and documents enabling the monitoring of the proper

exploitation of each Field.

The Contractor shall, in particular, carry out the following measures on each

producing well:

(a)



monthly testing of production and gas/oil ratio;



(b)



half-yearly measurement of the Field reservoirs pressure.



15.8. The Contractor undertakes to produce every year from each Field quantities

of Petroleum in accordance with the provisions of Article 15.6. The annual production

rates of each Field shall be submitted by the Contractor together with the Annual

Work Programs for the approval of NOCAL which shall not be withheld provided that

the Contractor gives proper technical and economic grounds.

15.9. The Contractor shall measure, in a point mutually agreed between the Parties,

all Petroleum produced and not used for the requirements of the Petroleum

Operations, and excluding unavoidable losses, after extraction of water and

sediments, by using the measurement appliances and procedures customarily used

in the international petroleum industry.

The authorized NOCAL's representatives shall have the right to examine those

measurements and inspect or cause, to be inspected the appliances or procedures

used. If the Contractor wishes to change said measurement appliances or

procedures, it shall obtain prior approval from NOCAL.



Where the appliances and procedures used therefore have caused an overstatement

or understatement of measured quantities, the error shall be deemed to have existed

since the date of the last calibration of the appliances, unless the contrary can be

justified, and the proper adjustment shall be made for the period of existence of

such error.

ARTICLE 16: RECOVERY OF PETROLEUM COSTS AND PRODUCTION SHARING

16.1. From the commencement of regular production of Crude Oil, the Contractor

shall market all the production of Crude Oil obtained from the Delimited Area, in

accordance with the provisions hereinafter defined.

16.2. For the purposes of recovery of the Petroleum Costs, the Contractor may

freely take each Calendar Year a portion of the production in no event greater than

___ percent (__%) of the Total Production of Crude Oil from the Delimited Area, or

only any lesser percentage which would be necessary and sufficient.

The value of such portion of Total Production allocated to the recovery of the

Petroleum Costs by the Contractor, as defined in the preceding paragraph, shall be

calculated in accordance with the provisions of Article 18.

If during a Calendar Year the Petroleum Costs not yet recovered by the Contractor

under the provisions of this Article 16.2 exceed the equivalent in value of ___

percent (__%) of the Total Production of Crude Oil from the Delimited Area, as

calculated above, the balance of the Petroleum Costs which cannot be recovered in

that Calendar Year shall be carried forward in the following Calendar Year or Years

until full recovery of the Petroleum Costs or until the expiration of this Contract.

16.3. The quantity of Crude Oil from the Delimited Area remaining during each

Calendar Year after the Contractor has taken from the Total Production the portion

necessary for the recovery of the Petroleum Costs, hereinafter referred to as

"Remaining Production," shall be shared between NOCAL and the Contractor as

follows:

The Remaining Production shall be shared according to the daily Total Production

from the Delimited Area:

Increments of daily

Total Production

(in Barrels per day)



NOCAL's Share Contractor's share



from 0 to 15,000

from 15,000 to 30,000

from 30,000 to 50,000

over 50,000



____% ____%

____% ____%

____% ____%

____% ____%



For the purpose of this Article, the daily Total Production shall be the average rate of

Total Production during the calendar quarter in question.

For the purposes of the tax legislation of the Republic of Liberia, the quantity of

Crude Oil that NOCAL will receive during each Calendar Year pursuant to this Article

16.3 shall include the portion necessary to pay any tax(es) of the Contractor in



Liberia which will be assessed on its incomes. NOCAL agrees to pay from this portion

any income tax on behalf and in the name of the Contractor and to deliver to the

latter official receipts of such payments.

16.4. NOCAL may receive its share of production defined in Article 16.3 either in kind

or in cash.

16.5. If NOCAL wishes to receive in kind all or part of its share of production

defined in Article 16.3 it shall so notify in writing the Contractor at least ninety (90)

days prior to the beginning of the calendar quarter concerned specifying the precise

quantity that it wishes to receive in kind during said quarter.

16.6. If NOCAL wishes to receive in cash all or part of its share of production

defined in Article 16.3 or if NOCAL has not notified the Contractor if its decision to

receive its share of production in kind pursuant to Article 16.5, the Contractor shall

market NOCAL's share, of production to be taken in cash for the quarter concerned,

lift said share during such quarter and pay to NOCAL within thirty (30) days following

the date of each lifting, an amount equal to the quantity corresponding to NOCAL's

share of production multiplied by the sale price defined in Article 18. NOCAL may

require payment, for sales of its share of production sold by the Contractor, in

Dollars or in the foreign currency in which the sale has been made.

ARTICLE 17: TAXATION

17.1. Unless otherwise provided for in this Contract the Contractor shall, in respect

of its Petroleum Operations, be subject to the laws generally applicable and the

regulations in force in Liberia concerning taxes which are or may be levied on

incomes, or determined thereto. It is specifically acknowledged that the provisions of

this Article shall apply individually to any entity comprising the Contractor under this

Contract.

The Contractor shall keep separate accounts for each Fiscal Year in respect of the

Petroleum Operations, in accordance with the regulations in force in Liberia, enabling

in particular the establishment of a profit and loss account as well as a balance sheet

showing both the results of said Petroleum Operations and the asset and liability

items allocated or related thereto.

17.2. For the purposes of Article 17.1 the Contractor shall in respect of its net profit

arising from Petroleum Operations, be liable to an income tax under the laws and

regulations in force in Liberia.

In accordance with the provisions of Article 16.3 under which NOCAL shall pay

Contractor's income tax from NOCAL's share of crude oil, the Contractor shall not be

liable for any payment to the STATE with respect to said tax. As regards the tax

authorities of Liberia, the share of Crude Oil of Total Production, which the

Contractor is entitled to receive under the provisions of Article 16.3 is considered as

representing the net profit obtained by the Contractor.

17.3. For the purposes of assessing the Contractor's taxable net income in respect

of a Fiscal Year, the profit and loss account shall, inter alia, be credited by the

Contractor's annual gross income recorded in its account books, arising from the

marketing of the quantity of Crude Oil to which it is entitled under Articles 16.2 and



16.3 all other incomes or proceeds related to the Petroleum Operations including

inter alia those arising from:

a)



the sale of related substances;



b)



processing, transportation or storage of products for Third Parties in

the facilities dedicated to the Petroleum Operations.



17.4. Such profit and loss account shall be debited with all charges necessary for

the purposes of the Petroleum Operations in respect of the Fiscal Year concerned,

which may be deducted under the applicable laws of Liberia and the provisions of

this Contract. In particular the following items may be debited from the income of

the Fiscal Year:

(a)



In addition to the charges specifically set forth below in this Article 17.4, all

other Petroleum costs, including the costs of supplies, personnel and

manpower expenses, costs of services provided to the Contractor in respect of

the Petroleum Operations, provided, however, that costs of supplies,

personnel and services rendered by Affiliated Companies shall be deductible

provided that they do not exceed those which would be normally charged in

arm's length transactions between independent buyer and seller for identical

or similar supplies or services.



