RÉPUBLIQUE DE GUINÉE ROYALTY AND PRODUCTION SHARING AGREEMENT BETWEEN THE REPUBLIC OF GUINEA AND USOil Corporation INTERNAL TRANSLATION
RÉPUBLIQUE
DE
GUINÉE
ROYALTY
AND
PRODUCTION
SHARING
AGREEMENT
BETWEEN
THE
REPUBLIC OF GUINEA
AND
USOil
Corporation
INTERNAL
TRANSLATION
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ARTICLE
1
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DEFINITIONS
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4
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ARTICLE
2
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NATURE
AND OBJECT OF THE CONTRACT
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6
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ARTICLE
3
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DURATION
OF THE CONTRACT
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7
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ARTICLE
4
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EXPLORATION
WORK AND EXPENDITURE OBLIGATIONS
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9
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ARTICLE
5
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SURRENDERS
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11
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ARTICLE
6
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APPRAISAL
OF A DISCOVERY
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11
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ARTICLE
7
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DEVELOPMENT
AND PRODUCTION
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13
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ARTICLE
8
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NATURAL
GAS
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15
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ARTICLE
9
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ANNUAL
WORK PROGRAMMES AND PETROLEUM OPERATIONS MANAGEMENT
COMMITTEE
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ARTICLE
10
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PREFERENCE
TO LOCAL PERSONNEL AND SUBCONTRACTORS
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ARTICLE
11
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CONTRACTOR'S
OBLIGATIONS IN THE CONDUCT OF PETROLEUM
OPERATIONS
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29
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ARTICLE
12
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CONTRACTOR’S
RIGHTS IN THE CONDUCT OF PETROLEUM OPERATIONS
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21
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ARTICLE
13
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RECOVERY
OF PETROLEUM COSTS AND PRODUCTION SHARING
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ARTICLE
14
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VALUATION
OF PETROLEUM
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ARTICLE
15
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STATE
PARTICIPATION
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ARTICLE
16
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TAXATION
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27
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ARTICLE
17
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OBLIGATION
TO SUPPLY DOMESTIC CONSUMPTION
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28
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ARTICLE
18
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SUPERVISION
AND INSPECTION OF PETROLEUM OPERATIONS
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29
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ARTICLE
19
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INFORMATION
AND REPORTS
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30
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ARTICLE
20
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ACCOUNTING
AND PAYMENTS
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32
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ARTICLE
21
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IMPORTS
AND EXPORTS
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33
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ARTICLE
22
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FOREIGN
EXCHANGE CONTROL
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34
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ARTICLE
23
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ASSIGNMENTS
AND TRANSFERS
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35
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ARTICLE
24
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SURRENDERS
AND TERMINATION
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36
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ARTICLE
25
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FORCE
MAJEURE
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37
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ARTICLE
26
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APPLICABLE
LAW AND STABILITY OF CONDITIONS
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38
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ARTICLE
27
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SETTLEMENT
OF DISPUTES
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39
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ARTICLE
28
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NOTICES
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40
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ARTICLE
29
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MISCELLANEOUS
PROVISIONS
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41
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ARTICLE
30
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EFFECTIVE
DATE
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42
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APPENDIX
A
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#1
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43
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CONTRACT
BETWEEN
The
Republic of Guinea, hereinafter referred to as the 'Government', represented
for
the purposes of this Contract by the Ministre-Directeur du Cabinet Particulier
du President de la Republic de Guinee
On
the one hand,
AND
US
Oil Corp., a corporation incorporated under the laws of the State of Texas,
and
having its office in Houston, hereinafter referred to as Contractor, and
represented for the purposes of this Contract by Xx. Xxxxxx Xxxxxx, its
president, hereinafter referred to either collectively or individually as the
“Contractor”,
On
the other hand,
WITNESSETH:
WHEREAS,
the Government wishes to promote the exploration and exploitation of Petroleum
within the territory of the Republic of Guinea to contribute to the economic
development of the country;
WHEREAS,
the Government, in order to carry out in the best technical and economic
conditions the Petroleum exploration and exploitation operations concerning
the
Contract Area, wishes to contract the services of a qualified
contractor;
WHEREAS,
the Contractor represents that it has the technical competence and financial
ability to perform the Petroleum Operations herein described, and wishes to
carry out such Petroleum Operations under the terms and conditions of a royalty
and production sharing contract pursuant to the provisions of the Petroleum
Code;
NOW
THEREFORE, the Parties hereby agree as follows:
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ARTICLE
1:
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DEFINITIONS
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The
words used in this Contract shall have the following
meanings;
1.1
“Calendar
Year” means a period of twelve (12) consecutive months commencing with the first
day of January and ending the last day of the following
December.
1.2
“Contract
Year” means a period of twelve (12) consecutive months commencing on the
Effective Date or the anniversary date of the Effective
Date.
1.3
“Barrel”
means a quantity consisting of 158.984 liters at standard atmospheric pressure
of 1.01325 bars and temperature of fifteen degrees centigrade (15 degree
C).
1.4
“Petroleum
Code” means the Ordinance N 119/PRG/86 of September 23, 1986 concerning the
legal and fiscal regime of the exploration and exploitation of Petroleum as
well
as the regulations made thereunder.
1.5
“Contractor”
means collectively or individuallyUSOil as well as any company to which rights
and obligations may be transferred pursuant to Article 23
below.
1.6
“Contract”
means this document and its appendices, as well as any extension or modification
hereto which may be mutually agreed by the Parties in accordance with the
provisions of Article 29 below.
1.7
“Petroleum
Costs” means all costs and expenses incurred in carrying out the Petroleum
Operations under this Contract.
1.8
“Effective
Date” means the date on which this Contract comes into force and effect, as
defined in Article 30 below.
1.9
“Commercial
Discovery” means the discovery of a Petroleum field which has been duly
evaluated in accordance with the provisions of the Article below, and which
can
be produced commercially after taking into account all technical and economic
data.
1.10
“Dollar”
means dollar of the United States of America.
1.11
“Natural
Gas” means the dry and wet gas, whether or not associated with Crude Oil, as
well as all gases produced in association with Petroleum.
1.12
“Government”
or “” means the Republic of Guinea.
1.13
“Petroleum”
means Crude Oil and Natural Gas.
1.14
“Minister”
means the Minister in charge of the Petroleum sector or his designated
representative.
1.15
“Petroleum
Operations” means the operations authorized under this Contract, related to the
exploration, appraisal, development, production, transportation and sale of
Petroleum, and includes Natural Gas processing operations as well as all
necessary connected operations, but does not include refining and marketing
of
petroleum products.
1.16
“Parties”
means the Government and the Contractor, and “Party” means either the Government
or the Contractor.
1.17
“Exploitation
Area” means that portion of the Contract Area delimited by a Commercial
Discovery and defined pursuant to Article 7.2 below.
1.18
“Crude
Oil” means all hydrocarbons that are produced in liquid state and at atmospheric
pressure, at the wellhead, at the separator or after processing, asphalt,
ozokerites and all other liquid hydrocarbons either in natural condition or
obtained from Natural Gas by condensation or extraction, including inter alia
(?) (Looks like byproducts, literally, products condensated between others)
condensates and Natural Gas liquids.
1.19
“Delivery
Point” means the FOB point at loading terminal of Crude oil or Natural Gas in
the Republic of Guinea or any other point agreed upon by the
Parties.
1.20
“Affiliated
Company” means any company that directly or indirectly controls or is controlled
by any entity constituting the Contractor, or any company that directly or
indirectly controls or is controlled by a company or entity which itself
directly or indirectly controls any entity constituting the Contractor. For
the
purposes of the foregoing definition, “Control” means the direct or indirect
ownership by a company or any other entity of at least fifty percent (50%,)
of
the shares or interest forming the capital of another company or entity
conferring upon the owner thereof a majority of voting rights exercisable at
general meetings of that another Company or entity, or a participation giving
a
determining position in the management of another company or
entity.
