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Contract #
ARTICLE 1. DEFINITIONS
ARTICLE 2. SCOPE OF CONTRACT
ARTICLE 3. TERM OF CONTRACT
ARTICLE 4. SIGNATURE BONUS
ARTICLE 5. RELINQUISHMENT
ARTICLE 6. MINIMUM WORK AND EXPENDITURE OBLIGATIONS
ARTICLE 7. STATE BODY’S ASSISTANCE
ARTICLE 8 TERMINATION
ARTICLE 9 – CONDUCT OF PETROLEUM OPERATIONS
ARTICLE 10. GAS
ARTICLE 12. APPROVAL PROCEDURE
ARTICLE 13 JOINT MANAGEMENT COMMITTEE
ARTICLE 14. DATA AND SAMPLES
ARTICLE 15. REPORTS AND RECORDS
ARTICLE 16. ACCESS AND INSPECTION
ARTICLE 17. MEASUREMENT, TRANSPORT AND DELIVERY
ARTICLE 18. COST RECOVERY AND PRODUCTION SHARING
ARTICLE 19. VALUATION OF COMMERCIAL OIL
ARTICLE 20. BOOKS OF ACCOUNT, ACCOUNTING AND AUDIT
ARTICLE 21. EXCHANGE AND CURRENCY CONTROL
ARTICLE 22. TITLE TO ASSETS
ARTICLE 23. TAXES
ARTICLE 24. LIABILITY AND INSURANCE
ARTICLE 25. IMPORT AND EXPORT
ARTICLE 26. TRAINING
ARTICLE 27. PARTICIPATION
ARTICLE 28. ASSIGNMENT
ARTICLE 29. LAWS AND REGULATIONS
ARTICLE 30. LOCAL GOODS AND SERVICES
ARTICLE 31. FORCE MAJEURE
ARTICLE 32. ENTIRE AGREEMENT
ARTICLE 33. AMENDMENTS
ARTICLE 34. CONFIDENTIALITY
ARTICLE 35. TITLES AND HEADINGS
ARTICLE 36. LANGUAGES
ARTICLE 37. CONTRACTOR’S OFFICE IN
ARTICLE 38. GOVERNING LAW
ARTICLE 39. SETTLEMENT OF DISPUTES – ARBITRATION
ARTICLE 41. COMING INTO FORCE
This Contract is made, signed and entered into, on this __ day of __
200_ by and between:
(PART 1), (State Body of State X) (hereinafter referred to as “State
Body”) of the one part, and
(PART 2) being a legal entity, established and existing under the laws
of the (Y) with office in ______________,
(PART 3) being a legal entity, established and existing under the laws
of the (Z) with office in ______________
being collectively referred to hereinafter as “Contractor”, of the other
part.
State Body and Contractor are referred to hereinafter either
individually as “Party” or collectively as “Parties”.
WHEREAS, (State X) is the sole owner of all natural resources within its
territory and offshore areas and has the exclusive right to explore,
develop, extract, exploit and utilize the natural resources there from;
and
WHEREAS, the State Body of Oil is the Governmental body concerned and
entrusted with 9 exploration, development and production of Petroleum
within (State X): and
WHEREAS, the Contractor is of sound financial standing and possesses
technical competency to can out development and production and generally
all and any Petroleum Operations as hereinafter defined: and
WHEREAS, the Parties mutually declare that they have the power authority
and desire to enter into this Development and Oil Production Contract in
relation to the Second Stage of (X oilfield) as defined herein.
NOW THEREFORE, and in consideration of the premises and the mutual
covenants hereinafter set out, the Parties agreed as follows:
ARTICLE 1. DEFINITIONS
Except as specifically provided otherwise herein, any reference to an
Article, Sub-Article, Annex or Addendum shall be construed as reference
to an Article, Sub-Article, Annex or Addendum of this Contract.
In this Contract words in the singular include the plural and vice
versa, and except where the context otherwise requires, the following
terms shall have the meanings set out as follows:
1.1 “Accounting Procedure” means the accounting procedures and
requirements set out in Annex X.
1.2 “Affiliate” means, with respect to any Company, any legal entity
which:
Controls that Company;
is controlled by that Company;
or is controlled by a legal entity which in its turn controls or is
controlled by that Company.
