Common use of Commerciality Clause in Contracts

Commerciality. 8.1 Contractor shall notify the Minister and GNPC in writing as soon as possible after any Discovery is made, but in any event not later than thirty (30) days after any Discovery is made. 8.2 As soon as possible after the analysis of the test results of such Discovery is complete and in any event not later than one hundred (100) days from the date of such Discovery, Contractor shall by a further notice in writing to the Minister indicate whether in the opinion of Contractor the Discovery merits appraisal. 8.3 Where the Contractor indicates that the Discovery does not merit appraisal, Contractor shall, subject to Article 8.17 below, relinquish the Discovery Area associated with the Discovery. 8.4 Where Contractor indicates that the Discovery merits appraisal, Contractor shall submit to the Minister within one hundred and eighty (180) days from the date of Discovery, an Appraisal Programme to be carried out by Contractor in respect of such Discovery. After thirty (30) days following its submission the Appraisal Programme shall be deemed approved as submitted, unless the Minister has before the end of the said thirty (30) period given the Contractor a notice in writing stating: i. that the Appraisal Programme as submitted has not been approved; and ii. the revisions proposed by the Minister to the Appraisal Programme submitted, and the reasons therefor. 8.5 Unless Contractor and the Minister otherwise agree in any particular case, Contractor shall have a period of two (2) years from the date of Discovery to complete the Appraisal Programme. 8.6 Contractor shall commence to conduct the Appraisal Programme within one hundred and fifty (150) days from the date of approval or deemed approval of the Appraisal Programme by the Minister. Where the Contractor is unable to commence the conduct of the Appraisal Programme within one hundred and fifty (150) days from the date of approval or deemed approval of the Appraisal Programme by the Minister, GNPC shall be entitled to exercise the option provided for in Article 9.1 to enable prompt appraisal, provided however that after Contractor actually embarks on appraisal work or obtains an extension of time for such work, this option may not be exercised. 8.7 Not later than ninety (90) days from the date on which said Appraisal Programme relating to the Discovery is completed, Contractor will submit to the Minister a report containing the results of the Appraisal Programme. Such report shall include all available technical and economic data relevant to a determination of commerciality, including, but not limited to, geological and geophysical conditions, such as structural configuration, physical properties and the extent of reservoir rocks, areas, thickness and depth of pay zones, pressure, volume and temperature analysis of the reservoir fluids; preliminary estimates of Crude Oil and Natural Gas reserves; recovery drive characteristics; anticipated production performance per reservoir and per well; fluid characteristics, including gravity, sulphur percentage, sediment and water percentage and refinery assay pattern. 8.8 Not later than ninety (90) days from the date on which said Appraisal Programme is completed Contractor will, by a further notice in writing, inform the Minister whether the Discovery in the opinion of Contractor is or is not a Commercial Discovery. 8.9 If Contractor informs the Minister that the Discovery is not a Commercial Discovery, then subject to Articles 8.17, Contractor shall relinquish such Discovery Area; provided, however, that in appropriate cases, before declaring that a Discovery is not a Commercial Discovery, Contractor shall consult with the other Parties and may make appropriate representations proposing minor changes in the fiscal and other provisions of this Agreement which may, in the opinion of Contractor, affect the determination of commerciality. The other Parties may, where feasible, and in the best interests of the Parties agree to make such changes or modifications in the existing arrangements. 8.10 If Contractor pursuant to Article 8.8 informs the Minister that the Discovery is a Commercial Discovery, Contractor shall not later than one hundred and eighty (180) days thereafter, prepare and submit to the Minister a Development Plan. 8.11 The Development Plan referred to in Article 8.10 shall be based on detailed engineering studies and shall include: a) Contractor’s proposals for the delineation of the proposed Development and Production Area and for the development of any reservoir(s), including the method for the disposal of Associated Gas in accordance with the provisions of Article 14.4; b) the way in which the Development and Production of the reservoir is planned to be financed; c) Contractor’s proposals relating to the spacing, drilling and completion of xxxxx, the production, storage, transportation and delivery facilities required for the production, storage and transportation of the Petroleum, including without limitation: i) the estimated number, size and production capacity of production platforms if any; ii) the estimated number of Production Xxxxx; iii) the particulars of feasible alternatives for transportation of the Petroleum, including pipelines; iv) the particulars of onshore installations required, including the type and specifications or size thereof; and v) the particulars of other technical equipment required for the operations; d) the estimated production profiles for Crude