(b)



overhead costs relating to the Petroleum Operations performed under this

Contract, including without limitation:



-



Rentals for movable and immovable properties as well as insurance

premiums;



-



A reasonable portion, in light of the services rendered to the Petroleum

.operations performed in Liberia, of wages and salaries paid to managers and

employees residing abroad, and the general and administrative overhead

costs of the central services of the Contractor and its Affiliated Companies

working for its account, located abroad, and indirect costs incurred by said

central services abroad for their account, overhead costs paid abroad shall in

no event be greater than the limits specified in the Accounting Procedure.



(c)



Interest paid to creditors of the Contractor, for their actual amount, subject to

the limits specified in the Accounting Procedure.



(d)



Losses of materials or assets resulting from destruction or damage, assets

which are renounced or abandoned during the year, bad debts, and

indemnities paid to Third Parties compensation for damage.



(e)



Reasonable and justified reserves made for clearly identified future losses or

liabilities which current events render probable.



(f)



Any other losses or charges directly related to the Petroleum Operations,

including exchange losses realized in connection with the Petroleum Operations

as well as bonuses and amounts paid during the Fiscal Year.



17.5. The Contractor's taxable net profit shall be equal to the difference, if positive,

between all the amounts credited and all the amounts debited in the profit and loss

account. If this mount is negative, it shall constitute a loss.

17.6. Within three (l5) months after the end of a Fiscal Year, each entity

constituting the Contractor shall submit to the competent tax authorities its annual

tax return together with financial statements, as required by applicable regulations.

NOCAL, shall, after submission of said annual tax return and acknowledgment of tax

payment, furnish to the Contractor within a reasonable period the tax receipts

evidencing, the payment of Contractors Liberian income tax and all other documents

certifying that the Contractor has, for the Fiscal Year in question, complied with all its

tax obligations with respect to the income tax as defined in this Article.

17.7. Except for the income tax defined in this Article and the bonuses. provided for

in Article 19, the Contractor shall be exempt from all other levies, duties, taxes or

contributions of any nature whatsoever arising from the Petroleum Operations and

any revenues related thereto or, more generally, on Contractor's property, activities

or actions, including its establishment and its operation hereunder. In particular, the

Contractor, its suppliers, subcontractors and Affiliated Companies shall be exempt

from the taxes or turnover (value added taxes and taxes on services) which would

be payable in connection with sales made by, work performed for and services

rendered to the Contractor under this Contract.

17.8. Assignments of any kind between the companies signing this Contract and

their Affiliated Companies as well as any assignment made in accordance with this

Agreement shall be exempt from any duties or taxes payable in such respect.

17.9. Surface rentals shall be payable to NOCAL per square kilometer of the area

remaining at the beginning of each Calendar Year as part of the Delimited Area, in

the amounts as set out below:

Phase of Operation



Subsurface Rentals Per Annum



First Exploration Period

Second Exploration Period

Third Exploration Period

Development & Exploitation Area



$ 30 per sq. km.

$ 50 per sq. km.

$ 75 per sq. km.

$100 per sq. km.



ARTICLE 18: VALUATION OF PETROLEUM

18.1. For the purposes of this Contract, the Crude Oil price shall be the F.O.B.

"Market Price" at the Delivery Point, expressed in Dollars per Barrel and payable

within thirty (30) days after the date of the bill of lading, as determined hereinafter

for each quarter. A Market Price shall be determined for each type of Crude Oil or

Crude oil mix.

18.2. The Market Price applicable to liftings Crude Oil made during a calendar

quarter shall be calculated at the end of said quarter and shall be equal to the

weighted average of the prices obtained for Crude Oil from the Delimited Area during

said quarter by the Contractor and by NOCAL from independent purchasers, as

adjusted to take into account the differences in quality and gravity as well as in

F.O.B. delivery terms and payment conditions.



18.3. In the event such sales are not made, the Market Price shall be determined

on the basis of the prices obtained on the international market during said quarter

between independent buyers and sellers for sales of crude oils of quality similar to

the Crude Oil from the Delimited Area in the same markets as those which the

Liberian Crude Oil would normally be sold, as adjusted to take into account the

differences in quality, gravity, transportation as well as in sales and payment

conditions.

18.4. The following transactions shall, inter alia, be excluded from the calculation of

the Market Price of Crude Oil:

(a)



sales in which the buyer is an Affiliated Company of the seller as well as sales

between entities constituting the Contractor;



(b)



sales in the Liberian domestic market;



(c)



sales in exchange for other than payment in freely convertible currencies and

sales fully or partially made for reasons other then the usual economic

incentives involved in Crude Oil sales on the international market (such as

exchange contracts, sales from government to government or to government

agencies).



18.5. Within ten (10) days following the end of each quarter, the Parties shall

advise each other of the prices obtained for their share of production of Crude Oil

from the Delimited Area sold to independent purchasers during the quarter in

question, indicating for each sale the identity of the purchaser, the quantities sold,

the delivery and payment terms. Within twenty (20) days following the end of each

quarter, the Contractor shall determine in accordance with the provisions of Article

18.2 or Article 18.3, as the case may be, the Market Price applicable for the quarter

concerned, and shall notify NOCAL of that Market Price, indicating the method of

calculation and all data used in the calculation of that market Price.

Within thirty (30) days following receipt of the notice referred to in the preceding

paragraph, NOCAL shall verify that the calculation of Market Price complies with the

provisions hereof and shall notify the Contractor of its acceptance or objections.

Failing notification from NOCAL within that thirty (30) day period the Market Price

provided for in the Contractor's notice referred to in the preceding paragraph shall be

deemed to have been accepted by NOCAL.

In the event that NOCAL has notified objections to the Market Price, the Parties shall

meet within fifteen (15) days following NOCAL' s notification to mutually agree on

the Market Price. If the Parties fail to agree on the Market Price applicable to a given

quarter within seventy-five (75) days after the end of that quarter, NOCAL or the

Contractor may immediately submit to an expert, appointed in accordance with the

following paragraph, the determination of the Market Price (including the

determination of reference crude oils if the Parties have not determined them). The

expert shall determine the price within thirty (30) days after his appointment and his

conclusions shall be final and binding on the Parties. The expert shall decide in

accordance with the provisions of this Article.

The expert shall be selected by agreement between the Parties or, if no agreement is

reached, by the International Center of Expertise of the International Chamber of

Commerce in accordance with its rules on Technical Expertise at the request of the



most diligent Party. The expertise costs shall be charged to the Contractor and

included in the Petroleum Costs.

18.6. In the event it would be necessary to calculate on a provisional basis during a

quarter the Crude Oil price applicable to the liftings made during said quarter, that

price shall be established as follows:

(a)



For any sale to independent buyers, the price applicable to that sale shall be

the price obtained for the Crude Oil for said sale, as adjusted to take into

account the F.O.B. delivery terms and thirty (30) days payment terms.



(b)



For any lifting other than those which are the subject of a sale to independent

buyers, the price applicable to that lifting shall be the Market Price

determined for the preceding quarter or, if that Market Price has not been

determined, a price set up by agreement between the Parties or, failing

agreement, the last known Market Price.

ARTICLE 19: BONUSES



Once the Market Price for a quarter has been determined on a final basis,

adjustments, if required, shall be made within thirty (30) days.