To “control” means to determine and pursue the policy of an
organization, enterprise or legal entity by way of direct or indirect
control over 50% (fifty per cent) or more of the shares or votes in such
organization.
1.3 “Appraisal” or “Appraisal Operations” shall include (but not be
limited to) such geological, geophysical, aerial and any other surveys
and any interpretation of data relating thereto and the drilling of such
shot-holes, core holes, stratigraphic rests, holes for the appraisal of
Petroleum and other related holes and wells, the production testing and
the purchase or acquisition of such supplies, materials and equipment
therefore.
1.4 “Approval” or “Approved” means the approval of the State Body in
written form.
1.5 “Average Daily Production” means the total cumulative production of
Crude Oil for a certain period of time divided by the number of calendar
days in that period of time.
1.6 “Barrel” means a quantity consisting of forty-two (42) United States
Gallons under one (1) atmosphere of pressure and temperature of sixty
(60) degrees Fahrenheit.
1.7 “Budget” means itemized expenditures and costs of Petroleum
Operations related to an Annual Work Program.
1.8 “Calendar Year” means a period of twelve (12) consecutive months
commencing with the first day of January and ending the last day of
December, according to the Gregorian calendar.
1.9 “Contract Area” means the development and production area covered by
this Contract, as described in Annex X and outlined in the map which
constitutes Annex Y. In case of difference between Annex X and Annex Y
the coordinate description in Annex X shall prevail.
1.10 “Contractor” means, at the Effective Date, (PART 1) and (PART 2),
and at any time thereafter shall include their legal successors and
permitted assigns.
1.11 “Crude Oil” means all hydrocarbons regardless of gravity which are
produced and
saved from the Field in liquid state at atmospheric pressure, including
asphalt, tar and the liquid hydrocarbons known as distillates and
condenses obtained from Natural Gas.
1.12. “Commercial Oil” means part of the Net Production transported,
commingled with other crudes, measured at the Delivery Measurement Point
(DMP) and delivered to the Contractor at the Delivery Point in
accordance with the provisions of Articles 18 and 19 and Addendum Two.
1.13. “Commercial Oil Price” means the price of one Barrel of Commercial
Oil Free on Board (FOB, Incoterms-2000) at the Delivery Point, computed
in accordance with the provisions of Article 19.
1.14. “Delivery Point” or “DP” means the point(s) at the loading flanges
of the (X) loading terminal(s) in the Arabian Gulf where Contractor’s
entitlement of Commercial Oil under this Contract shall be delivered.
1.15 “Development Operations” means any and all operations, including
primary and subsequent (secondary, tertiary or other) recovery projects
and pressure maintenance, conducted with a view to developing the Field
including, but without limitation: the drilling of evaluation,
appraisal, production and injection wells; the engineering, building and
erecting or laying of production plants and construction of the
facilities (such as without limitation: separators;
Compressors; generators; pumps and tankage; gathering lines; pipelines;
and all facilities required to be installed for production, pressure
maintenance, and treatment, storing and transporting of Petroleum, and
loading the same into seagoing tankers); the obtaining of such
materials, equipment, machinery, articles and supplies as may be
required or expedient for the above activities; and all auxiliary
operations, activities; and services required or expedient for the
better conduct or result of the above activities, all in accordance with
sound oil field and economic practices.
1.16. “Development Plan” means scheduled programmer and cost estimate
specifying the Development Operations required to develop and/or
increase the production capacity of the Field, which includes Initial
Field Development Plan, General Field Development Plan and subsequent
revisions thereof.
1.17. “Local Currency” means the currency of (State X).
1.18. “Dollar” or “USD” means dollar of the United States of America.
1. 19. “Effective Date” means the date when this Contract comes into
force according to Article 41
1. 20. “Excluded Risks”: mean such events as war, foreign invasion,
military actions (may be not connected with declaration of war), civil
war, insurrection, revolution, rebellion, strikes, disturbances,
confiscation, requisition, destruction – in case if such events:
take place on the territory of (State X);
are not a result of the Contractor’s and/or the Operator’s activities;
are not covered by insurance.