Oil and Natural Gas from the Petroleum reservoirs; e) estimates of capital and Production Operation expenditures; f) the economic feasibility studies carried out by or for Contractor in respect of alternative methods for Development of the Discovery, taking into account: i) location; ii) water depth (where applicable); iii) meteorological conditions; iv) estimates of capital and Production Operation expenditures; and v) any other relevant data and evaluation thereof; g) the safety measures to be adopted in the course of the Development and Production Operations, including measures to deal with emergencies; h) the necessary measures to be taken for the protection of the environment; i) Contractor’s proposals with respect to the procurement of goods and services obtainable in Ghana; j) Contractor’s plan for training and employment of Ghanaian nationals; and k) the timetable for effecting Development Operations. 8.12 The date of the Minister’s approval of the Development Plan shall be the Date of Commercial Discovery. 8.13 After thirty (30) days following its submission, the Development Plan shall be deemed approved as submitted, unless the Minister has before the end of the said thirty (30) day period given Contractor a notice in writing stating: i) that the Development Plan as submitted has not been approved; and ii) the revisions, proposed by the Minister, to the Development Plan as submitted, and the reasons thereof. 8.14 Where the Development Plan is not approved by the Minister as provided under Article 8.13 above, the Parties shall within a period of thirty (30) days from the date of the notice by the Minister as referred to under Article 8.13 above meet to agree on the revisions proposed by the Minister to the Development Plan. In the event of failure to agree to the proposed revisions, within fourteen (14) days following said meeting any matters in dispute between the Minister and the Contractor shall be referred for resolution in accordance with Article 24. 8.15 Where the issue in dispute referred for resolution pursuant to Article 24 is finally decided in favour of Contractor the Minister shall forthwith give the requisite approval to the Development Plan submitted by Contractor. 8.16 Where the issue in question referred for resolution pursuant to Article 24 is finally decided in favour of the Minister in whole or in part, Contractor shall forthwith: i) amend the proposed Development Plan to give effect to the final decision rendered under Article 24, and the Minister shall give the requisite approval to such revised Development Plan; or ii) subject to Article 8.19 below relinquish the Discovery Area. 8.17 Notwithstanding the relinquishment provisions of Articles 8.3 and 8.9 above, if Contractor indicates that a Discovery does not at the time merit appraisal, or after appraisal does not appear to be commercial but may merit appraisal or potentially become commercial at a later date during the Exploration Period, then Contractor need not relinquish the Discovery Area and may continue its Exploration Operations in the Contract Area during the Exploration Period provided that the Contractor shall explain what additional evaluations, including Exploration work or studies (within or outside the Discovery Area), are or may be planned in order to determine whether subsequent appraisal is warranted or that the Discovery is commercial. Such evaluations shall be performed by Contractor according to a specific time table, subject to its right of earlier relinquishment of the Discovery Area. After completion of the evaluations, Contractor shall make the indications called for under Article 8.2 or 8.8 and either proceed with appraisal, confirm commerciality or relinquish the Discovery Area. In any case, if at the end of the Exploration Period Contractor has not indicated its intent to proceed with an Appraisal Programme or that the Discovery is a Commercial Discovery, then the Discovery Area shall be relinquished. 8.18 Before Contractor indicates that the Discovery will not merit appraisal, or after an Appraisal Programme, indicates it will not be a Commercial Discovery, Contractor may consult with the other Parties and may make appropriate representations proposing minor changes in the fiscal and other provisions of this Agreement which may, in the opinion of Contractor, affect the determination of commerciality. The other Parties may, agree to make such changes or modifications in the existing arrangements. In the event the Parties do not agree on such changes or modifications, then subject to Article 8.17 and Article 8.19 Contractor shall relinquish the Discovery Area. 8.19 Nothing in Article 8.3, 8.9, 8.16 or 8.17 above shall be read or construed as requiring Contractor to relinquish: a) any area which constitutes or forms part of another Discovery Area in respect of which: i) Contractor has given the Minister a separate notice indicating that such Discovery merits appraisal or confirmation; or ii) Contractor has given the Minister a separate notice indicating that such Discovery is a Commercial Discovery; or b) any area which constitutes or forms part of a Development and Production Area. 8.20 In the event a field extends beyond the boundaries of the Contract Area, the Minister may require Contractor if it so wishes, to exploit said Field in association with the third party holding the adjacent area, pursuant to unitization and engineering principles and practices in accordance with accepted international Petroleum industry practices.

