Common use of Material Costs Clause in Contracts

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following. (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's length transactions – except as otherwise provided in paragraph 3.8(d), material purchased by the Contractor in arm's length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of the materials purchased. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "First in, First out" (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii) and 3.8(d)(iii). (i) New material, including used new material moved from inventory (Condition "A"), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's length transactions in the open market. (ii) Used material (Conditions "B", "C" and "D"):

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d3.8 (c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of such transaction shall not exceed the materials purchasedcost of similar transactions conducted with third parties under similar conditions. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "First in, First out" (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i3.8 (d) (i), 3.8(d)(ii3.8 (d) (ii) and 3.8(d)(iii3.8 (d) (iii). (i) New material, including used new material moved from inventory (Condition "A"), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "B", "CB","C" and "D"): a. Material which is in sound and serviceable condition and is suitable for re-use without reconditioning shall be classified as Condition "B" and priced at not more than seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(c)(i); b. Material which cannot be classified as Condition "B", but which after reconditioning will be further serviceable for its original function, shall be classified as Condition "C" and priced at not more than fifty percent (50%) of the current price of new material as defined in paragraph 3.8 (d) (i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition "C" material plus the cost of reconditioning does not exceed the value of Condition "B"material; c. Material which cannot be classified as Condition "B" or Condition "C" shall be classified as Condition "D" and priced at a value commensurate with its use by the Contractor. If material is not fit for use by the Contractor it shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8 (d) (i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8 (d) (ii) (b), such material shall be priced on a basis that will result in a net charge to the accounts under this Contract consistent with the value of the service rendered. (v) Premium prices – whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor's actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to the Ministry of the proposed charge prior to charging Petroleum Operations for such material and the Ministry shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor – the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum the Hydrocarbons Operations subject to the following.: (a) Acquisition – the Acquisition: Contractor shall only supply or purchase materials for use in Petroleum the Hydrocarbons Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except transactions: Except as otherwise provided in paragraph 3.8(d)) below, material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Hydrocarbons Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to of port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other than items chargeable against imported important materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of the materials purchased. (c) Accounting – such Accounting: Such material costs shall be charged to the Accounting Records accounting records and books based in accordance with the "“First inIn, First out" Out” (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or of transferred from other activities of the Contractor to or from Petroleum the Hydrocarbons Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii(i) and 3.8(d)(iii)to (v) below. (i) New material, including used new material moved from inventory (Condition "“A"”), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material in good condition (Conditions "Condition “B"”): Material which is in sound and serviceable conditions and is suitable for re-use without reconditioning shall be classified as Condition “B” and priced at seventy-five percent (75%) of the current price of new material defined in paragraph (i) above. (iii) Used material in poor condition (Condition “C”): Material which cannot be classified as Condition “B” but which after reconditioning will be further serviceable for its function shall be classified as Condition “C” and priced at not more than fifty percent (50%) of the current price of new material as defined in paragraph (i) above. The cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition “C” material plus the costs of reconditioning does not exceed the value of Condition “B” material. (iv) Scrap and discard (Condition “D”): Material which cannot be classified as Condition “B” or Condition “C” shall be classified as Condition “D” and priced at a value commensurate with its use by the Contractor. If material is not fit for use by the Contractor it shall be disposed of as junk. (v) Material involving erection costs shall be charged at the applicable conditions percentage of the current knocked-down price of new material as defined in paragraph (i) above. (vi) When the use of materials is temporary and its services to the Hydrocarbons Operations does not justify reduction in price as provided for in paragraph (iii) above, "C" such material shall be priced on a basis that will result in a net charge to the accounts under Contract consistent with the value of the service rendered. (vii) Premium prices: Whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge the Hydrocarbons operations for the required material at the Contractor’s actual costs incurred in providing such material, in making it suitable for use, and "D"):in moving it to the Contract Area; provided notice in writing is furnished to the Minister of the proposed charge prior to charging the Hydrocarbons Operations for such material and the Minister shall have the right to challenge the transaction on audit. (viii) Warranty on material furnished by the Contractor: The Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to the Hydrocarbons Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – - except as otherwise provided in paragraph 3.8(d3.8(c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent percent of the value of the materials may be added to the cost of the materials purchased. (cb) Accounting – - such material costs shall be charged to the Accounting Records and books in accordance with the "“First in, First out" ” (FIFO) method. (dc) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i3.8(c)(i), 3.8(d)(ii3.8(c)(ii) and 3.8(d)(iii3.8(c)(iii). (i) New material, including used new material moved from inventory (Condition "“A"”), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "“B"”, "“C" ” and "“D"”): a. Material which is in sound and serviceable condition and