19.1. The Contractor shall pay to NOCAL the following bonuses:

(a)

million Dollars when the Total Production of Crude Oil from the Delimited Area

first reaches the average rate of thirty thousand (30,000) Barrels per day during a

period of thirty (30) consecutive days.

(b)

million Dollars when the Total Production of Crude Oil from the Delimited Area

first reaches the average rate of fifty thousand (50,000) Barrels per day during a

period of thirty (30) consecutive days.

(c)

million Dollars when the Total Production of Crude Oil from the Delimited Area

first reaches the average rate of one hundred thousand (100,000) Barrels per day

during a period of thirty (30) consecutive days.

Each of the amounts referred to in (a), (b) and (c) above shall be paid within thirty

(30) days following the expiration of the reference period of thirty (30) consecutive

days.

19.2. The payments referred to in Article 19.1 be recoverable and, therefore, shall

be considered as Petroleum Costs.

ARTICLE 20: OWNERSHIP AND ABANDONMENT OF ASSETS

20.1. Upon expiration, surrender or termination of this Contract, whatever the

reason thereof, in respect of all or part of the Delimited Area, or at the end of

exploitation of a Field, the Contractor shall transfer at no cost to NOCAL, the

ownership of assets, movables and immovables, used for the requirements of the

Petroleum Operations carried out in the area so surrendered, located whether inside

or outside the Delimited Area, such as wells and their equipment, buildings,

warehouses, docks, lands, offices, plants, machinery and equipment, bases, harbors,



wharfs, jetties, buoys, platforms, pipelines, roads, bridges, railroads and other

facilities.

Such transfer of ownership shall cause the automatic cancellation of any security or

surety concerning those assets, or which those assets constitute.

However, the Contractor may continue to use those assets beyond the date referred

to in the first paragraph, for the requirements of its Petroleum Operations in Liberia

governed by other contracts.

20.2. If NOCAL decides not to accept, for all or part of the assets, the transfer of

ownership provided for in Article 20.1, it may, not later than ninety (90) days

following the date specified in said Article, require the Contractor, in accordance with

good international petroleum industry practice, to perform abandonment operations

and to remove, at the cost of the Contractor, the facilities relating to the surrendered

area.

ARTICLE 21: NATURAL GAS

21.1. Non-Associated Natural Gas

21.1.1. In the event of a Non-Associated Natural Gas discovery, the Contractor shall

engage in discussions with NOCAL with a view to determining whether the appraisal

and exploitation of said discovery have a potentially commercial nature.

21.1.2. If the Contractor, after the above-mentioned discussions, considers that the

appraisal of such Non-Associated Natural Gas discovery is justified, it shall undertake

the appraisal work program for said discovery.

The Contractor shall have the right, for the purposes of evaluating the commerciality

of the Non-Associated Natural Gas discovery, if it so requests at least thirty (30)

days prior to the expiration of the third exploration period set forth in Article 3.3 to

be granted an exclusive appraisal authorization concerning the Appraisal Perimeter of

the above-mentioned discovery, for a term of two (2) years.

In addition, the Parties shall jointly evaluate the possible outlets for the Natural Gas,

both on the local market and for export, together with the necessary means for its

marketing, and they shall consider the possibility of a joint marketing of their shares

of production in the event the Natural Gas discovery would not otherwise be

commercially exploitable. For that purpose, a Consultative Committee for Natural

Gas shall be established by the Parties to ensure the coordination of the upstream

and downstream components of the Natural Gas project and facilitate its evaluation

and implementation.

21.1.3 Following completion of appraisal work, in the event the Parties should jointly

decide that the exploitation of that discovery is justified supply the local market, or

in the event the Contractor should undertake to develop and produce that Natural

Gas for export, the Contractor shall submit prior to the expiration of the appraisal

period an application for an exclusive exploitation authorization which NOCAL will

grant under the terms provided by Article 12.1.

The Contractor shall then have the right and obligation to proceed with the

development and production of that Natural Gas in accordance with the approved



development plan referred to in Article 11.3 and the provisions of this Contract

applicable to Crude Oil shall apply, mutatis mutandis, to Natural Gas, unless

otherwise specifically provided under Article 21.3.

21.1.4. If the Contractor considers that the appraisal of the Non-Associated Natural

Gas discovery concerned, is not justified, NOCAL may, by giving twelve (12) months

prior notice which may be reduced either with NOCAL's consent or automatically in

the event the exclusive exploration authorization expires earlier, require the

Contractor to surrender its rights in respect of the area encompassing said discovery.

In the same manner, if the Contractor, after completion of appraisal works, considers

that the Non-Associated Natural Gas discovery is not commercial, NOCAL may, by

giving three (3) months prior notice, unless the exclusive exploration authorization

expires earlier, require the Contractor to surrender its rights on the area

encompassing said discovery.

In both cases, the Contractor shall forfeit its rights to all Non-Associated Natural Gas

which could be produced from said discovery, and NOCAL may then carry out, or

cause to be carried out, all the appraisal, development, production, processing,

transportation and marketing work relating to that discovery, without any

compensation for the Contractor.

21.2



Associated Natural Gas



21.2.1. In the event of a commercial discovery of Crude Oil, the Contractor shall

state if it considers that the production of Associated Natural Gas is likely to exceed

the quantities necessary for the requirements of the Petroleum Operations related to

the production of Crude Oil (including reinjection operations), and if it considers that

such excess is capable of being produced in commercial quantities. In the event the

Contractor shall have informed ,NOCAL of such an excess, the Parties shall jointly

evaluate the possible outlets for that excess of Natural Gas, both on the local market

and for export (including the possibility of joint marketing of their shares of

production of that excess of Natural Gas in the event such excess would not

otherwise be commercially exploitable), together with the means necessary for its

marketing.

In the event the Parties should decide that the development of the excess of Natural

Gas is justified, or in the event the Contractor would wish to develop and produce

that excess for export, the Contractor shall indicate in the development and

production program referred to in Article 11.3.3 the additional facilities necessary for

the development and exploitation of that excess and its estimate of the costs related

thereto.

21.2.2. The Contractor shall then have the right to proceed with the development

and exploitation of that excess in accordance with the development and production

program approved by NOCAL under the terms provided by Article 11.3.6., and the

provisions of the Contract applicable to Crude Oil shall apply, mutatis mutandis, to

the excess of Natural Gas, unless otherwise specifically provided by Article 21.3.

A similar procedure shall be applicable if the sale or marketing of Associated Natural

Gas is decided during the exploitation of a Field.



In the event the Contractor should not consider the exploitation of the excess of

Natural Gas as justified and if NOCAL, at any time, would wish to utilize it, NOCAL

shall notify the Contractor thereof, in which event:

(a)



the Contractor shall make available to NOCAL free of charge at the

Crude Oil and Natural Gas separation facilities all or part of the excess

that NOCAL wishes to lift;



(b)



NOCAL shall be responsible for the gathering, processing, compressing

and transporting of that excess from the above mentioned separation

facilities, and shall bear any additional costs related thereto;



(c)



the construction of the facilities necessary for the operations referred

to in paragraph (b) above, together with the lifting of that excess by

NOCAL, shall be carried out in accordance with good international

petroleum industry practice and in such a manner as not to hinder the

production, lifting and transportation of Crude Oil by the Contractor.