1.21
“Quarter”
means a period of three (3) consecutive months commencing with the first day
of
January, April, July and October.
1.22
“Contract
Area” means the area described in Appendix A. It is understood that the zones
given back by the Contractor will be considered as excluded from the Contract
Area. Conversely, the exploitation zones will form an integral part of the
Contract Area during the term of this contract. The Contract Area is represented
by (?) a surface of {blank} as indicated by the map on Appendix
A.
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ARTICLE
2:
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NATURE
AND OBJECT OF THE CONTRACT
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2.1
This
Contract is a royalty and production sharing contract whereby the Government
appoints the Contractor for rendering all the necessary services, on behalf
of
the Government, regarding the exploration for and, where applicable, the
exploitation of Petroleum that may exist in the Contract
Area.
The
Contractor shall act, on a exclusive basis for the Government for the entire
Contract Area, to conduct and carry out the Petroleum Operations. It shall
supply all technical means technologies, equipment and materials as well as
the
personnel necessary for operations.
The
Contractor shall bear, at its sole risk and expense, the full responsibility
to
finance the Petroleum Operations, subject to the provisions of Article 15
below.
In
the event of a Commercial Discovery in the Contract Area, the production of
Petroleum shall be, during the term of the exploitation period, shared between
the Parties in accordance with the provisions of Article 13
below.
2.2
The
object of this Contract is to define the terms and conditions under which the
Contractor shall provide the Government with the services set forth in the
Article above, as well as the respective rights and obligations of the
Parties.
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ARTICLE
3:
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DURATION
OF THE CONTRACT
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3.1
This
Contract shall consist of a First Exploration period and a Second Exploration
period, and in respect of each Commercial Discovery, an exploitation
period.
3.2
The
First Exploration period shall be ONE
Contract Year.
3.3
The
Contractor shall begin the Petroleum exploration operations within
two
(2)
months after the Effective Date.
3.
4
If
the Contractor has fulfilled for the First Exploration period its work and
expected expenditure obligations as set forth in Article 4 hereof, it shall
obtain ipso jure a new Exploration period of two
(2)
Contract Years. For each renewal, he Contractor shall notify, in accordance
with
the provisions of the Petroleum Code, a justifiable application with the
Minister at least two (2) months prior to the expiry of the First Exploration
period.
3.5
In
order to enable the Contractor to complete its work and expected expenditure
obligations, the Minister will grant an extension to the Second Exploration
period for a period not exceeding twelve(12)
months, upon notification made by the Contractor at least two (2) months prior
to the expiry of the Second Exploitation period.
3.6
In
the event the contractor has completed its initial exploration work program,
or
before, if the Contractor believes exploration operations could be more
beneficial, the contractor will commit to begin the second exploration period;
to begin and to complete one (1) exploratory well and to undertake logging,
testing and hook-up operations. To facilitate the Contractor in executing this
work, the Minister will grant an extension to the second exploration period,
for
a period not to exceed four (4) years, upon notification made by the contractor
at least two (2) months prior to the end of that exploration
period.
In
the event a Petroleum discovery is made during this Second Exploration period
and the remaining period of validity is insufficient to allow the Contractor
to
undertake the appraisal of that discovery, such exploration period shall, upon
application by Contractor, be extended for the time necessary to the completion
of that work. Such extension shall not exceed a period of twelve(12)
months.
3.7
Subject
to the provisions of Article 24 below, this Contract shall expire two years
after the end of the second exploration period and all of the relevant
extensionsfor the entirety of the Contract Area, with the exception of the
Exploitation Area(s), each being defined as a contiguous area of 50 Kilometers
by 50 Kilometers, to be designated by the Contractor following exploration
and
based on information furnished from the exploratory well.
3.8
Following
the determination by the Contractor of the commercial viability of a discovery,
the exploitation period with respect to that Commercial Discovery shall commence
upon the date of adoption of the development plan in accordance with the
provisions of Article 3.7 below and shall expire thirty five (35) years
following that date.
However,
where the Contractor at the expiry of that exploitation period considers and
demonstrates to the Minister that the field is able to continue to produce
commercially, said exploitation period shall be extended up to a maximum of
five
(5) years.
3.9
The
Contractor shall have the right to drill more xxxxx in the Exploitation area
during the Exploitation period and where there is more than one Commercial
Discovery, each of them shall have a different exploitation
period.
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ARTICLE
4:
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EXPLORATION
WORK AND EXPENDITURE
OBLIGATIONS
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4.1
The
Contractor shall pay two hundred fifty thousand US Dollars (US$ 250,000) to
the
Republic of Guinea as a fee for access the seismic data at the beginning of
the
first exploration period and no later than ninety (90) days from the date that
the present contract takes effect.
4.2
The
Contractor shall carry out the following minimum exploration work and expected
expenditures:
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(a)
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during
the First Exploration
period:
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(i)
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Data
evaluation, reinterpretation and reprocessing seismic data, as may
be
needed;
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(ii)
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A
3D survey or a topographical and seismic study of the field over
4000
Kilometers will be conducted to determine location of initial exploratory
well;
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(iii)
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Estimated
expenditure for the above is SixMillion Dollars
($6,000,000.00).
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(b)
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during
the Second Exploration period the
Contractor:
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(i)
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Should
drill a minimum of One
exploratory well with expected expenditure of $Ten Million Dollars
($10,000,000.00) each.
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(ii)
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Could
acquire new additional seismic data (optional by
Contractor)
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(c)
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During
the exploitation period, the Contractor
should:
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(i)
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Notify
the appropriate minister of all of the effective discoveries in the
granted area
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(ii)
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Pay
to the Republic of Guinea One Million US Dollars (US $ 1,000,000.00)
towards the grant of a permit covering a perimeter of 50 km x 50
km for
exploitation,
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(iii)
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Accomplish
the work defined by articles 6 and
7.
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4.3
If
the Contractor fails to fulfill the obligations set forth in Article 4.2(a),
then this contract will become automatically null and
void.
4.4
Each
exploratory well set forth in this Article shall be drilled to a minimum depth
of 2500
meters. However, the Contractor may, after prior notice to the Minister,
discontinue an exploratory well at a lesser depth than initially specified
for
one of the following reasons:
- (a)
the basement is encountered at a lesser depth than the minimum contractual
depth;
- (b)
Continuation of drilling represents a manifest danger due to the existence
of
abnormal formation pressure;
- (c)
Petroleum formations are encountered, the penetration of which requires the
placement of casings for protection, and thus, prevents reaching the minimum
contractual depth.
In
the event that any of the above reasons exists, the exploratory well in question
shall be deemed to have been drilled to the minimum contractual
depth.
For
the purposes of this Article, a well drilled under an appraisal work program
shall not be considered as an exploratory well and shall not relieve the
Contractor of the corresponding work obligations.
4.5
The
Contractor can carry out, either during the First exploration period or during
the Second exploration period, exploration works in excess of the minimum work
obligations.
4.6
The
expected exploration expenditure obligations set forth in Article 4.1 above
are
expressed in constant Dollars.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
11
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ARTICLE
5:
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SURRENDERS
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5.1
The
Contractor shall surrender the entire exploration area, with the exception
of a
50 kilometer by 50-kilometer area, to be designated by the Contractor at the
expiry of Second Exploration period or at the beginning of the exploitation
period.
5.2
For
the purposes of Article 5.1 above:
(a)
each
50km x 50 km area granted to the Contractor as an exploitation area will be
returned to the Government according to the provisions of Articles 3.8 and
3.9;
(b)
The
surrendered area(s) shall consist of limited number of areas of a simple
geometrical shape, as determined previously by the
Contractor.