Commerciality. 8.1 Contractor shall notify the Minister and GNPC in writing as soon as possible possible, after any Discovery is made, but in any event not later than thirty (30) days days, after any such Discovery is made. 8.2 As soon as possible after the analysis of the test results of such Discovery is complete and in any event not later than one hundred (100) days from the date of such Discovery, Contractor shall by a further notice in writing to the Minister indicate whether in the opinion of Contractor the Discovery merits appraisal. 8.3 Where the Contractor indicates that the Discovery does not merit appraisal, Contractor shall, subject to Article 8.17 and 8.19 below, relinquish the Discovery Area associated with the Discovery. 8.4 Where Contractor indicates that the Discovery merits appraisal, Contractor shall submit to the Minister within one hundred and eighty (180) days from the date of Discovery, an Appraisal Programme to be carried out by Contractor in respect of such Discovery. After thirty (30) days following its submission the Appraisal Programme shall be deemed approved as submitted, unless the Minister has before the end of the said thirty (30) period given the Contractor a notice in writing stating: i. that the Appraisal Programme as submitted has not been approved; and ii. the revisions proposed by the Minister to the Appraisal Programme submitted, and the reasons therefor. 8.5 Unless Contractor and the Minister otherwise agree in any particular case, Contractor shall have a period of two (2) years from the date of Discovery to complete the Appraisal Programme. 8.6 Unless the Minister requires revisions to the Appraisal Programme submitted under Article 8.4, Contractor shall commence to conduct the Appraisal Programme within one hundred and fifty eighty (150180) days from the date of approval or deemed approval of the Appraisal Programme by the Minister. Where the Contractor is unable to commence the conduct of the Appraisal Programme within one hundred and fifty eighty (150180) days from the date of approval or deemed approval of the Appraisal Programme by the Minister, the Minister shall notify Contractor that it risks having the Discovery Area released to GNPC and if within thirty (30) days of such notification Contractor does not commence to conduct the Appraisal Programme, the Discovery area shall be entitled deemed relinquished to exercise the option provided for in Article 9.1 to enable prompt appraisal, GNPC provided however that after Contractor actually embarks on appraisal work or obtains an extension of time for such work, this option may such release shall not be exercisedoccur. 8.7 Not later than ninety (90) days from the date on which said Appraisal Programme relating to the Discovery is completed, Contractor will submit to the Minister a report containing the results of the Appraisal Programme. Such report shall include all available technical and economic data relevant to a determination of commerciality, including, but not limited to, geological and geophysical conditions, such as structural configuration, physical properties and the extent of reservoir rocks, areas, thickness and depth of pay zones, pressure, volume and temperature analysis of the reservoir fluids; preliminary estimates of Crude Oil and Natural Gas reserves; recovery drive characteristics; anticipated production performance per reservoir and per well; fluid characteristics, including gravity, sulphur percentage, sediment and water percentage and refinery assay pattern. For the avoidance of doubt, all costs associated with the planning and execution of the Appraisal Programme shall be deductible as Petroleum Costs and shall be deemed included in Section 2.2 of the Accounting Guide. 8.8 Not later than ninety (90) days from the date on which said Appraisal Programme is completed completed, Contractor will, by a further notice in writing, inform the Minister whether the Discovery in the opinion of Contractor is or is not a Commercial Discovery. 8.9 If Contractor informs the Minister that the Discovery is not a Commercial Discovery, then subject to Articles 8.178.17 and 8.19, Contractor shall relinquish such Discovery Area; provided, however, that in appropriate cases, before declaring that a Discovery is not a Commercial Discovery, Contractor shall consult with the other Parties and may make appropriate representations proposing minor changes in the fiscal and other provisions of this Agreement which may, in the opinion of Contractor, affect the determination of commerciality. The other Parties may, where feasible, and in the best interests of the Parties agree to make such changes or modifications in the existing arrangements. 8.10 If Contractor pursuant to Article 8.8 informs the Minister that the Discovery is a Commercial Discovery, Contractor shall shall, not later than one hundred and eighty (180) days thereafter, prepare and submit to the Minister a Development Plan. 8.11 The Development Plan referred to in Article 8.10 shall be based on detailed engineering studies and shall include: a) Contractor’s proposals for the delineation of the proposed Development and Production Area and for the development of any reservoir(s), including the method for the disposal of Associated Gas in accordance with the provisions of Article 14.4; b) the The way in which the Development and Production of the reservoir is planned to be financed; c) Contractor’s proposals relating to the spacing, drilling and completion of xxxxx, the production, storage, transportation and delivery facilities required for the production, storage and transportation of the Petroleum, including without limitation: i) the The estimated number, size and production capacity of production platforms if any; ii) the The estimated number of Production Xxxxx; iii) the The particulars of feasible alternatives for transportation of the Petroleum, including pipelines; iv) the The particulars of onshore installations required, including the type and specifications or size thereof; thereof and v) the The particulars of other technical equipment required for the operations; d) the