21.2.3. Any excess of Associated Natural Gas which would not be utilized under

Articles 21.2.1. and 21.2.2., shall be reinjected by the Contractor. However, the

Contractor shall have the right to flare said gas in accordance with good international

petroleum industry practice, provided that the Contractor furnishes NOCAL with a

report demonstrating that said gas cannot be economically utilized to improve the

rate of recovery of Crude Oil by means of reinjection pursuant to the provisions of

Article 15.6., and provided, further, that NOCAL approves said flaring, which

approval shall not be unreasonably withheld.

21.3



Provisions common to Associated and Non-Associated Gas



21.3.1.

In order to encourage the exploitation of Natural Gas, NOCAL may

grant to the Contractor specific benefits when they are duly justified concerning,

inter alia, the recovery of the Petroleum Costs relating to Natural Gas.

21.3.2. The Contractor shall have the right to dispose of its share of production of

Natural Gas, in accordance with the provisions of this Contract. It shall also have the

right to proceed with the separation of liquids from all Natural Gas produced, and to

transport, store as well as sell on the local market or for export its share of liquid

Petroleum so separated which will be considered as Crude Oil for the purposes of

their sharing between the Parties under Article 16.

21.3.3. For the purposes of this Contract, the Natural Gas price, expressed in Dollars

per million BTU, shall be equal to:

(a)



with respect to Natural Gas export of sales to Third Parties, the price obtained

from purchasers;



(b)



with respect to sales on the, local market of Natural Gas as a fuel, the

equivalent of _______ percent (____%) of the price of high sulfur heavy fuel

oil (expressed in Dollars per million BTU) exported from or imported into

Liberia, or such other price as NOCAL (or the national entity that the STATE

would set up for the distribution of Natural Gas on the local market) and the

Contractor would mutually agree upon.



ARTICLE 22: FOREIGN EXCHANGE CONTROL

The above-mentioned equivalent price for the utilization of Natural Gas as a fuel shall

be determined on the basis of the same calorific value with respect to commercial

gas delivered at the entry point of the main gas transportation network, if any, or

otherwise where delivered to large consumers. In the event of transfer of the gas at

a delivery point located upstream, the selling price shall be adjusted accordingly.

22.1. The Contractor shall comply with the foreign exchange control regulations,

subject to the provisions of this Article.

22.2. The Contractor shall have the right to retain abroad all the foreign currencies

arising from export sales of all Petroleum to which it is entitled under this Contract,

or from assignments, as well as equity, incomes from loan and more generally, all

assets acquired abroad by it, and to freely dispose of such foreign currencies or

assets to the extent that they may exceed its requirements for its operations in

Liberia.

22.3. No restriction shall be exercised on importation by the Contractor of funds

intended for the performance of the Petroleum Operations.

22.4. The Contractor shall have the right to purchase currencies of Liberia with

foreign currencies, and freely exchange into foreign currencies of its election any

funds held by it in Liberia in excess of its local requirements at exchange rates which

shall not be less favorable than those generally applicable to any other buyer or

seller of foreign currencies.

ARTICLE 23: APPLICABLE LAW

The laws and regulations in force in the Republic of Liberia and the provisions of

international law as may be applicable to international oil and gas activities shall

apply to the Contractor, to this Contract and to the Operations which are the purpose

thereof, unless otherwise provided by the Contract.

ARTICLE 24: MONETARY UNIT

24.1. The registers and accounting books relating to this Contract shall be

maintained and recorded in Dollars. Said registers and accounting books shall be

used to determine the Petroleum Costs, gross income, exploitation costs and net

profits for the purpose of the preparation of the Contractor's tax return; they shall

contain, inter alia, Contractor's accounts showing the sales of Petroleum under this

Contract.

24.2. Whenever it is necessary to convert into

expressed in another currency, the exchange rates

arithmetic average of the daily closing rates for

currency during the month when the expenses were



Dollars expenses and incomes

to be used shall be equal to the

the purchase and sale of said

paid and the income received.



24.3. The originals of the registers and accounting books referred to in Article 24.1

shall be kept in Liberia. The registers and accounting books shall be supported by

detailed documents with respect to receipts and Petroleum Costs.

ARTICLE 25 ACCOUNTING METHOD AND AUDITS



25.1. The Contractor shall maintain its accounts in accordance with the regulations

in force and with the provisions of the Accounting Procedure set out in Appendix 2

attached hereto forming an Integral part of this Contract.

25.2. After giving the Contractor notice thereof in writing, the STATE shall have the

right to cause the registers and accounting books relating to the Petroleum

Operations to be inspected and audited by its own agents or by experts of its

election, and shall have a period of four (4) years following the end of each Calendar

Year to carry out those inspections or audits relating to said Year and may submit its

objections to the Contractor for any contradictions or errors found during such

inspection or audits.

Should the STATE fail to make any claim within the above-mentioned period of four

(4) years, no further objection or claim shall be made by the Liberian administration

for the Calendar Year concerned.

ARTICLE 26: IMPORT AND EXPORT

26.1. (a)

The Contractor shall have the right to import into Liberia, in its own

name or on behalf of its contractors and subcontractors, all the technical

equipment, materials, machinery and tools, goods and supplies necessary in

the Contractor's opinion for the proper conduct and achievements of the

Petroleum Operations; such imports include but are not limited to, drilling,

exploration, development, production, transportation, sales and marketing,

equipment, pipelines, tanks, geological and geophysical tools, boats, ships,

launches, drilling barges, ships and platforms, production platforms, civil

engineering and telecommunication equipment, power plants and all related

equipment, aircraft, automotive equipment and other vehicles, instruments,

tools, spare parts, alloys and additives, camping equipment, protective

clothing and equipment, medical, surgical and sanitary equipment, supplies

and instruments necessary for the installation and operation of hospitals and

dispensaries, documentation equipment, construction materials of all types,

lumber, office furniture and equipment, automobiles, explosives, chemicals,

fuels, ship supplies, pharmaceutical products, medicines.

(b)

The Contractor shall have the right to import into

name or on behalf of its contractors or subcontractors, the

household appliances and all personal effects for all the

and their families assigned to work in Liberia for the

contractors or subcontractors.



Liberia, in its own

furniture, clothing,

foreign employees

Contractor or its



(c)

However, the Contractor, its agents, contractors and subcontractors

undertake not to proceed with the imports mentioned in Article 26.1. (a)

insofar as such items are available in Liberia under equivalent conditions of

quantity, quality, price, delivery and terms of payment, unless specific

requirements or technical emergencies are presented by the Contractor.

(d)

The Contractor, its agents, contractors and subcontractors shall have

the right to re-export from Liberia, free of all duties and taxes and at any

time, all the items imported under Article 26.1. (a) and (b) which are no

longer necessary for the Petroleum Operations except the items which have

become the property of the State under the provisions of Article 20.



26.2. All the technical materials, machinery and tools, goods and supplies specified

in Article 26.1 which the Contractor, its agents, contractors and subcontractors, their

foreign employees and their families will have the right to import in one or more

shipments to Liberia, shall be fully exempt of all duties and taxes payable as a result

of the importation ("entry duties and taxes").