5.3
The
Contractor will surrender the total Exploration area and discharge all its
rights regarding any areas if there is no petroleum activity {on them}?over
a
consecutive period of six months during the first and second exploration
periods.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
12
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ARTICLE
6:
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APPRAISAL
OF A DISCOVERY
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6.1
The
Contractor shall forthwith notify the Minister of any Petroleum discovery made
within the Contract Area and shall supply the Minister with all information
related to such discovery.
6.2
lf
the Contractor decides to appraise the discovery above-mentioned, it shall
notify the Petroleum Operations Management Committee defined in Article 9.2
below, of the detailed appraisal work program and the corresponding budget
for
such discovery. The provisions of Article 9.5 below shall apply mutatis mutandis
to that appraisal work program as regards its adoption by the
Minister.
6.3
After
adoption of the appraisal work program and the corresponding budget, the
Contractor shall carry out such works with due diligence and in accordance
with
the established program.
6.4
Within
two (2) months after the appraisal works are completed, the Contractor shall
supply the Minister with a report establishing whether the discovery is
commercial and including all information related to the technical and economic
characteristics of such discovery.
6.5
If
the Contractor has not commenced the appraisal works for a Petroleum discovery
within two (2) years from the date of notice of such discovery to the Minister,
or if the Contractor does not consider a discovery as commercial within eighteen
(18) months from the completion date of the appraisal work, the Minister, at
his
discretion, may require the Contractor to relinquish all its rights in respect
of the area of the discovery. In such a case, the Contractor shall lose the
rights on the Petroleum produced from only this discovery and any areas
surrendered in this manner will reduce the areas which are required to be
abandoned under Article 5 above.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
13
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ARTICLE
7:
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DEVELOPMENT
AND PRODUCTION
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7.1
If
the Contractor considers a discovery to be a Commercial Discovery, it shall,
within six (6) months from the completion of the appraisal work mentioned in
Article 6.4 above, notify to the Petroleum Operations Management Committee
referred to in Article 9.2 below the development plan concerning such Commercial
Discovery.
7.2
The
development plan submitted by the Contractor shall, inter alia,
contain:
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(a)
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the
preliminary definition of the Exploitation Areas related to the discovery
covering the Commercial
Discovery;
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(b)
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an
estimate of the recoverable reserves and production
profile;
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(c)
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the
work necessary for the exploitation of the fields such as the number
of
xxxxx, the facilities required for the production, treatment, storage
and
transportation of
Petroleum;
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(d)
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an
estimate of the duration of the above-mentioned
work;
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(e)
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an
estimate of the investment required for development and operating
costs;
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(f)
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an
economic study supporting the commercial nature of the
discovery.
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The
Contractor shall determine the commercial nature of a discovery, provided that
the above-mentioned economic study demonstrates the commercial nature of that
discovery. A discovery may be declared as commercial by the Contractor if,
after
taking into account the contractual provisions and the submitted development
plan, the forecast of income and expenses prepared in accordance with the
standards used in the international petroleum industry confirm its
commerciality.
7.3
Within
sixty (60) days from the notification of the development plan to the Petroleum
Operations Management Committee; the latter may notify the Contractor of
revisions or changes to that development plan. The Contractor will endeavor
to
include said revisions or changes in accordance with good international
petroleum industry practice.
No
later than thirty (30) days after the expiry of the time period referred to
above, the Contractor shall submit the development plan to the Minister, for
its
adoption within thirty (30) days.
The
date of adoption of the development plan shall be the date of notice given
by
the Minister. If the Minister fails to give such notice within the thirty (30)
days’ period, the development plan submitted by the Contractor shall be deemed
adopted at the date of expiry of said period.
7.4
The
Contractor shall commence the physical development works on the field within
six
(6) months after the date of adoption of the development plan and shall continue
them with due diligence.
7.5
No
later than three (3) months prior to the end of each Calendar Year, the
Contractor shall notify the Petroleum Operations Management Committee of the
annual development program, and, as the case may be, the annual production
program relating to each Exploitation Area, for the following Calendar Year.
The
provision of Article 9.5 below shall apply mutatis mutandis to the annual
development and production program as regards their adoption by the
Minister.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
14
7.6
During
the Exploitation period of a field, the Contractor shall produce annually
reasonable quantities of Petroleum from said field in accordance with good
international petroleum industry practice and taking into consideration, inter
alia, the rules for the proper conservation of fields and the optimal recovery
of Petroleum reserves under economic conditions.
7.7
The
suspension of production of a field during a continuous period of at least
twelve (12) months, decided by the Contractor without the agreement of the
Government, may result in the termination of this Contract pursuant to the
provisions of Article 24.5 below.
7.8
Where
a field extends beyond the boundaries of the Contract Area, the Minister may,
as
the case may be, require the Contractor to exploit said field in association
with the contractor of the adjacent contract area under the provisions of a
unitization agreement.
Within
six (6) months following the Minister’s request, the Contractor shall notify the
Minister of the development plan relating to the Commercial Discovery that
shall
be prepared in agreement with the contractor of the adjacent contract
area.
If
the development plan is not submitted to the Minister within the above-mentioned
time period, or if the Minister does not adopt such plan, the latter will
prepare a development plan in accordance with good international petroleum
industry practice. Said plan shall be adopted by the Contractor, provided that
the conditions imposed by the Minister do not reduce the economic profitability
of the Contractor as arising from this Contract, and do not require more capital
than normally the Contractor would contribute in the conduct of the Petroleum
Operations.
7.9
The
Contractor shall measure, in a point mutually agreed by the Parties, all
Petroleum produced, after extraction of associated water and foreign substances,
by using, after notification by the Minister, the measurement appliances and
methods customarily used in the international petroleum industry. Pursuant
to
the provisions of Article 18 below, the Minister shall have the right to examine
such measurements and to inspect the appliances and methods
used.
If
during the Exploitation the Contractor wishes to modify said appliances and
methods, it shall notify the Minister.
Where
the appliances and methods used therefore have caused an overstatement or
understatement of measured quantities, the error shall be deemed to have existed
since the date of the last calibration of the measurement device, unless the
contrary may be justified, and an appropriate adjustment shall be made for
the
period said error has existed.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
15
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ARTICLE
8:
|
NATURAL
GAS
|
8.1
The
provisions of this Contract shall apply mutatis mutandis to Natural Gas, subject
to the specific provisions set forth below.
8.2
In
order to enable the Contractor to establish the commercial nature of a
non-associated Natural Gas discovery duly evaluated in accordance with the
provisions of Article 6 above, the exploration period shall be, upon
Contractor’s application, extended for the time period necessary to establish
the commercial nature, provided that such extension shall only be with respect
to the area of the discovered Natural Gas Field.
8.3
Any
associated Natural Gas production, which, in the opinion of the Contractor,
cannot be utilized in Petroleum Operations, or economically, reinjected or
sold,
may be flared.
8.4
If
the Contractor decides to flare associated Natural Gas, or if the Contractor
decides not to exploit a non-associated Natural Gas discovery, the Government
may produce, process and dispose of said Natural Gas, without any compensation
to the Contractor.
In
such a case, the Government shall bear all costs and risks related to the
production, processing and disposal of said Natural Gas.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
16
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ARTICLE
9:
|
ANNUAL
WORK PROGRAMS AND PETROLEUM OPERATIONS MANAGEMENT
COMMITTEE
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9.1
The
Contractor shall carry out all Petroleum Operations during any Calendar Year
according to the annual work program and the corresponding budget with respect
to that Calendar Year.
The
annual work program and budgets referred to above shall itemize the exploration,
appraisal, development and production activities, and shall be submitted to
the
Minister in accordance with the provisions of the following
Articles.
9.2
In
order to ensure the timely notice of Petroleum Operations, a Petroleum
Operations Management Committee shall be set up on the Effective
Date.