is suitable for re-use without reconditioning shall be classified as Condition “B” and priced at seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(c)(i); b. Material which cannot be classified as Condition “B”, but which after reconditioning will be further serviceable for its original function, shall be classified as Condition “C” and priced at not more than fifty per cent (50%) of the current price of new material as defined in paragraph 3.8(c)(i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition “C” material plus the cost of reconditioning does not exceed the value of Condition “B” material; c. Material which cannot be classified as Condition “B” or Condition “C” shall be classified as Condition “D” and priced at a value commensurate with its use by the Contractor. If material is not fit for use by the Contractor it shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8(c)(i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8(c)(ii)(b), such material shall be priced on a basis that will result in a net charge to the accounts under this Agreement consistent with the value of the service rendered. (v) Premium prices - whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor’s actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to the Ministry of the proposed charge prior to charging Petroleum Operations for such material and the Ministry shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor - the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d3.8(c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of such transaction shall not exceed the materials purchasedcost of similar transactions conducted with third parties under similar conditions. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "First in, First out" (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii) and 3.8(d)(iii). (i) New material, including used new material moved from inventory (Condition "A"), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "B", "CB","C" and "D"): (a) Material which is in sound and serviceable condition and is suitable for re- use without reconditioning shall be classified as Condition "B" and priced at not more than seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(d)(i); (b) Material which cannot be classified as Condition "B", but which after reconditioning will be further serviceable for its original function, shall be classified as Condition "C" and priced at not more than fifty percent (50%) of the current price of new material as defined in paragraph 3.8(d)(i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition "C" material plus the cost of reconditioning does not exceed the value of Condition "B" material; and (c) Material which cannot be classified as Condition "B" or Condition "C" shall be classified as Condition "D" and priced at a value commensurate with its use by the Contractor. If material is not fit for use by Contractor shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8(d)(i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8(d)(ii)(b), such material shall be priced on a basis that will result in a net charge to the accounts under this Contract consistent with the value of the service rendered. (v) Premium prices – whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor's actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to ANPM of the proposed charge prior to charging Petroleum Operations for such material and ANPM shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor – the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d3.8(c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of such transaction shall not exceed the materials purchasedcost of similar transactions conducted with third parties under similar conditions. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "First in, First out" (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii) and 3.8(d)(iii). (i) New material, including used new material moved from inventory (Condition "A"), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "B", "CB","C" and "D"): (a) Material which is in sound and serviceable condition and is suitable for re- use without reconditioning shall be classified as Condition "B" and priced at not more than seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(d)(i); (b) Material which cannot be classified as Condition "B", but which after reconditioning will be further serviceable for its original function, shall be classified as Condition "C" and priced at not more than fifty percent (50%) of the current price of new material as defined in paragraph 3.8 (d)(i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition "C" material plus the cost of reconditioning does not exceed the value of Condition "B" material; and (c) Material which cannot be classified as Condition "B" or Condition "C" shall be classified as Condition "D" and priced at a value commensurate with its use by the Contractor. If material is not fit for use by Contractor shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8(d)(i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8(d)(ii)(b), such material shall be priced on a basis that will result in a net charge to the accounts under this Contract consistent with the value of the service rendered. (v) Premium prices – whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor's actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to ANPM of the proposed charge prior to charging Petroleum Operations for such material and ANPM shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor – the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d3.8(c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of such transaction shall not exceed the materials purchasedcost of similar transactions conducted with third parties under similar conditions. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "“First in, First out" ” (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii) and 3.8(d)(iii). (i) New material, including used new material moved from inventory (Condition "“A"”), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "“B"”, "“C" ” and "“D"”): a. Material which is in sound and serviceable condition and is suitable for re-use without reconditioning shall be classified as Condition “B” and priced at not more than seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(c)(i); b. Material which cannot be classified as Condition “B”, but which after reconditioning will be further serviceable for its original function, shall be classified as Condition “C” and priced at not more than fifty per cent (50%) of the current price of new material as defined in paragraph 3.8(d)(i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition “C” material plus the cost of reconditioning does not exceed the value of Condition “B” material; c. Material which cannot be classified as Condition “B” or Condition “C” shall be classified as Condition “D” and priced at a value commensurate with its use by the Contractor. If material is not fit for use by the Contractor it shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8(d)(i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8(d)(ii)(b), such material shall be priced on a basis that will result in a net charge to the accounts under this Contract consistent with the value of the service rendered. (v) Premium prices – whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor's actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to the Ministry of the proposed charge prior to charging Petroleum Operations for such material and the Ministry shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor – the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following. (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's length transactions – except as otherwise provided in paragraph 3.8(d), material purchased by the Contractor in arm's length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of the materials purchased. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "First in, First out" (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii) and 3.8(d)(iii). (i) New material, including used new material moved from inventory (Condition "" A"), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's length transactions in the open market. (ii) Used material (Conditions "B", "C" and "D"):

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in the Petroleum Operations subject to the following.: (a) Acquisition – the Contractor Acquisition: Investor shall only supply or purchase materials for use in the Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, shall take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d), material transactions: Material purchased by the Contractor Investor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice purchase price less from point of supply to the point of delivery. Invoice price shall be reduced for trade and cash discounts, purchase and procurement fees plus and increased for freight and forwarding charges between point of supply and point of shipment, freight to of port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other than items chargeable against imported important materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of the materials purchased. (c) Accounting – such Accounting: Such material costs shall be charged to the Accounting Records accounting records and books based in accordance with the "“First in, First out" ” (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or Investor of transferred from other activities of the Contractor Investor to or from the Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii(i) and 3.8(d)(iii)to (v) below. (i) New material, including used new material moved from inventory (Condition "“A"”), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material in good condition (Conditions "Condition “B"”): Material which is in sound and serviceable conditions and is suitable for re-use without reconditioning shall be classified as Condition “B” and priced at seventy-five percent (75%) of the current price of new material defined in paragraph (i) above. (iii) Used material in poor condition (Condition “C”): Material which cannot be classified as Condition “B” but which after reconditioning will be further serviceable for its function shall be classified as Condition “C” and priced at not more than fifty percent (50%) of the current price of new material as defined in paragraph (i) above. The cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition “C” material plus the costs of reconditioning does not exceed the value of Condition “B” material. (iv) Scrap and discard (Condition “D”): Material which cannot be classified as Condition “B” or Condition “C” shall be classified as Condition “D” and priced at a value commensurate with its use by the Investor. If material is not fit for use by the Investor it shall be disposed of as junk. (v) Material involving erection costs shall be charged at the applicable conditions percentage of the current knocked-down price of new material as defined in paragraph (i) above. (vi) When the use of materials is temporary and its services to the Petroleum Operations does not justify reduction in price as provided for in paragraph (iii) above, "C" such material shall be priced with the value of the service rendered. (vii) Premium prices: Whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Investor has no control, the Investor may charge the Petroleum Operations for the required material at the Investor’s actual costs incurred in providing such material, in making it suitable for use, and "D"):in moving it to the Agreement Area; provided notice in writing is furnished to the Agency of the proposed charge prior to charging the Petroleum Operations for such material and the Agency shall have the right to challenge the transaction on audit. (viii) Credit of the material furnished by the Investor: In case of defective material, credit shall not be passed to the Petroleum Operations until adjustment has been received by the Investor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d3.8(c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of such transaction shall not exceed the materials purchasedcost of similar transactions conducted with third parties under similar conditions. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "“First in, First out" ” (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i3.8(c)(i), 3.8(d)(ii3.8(c)(ii) and 3.8(d)(iii3.8(c)(iii). (i) New material, including used new material moved from inventory (Condition "“A"”), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "“B"”, "“C" ” and "“D"”): a. Material which is in sound and serviceable condition and is suitable for re-use without reconditioning shall be classified as Condition “B” and priced at not more than seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(c)(i); b. Material which cannot be classified as Condition “B”, but which after reconditioning will be further serviceable for its original function, shall be classified as Condition “C” and priced at not more than fifty per cent (50%) of the current price of new material as defined in paragraph 3.8(c)(i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition “C” material plus the cost of reconditioning does not exceed the value of Condition “B” material; c. Material which cannot be classified as Condition “B” or Condition “C” shall be classified as Condition “D” and priced at a value commensurate with its use by the Contractor. If material is not fit for use by the Contractor it shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8(c)(i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8(c)(ii)(b), such material shall be priced on a basis that will result in a net charge to the accounts under this Agreement consistent with the value of the service rendered. (v) Premium prices – whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor's actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to the ANP of the proposed charge prior to charging Petroleum Operations for such material and the ANP shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor – the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.