As the case may be, the applicable administrative formalities will be those of the

following regimes:

(a)



Exceptional temporary admission regime in full suspension of entry duties and

taxes for equipment, materials, machinery and tools, goods and supplies

necessary for the proper progress of the Petroleum Operations, for the entire

duration of their use in Liberia including the continental shelf, it being

understood that for the equipment, materials, machinery and tools, and

goods and supplies consumed during the operations or left in place, the

exceptional temporary admission discharge will be automatic by simple

quarterly declaration and without payment of duties and taxes.

In the event of a duly justified emergency, the equipment, materials, tools

and machinery, goods and supplies will be placed at the disposal of the users

as soon as they arrive in Liberia and the administrative regularization relating

to their admission will be made later and as soon as possible.



(b)



Supply regime for consumable goods and foodstuffs, fuels and lubricants used

at sea, in particular on all ships, aircraft and machinery used for petroleum

exploration and exploitation.



(c)



Exempt admission regime according to the regulations in force, for furniture,

clothing, household appliances and personal effects.



26.3. The Contractor, its agents, contractors and subcontractors shall, provided that

they inform the STATE in advance of their intent to sell and subject to the provisions

of Article 20, have the right to sell in Liberia, all equipment, materials, machinery

and tools, goods and supplies which they have imported when they are considered as

surplus and no longer necessary for the Petroleum Operations. In that event, the

seller shall be responsible for paying all duties and taxes applicable on the date of

the transaction and for filing all the formalities prescribed by the regulations in force.

26.4. During the term of this Contract, the Contractor, its customers and their

carriers shall have the right to export freely at the export point selected for that

purpose, free of all duties and taxes and at any time, the portion of Petroleum to

which the Contractor is entitled in accordance with the provisions of this Contract,

after deduction of all deliveries made to the STATE.

ARTICLE 27: DISPOSAL OF PRODUCTION

27.1. Each Calendar Year, up to a total of ten percent (10%) of the share of Crude

Oil Production to which the Contract is entitled, shall be sold to NOCAL by the

Contractor for the purpose of satisfying the needs of the domestic market of Liberia.

Such contribution of the Contractor shall be in proportion to its share of production,

in the total Crude Oil Production in Liberia.



The quantity of Crude Oil the Contractor shall be obligated to sell to NOCAL shall be

notified to it by NOCAL at least three (3) months prior to the beginning of each

calendar quarter.

27.2. The price of the Crude Oil sold to NOCAL under Article 28.1 for the needs of

the domestic market shall be the Market Price defined in Article 18.

That Crude Oil price shall be payable to the Contractor in Dollars two (2) months

after receipt of the invoice unless otherwise agreed between the Parties.

27.3. The transfer of title to, and risk of, the share of Petroleum production to

which each party is entitled, shall be made at the Delivery Point, or at any other

transfer point agreed between the Parties.

27.4. Each of the Parties shall have the right and obligation, to dispose of and lift

the share of Petroleum to which it is entitled under this Contract. Such share shall be

lifted on as regular a basis as possible, it being understood that each of the Parties,

within reasonable limits, will be authorized to lift more (overlift) or less (underlift)

than its share of Petroleum produced and unlifted by the lifting day to the extent that

such overlift or underlift does not infringe on the rights of the other Party and is

compatible with the production rate and the storage capacity. In the establishment

of the sequence of liftings, priority will be given to the Party with the largest share of

produced and unlifted quantity of Petroleum at a given time. The Parties shall

periodically meet to establish a provisional lifting program on the basis of the

principles above described and taking into account the wishes of the Parties as

regards the dates and quantities of their liftings, provided that those wishes are

compatible with said principles.

ARTICLE 28: PROTECTION OF RIGHTS

28.1. The Contractor shall take all necessary steps to achieve the objectives of this

Contract in its conduct of Petroleum Operations.

28.2. NOCAL shall take all necessary steps to facilities the implementation by the

Contractor of the objectives of this Contract, and the STATE shall protect the

property and operations of the Contractor, its employees and agents in the territory

of Liberia.

28.3. At the request of the Contractor, the STATE shall prohibit the construction of

dwelling or business buildings in the vicinity of installations which the Contractor may

declare dangerous as a result of its operations. It shall take all necessary precautions

to prohibit anchoring in the vicinity of submerged pipelines at river passages, and to

prohibit any hindrance to the use of any other installation necessary for the

Petroleum Operations whether on land or offshore.

28.4. The Contractor shall take out and cause to be taken out by its contractors and

subcontractors, in respect of the Petroleum Operations, all insurances of the type

and for such amounts customarily used in the international petroleum industry,

including without limitation, third party liability insurance and insurances to cover

damage to property, facilities, equipment and materials, without prejudice to such

insurances which would be required under Liberian legislation.

ARTICLE 29: PERSONNEL AND TRAINING



29.1. The Contractor shall, for the purposes of the Petroleum Operations, employ

Liberian personnel whenever qualified for requirements of the employment.

Managers, technicians, engineers, accountants, geologists, geophysicists, scientists,

chemists, drillers, foremen, mechanics, skilled workers, secretaries and executive

employees may be hired outside Liberia if similarly qualified specialists cannot be

hired in Liberia.

29.2. Upon commencement of the Petroleum Operations, the Contractor shall

organize a training program for Liberian nationals. For that purpose the Contractor

shall devote a minimum annual training Budget of:

(a)



___ Dollars during each year of the exploration periods;



(b)



___ Dollars during each year of the exploitation periods.



The training expenses borne by the Contractor shall be included in the recoverable

Petroleum Costs.

29.3. The entry into Liberia of all foreign personnel shall be authorized and the

STATE shall issue the documents necessary for that entry to all members of the

foreign personnel, such as entry visas, working permits and exit visas, in compliance

with the immigration regulations in force in Liberia.

At the request of the Contractor, the STATE shall facilitate any immigration

formalities with the Immigration Bureau, at the points of entry into and exit from

Liberia, in respect of the Contractor's employees, contractors, subcontractors and

agents, and their families, all without undue delays.

29.4. All the employees required for the conduct of the Petroleum Operations shall

be under the Contractor's authority or that of its contractors, subcontractors and

agents, in their capacity as employers. Their work, number of working hours, salaries

and any other matters relating to their employment conditions shall be determined

by the Contractor or its contractors, subcontractors and agents.

ARTICLE 30: ACTIVITY REPORTS IN RESPECT OF EXCLUSIVE EXPLOITATION

AUTHORIZATIONS

30.1. The provisions of Article 12 shall apply, mutatis mutandis, to any exclusive

exploitation authorizations. In addition, the following periodic activity reports shall,

inter alia, be furnished in respect of each Field:

(a)



daily production reports;



(b)



monthly reports stating the quantities of Petroleum produced and

those sold during the previous month together with information on

such sales.



Unless the Contractor gives its written consent, the information relating to a Field

under exploitation, except statistical data about activity, shall be considered as

confidential by the Parties during the term of this Contract.



30.2. The Contractor shall forthwith notify the STATE of any material damage

whatsoever caused to the petroleum fields or facilities, and shall take all necessary

steps to terminate it and carry out the necessary repairs.