That
Committee shall consist on one hand, of three (2) representatives from the
Ministry, and, on the other hand, of two (2) representatives from the
Contractor.
That
Committee shall be chaired by a representative of the Contractor for a two
year
term followed by a Ministry representative for a two year term and henceforth
in
this sequence. The Committee shall meet upon a reasonable request made by its
chairman. Unless otherwise agreed by the Parties, the Committee shall meet
in
Conakry.
9.3
Within
two (2) months from the Effective Date, the Contractor shall notify the
Petroleum Operations Management Committee of the annual work program and the
corresponding budget for the remaining period of the current Calendar
Year.
9.4
For
the following Calendar Year, the Contractor shall submit to the Petroleum
Operations Management Committee no later than two (2) months prior to the expiry
of each Calendar Year, the annual work program and the corresponding budget
related to the following Calendar Year.
9.5
Within
fifteen (15) days from the submission of the annual work program and budget
to
the Petroleum Operations Management Committee, the latter may advise the
Contractor of revisions or changes to such program or budget. The Contractor
may
endeavor to include said revisions or changes in accordance with good
international petroleum industry practice.
No
later than thirty (30) days after the expiry of the above-mentioned time period,
the Contractor shall convey to the Minister, for its adoption within fifteen
(15) days, the annual work program and the corresponding
budget.
The
date of adoption of the annual work program and the corresponding budget shall
be the date of notice given by the Minister.
If
the Minister fails to give such notice within the fifteen (15) days’ period, the
annual work program and the corresponding budget submitted by the Contractor
shall be deemed to have been adopted at the date of expiry of said
period.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
17
9.6
After
the adoption of the annual work program and budget by the Minister, the
Contractor may make such changes to that program and budget as would be
necessary for the Petroleum Operations and duly accounted for, provided that
the
fundamental objectives of said program are not modified. Such possible changes
shall be timely communicated to the Minister.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
10:
|
PREFERENCE
TO LOCAL PERSONNEL AND
SUBCONTRACTORS
|
10.1
From
the commencement of Petroleum Operations, the Contractor
shall:
(a)
give
preference to the employment of qualified Guinean personnel as needed in
Petroleum Operations;
(b)
contribute
to the training of those personnel in order that they may have access to any
position of skilled workers, foremen, executives and
directors.
10.2
At
the end of each year, the Contractor shall prepare and deliver to the Minister
a
recruitment program concerning Guinean personnel for the following years with
a
view to increasing the participation of Guinean personnel in Petroleum
Operations.
10.3
In
order to promote employment of Guinean personnel, at the end of each year,
the
Contractor shall establish and apprise the Minister of its training program
for
Guinean citizens forthe following year.
The
training program may, inter alia, include the participation of Guinean citizens
to courses or training periods organized either in the Republic of Guinea or
abroad, by the Contractor or third parties, as well as the granting of
scholarships abroad.
10.4
The
Contractor and its subcontractors shall give preference to products and
equipment available in the Republic of Guinea, provided that such goods are
competitive in price, quality, quantities, and timelines of delivery and terms
of payment, with imported goods.
10.5
The
Contractor and its subcontractors shall give preference to Guinean enterprises
for all service, construction or supply contracts, provided that such services
ere competitive in price, quality, quantities, timelines of delivery and terms
of payment, with imported services.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
11:
|
CONTRACTOR’S
OBLIGATIONS IN THE CONDUCT OF PETROLEUM
OPERATIONS
|
11.
1
The
Contractor shall undertake and carry out Petroleum Operations in accordance
with
the provisions of this Contract.
11.2
The
Contractor shall carry out Petroleum Operations diligently and in accordance
with good international petroleum industry practice.
11.3
The
Contractor, in carrying out Petroleum Operations, shall use standard methods
and
technologies customarily used in the international petroleum industry and shall
take all measures intended to prevent environment
pollution.
In
particular, the Contractor shall:
(a)ensure
that all facilities and equipment used in Petroleum Operations
(b)
are in good order and correctly kept in good repair;
(c)
prevent
water from entering any Petroleum bearing strata except where enhanced recovery
methods by means of water injection are used;
(d)
avoid
losses and discharges of Petroleum produced as well as losses and discharges
of
mud or any other product used in Petroleum Operations:
(e)
prevent
Petroleum produced and substances used in Petroleum Operations from
contaminating water bearing strata;
(f)
store
Petroleum produced in facilities constructed for that purpose, and not store
Petroleum in earthen reservoir, except temporarily in an
emergency.
11.4
All
work and facilities erected by the Contractor under this Contract shall,
according to their nature and the circumstances, be built, indicated and marked
out so as to allow at any time free and safe passage to navigation and, without
prejudice to the foregoing, the Contractor shall, in order to facilitate
navigation, install and keep in good repair sound or optical devices approved
by
the appropriate Guinean authorities.
11.5
In
the event that the Contractor consists of several enterprises, the obligations
and liabilities of those enterprises under this Contract are joint and
several.
The
joint operating agreement between those enterprises shall be forthwith submitted
to the Minister.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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11.6
For
the purposes of the Petroleum Operations, the Contractor shall set up an office
in the Republic of Guinea and appoint a representative in charge of the
supervision of Petroleum Operations.
11.7
The
Contractor shall take out, and cause to be taken out by its subcontractors,
withrespect to Petroleum Operations, all insurance of the type and for such
amounts in accordance with good international petroleum industry practice,
including, inter ala, third party liability insurance and insurances to cover
damage to property, installations, equipment and materials, without prejudice
to
such reasonable insurance as may be required under Guinean
law.
11.8
On
the expiration, surrender or termination date of this Contract with respect
to
all or part of the Contract Area, the Contractor shall transfer at no cost
to
the Government the ownership of installations, equipment and material and data
used in connection with the Petroleum Operations carried out in the area so
surrendered, and located either within or outside said area, except where those
facilities, equipment and material are used by the Contractor for other
petroleum operations in the Republic of Guinea.
Such
transfer of ownership shall cause the termination of any security or surety
related to those facilities, equipment and material, or which those items
constitute.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
12:
|
CONTRACTOR’S
RIGHTS IN THE CONDUCT OF PETROLEUM
OPERATIONS
|
12.1
Subject
to the laws and regulations in force and according to the provisions of this
Contract, the Contractor shall have the right to take all measures and all
actions, within or outside the Contract Area, which are necessary for the
carrying out of Petroleum Operations, within and without the Contract
Area.
12.2
The
Contractor shall have the right, on its own responsibility, to use qualified
subcontractors in order to undertake Petroleum Operations.
12.3
Subject
to the provisions of the Petroleum Code, the employees and agents of the
Contractor and its subcontractors shall have the right to enter into any place
located within the Contract Area for conducting Petroleum Operations. However,
other persons may be authorized by the government to enter the Contract Area
to
conduct mining work, among other things, except for any Petroleum exploration
and exploitation activity, provided that said authorizations shall not interfere
with the carrying out of Petroleum Operations.
12.4
The
Contractor may, in accordance with the regulations in
force:
(a)
use
stones, sand, clay, gypsum, limestone and other analogous substances needed
for
Petroleum Operations;
(b)
use
water needed for Petroleum Operations, provided that the persons or livestock
watering places are not deprived of the water supply.
12.5
With
authorization of the Minister, the Contractor shall have the right to build,
within or outside the Contract Area, all facilities, works and buildings
necessary to carry out Petroleum Operations, such as roads, conveyances,
communication facilities, pipelines, storage facilities or port facilities.
Said
authorization shall not be unreasonably withheld but may, however, be subject
to
the availability of such facilities to third parties in the event they are
not
used to capacity by the Contractor, provided that such use shall not interfere
with the carrying out of Petroleum Operations.
12.6
Except
otherwise specifically provided in this Contract, no restriction shall be made
to the entry, stay, displacement right, employment and repatriation of persons
employed by the Contractor and its subcontractors and their
families.