The estimated production profiles for Crude Oil and Natural Gas from the Petroleum reservoirs; e) estimates Estimates of capital and Production Operation expenditures; f) the The economic feasibility studies carried out by or for Contractor in respect of alternative methods for Development of the Discovery, taking into account: i) locationLocation; ii) water depth (where applicable)Water depth; iii) meteorological Meteorological conditions; iv) estimates Estimates of capital and Production Operation expenditures; and v) any Any other relevant data and evaluation thereof; g) the The safety measures to be adopted in the course of the Development and Production Operations, including measures to deal with emergencies; h) the The necessary measures to be taken for the protection of the environment; i) Contractor’s proposals with respect to the procurement of goods and services obtainable in Ghana; j) Contractor’s plan for training and employment of Ghanaian nationals; and k) the The timetable for effecting Development Operations. 8.12 The date of the Minister’s approval of the Development Plan shall be the Date of Commercial Discovery. 8.13 After thirty (30) days following its submission, the Development Plan shall be deemed approved as submitted, unless the Minister has before the end of the said thirty (30) day period given Contractor a notice in writing stating: i) that That the Development Plan as submitted has not been approved; and ii) the The revisions, proposed by the Minister, to the Development Plan as submitted, and the reasons thereof. 8.14 Where the Development Plan is not approved by the Minister as provided under Article 8.13 above, the Parties shall shall, within a period of thirty (30) days from the date of Contractor’s receipt of the notice by from the Minister as referred to under Article 8.13 above above, meet to agree on the revisions proposed by the Minister to the Development Plan. In the event of failure to agree to the proposed revisions, within fourteen Fourteen (14) days following said meeting any matters in dispute between the Minister and the Contractor shall be referred for resolution in accordance with Article 24. 8.15 Where the issue in dispute referred for resolution pursuant to Article 24 is finally decided in favour of Contractor Contractor, the Minister shall forthwith give the requisite approval to the Development Plan submitted by Contractor. 8.16 Where the issue in question referred for resolution pursuant to Article 24 is finally decided in favour of the Minister in whole or in part, Contractor shall forthwith: i) amend Amend the proposed Development Plan to give effect to the final decision rendered under Article 24, and the Minister shall give the requisite approval to such revised Development Plan; or ii) subject Subject to Article 8.19 below relinquish the Discovery Area. 8.17 Notwithstanding the relinquishment provisions of Articles 8.3 and 8.9 above, if Contractor indicates that a Discovery does not at the time merit appraisal, or after appraisal does not appear to be commercial a Commercial Discovery but may merit appraisal or potentially become commercial at a later date during the Exploration Period, then Contractor Contractor, need not relinquish the Discovery Area and may continue its Exploration Operations in the Contract Area during the Exploration Period provided Period; provided, that the Contractor shall explain what additional evaluations, including Exploration work or studies (within or outside the Discovery Area), are or may be planned in order to determine whether subsequent appraisal is warranted or that the Discovery is commercial. Such evaluations shall be performed by Contractor according to a specific time tabletimetable, subject to its right of earlier relinquishment of the Discovery Area. After completion of the evaluations, Contractor shall make the indications called for under Article 8.2 or 8.8 and either proceed with appraisal, confirm commerciality or relinquish the Discovery Area. In any case, if at the end of the Exploration Period Period, Contractor has not indicated its intent to proceed with an Appraisal Programme or that the Discovery is a Commercial Discovery, then the Discovery Area shall be relinquished. 8.18 Before Contractor indicates that the Discovery will not merit appraisal, or after an Appraisal Programme, indicates it will not be a Commercial Discovery, Contractor may consult with the other Parties and may make appropriate representations proposing minor changes in the fiscal and other provisions of this Agreement which may, in the opinion of Contractor, affect the determination of commerciality. The other Parties may, agree to make such changes or modifications in the existing arrangements. In the event the Parties do not agree on such changes or modifications, and, if within sixty (60) days after such failure to agree, Contractor does not propose additional evaluations, including Exploration work or studies, that are or may be planned in order to determine whether subsequent appraisal is warranted or that the Discovery is commercial, then subject to Article 8.17 and Article 8.19 8.19, Contractor shall relinquish the Discovery Area. 8.19 Nothing in Article 8.3, 8.9, 8.16 or 8.17 above shall be read or construed as requiring Contractor to relinquish: a) any Any area which constitutes or forms part of another Discovery Area in respect of which: i) Contractor has given the Minister a separate notice indicating that such Discovery merits appraisal or confirmation; or ii) Contractor has given the Minister a separate notice indicating that such Discovery is a Commercial Discovery; or b) any Any area which constitutes or forms part of a Development and Production Area. 8.20 In the event a field extends beyond the boundaries of the Contract Area, the Minister may require Contractor if it so wishes, to exploit said Field in association with the third party holding the adjacent area, area pursuant to unitization unitisation and engineering principles and practices in accordance with accepted international Petroleum petroleum industry practices.