30.3. From the year of granting an exclusive exploitation authorization, the annual

report referred to in Article 8.2 shall also include the following:

(a)



information on all development and production operations carried out

during the previous Calendar Year, including the quantities of

Petroleum produced and those sold, if any;



(b)



information on all transportation and sales operations together with

the location of the main facilities built by the Contractor, if any,



(c)



a statement specifying the number of employees and workers, their

qualification and their nationality, together with a report on the

medical care and training provided to them.

ARTICLE 31: ARBITRATION



31.1. In the event of any dispute between the STATE or NOCAL and the Contractor

relating to, or arising out of, the interpretation or execution of the provisions of this

Contract, the Parties shall make their best efforts to settle such dispute amicably.

If within three (3) months from the date of notice of such dispute by either Party to

the other, the Parties have not reached settlement, the dispute shall, at the request

of the most diligent Party, be referred for arbitration to the International Chamber of

Commerce in accordance with its rules and regulations.

31.2. The arbitration shall be held in London, England. The language used during

the procedure shall be the English language. The arbitration shall be determined by

three (3) arbitrators. The arbitrators shall not have the same nationality as the

Parties.

The arbitration tribunal's award shall be final; it shall be binding on the Parties and

shall be enforceable in any court of appropriate jurisdiction

31.3. The expenses of any arbitration shall be borne equally by the Parties, that is

to say, each Party shall pay the expenses of its own arbitrator and the expenses of

the third arbitrator in equal shares, and any expenses imposed by the International

Chamber of Commerce shall be shared equally by the Parties.

The performance by the Parties of their obligations under this Contract shall not be

suspended during the course of the arbitration.

ARTICLE 32: FORCE MAJEURE

32.1. No delay or default of Party in performing any of the obligations resulting

from this Contract shall be considered as a breach of this Contract if such delay or

default is caused by a case of Force Majeure. If in the event of Force Majeure the

performance of any of the obligations under this Contract is delayed, that delay

extended by the period of time required to repair the damage caused during such

delay and to resume the Petroleum Operations, shall be added to the period provided



by this Contract for the performance of said obligation, and the exclusive exploration

or exploitation authorizations shall be extended by that period as regards the area

concerned by Force Majeure.

32.2. Force Majeure means any event unforeseeable and beyond the control of a

Party, such as: earthquake, flood, accident, strike, lockout, riot, delay in obtaining

the rights-of-way, insurrection, civil disturbances, sabotages, acts of war or

conditions attributable to war, or any other cause beyond its control, similar to or

different from those already mentioned.

32.3. Where a Party considers it is prevented from performing any of its obligations

by the Occurrence of Force Majeure, it shall forthwith notify the other Party thereof

by specifying the grounds for establishing Force Majeure, and take all necessary and

useful steps to ensure the normal resumption of the performance of the concerned

obligations upon termination of the event constituting the Force Majeure. Obligations

other than those affected by Force Majeure shall continue to be performed in

accordance with the provisions of this Contract.

ARTICLE 33: JOINT AND SEVERAL OBLIGATIONS AND GUARANTEES

33.1. All the clauses, conditions and provisions of this Contract shall be

the Parties and their respective successors and assignees. This Contract

the only agreement between the Parties and no previous communication,

agreement, whether oral or written, between the Parties, related to the

this Contract may be asserted to amend the clauses hereof.



binding on

constitutes

promise or

purpose of



The STATE certifies and guarantees that there is no other applicable agreement with

respect to the petroleum rights within the Delimited Area, that it will perform its

obligation in fairness and good faith and that this Contract will not be cancelled,

amended or modified except by agreement between the Parties.

33.2. Where the Contractor is constituted by several entities, the obligations and

liabilities of those entities under this Contract shall be joint and several.

ARTICLE 34: RIGHTS OF ASSESSMENT

34.1. All or part of the rights and obligations arising from this Contract may be

assigned by any of the entities constituting the Contractor to Third Parties whose

technical and financial reputation is well established; the assignees with the other

entities constituting the Contractor shall thereafter be jointly and severally liable for

the obligations arising from this Contract.

The terms of any assignment shall be subject to the prior approval of NOCAL, which

approval shall not be unreasonably withheld. If within thirty (30) days following

notification to NOCAL of a projected assignment accompanied by all the related

information and the draft assignment deed, NOCAL has not given its decision, that

assignment shall be deemed to be approved by NOCAL.

From the date of approval of an assignment, the assignee shall comply with the

terms and conditions of this Contractor.

34.2. All or part of the joint and several rights and obligations arising from this

Contract may be freely assigned at any time by any of the entities constituting the



Contractor to one or more Affiliated Companies or other entities constituting the

Contractor.

ARTICLE 35: STABILITY OF CONDITIONS

35.1. This Contract is executed between the Parties in accordance with the laws and

regulations in force at the date of its signing and on the basis of the provisions of

said laws and regulations, as regards, inter alia, the economic, fiscal and financial

provisions of this Contract.

35.2. Consequently, should new laws or regulations modify the provisions of the

laws and regulations in force at the date of signing of this Contract and should those

modifications bring about a material change in the respective economic situation of

the Parties resulting from the original provisions of said Contract, the Parties shall in

good faith enter into an agreement with a view to modifying those provisions in

order to restore the economic balance of the Contract as intended at the signing

thereof.

ARTICLE 36: IMPLEMENTATION OF THE CONTRACT

36.1. The Parties agree to cooperate in every possible manner to achieve the

objectives of this Contract.

NOCAL shall facilitate the Contractor's performance of its activities by granting it any

permits, licenses, access rights necessary for the performance of the Petroleum

Operations and by making available to it any appropriate services and facilities, so

that the Parties can obtain the best benefit from a sincere cooperation. However, the

Contractor shall observe the applicable procedures and formalities, and shall apply to

the competent Ministries and/or Agencies of the Administration.

36.2. Any notices or other communication under this Contract shall be deemed to

have been made when they are delivered to an authorized representative of the

Party concerned at the location of said Party's principal office in Liberia, or sent by

telegram, cable or facsimile with all expenses paid, or deposited as registered letters

with the Postal administration of Liberia with postage prepaid.

Notifications shall be deemed to have been made on the date when the addressee

shall receive them.

36.3. If NOCAL considers that the Contractor has committed a breach in the

performance of any of its obligations, it shall so notify the Contractor in writing and

the Contractor shall have sixty (60) days to remedy the breach or refer the matter to

arbitration in accordance with this Contract.

36.4. The terms and conditions of the Contract may be modified only in writing and

by mutual agreement between the Parties.

36.5. Unless otherwise specified in writing, the Ministry and NOCAL shall represent

the STATE under this Contract and is powered to grant, in the name and on behalf of

the STATE, any consent necessary or useful for the implementation of this Contract.



36.6. Headings in this Contract are inserted for purposes of convenience and

reference and in no event shall define, restrict or describe the scope of object of the

Contract or of any of its clauses.

36.7. Appendices 1 and 2 attached hereto shall form an integral part of this

Contract.

36.8. Any waiver of the STATE or NOCAL concerning the performance of any

obligation of the Contractor shall be in writing and signed by the representative of

the STATE or NOCAL, and no waiver shall be implied if the STATE or NOCAL does not

exercise any of its rights to which it is entitled under this Contract.