The
Government shall facilitate the issue and renewal at visas and residence permits
for said employees and their families.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
13:
|
RECOVERY
OF PETROLEUM COSTS AND PRODUCTION
SHARING
|
13.1
Following
the date of initial production for each field, the Contractor shall pay to
the
Government a royalty of 15% based on the valuation of the petroleum
products.
13.2
The
Contractor shall have the unrestricted right to receive, each Calendar Year,
for
the purposes of recovery of Petroleum Costs, a maximum share of
fifty
percent (50%) of the production from the Contract Area not lost or used in
Petroleum Operations.
13.3
Petroleum
Costs shall be recoverable as follows:
(a)
Petroleum
Costs incurred during the execution of Petroleum Operations relative to the
Contract Area, with the exception of Capital Expenditures, as defined in
Appendix B {there is no Appendix B},which shall be recoverable either in the
Calendar Year in which these Petroleum Costs are incurred or in the Calendar
Year in which the first Commercial Discovery in the Contract Area is put into
production, whichever is the later.
(b)
Capital
Expenditures incurred relative to each Exploitation Area shall be recoverable
at
an accelerated depreciation rate. Recovery of Capital Expenditures related
to an
Exploitation Area shall commence either in the Calendar Year in which
expenditure is incurred or in the Calendar Year in which production from said
Petroleum Area commences, whichever is the later.
(c)
To
the extent that, in a Calendar Year, recoverable Petroleum Costs exceed the
value of the percentage set forth in Article 13.2 above, the excess shall be
carried forward in the next succeeding years until said Petroleum Costs are
fully recovered.
13.4
After
determination of the share of Petroleum production allocated to recovery of
Petroleum Costs by the Contractor pursuant to the provisions of Article 13.1,
13.2 and 13.3 above, the Contractor shall receive, as its remuneration, a
percentage of the remaining production after royalty during each Calendar Year.
For this purpose, said remaining production shall be shared between the
Government and the Contractor as follows:
|
Increments
of daily
production
(in
Barrels per day)
|
Government
Share
|
Contractor
Share
|
|||
|
From
0 to 2000
|
25%
|
75%
|
|||
|
From
2001 to 5000
|
30%
|
70%
|
|||
|
From
5001 to 10000
|
40%
|
60%
|
|||
|
Over
10000
|
50%
|
50%
|
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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For
the purpose of this Article 13.4, “daily production” means the average
production rate in the Contract Area during the Quarter in question less the
portion of production necessary for the recovery of Petroleum
Costs.
13.5
Recovery
of Petroleum Costs and production sharing shall be done each Quarter on an
cumulative basis. Where actual quantities and recoverable Petroleum Costs are
not known at the date of calculation, provisional estimates based on the annual
work program and budget related to the Calendar Year in question as stipulated
in Article 9 above shall be used. Two (2) months before the end of each Calendar
Year, the actual amounts regarding recovery of Petroleum Costs and production
sharing for said Calendar Year shall be determined as well as any necessary
adjustments.
13.6
The
Government shall decide whether to take in kind or in cash the remaining share
of production to which it is entitled, after the recovery of Petroleum Costs.
If
the Government decides to take its share of production in kind, in whole or
in
part, the Minister shall notify the Contractor at least three (3) months before
the commencement of each half-year of the Calendar Year, specifying the precise
quantity he elects to take during the following half-year of a Calendar
Year.
If
the Government decides to convert in cash its share of production, in whole
or
in part, the Contractor shall pay the Government the value of that production
calculated according to Article 14 below. That payment shall be made monthly
within thirty (30) days after the end of the month to which it relates and
the
Contractor shall have title on said share of production at the Delivery
point.
It
is understood that the Contractor shall not enter into any sale commitment
relative to the Government’s share of production for a term of more than six (6)
months without the Minister’s written consent.
13.7
In
the event of Natural Gas production, Petroleum Costs relating to that production
shall be recoverable out of said production only. For the purpose of Article
13.5 above, one hundred and sixty five (165) cubic meters of Natural Gas at
a
temperature of 15 degrees centigrade and pressure of one atmosphere shall be
deemed to be equivalent to one (1) Barrel of Crude Oil.
13.8
For
the purposes of this Article, the value of Petroleum produced shall be the
value
established according to Article 14 below.
13.9
Except
otherwise agreed, the Contractor shall have title to Petroleum to which it
is
entitled under this Contract at the Delivery Point.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
14:
|
VALUATION
OF PETROLEUM
|
14.1
For
the purposes of this Contract and, in particular, for the purposes of Article
13
above, the unit selling price of Crude Oil at the Delivery Point shall be
denominated in Dollars and calculated each Quarter as
follows:
(a)
If
Crude Oil from Contract Area is sold to Third Parties by the Contractor, the
unit price of Crude Oil shall be calculated on the basis of the weighted average
of the F.O.B. destination realized selling prices obtained by the Contractor
during said Quarter from Third Parties in sales at arm’s length not involving
swap, barter or discount, but taking into account differentials concerning
quality, gravity, transportation and terms of payment;
(b)
in
the absence of such sales of Crude Oil during said Quarter but if there have
been sales of Guinean Crude Oil to Third Parties made by another contractor,
the
provisions of paragraph (a) above shall apply mutatis
mutandis;
(c)
in
the absence of sales of Guinean Crude Oil during said Quarter, the unit price
of
Crude Oil shall be calculated on the basis of the F.O.B. destination realized
selling prices obtained during that Quarter on the international market in
arm's
length transactions for Crude Oils from neighboring countries or from the
region, taking into account the conditions of sales as well as differentials
concerning quality, gravity, transportation and terms of
payment.
For
the purpose of this Article, “Third Parties” means any person that is neither an
Affiliated Company nor a Party to this Contract.
14.2
A
committee directed by the Minister or his representative and consisting of
representatives of the administration and representatives of the Contractor
shall meet at the request of its chairmen in order to establish in accordance
with the provisions of Article 14.1 the unit selling price of Crude Oil produced
applicable to each Quarter. The decisions of the committee shall be reached
by
unanimous vote; the Minister and the Contractor having one vote
each.
14.3
If
no decision is made by the committee within thirty (30) days from the and of
said Quarter, the unit selling price of Crude Oil produced shall be determined
by an internationally recognized expert, appointed by mutual agreement between
the Parties or, failing such agreement, upon request by the most diligent Party,
which shall be notified to the other Party, by the International Center for
Technical Expertise from the International Chamber of Commerce. The expert
shall
determine the price within twenty (20) days from his appointment and his
conclusion shall be final and binding upon the Parties.
14.4
Pending
the determination of Crude Oil price, the provisional unit-selling price in
respect of a Quarter shall be the unit-selling price of the preceding Quarter.
Any necessary adjustment shall be made within thirty (30) days after the
unit-selling price for the Quarter in question is
established.
14.5
For
the purpose of this Contract, the value of Natural Gas sold shall be the
realized price obtained by the Contractor for the sale of said Natural
gas.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
15:
|
PARTICIPATION
|
15.1
At
the adoption date of the development plan concerning a Commercial Discovery
as
mentioned above in Article 7.3, the Government can opt to participate in the
risks and results of the Petroleum Operations related to that Commercial
Discovery.
To
this end, the Government can opt at that date to acquire an interest of up
to
fifteen percent (15%), whether directly or through a nationalized partner as
designated by the Government for that purpose.
15.2
The
Government shall exercise its option to participate by written notice to the
Contractor within three (3) months from the date the development plan is
adopted. Such notice shall specify the participating interestGovernment has
elected to acquire.
When
the Government exercises its option to participate, the entities constituting
the Contractor shall transfer, each one in proportion to its participating
interest, a percentage of their interest in said Exploitation Area so that
the
total interest transferred is equal to the level of participation elected by
the
Government.