1.21. “Field” means the part of (X oilfield) limited to the reservoirs
defined in Section X of Annex X, the area limits of which shall be
defined as and when the Appraisal work is carried out, all within the
Contract Area and subject to the provision of Article 5 hereof.
1.22. “Government” means the Government of (State X).
1.23. “Libor” – means the fixed interbank rate proposed for a three
months deposits in US Dollars published by the London newspaper
“Financial Times” on the date when the interests start accumulating.
In case such rate was not published by the “Financial Times” on the date
when the interests start accumulating, the latest rate published within
the seven working days prior to the required date shall be used.
In case Libor rate cannot be detected by the above method the London
interbank rate proposed for a three months deposits in US Dollars
indicated in article “The Monetary Market Rates” of the “Wall-Street
Journal” (New-York) shall be applied.
1.24. “Measurement Point” means the place (s) at which volumes and
qualities of Crude Oil produced, received, transmitted or delivered
shall be measured.
1.25. “Minimum Work Obligations” means the minimum commitments
undertaken by Contractor under Article 6 and Annex X.
1.26. “Natural Gas” or “Gas” means hydrocarbons that are in a gaseous
phase at atmospheric conditions of temperature and pressure.
1.27. “Net Production” means Crude Oil, measured’at the PMP and
transferred to the Transporter at the Transfer Point less
transportation. losses, linefill and terminal dead stock computed in
accordance with Addendum Two and the subsequent Transportation
Agreement.
1.28. “Operator” means the entity designated pursuant to Article 9
hereof to conduct Petroleum Operations.
1.29. “Participating Interest” – means, with respect to (PART 1) and
(PART 2) comprising Contractor, its percentage interest as defined in
Article 27 and Addendum X in rights, privileges, obligations and
liabilities under the Contract.
1.30. “Petroleum” means all hydrocarbons including liquid and gaseous
hydrocarbons produced and saved from the Field under this Contract.
1.31. “Petroleum Costs” means all expenditures incurred and payments
made by Contractor and/or Operator in connection with or in relation to
Petroleum Operations preparing and their realization including but not
limited to expenses (damage, loss, deterioration) caused by Excluded
Risks, social expenses for the personnel, food and medicine purchases
except as otherwise stipulated herein determined in accordance with the
provisions of this Contract and Annex X.
1.32. “Petroleum Operations” means all operations in connection with
Appraisal, Development, and Production Operations and other activities
related thereto including technical documentation preparing, under this
Contract.
1.33. “Production Operations” means any and all operations related to
production of Petroleum including (but not limited to) workovers,
stimulation’s, operating, staffing, supervising, servicing, repairing
and maintaining of any and all wells, plants, equipment, pipelines, tank
farms, terminals. and all other installations and facilities.
1.34. “Quarter” means a period of three (3) consecutive months
commencing with the ‘ first day of January, April, July or October,
according to the Gregorian calendar.
1.35. “Sub-contractors” means the suppliers, contractors and
sub-contractors of the Operator at whatever level.
1.36. “Transfer Pointer “TP” means the inlet flange(s), immediately
after the Measurement Point at the Field, of the pipeline (s) through
which Crude Oil is to be transported by the Transporter to the Delivery
Point.
1.37. “Transporter means the entity designated by State Body for
transportation and storage of Crude/Commercial Oil beyond the Transfer
Point pursuant to Article 17, Addendum X and the subsequent
Transportation Agreement.
1.38. “Work Programmer” means an itemization and time schedule of the
Petroleum Operations to be carried out under this Contract.
1.39. “Year” means the period of twelve (12) consecutive months
according to the Gregorian Calendar.
1.40. Joint Operating Company (JOC) – means the organization designated,
according to Article 9 of the Contract, to conduct Petroleum Operations
as Operator’s successor personate to Addendum X.
ARTICLE 2. SCOPE OF CONTRACT
2.1 This Contract is a Contract for the Development and Production from
the Field in accordance with the provisions herein contained. It
includes Annexes X – Y and Addenda X – Y attached hereto and made part
thereof.
In the event of conflict of the texts between the Contract and the
Annexes or the Addenda, the provisions of the Contract shall prevail.