ARTICLE 37: EFFECTIVE DATE

Upon execution by the Parties and when promulgated as the law of the Republic of

Liberia, this Contract shall become effective, the date of execution being referred to

as the Effective Date, and said Contract shall become binding on the Parties.

IN WITNESS WHEREOF, the Parties have signed this Contract on the date as set

forth below.

For the Republic of Liberia Date

National Oil Company of Liberia Date

Contractor Date.

APPENDIX 1

Attached to and made part of this Contract between the Republic of Liberia and the

Contractor.

DELIMITED AREA

On the Effective Date, the Delimited Area, designated as _________ Block, is formed

by the area included inside the perimeter constituted by the points indicated

___________ on the map attached thereto.

The geographical coordinates of those points are the following, with reference to the

Greenwich meridian:

Point Latitude Longitude

Those coordinates are only given, for purposes of illustration and shall not be

considered as the boundaries of the national jurisdiction of Liberia.

The surface of the Delimited Area above-defined is deemed to be equal to about

________ sq. km.

APPENDIX 2

Attached to and made part of this Contract between the Republic of Liberia and the

Contractor.



ACCOUNTING PROCEDURE

Article I - General Provisions

I.1.



Object



This Accounting Procedure shall be followed and observed in the performance of the

obligations under the Contract to which this Appendix is attached.

I.2



Accounts and statements



The registers and accounting books of the Contractor shall be in conformity with

accounting rules and regulations for business applicable in Liberia. However, the

Contractor may apply the accounting rules and procedures customarily used in the

petroleum industry, insofar as none of these are contrary to the rules and regulations

referred to above.

In accordance with the provisions of Article 25 of the Contract, accounts, books and

registers shall be maintained and recorded in Dollars. These accounts shall be used,

inter alia, to determine the amount of Petroleum Costs, the recovery of said Costs,

the production sharing, as well as for the purposes of Contractor's tax return.

The Contractor shall record all operations connected with the Petroleum Operations

in accounts separate from those relating to any other activities which it may carry

out in the Republic of Liberia.

All accounts, books, records and statements, together with documents supporting

expenses incurred, such as invoices and service contracts, shall be kept in the

Republic of Liberia in order to be provided at the request of the competent

authorities of Liberia.

I.3.



Interpretation



The definitions of the terms. used in this Appendix 2 shall be the same as those of

the same terms set forth in the Contract. In the event of any conflict between the

provisions of this Accounting Procedure and the Contract, the provisions of the

Contract shall prevail.

I.4.



Modifications



The provisions of this Accounting Procedure may be modified by mutual agreement

between the Parties. The Parties agree that if any provision of the Accounting

Procedure proves inequitable to either Party, such provision shall be modified in good

faith by the Parties.

Article II - Petroleum Costs

II.1.



Petroleum Costs Account



The Contractor shall maintain a "Petroleum Costs Account" which will record in detail

the expenses incurred by the Contractor directly relating to the Petroleum Operations



carried out under this Contract,. and which will be recoverable in accordance with the

provisions of Article 16 of the Contract.

This Petroleum Costs Account shall, inter alia, record separately, by Appraisal

Perimeter or Exploitation Perimeter if any, the following expenses:

(a)

(b)

(c)

(d)

(e)

(f)

(g)



exploration expenditures;

appraisal expenditures;

development expenditures;

exploitation expenses;

financial costs;

overhead costs in Liberia;

overhead costs. abroad.



The Petroleum Costs Account shall enable, inter alia, to identify at any time:

(a)

(b)

(c)

(d)



the total amount of Petroleum Costs since the Effective Date;

the total amount of Petroleum Costs recovered;

the total amount credited to the Petroleum Costs Account pursuant to

Article IIA.(b) below;

the total amount of Petroleum Costs which remain to be recovered.



For the purposes of Article 16 of the Contract, Petroleum Costs shall be recovered in

the following sequence:

(a)

(b)

(c)



exploitation expenses in respect of a Field incurred and paid from the

date of commencement of regular production;

financial costs;

other Petroleum Costs.



In addition, within each of the foregoing categories, the costs shall be recovered in

the sequence in which they are incurred.

Unless otherwise provided for in this Accounting Procedure the intent of the Parties is

not to duplicate any item of the credit or debit of the accounts maintained under the

Contract.

II.2.



Items debited to the Petroleum Costs Account



The following expenses and costs shall be debited to the Petroleum Costs Account:

II.2.1. Personnel expenses

All payments in respect of the salaries and wages of the Contractor's employees

directly assigned to the Petroleum, Operations carried out under this Contract, in the

Republic of Liberia, whether temporarily or permanently, including amounts imposed

by the applicable laws and costs of employees' benefits and all additional charges or

expenses in accordance with the individual or collective employment contracts or

pursuant to the Contractor's personnel policies.

II.2.2 Overhead costs in Liberia



Wages and salaries of the Contractor's personnel directly engaged in the Petroleum

Operations in the Republic of Liberia, whose work time is not directly allocated to the

programs, as well as costs of maintaining and operating in Liberia a main and

administrative office and sub-offices necessary for the Petroleum Operations.

II.2.3. Overhead costs abroad

The Contractor shall add a reasonable amount as overhead paid abroad, connected

to the carrying out of the Petroleum Operations by the Contractor or its Affiliated

Companies, such amounts representing the estimated cost of services directly

rendered for the benefit of the said Petroleum Operations.

The amounts charged shall be provisional amounts established on the basis of the

experience of the Contractor, and shall be annually adjusted according to the actual

. costs borne by the Contractor. However, overhead costs paid abroad shall be

charged only within the following limits:

(a)



prior to the grant of an exclusive exploitation authorization _____

percent (__%) of the expenses charged to the Petroleum Costs

Account excluding overhead costs for the year in question;



(b)



from the grant of the first exclusive exploitation authorization ____

percent (__%) of expenses charged to the Petroleum Costs Account

excluding overhead costs for the year in question.



II.2.4 Buildings

Construction, maintenance expenses, as well as rents paid for all offices,. houses,

warehouses and buildings of other types, including housing for employees, and cost

of equipment, furniture, and fittings necessary for the operation of those buildings

directly required for the performance of the Petroleum Operations.

II.2.5. Materials, equipment and rentals

Costs of equipment, materials, machinery, and facilities purchased or provided for

use in the Petroleum Operations, as well as rentals or compensations paid or

incurred for the use of any equipment or facilities required directly for the

performance of the Petroleum Operations.

II.2.6. Services

Costs of services directly related to Petroleum Operations rendered by

subcontractors and consultants, as well as any costs directly related to services

rendered by the STATE or NOCAL or any other authorities of the Republic of Liberia.

Costs of services directly related to Petroleum Operations rendered by Affiliated

Companies, provided that such costs shall not exceed those normally charged by

independent companies for an identical or similar service.

II.2.7. Insurance Premiums

Premiums paid for insurances customarily taken out for the Petroleum Operations to

be carried out by the Contractor.



II.2.8. Legal Expenses

All expenses of handling, investigation and settlement of litigation or claims directly

arising from the Petroleum Operations.

