The term of the contract shall start on the commencement date, that is the date of the contract, and end on the earliest of the date Loon Brunei Limited and QAF Brunei Sendirian Berhad relinquish the whole or the last retained part of the contract area or the 30th anniversary of the commencement date.
The exploration period shall commence immediately following the commencement date and continue for 6 years. This period may be extended for a period to be agreed by the parties.
The development and production period shall commence on the relevant commerciality date and shall expire on the 24th anniversary of its commencement.
Loon Brunei Limited (Loon Brunei) and QAF Brunei Sendirian Berhad (QAF) shall minimize the flaring of natural gas by means of re-injecting associated gas not needed in the conduct of petroleum operations and not capable of being produced commercially, into suitable underground strata or storage in accordance with good oilfield practice.
Loon Brunei and QAF shall seek the Brunei National Petroleum Company’s prior written approval to flare any natural gas that cannot be re-injected due to specific reservoir considerations or for other reasons that are accepted in good oilfield practice.
Loon Brunei and QAF shall be allowed to flare natural gas, without the Brunei National Petroleum Company’s written approval, in emergency circumstances caused by materially unsafe conditions and requiring immediate action provided that any such flared volume of natural gas is kept to a minimum, Loon Brunei and QAF uses their best endeavors to bring such flaring to an end as soon as reasonably practicable and they notify the Brunei National Petroleum Company promptly after the commencement of any such flaring.
Within 30 days from the commencement date, Loon Brunei Limited and QAF Brunei Sendirian Berhad shall make a bonus payment of a specified sum to the government and this bonus payment shall be non-recoverable.
Loon Brunei Limited and QAF Brunei Sendirian Berhad shall be severally liable to pay income tax to the government in accordance with the Income Tax (Petroleum) Act (Cap 119).
The rate of the assessable income tax levied in respect of the petroleum operation shall be the specified rate under the contract without prejudice to any penalties payable under the Income Tax (Petroleum) Act (Cap 119).
Loon Brunei Limited (Loon Brunei) and QAF Brunei Sendirian Berhad (QAF) shall pay to Brunei National Petroleum Company a research and development contribution of 2% of the market value of cost oil, their share of profit oil, cost gas, and their share of profit gas.
These contributions are not recoverable but shall be deductible for purposes of income tax payable.
In consideration of Brunei National Petroleum Company’s assistance, Loon Brunei and QAF shall pay to Brunei National Petroleum Company:
a) US$ 300,000 per year during the exploration period; and
b) US$ 200,000 thereafter.
These payments are not recoverable but shall be deductible for purposes of income tax payable.
Partage de production - Eléments de "Profit Oil" (critères pour la modification du partage, - TRI, facteur "r", niveau de production, etc.)
Profit oil and profit gas allocable to the Brunei National Petroleum Company, Loon Brunei Limited and QAF Brunei Sendirian Berhad shall be determined and split in accordance with the contract.
Partage de production - Eléments de "Cost Oil" (base de calcul, limites sur le recouvrement des coûts, e.g. comme % des revenues ou de la production, crédit d'investissement, etc.)
The cost oil and cost gas shall be split as provided in the contract.
If the recoverable costs shall exceed the oil cost pool, the unrecovered costs shall be carried forward to the next calendar quarter.
Loon Brunei Limited (Loon Brunei) and QAF Brunei Sendirian Berhad (QAF) shall assist in the development of the economy and skills base of Brunei and shall procure goods and services to:
a) Promote the transfer of non-proprietary technology from Loon Brunei and QAF or their sub-contractors to firms and companies in Brunei with the objective of developing local technical and managerial capabilities;
b) Minimize the outflow of foreign currency; and
c) Develop ancillary industries arising from petroleum operations to enhance the growth of the economy of Brunei.
In conducting petroleum operations, Loon Brunei and QAF shall give priority to goods and services produced in Brunei or rendered by Brunei nationals, provided that:
a) such goods and services are offered on terms competitive with those available on the international; market particularly with regard to quality, price and availability at the time and in the quantities required; and
b) in arranging financing for petroleum operation, seek to consult with financial institutions based in Brunei (in particular Brunei national financial institutions) with a view to encourage participation (as part of a lender syndicate or otherwise) of such financial institutions in the financing.