15.3
The
effective date of the Government participation shall be the date of adoption
of
the development plan.
15.4
Within
three (3) months from the date of notice of the option to participate, the
Parties shall negotiate and conclude a joint operating agreement established
in
accordance with good international petroleum industry
practice.
In
addition to the customary provisions, that agreement shall contain provisions
to
implement the following principles:
(a)
the
participation shall not imply the establishment of a legal
entity;
(b)
the
Government shall have a voting right equal to its participating interest with
respect to all decisions regarding said Exploitation Area;
(c)
the
Government shall, in proportion to its participating interest, dispose of the
production received by the Contractor under Articles 13.1 and 13.3 above with
respect to said Exploitation Area;
(d)
the
Government shall assume, in proportion to its participating interest, its share
of all costs and expenses incurred by the Contractor from the effective date
of
participation with respect to the Petroleum Operations within said Exploitation
Areas.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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(e)
the
Government shall reimburse the Contractor, in proportion to its participating
interest, its share of all costs and expenses incurred by the Contractor with
respect to the Petroleum Operations within said Exploitation Area from the
date
that the participation becomes effective to the option exercise
date.
That
reimbursement shall be made within three (3) months after the date of notice
by
the Government of its decision to participate.
(f)
subject
to the provisions of Article 11.9 above, the assets acquired for the Petroleum
Operations provided for in the joint operating agreement shall be the joint
property of the Government and the Contractor, in proportion to their
participating interests; and
(g)
the
operator on duty upon the date of exercise of the option to participate shall
continue to act as operator in accordance with the provisions of the joint
operating agreement.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
16:
|
TAXATION
|
16.1
The
Contractor shall be subject to the direct tax on industrial and trading profits
as provided for in the General Income Tax Code (“Code des Contributions
Directes”) as well as in Section V of the Petroleum Code.
16.2
For
the purposes of the tax legislation of the Republic of Guinea, the share of
Petroleum which the Contractor is entitled to take under Article 13.2, 13.3,
and
13.4 above shall be deemed to include both the recovery of Petroleum Costs
and
the net profit after payment of the direct tax on industrial and trading profits
of the Contractor under this Contract. The share of production which the
Government is entitled to take under Article 13.1, 13.2 and 13.4 above shall
therefore include the portion necessary to pay all direct tax on industrial
and
trading profits due by the Contractor. The Government undertakes to pay and
discharge on this portion the direct tax on industrial and trading profits
for
and on behalf of the Contractor.
For
the determination of the taxable income of the Contractor, the annual gross
income of the Contractor derived from the sales of the share of Petroleum which
the Contractor is entitled to take under Article 13.2, 13.3 and 13.4 above
shall
be increased by the value of the portion of Petroleum which is necessary for
the
payment of the direct tax on industrial and trading profits as provided for
in
this Article.
Within
three (3) months after the date the Contractor files its income tax return
to
the Government, the Minister will furnish the Contractor with proper receipts
and other documents certifying that the Contractor has complied with all its
tax
obligations under this Article.
Nota
Bene:
If
necessary, the Government would be prepared to consider changes to the wording
of this Article in order to prevent possible double taxation problems, provided
that such changes do not have adverse financial consequences for the
government.
16.3
Expatriate
employees of the Contractor and its subcontractors shall be exempt from the
general income tax provided for in the General Income Tax Code (“impot general
sur le revenu prevu au Code des Contributions Directes”).
16.4
Foreign
subcontractors of the Contractor having no permanent establishment in the
Republic of Guinea shall be exempt from the direct tax on industrial and trading
profits derived from services rendered to the Contractor that are directly
necessary for Petroleum Operations.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
17:
|
OBLIGATION
TO SUPPLY DOMESTIC
CONSUMPTION
|
17.1
The
Contractor shall have the option to supply by priority the Crude Oil domestic
consumption of the Republic of Guinea if the Government is unable to meet that
consumption with the share(s) of production to which it is
entitled.
17.2
The
Minister to the Contractor shall notify the quantity of Crude Oil the Contractor
shall have the option to sell to the Republic of Guinea at least three (3)
months prior to the commencement of each Quarter. Said quantity shall not exceed
the maximum amount calculated for each Quarter according to the following
formula:
|
A
|
=
|
B
|
x
|
C
|
-
|
E
|
||
|
D
|
where:
A
means the maximum amount of Crude Oil the Contractor shall sell to the
Government for said Quarter;
B
means the domestic consumption of the Republic of Guinea for said Quarter,
with
the exception of Crude Oil refined for the purpose of its export, if
any;
C
means the total Crude Oil production from the Contract Area for said
Quarter;
D
means the total Crude Oil production in the Republic of Guinea for said
Quarter;
E
means the quantity of Crude Oil produced from the Contract Area during said
Quarter and to which the Government is entitled under Articles 13.1, 13.4 and
15.4 above.
For
the purposes of this Article, the Government or the national Company when they
participate in Petroleum Operations as provided for in Article 15 above shall
be
considered as entities constituting the Contractor.
17.3
When
the Contractor supplies Crude Oil to the Government for domestic consumption
in
the Republic of Guinea, the price paid by the Government shall be determined
in
accordance with the provisions of Article 14 above.
Such
sales shall be invoiced monthly to the Government and shall be paid in Dollars
within two (2) months after the receipt of the invoice, unless otherwise agreed
by the Parties.
Any
late payment shall bear interest at a rate determined by average lending rates
normally charged by local banks at that time, from the date said payment should
have been paid.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLES
18:
|
SUPERVISION
AND INSPECTION OF PETROLEUM
OPERATIONS
|
18.1
The
Contractor shall provide the Minister as soon as practicable all details of
projected Petroleum Operations, such as geological survey, seismic survey,
commencement of drilling, installation of a platform, etc... In the event the
Contractor decides to abandon a well, it shall so notify the
Minister.
18.2
One
or more duly authorized representatives of the Minister shall have the right,
at
reasonable intervals, to inspect the facilities, equipment, material, records
and books related to Petroleum Operations, provided that such inspection shall
not unduly delay the proper conduct of said operations.
18.3
In
order to permit the exercise of the above-mentioned rights, the Contractor
shall
provide to the representatives of the Minister reasonable assistance as regards,
inter alia, transportation and accommodation. Transportation and accommodation
costs and expenses directly connected with the supervision and inspection shall
be borne by the Government.
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
19:
|
INFORMATION
AND REPORTS
|
19.1
The
Contractor shall record and keep in accordance with good international petroleum
industry practice all information and data resulting from Petroleum Operations
and, as soon as practicable, shall furnish to the Minister a copy of all
information, data, documents, reports and interpretations obtained or prepared
in the course of Petroleum Operations, and consisting of, inter
alia:
(a)
geological
studies and synthesis reports as well as the maps and documents related
thereto;
(b)
geophysical
studies, measurements and interpretation reports, along with the maps, profiles,
sections and other documents related thereto and, upon request by the Minister,
a copy of the records made. In any event, the Minister shall be supplied with
these records at the expiry of the Contract;
(c)
the
well location reports, well completion reports, measurements, analyses or other
results concerning any activity charged to the Petroleum Costs account under
this Contract.
The
Contractor shall also supply the Minister with a representative portion of
the
cores, cutting and samples of fluids produced during production
tests.
All
maps, sections, profiles and all other geophysical or geological documents
shall
be delivered to the Minister on transparent media suitable for use in later
reproduction.
At
the Minister’s request, the Contractor shall communicate to him all other
information in its possession relating to Petroleum
Operations.