II.2.9. Financial Costs

All interests paid by the Contractor in respect of the loans from Third Parties and

advances obtained from Affiliated Companies, provided that those loans and

advances shall be for the purpose of the financing of Petroleum Costs related only to

the development of Petroleum Operations in respect of a Field. In the event such

financing is provided by Affiliated Companies, the allowable interest rates shall not

exceed the rates customarily used in the international financial markets for loans of a

similar nature.

II.2.10. Other Expenses

Any other expenses incurred and paid by the Contractor for the purposes of the

necessary and proper conduct of the Petroleum Operations under the approved

Annual Work Programs and Budgets, other than the expenses covered and dealt with

by the foregoing provisions of this Article and other than the expenses excluded from

the Petroleum Costs.

II.3. Expenses not chargeable to the Petroleum Costs Account

The expenses which are not directly necessary for the performance of the Petroleum

Operations, and the expenses excluded by the provisions of the Contract or this

Accounting Procedure as well as by the regulations in force in Liberia, are not

chargeable to the Petroleum Costs Account and shall therefore not be recoverable.

Such expenses shall include, without limitation:

(a)

(b)

(c)

(d)

(e)



expenses relating to the period before the Effective Date;

any expenses relating to the operations carried out beyond the

Delivery Point, such as transportation and marketing costs;

financial costs relating to the financing of exploration Petroleum

Operations, and those relating to the share of financing of

development Petroleum Operations;

bonuses defined in Article 19 of the Contract;

exchange losses.



II.4. Items credited to the Petroleum Costs Account

The following incomes and proceeds shall, inter alia, be credited to the Petroleum

Costs Account:

(a)



income arising from the marketing of the quantity of Crude Oil to

which the Contractor is entitled under Article 16 of the Contract for the

purpose of recovery of the Petroleum Costs;



(b)



any other incomes or proceeds related to the Petroleum Operations,

specifically those arising from:



-



sales of related substances;

any services rendered to Third Parties using the facilities dedicated to

the Petroleum Operations, including, but not limited to, processing,

transportation and storage of products for Third Parties in those

facilities.



Article III - Cost Evaluation Basis For Services, Materials and Equipment Used in the

Petroleum Operations

III.1. Technical services

A reasonable rate shall be charged for the technical services rendered by the

Contractor or its Affiliated Companies for the direct benefit of the Petroleum

Operations carried out under the Contract, such as gas, water, core analyses and

any other analyses and tests, provided that such charges shall not exceed those

normally charged by independent technical service companies and laboratories for

similar services.

III.2. Purchase of materials and equipment

Materials and equipment purchased from Third Parties and directly necessary for the

performance of the Petroleum Operations carried out under the Contract shall be

charged to the Petroleum Costs Account at "Net Cost" incurred by the Contractor.

"Net Cost" shall include such items as taxes, shipping agent fees, transportation,

loading and unloading costs, license fees, related to the supply of materials and

equipment, as well as transit losses not recovered through insurance.

III.3. Use of equipment and facilities owned exclusively by the Contractor

Equipment and facilities owned by the Contractor and used directly for the Petroleum

Operations shall be charged to the Petroleum Costs Account at a rental rate which

shall be sufficient to cover maintenance, repairs, depreciation and services required

for the performance of the Petroleum Operations.

IIII.4. Valuation of materials

All materials transferred to Liberia from the Contractor's warehouses, or from those

of any entity constituting the Contractor or their Affiliated Companies, shall be

valued as follows:

(a)



New Material

New material (condition "A") means new material which has never been used;

one hundred percent (100%) of the current market price, which corresponds

to the price normally charged for similar supplies in arm's length transactions

between buyer and seller.

Material in good condition (condition "B") means material in good condition

which is still usable for its original purpose without repair, at a maximum of

seventy-five percent (75%) of the price of new material.



(b)



Other used material



Other used material (condition "C") means material still usable for its original

purpose, but only after repairs and reconditioning: at a maximum of fifty

percent (50%) of the price of new material.

(c)



Material in poor condition

Material in poor condition (condition "D") means material no longer usable for

its original purpose but still usable for other purposes: at a maximum of

twenty-five percent (25%) of the price of new material.



(d)



Scrap material

Scrap material (condition "E") means material beyond usage and repair:

prevailing price of scrap material.



III.5. Materials and equipment disposed by the Contractor

Materials and equipment purchased by all the entities constituting the Contractor

shall be valued in accordance with the principles defined in Article III.4 above.

Materials and equipment purchased by any entity constituting the Contractor or by

Third Parties shall be valued at the received sale price, which shall in no event be

less than the price determined in accordance with the principles defined in Article

III.4 above. The corresponding amounts shall be credited to the Petroleum Costs

Account

Article IV - Inventories

IV.1. Period

The Contractor shall keep a permanent inventory both in quantity and value of all

normally controllable materials used for the Petroleum Operations and shall proceed

at reasonable intervals with the physical inventories as required by the Parties.

IV.2. Notice

A written notice of intention to take an inventory shall be sent by the Contractor at

least ninety (90) days prior to the commencement of said inventory so that the

STATE and the entities constituting the Contractor may be represented at their own

expenses during the inventory operations.

IV.3. Information

In the event the STATE or any entity constituting the Contractor shall not be

represented at an inventory, such Party or Parties shall be bound to accept the

inventory taken by the Contractor which shall fulfill to such Party or Parties a copy of

said inventory.

Article V - Financial and Accounting Statements

The Contractor shall furnish the STATE and NOCAL with all the reports, records and

statements provided by the provisions of the Contract and the applicable regulations

and, inter alia, the following financial and accounting statements:



V.1. Statement of exploration work obligations

Such annual statement shall be submitted not later than one (1) month after the end

of each Contractual Year in respect of the exploration periods.

It shall present with details the exploration work and expenditures carried out by the

Contractor to fulfill its obligations set forth in Article 4 of the Contract, excluding

specifically appraisal wells and related appraisal expenditures as well as development

expenditures, exploitation expenses, overhead costs and bonuses.

V.2. Statement of recovery of Petroleum Costs

A quarterly statement shall be submitted not later than one (1) month after the end

of each Calendar Quarter. It shall present the following items of the Petroleum Costs

Account:

(a)



the amount of Petroleum Costs which remain to be recovered at the beginning

of the quarter;



(b)



the amount of Petroleum Costs in respect of that quarter and recoverable

under the provisions of the Contract;



(c)



the quantity and the value of the production of Petroleum taken by the

Contractor during the quarter for the purpose of recovery of the Petroleum

Costs;



(d)



the amount of incomes or proceeds credited for the purpose of Article II.5.(b)

above during the quarter;



(e)



the amount of Petroleum Costs which remain to be recovered at the end of

the quarter.



In addition, an annual statement of the recovery of Petroleum Costs shall be

submitted prior to the end of February of each Calendar Year.

V.3.



Statement of production



After commencement of production, such monthly statement shall be submitted not

later than fifteen (15) days after the end of each month. It shall present for each

month the detailed production of each Exploitation Perimeter and, inter alia, the

quantities of Petroleum:

(a)



stored at the beginning of the month;



(b)



lifted during the month;



(c)



lost and used for the requirements of the Petroleum Operations;



(d)



stored at the end of the month.