Material Costs. Costs of materials and supplies, equipment, machines, tools and any other goods of a similar nature used or consumed in Petroleum Operations subject to the following.: (a) Acquisition – the Contractor shall only supply or purchase materials for use in Petroleum Operations that may be used in the foreseeable future. The accumulation of surplus stocks and inventory shall be avoided so far as is reasonably practical and consistent with efficient and economical operations. Inventory levels shall, however, take into account the time lag for replacement, emergency needs, weather conditions affecting operations and similar considerations. (b) Components of costs, arm's ’s length transactions – except as otherwise provided in paragraph 3.8(d3.8(c), material purchased by the Contractor in arm's ’s length transactions in the open market for use in the Petroleum Operations shall be valued to include invoice price less trade and cash discounts, purchase and procurement fees plus freight and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, customs duties, consular fees, excise taxes, other items chargeable against imported materials and, where applicable, handling and transportation expenses from point of importation to warehouse or operating site. Where an Affiliate of the Contractor has arranged the purchase, coordinated the forwarding and expediting effort, a fee equal to four (4) per cent of the value of the materials may be added to the cost of such transaction shall not exceed the materials purchasedcost of similar transactions conducted with third parties under similar conditions. (c) Accounting – such material costs shall be charged to the Accounting Records and books in accordance with the "“First in, First out" ” (FIFO) method. (d) Material purchased from or sold to Affiliates of the Contractor or transferred from other activities of the Contractor to or from Petroleum Operations shall be valued and charged or credited at the prices specified in sub-paragraphs 3.8(d)(i), 3.8(d)(ii) and 3.8(d)(iii). (i) New material, including used new material moved from inventory (Condition "“A"”), shall be valued at the current international net price which shall not exceed the price prevailing in normal arm's ’s length transactions in the open market. (ii) Used material (Conditions "“B"”, "“C" ” and "“D"”): a. Material which is in sound and serviceable condition and is suitable for re-use without reconditioning shall be classified as Condition “B” and priced at not more than seventy-five per cent (75%) of the current price of new material defined in paragraph 3.8(d)(i); b. Material which cannot be classified as Condition “B”, but which after reconditioning will be further serviceable for its original function, shall be classified as Condition “C” and priced at not more than fifty per cent (50%) of the current price of new material as defined in paragraph 3.8(d)(i); the cost of reconditioning shall be charged to the reconditioned material provided that the value of Condition “C” material plus the cost of reconditioning does not exceed the value of Condition “B” material; c. Material which cannot be classified as Condition “B” or Condition “C” shall be classified as Condition “D” and priced at a value commensurate with its use by the Contractor. If material is not fit for use by the Contractor it shall be disposed of as junk. (iii) Material involving erection costs shall be charged at the applicable condition percentage of the current knocked-down price of new material as defined in paragraph 3.8(d)(i). (iv) When the use of material is temporary and its service to the Petroleum Operations does not justify the reduction in price as provided for in paragraph 3.8(d)(ii)(b), such material shall be priced on a basis that will result in a net charge to the accounts under this Contract consistent with the value of the service rendered. (v) Premium prices – whenever material is not readily obtainable at published or listed prices because of national emergencies, strikes or other unusual causes over which the Contractor has no control, the Contractor may charge Petroleum Operations for the required material at the Contractor's actual cost incurred in providing such material, in making it suitable for use, and in moving it to the Contract Area; provided notice in writing is furnished to the Ministry of the proposed charge prior to charging Petroleum Operations for such material and the Ministry shall have the right to challenge the transaction on audit. (vi) Warranty of material furnished by the Contractor – the Contractor does not warrant the material furnished. In case of defective material, credit shall not be passed to Petroleum Operations until adjustment has been received by the Contractor from the manufacturers of the material or their agents.