Loon Brunei and QAF shall submit to the Brunei National Petroleum Company a report setting out the basis which they plan to evaluate bids for goods and services, a list of goods and services required for the petroleum operations which they consider are not available in Brunei and their strategy for the award of contracts for goods and services to Bruneian entities in the forthcoming year and their progress in maximizing the use of Bruneian goods and services in the preceding year.
Loon Brunei and QAF shall ensure that their sub-contractors comply with the local procurement provisions of the contract.
Loon Brunei Limited (Loon Brunei) and QAF Brunei Sendirian Berhad (QAF) shall, for the purposes of petroleum operations and subject to good oilfield practice, have the right to lay pipelines, build roads, construct bridges, ferries, jetties, harbours, platforms, aerodromes, landing fields, radio telephones and related communication and infrastructure facilities and exercise other ancillary rights as may be reasonably necessary for the petroleum operations.
Loon Brunei and QAF shall have the right to use all railways, roads, airports, landing fields, canals, rivers, bridges, waterways, telecommunication networks and other facilities as well as the right of access, egress and occupation in respect of areas on or under the sea floor and/or surface land which are located outside the contract area, provided that they have agreed terms of such use, including terms of payment or other consideration, with the owner of the relevant facility or area.
All procurement of goods and services from a person which is a Brunei national, with a value in excess of US$ 100,000 and from a person which is not a Brunei national (including a person merely having a registered office in Brunei but not being incorporated under the laws of Brunei or having its headquarters or being domiciled in Brunei), with a value in excess of US$ 500,000 shall be on arm’s length basis and shall, unless otherwise approved by Brunei National Petroleum Company in writing, be obtained as a result of competitive bidding.
For phase 1 of the exploration period, Loon Brunei Limited (Loon Brunei) and QAF Brunei Sendirian Berhad (QAF) shall:
i) subject to such seismic data being made available to the government by third parties, reprocess at least 1,5000 kilometers of seismic data, to the extent that such data is made available by the government and is capable of being reprocessed by Loon Brunei and QAF acting in accordance with good oilfield practice.
Loon Brunei and QAF shall reimburse the government for any costs incurred in reproducing the seismic data provided that cost is to be recoverable;
ii) acquire and process not less than 750 kilometers of onshore 2D seismic data and 500 kilometers of offshore 2D seismic data;
iii) acquire and process not less than 150 square kilometers of 3D offshore seismic data, provided that such 3D programme may be convertible in to a dollar equivalent onshore 2D seismic programme by Loon Brunei and QAF with the prior written consent of the government acting in its absolute discretion; and
iv) drill at least 2 onshore exploration wells, each to a depth of 2,000 meters.
Loon Brunei and QAF’s minimum expenditure for phase 1 of the exploration period shall be US$ 20,500,000.
Loon Brunei and QAF’s minimum work obligation for phase 2 of the exploration period shall be:
i) acquire and process not less than 500 kilometers of onshore 2D seismic data and 500 kilometers of offshore 2D seismic data;
ii) acquire and process not less than 150 square kilometers of 3D offshore seismic data, provided that such 3D programme may be convertible in to a dollar equivalent onshore 2D seismic programme by Loon Brunei and QAF with the prior written consent of the government acting in its absolute discretion; and
iii) drill at least 2 onshore exploration wells, each to a depth of 2,000 meters.
Loon Brunei and QAF’s minimum expenditure for phase 2 of the exploration period shall be US$ 16,000,000.
Loon Brunei and QAF shall each deliver to the government an irrevocable letter of guarantee from a bank incorporated in Brunei Darussalam for an initial sum equal to its percentage interest of the guarantee amount for phase I and 2 and the letter of guarantee shall terminate upon the fulfilment of the minimum expenditure obligation for phase 1 or 2 as applicable or upon the expiration of phase 1 or 2, whichever is earlier.