19.2
In
addition, the Contractor shall prepare and furnish to the Minister the following
periodic reports:
(a)
daily
reports concerning drilling and production activities;
(b)
weekly
reports on geophysical activities;
(c)
within
thirty (30) days from the end of each Quarter, a report concerning Petroleum
Operations during the previous Quarter and which shall contain, inter alia,
a
detailed description of Petroleum Operations carried out and a detailed
statement of Petroleum Costs incurred;
(d)
within
sixty (60) days from the end of each Calendar Year, or on any other date agreed
by the Parties, a report concerning Petroleum Operations carried out during
the
previous Calendar Year and which shall contain, inter alia, a detailed
description of Petroleum Operations carried out and a detailed statement of
Petroleum Costs incurred.
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19.3
All
reports, documents and data the Minister is provided for by the Contractor
under
this Article shall be considered as confidential for five (5) years after their
submission.
However,
the Minister may supply his employees or persons acting on his behalf with
such
information, and these persons shall abide by the above confidentiality clause.
In addition, the Minister may use any information obtained, for the purpose
of
preparing and publishing such reports as may be required by applicable laws
as
well as reports of a general nature.
Notwithstanding
the foregoing provisions, the Minister may publish any information that relates
to an area on which the Contractor has no longer exclusive
rights.
19.5
The
Contractor shall give notice to the Minister of any discovery of mineral
substances.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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|
ARTICLE
20:
|
ACCOUNTING
AND PAYMENTS
|
20.1
The
Contractor shall keep accounts in accordance with the regulations in
force.
20.2
The
registers and accounting books shall be kept in the French language and in
Dollars. Such registers shall be used, inter alia, to establish the amount
of
Petroleum Costs, the recovery of said costs, the production sharing and for
the
filing of the Contractor’s tax return.
For
informational purposes only, the accounts and balance sheets may be also kept
in
Guinean Francs.
20.3
Whenever
it is necessary to convert into a currency the expenses and receipts expressed
in another freely convertible currency, the expenses and receipts shall be
valued on the basis of the arithmetical average of the daily closing rates
for
the sale of said currency during the month when the expenses were paid and
the
receipts collected.
The
exchange rates to be applied in order to make the conversions provided for
in
this Article shall be those quoted on the Paris foreign exchange
market.
20.4
The
registers and accounting books shall be materially supported by detailed
documents proving the expenses and receipts of the Contractor under this
Contract.
20.5
The
government shall have the right to examine and audit the registers and
accounting books concerning Petroleum Operations and shall have four (4) years
following the end of an accounting year to carry out examination or audit and
to
submit to the Contractor any discrepancy or error encountered during that
examination or audit.
The
absence of a claim by the Government within the above-mentioned four (3) years'
period shall terminate the right for the Government to make any objection,
contestation or claim in respect of the accounting year in
question.
20.6
All
sums due to the Government or the Contractor under this Contract shall be paid
in Dollars or other convertible currency agreed to by the
Parties.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
21:
|
IMPORTS
AND EXPORTS
|
21.1
Subject
to the provisions of Article 10 above, the Contractor and its subcontractors
shall have the right to import into the Republic of
Guinea:
(a)
the
equipment, machinery and vehicles necessary for Petroleum Operations, all import
duties and taxes on which shall be suspended;
(b)
the
materials, spare parts and consumable items necessary for Petroleum Operations,
exempt from all import duties and taxes.
21.2
The
expatriate employees of the Contractor and its subcontractors as well as their
families shall have the right to import into the Republic of
Guinea.
(a)
personal
effects and household goods as well as the foodstuffs they need, free of all
import duties and taxes,
(b)
one
(1) automobile per expatriate employee for his own use, in respect of which
all
import duties and taxes, shall be suspended.
21.3
Subject
to the provisions of Article 10 above, the Contractor, its subcontractors,
their
expatriate employees and their families may export from the Republic of Guinea,
free of all export duties and taxes, the goods imported under Articles 21.1
and
21.2 above which are no longer needed for Petroleum
Operations.
21.4
The
goods imported under Articles 21.1 and 21.2 above which are no longer directly
assigned to the Petroleum Operations or to the personal use of the expatriate
employees may be sold in the Republic of Guinea by the Contractor, its
subcontractors, or their expatriate employees, provided however that prior
notice is given to the Minister. In this case, the seller shall fulfill all
formalities prescribed by the Customs regulations in force and shall pay the
duties and taxes which are applicable at the date of transaction, except if
the
aforementioned goods are transferred to other holders of Petroleum contracts
concluded with the Government or a national company.
21.5
During
the term of this Contract, the Contractor shall have the right to freely export,
at the point exportation chosen for this purpose, exempt from all export duties
and taxes, the share of Petroleum to which the Contractor is entitled under
the
provisions of this Contract.
21.6
All
imports and exports made under this Contract shall be subject to the formalities
required by customs.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
22:
|
FOREIGN
EXCHANGE CONTROL
|
22.1
The
Contractor shall be subject to foreign exchange control regulations in force
in
the Republic of Guinea, it being however understood that the Government
guarantees during the term of this Contract, to the Contractor and its
subcontractors, and only with respect to Petroleum Operations under this
Contract, the following benefits:
(a)
the
right to open and operate bank accounts outside the Republic of
Guinea;
(b)
the
right to receive, retain on those foreign accounts all funds acquired or
borrowed abroad, including the proceeds of sales of Petroleum made by the
Contractor, within the limit of the amounts which exceed their domestic
requirements concerning their operations in the Republic of Guinea, as well
as
the right to freely dispose of such excess funds abroad;
(c)
the
right to freely remit outside the Republic of Guinea the proceeds of sales
of
Petroleum to which the Contractor is entitled under this Contract, the dividends
and other proceeds of any kind arising from Petroleum
Operations;
(d)
the
right to pay directly abroad the enterprises which provide for goods and
services necessary to carry out Petroleum Operations; and
(e)
with
respect to carry out of Petroleum Operations, the right to convert national
currency and foreign convertible currencies, through banks and agents installed
in the Republic of Guinea and duly authorized, at exchange rates which are
no
less favorable to the Contractor or its subcontractors than either the daily
rate or the rate generally applicable in the Republic of Guinea to other
enterprises on the day the exchange transactions occur.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
23:
|
ASSIGNMENTS
AND TRANSFERS
|
23.1
The
Contractor, or each entity constituting the Contractor, shall not assign part
or
all of its rights and obligations arising from this Contract without the prior
approval of the Minister.
Within
thirty (30) days after notice to the Minister of the intended assignment, the
assignment shall be approved or disapproved by the
Minister.
Upon
approval, the assignee shall be bound by the terms and conditions of this
Contract.
23.2
If
the Contractor, or an entity constituting the Contractor notifies the Minister
an intended assignment to an Affiliate, the Minister shall authorize that
assignment, provided that the assignor accepts to be bound by the terms and
conditions of this Contract.
23.3
In
accordance with the provisions of Article 11.5 above, where a partial assignment
is notified, the Contractor and the assignor shall be jointly and severally
liable for all obligations hereunder as from the date of such
authorization.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
24:
|
SURRENDER
AND TERMINATION
|
24.1
The
Contractor, upon giving three (3) months' prior notice to the Minister, may
at
any time surrender its rights with respect to the entire Contract Area or any
portion thereof, subject to the provisions of Article 24.2 below.
In
case of the surrender of a part only of the Contract Area, the provisions of
Article 5.2 above shall apply.
A
surrender during an exploration period shall not reduce the exploration work
and
financial obligations for that exploration period as provided for in Article
4
above.
24.2
In
addition, the Contractor, upon giving twelve (12) months' prior notice to the
Minister, may at any time surrender its rights in respect of whole or part
of an
Exploitation Area, provided however that all the obligations under this Contract
have been fulfilled at the date of surrender.
24.3
A
surrender pursuant to Article 24.1 and 24.2 above, shall not exempt the
Contractor of any obligation under this Contract incurred before the effective
date of such surrender.
24.4
Subject
to the provisions of Article 24.3 above, surrender in respect of the whole
Contract Area shall terminate this Contract.