The Contractor, subject to the provisions herein contained, shall:
2.1.1 Carry out Petroleum Operations to develop and produce the relevant
reservoirs of the Field with a view to achieving a sustained production
level of (000) thousand Barrels per day by the end of (X) Years period
from the Effective Date;
2.1.2 Provide all capital, machinery, equipment, and technology,
personnel and services necessary for the carrying out of Petroleum
Operations.
2.1.3 Incur all Petroleum Costs required for carrying out Petroleum
Operations, in order to achieve the plateau set out in item 2.1.1 above.
2.1.4 Fulfill all-financial and other obligations of the Contractor and
enjoy all rights and benefits, in accordance with the provisions of this
Contract.
2.2 Notwithstanding the above, scope of this Contract does not include
developed reservoirs defined in Section X of Annex X.
2.3 The Companies comprising the Contractor shall be jointly and
severally responsible towards the State Body for the Contractor’s
obligations fulfillment within the limits of their joint Participating
Interest.
ARTICLE 3. TERM OF CONTRACT
The term of this Contract shall be __ Years from the Effective Date.
The term may be extended for a further period up to Years upon written
request of the Contractor and the State Body’s approval. Such request
shall be submitted by the Contractor to the State Body at least _____
Year prior to the expiry date of the Contract.
ARTICLE 9 – CONDUCT OF PETROLEUM OPERATIONS
9.1 Contractor shall carry out Petroleum Operations on the Field on an
exclusive basis subject to the provisions of tills Contract. State Body
shall take necessary measures to ensure that third party and State
Body’s operations within the Contract Area shall no unreasonably
obstruct, hinder, or unduly delay the Petroleum Operations.
9.2. OPERATORSHIP
9.2.1 (PART 2) on behalf of Contractor shall establish the Operating
Company that shall perform Operator’s functions before the Date of
Transfer of the Operatorship to the Joint Operating Company (JOC) as
defined hereunder. Contractor shall not change the Operator without the
prior written consent of State Body.
9.2.2 The Date of Transfer of Operatorship shall mean, for the purpose
of tills Article, the date occurring (X) years after the (Cost Recovery
Date). For the purposes of this Contract Cost Recovery Date shall be the
first Day of the Quarter, following the two consecutive Quarters, where
for the first time no recoverable costs are carried forward from the
previous Quarter in accordance with Sub-Article 18.1.2 of the Contract
and subject to the provisions of Annex X.
9.2.3 On the Date of Transfer of Operatorship, Operator designated in
accordance with Sub-article 9.2.1 shall transfer the conduct of
Petroleum Operations to JOC which shall be established pursuant to the
provisions of Addendum Three hereto between (PART 2) and an entity
designated by State Body, at least (X) months prior to the Date of
Transfer of Operatorship.
9.2.4 The principle terms of the Charter of the Joint Operating Company
are stipulated in Addendum X.
9.2.5 The Operator and the Joint Operating Company shall conduct the
Petroleum Operations in strict accordance with the provisions of the
Contract. The Operator and the Joint Operating Company shall be granted
the rights, privileges and authorities under the Contract for the
purpose of carrying out Petroleum Operations.
9.3. Operator shall open and maintain a branch and office in (State X).
The State Body shall assist the Operator in this respect.
9.4. Contractor and Operator shall diligently conduct the Petroleum
Operations in compliance with good international petroleum industry
practice.
9.5. Contractor’s and Operators activities shall be designed to achieve
the efficient and safe production of Petroleum from the Field. The
Operator shall ensure that all materials, equipment and facilities used
in Petroleum Operations comply with generally accepted engineering
norms, are of proper and accepted construction and are kept in good
working order throughout the term of the Contract.
9.6. Contractor and Operator shall take all appropriate and necessary
measures in accordance with international standards to safeguard the
environment and prevent pollution, which may result from Petroleum
Operations and minimize the effects of any pollution, which may occur.
9.7. Contractor and Operator shall conduct Petroleum Operations in
accordance with the provisions of this Contract and under the general
supervision and control of the Joint Management Committee (JMC) referred
to in Article 13.
9.8. Pursuant to Sub-article 9.7., the Operator shall:
9.8.1. Provide the personnel required for the Petroleum Operations,
giving first priority to (X) personnel, taking into consideration
qualifications and experience.