24.
5
The
Government may terminate this Contract in any of the following
events:
(a)
material
breach by the Contractor of the provisions of the Petroleum Code or this
Contract;
(b)
failure
of the Contractor to make a payment to the Government for a period exceeding
three (3)
months;
(c)
failure
of the Contractor to comply, within the prescribed period laid down with any
final arbitrated award rendered in accordance with the provisions of Article
27
below; or
(d)
bankruptcy,
creditor workout agreements (adjustments to creditor accounts) or liquidation
of
assets of the Contractor.
Except
in respect of paragraph (d) above, the Government will pronounce the termination
only after having given the Contractor notice to remedy such default within
three (3) months from the date of such notification. Should there be no remedy
within the prescribed period, the Government may terminate the
Contract.
Any
dispute as to whether any grounds exist to justify the termination pronounced
by
the Government may be subject to arbitration under Article 27 below. In the
case
of any such dispute, this Contract shall remain in force until the execution
by
the Parties of the arbitral award, without prejudice to the provisions of
Article 24.3 above.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
25:
|
FORCE
MAJEURE
|
25.1
Where
either Party is prevented from performing its Contractual obligations (other
then the obligations to make payments of money) or may only perform them with
delay, the non-performance or delay in performance shall not be considered
as a
breach to this Contract if such non-performance or delay is caused by a case
of
Force Majeure and provided however that there is a direct link between the
non-performance and the case of Force Majeure invoked.
25.2
For
the purposes of this Contract, may be considered as a case of Force Majeure
any
event unforeseeable and beyond the control of a Party, such as earthquake,
strike, riot, insurrection, civil war, sabotage, act of war or conditions
resulting from war. The intent of the Parties is that Force Majeure shall be
interpreted in conformity with the principles and customary rules of
international law.
25.3
When
either Party considers it is prevented from performing any of its obligations
by
the occurrence of a case of Force Majeure, such Party
shall:
(a)
forthwith
notify the other Party of the occurrence thereof and state the reasons
therefore;
(b)
take
all actions which ere useful and necessary to permit the normal resumption
of
the performance of the concerned obligations upon termination of the event
constituting the case of Force Majeure.
25.4
If
as a result of Force Majeure, the performance of any contractual obligation
is
delayed, that delay together with such period as may be necessary for the repair
of any damage caused during such delay shall be added to the period allowed
in
this Contract for the performance of that obligation, as well as to the duration
of this Contract.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
26:
|
APPLICABLE
LAW AND STABILITY OF
CONDITIONS
|
26.1
The
laws of Guinea shall apply to this Contract, to operations made under this
Contract, to individuals and entities that intervene in this respect within
the
territory of the Republic of Guinea.
26.2
The
Contractor shall be subject at any time to the laws and regulations in force
in
the Republic of Guinea.
26.3
This
Contract is executed by the Parties in accordance with the laws and regulations
in force at the date of its signing, and on the basis of the provisions of
said
laws and regulations, as regards, inter alia, the economic, fiscal and financial
provisions of this Contract.
Consequently,
where new laws and regulations modify the provisions of the laws and regulations
in force at the date of signing of this Contract and where such modifications
shall bring about a material change concerning the respective economic situation
of the Parties resulting from the original provisions of this Contract, the
Parties shall in good faith enter into an agreement with a view to modifying
these provisions in order to restore the economic balance as intended at the
signing of this Contract.
In
the event the Parties, in spite of their efforts, are unable to reach an
agreement, the provisions of Article 27 below shall apply.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
27:
|
SETTLEMENT
OF DISPUTES
|
27.1
In
the event of any dispute between the Government and the Contractor arising
out
of, or in relation to, or in connection with, the interpretation or execution
of
the provisions of this Contract, the Parties shall make their best efforts
to
settle such dispute amicably.
If
no settlement is reached by the Parties within three (3) months after the date
of notice of the dispute by either Party to the other, the dispute shall, at
the
request of the most diligent Party, be referred for arbitration to the
International Center for Settlement of Investment Disputes in accordance with
the rules set forth by the Convention on the Settlement of Investment Disputes
between States and Nationals of Other States signed and ratified by the
Government of the Republic of Guinea.
27.2
The
place of arbitration shall be London (England), the French and English language
shall be used in the arbitration proceedings, and the applicable law shall
be
the principles and rules of international law applicable on the
subject.
The
Parties shall execute the award of the arbitral tribunal without appeal or
any
other remedy.
27.3
The
Parties shall conform in any circumstances to any measure prescribed or
recommended by the arbitrators, being understood that any request to arbitration
shall suspend the contractual provisions concerning the subject matter of the
dispute but all other rights and obligations of the Parties arising from the
other provisions of this Contract shall not be suspended.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
28:
|
NOTICES
|
28.1
Any
notice or other communication regarding this Contract shall be in writing and
shall be considered as received as soon as they are delivered by hand, by
registered mail with acknowledgement of receipt, or sent by telegram, facsimile
or telex to the following addresses:
|
-
|
to
the Government:
|
Dr.
Alpha Xxxx Xxxxxx
Le
Ministre - Cabinet Parti
|
-
|
to
the Contractor:
|
USOil
Corporation
0000
Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 000000
XXX
FAX
0000000000
28.2
The
Government and the Contractor may at any time change its authorized
representative or its address herein on giving the other at least ten (10)
days
notice in writing to such effect.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
29:
|
MISCELLANEOUS
PROVISIONS
|
29.1
Headings
in this Contract are inserted for purposes of convenience and reference and
in
no event shall define, restrict or describe the scope or object of the Contract
or of any of its clauses.
29.2
Appendix
A which are attached are an integral part of this
Contract.
29.3
This
Contract shall not be modified except in writing and with the mutual agreement
of the Parties.
29.4
Any
waiver of the Government concerning the performance of an obligation of the
Contractor shall be in writing and signed by the Minister, and no waiver shall
be implied if the Minister does not exercise a remedy under this
Contract.
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and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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ARTICLE
30:
|
EFFECTIVE
DATE
|
30.1
This
Contract shall be effective on December 2, 2002.
IN
WITNESS WHEREOF, the Parties have signed this Contract in 6
copies.
|
Conakry:
|
2002
|
|||
|
|
|
(Seal)
|
||
|
For
the Republic of Guinea:
|
||||
|
Dr.
Alpha Xxxx XXXXXX
|
||||
|
Ministre-Director
de Particuleir
|
||||
|
President
de la Republic de Guinea
|
||||
|
Date:
_________,
2002
|
||||
|
(Seal)
|
||||
|
For
the Contractor:
|
||||
|
Date:
_________,
2002
|
||||
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
43
APPENDIX
A #1
Attached
to and made part of this Contract between the Government of the Republic of
Guinea and the Contractor.
CONTRACT
AREA
The
Contract Area for the First Exploration Period represented on the attached
map
consists of an area deemed equal to around 65,000 xx.xx.
The
points indicated on this map are defined hereinafter with reference to the
Greenwich meridian
|
Point
A:
|
10^49’55”N
|
15^10’33”W
|
||||
|
Point
B:
|
10^39’49”N
|
15^20’32”W
|
||||
|
Point
C:
|
10^39’49”N
|
15^34’16”W
|
||||
|
Point
D:
|
09^23’27”N
|
17^26’00”W
|
||||
|
Point
E:
|
08^10’30”N
|
14^21’12”W
|
||||
|
Point
F:
|
08^55’23”N
|
13^30’07”W
|
||||
|
Point
G:
|
10^10’38”N
|
14^30’00”W
|
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
44
APPENDIX
A #2
CONTRACT
AREA MAP AND COORDINATES
Contract
Area: First Exploration Period
Royalty
and Production Sharing Agreement between Republic of Guinea and USOil
Corporation 2002
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