9.8.2. Adhere to employment and training programmers, which shall aim at
the (X) of the Operators manpower within a short period to be defined by
the Joint Management Committee.
9.8.3. Utilize Sub-contractors of proven capability and professional
experience on competitive basis. However, prior approval shall be
obtained before signing for any purchase orders and/or sub-contracts
exceeding the following limits:
JMC’s approval for purchase orders and Sub-contracts exceeding USD
(000.000.000).
State Body’s approval for purchase orders and Sub-contracts exceeding
USD (X00.000.000).
9.8.4. Prepare and issue reports pursuant to Article 15, and provide any
further information as may be reasonably required by the State Body.
9.9. Contractor shall place fixtures and installations inside and
outside the Contract Area, as shall be necessary to carry out Petroleum
Operations in accordance with the approved Development Plans. Fixtures
and installations outside the Contract Area relating to the
transportation and export of Crude Oil shall be handed over upon
completion and commissioning, to the Transporter designated by the State
Body which will be responsible for the operation and maintenance of such
fixtures and installations beyond the Transfer Point in accordance with
the provisions of Addendum Two hereto and the subsequent Transportation
Agreement.
9.10. Operator may exceed the Approved Annual Budget by an amount up to
10% for any item therein, as it may become necessary for fulfillment of
the Work Programmer provided that the cumulative excess shall not exceed
5% of the total Annual Budget. The JMC approval shall thereafter be
sought.
ARTICLE 10. GAS
10.1. Associated Gas shall not be flared except in accordance with
applicable _____ laws and the provisions of this Contract.
10.2. Contractor shall submit to State Body, as part of the Initial and
General Field Development Plans, proposed economically and technically
feasible schemes for utilization and/or disposal of Gas. For this
purpose consideration shall be given to the following alternatives or
combination thereof as applicable:
10.2.1 Gas re-injection into the reservoir(s), either for the purpose of
pressure maintenance, enhanced recovery or temporary storage;
10.2.2 Gas treatment for delivery to State Body;
10.2.3 Gas processing at a () plant(s);
10.3. Contractor may use, free of charge, the quantity of Gas necessary
for Petroleum Operations and for local utilities.
10.4. All Gas produced from the Field, which is neither used in
Petroleum Operations and for local utilities nor re-injected in the
Field, shall be delivered to State Body, at delivery point(s) and
subject to specifications to be defined in the Initial and General
Development Plans.
10.5. Quantities of Gas made available to but not received by State Body
may be flared. Gas may also be flared in limited quantities for
maintenance purposes and in emergency cases.
10.6. Fixtures and installations built by the Contractor outside the
Contract Area related ro the utilization and/or disposal of Gas shall be
handed over upon completion and commissioning to the relevant (X) entity
designated by State Body, which shall be responsible thereafter for such
fixtures and installations.
10.7. All costs and expenses incurred by Contractor in connection with
the production. use, re-injection, treatment, delivery, and disposal of
gas under tills Contract shall be recovered as Petroleum Costs.
ARTICLE 14. DATA AND SAMPLES
14.1 All original data and samples obtained by Operator shall be the
property of State Body.
14.2 Operator may remove and export, for the purpose of laboratory
examination or analysis, petrologic specimens or samples of Petroleum or
water encountered in a borehole or well and provide State Body, free of
charge, with samples and specimens of equivalent size and quality,
before such exportation.
14.3 Originals of technical data and records may be exported after
providing State Body with copies of same, provided that Contractor
guarantees their proper storage and keeping, and that such data and
records shall be repatriated to (X) within a maximum period of (X)
months from the date of completion of any smudgy, analysis or processing
that they may have been used for.
14.4 Operator shall save and keep in _____, for a minimum of ___ Year
period, representative portions of each sample of cores and cuttings
taken from drilled wells, to be disposed of or forwarded to State Body
in a manner directed by State Body.
14.5 Operator shall provide State Body with copies of any and all data
(including bui not limited to geological and geophysical reports, logs
and well surveys) reports, information, interpretation of data and all
other information or work product pertaining to the Field in Contractors
or Operators Affiliate’s possession.
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