EXHIBIT 18
EXPORT MARKETING AND SHIPPING AGREEMENT
EP INTEROIL, LTD. (EXPORTER)
AND
SHELL INTERNATIONAL EASTERN TRADING COMPANY (MARKETER)
FINAL EXECUTION FORM
EXPORT MARKETING AND SHIPPING AGREEMENT
Table of Contents
1 Definitions and interpretation
1.1 Definitions
1.2 Interpretation
1.3 Consents or Approvals
1.4 Relationship between Parties
1.5 Governing Law
1.6 Waiver
1.7 Variations
2 Commencement, term and renewal
3 General Scheme of Arrangements
3.1 Effect of this Clause
3.2 General scheme of arrangements
4 Exclusive Exporter
4.1 Grant of rights
4.2 Undertakings of Exporter
5 Export
5.1 Export
5.2 Purchase of Exported Product
5.3 Export Permits
6 Distribution Rights
6.1 Distribution rights of Marketer
6.2 Distribution rights of Exporter
6.3 Exceptions to distribution rights of Marketer.
6.4 Commission for introduction
7 Undertakings of the Marketer relating to distribution
8 Undertakings of the Exporter relating to distribution
9 Committees
9.1 Prior to commencement of supply
PAGE (i)
EXPORT MARKETING AND SHIPPING AGREEMENT
9.2 From commencement of normal supply
10 Ongoing planning
10.1 Weekly forecast production and other information.
10.2 Shipping report
10.3 Marketing plans and development of Term contract
arrangements.
11 Supply of Products to Marketer for distribution
12 Distribution by open book sales and approvals for such sales
13 Shell distribution system sales
13.1 Supply of Product for Shell Group's own stocks
13.2 Excess Product
14 Standard terms of sale
15 Nominations for Products
16 Commission
16.1 Commission
16.2 Relationship between Nominations and Commission
17 Insurance
17.1 Insurance
17.2 Marketer to assist Exporter
18 Force Majeure
18.1 Relief from Obligations
18.2 Payments
18.3 Notice
18.4 Remedy of Force Majeure
18.5 Extended Force Majeure..
18.6 Mitigation
19 Limitation of Liability
20 Notice
20.1 Means of Notice
PAGE (ii)
EXPORT MARKETING AND SHIPPING AGREEMENT
20.2 Change of Address
20.3 Representatives
21 Assignment
21.1 Successors and Assigns
21.2 Conditions of Assignment
22 Confidentiality
22.1 Non-Disclosure
22.2 Exclusions
23 Dispute Resolution
23.1 Notice of Dispute
23.2 Meeting
23.3 Further alternative dispute resolution
23.4 Expert
23.5 Arbitration
23.6 Enforcement
23.7 Confidentiality of proceedings
23.8 Representation
23.9 Continued Performance of Obligations
Schedule 1
Schedule 2
Schedule 3
PAGE (iii)
EXPORT MARKETING AND SHIPPING AGREEMENT
Date MARCH 23rd, 2001
Parties
EP InterOil, Ltd. incorporated in the Cayman Islands of Xxxxxx
House, South Church Street, Georgetown, Grand Cayman, Cayman
Islands, British West Indies (the Exporter).
Shell International Eastern Trading Company owned by Shell Eastern
Trading (Pte) Ltd, incorporated in Singapore of Shell House #04-00,
UE Square, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx 000000 (the Marketer).
Recitals
A InterOil Limited and EP InterOil, Ltd members of the InterOil Group,
have constructed or are in the course of constructing a petroleum
refinery at Napa Napa, NCD, Port Moresby in Papua New Guinea.
B All petroleum Products produced at the InterOil Refinery that are in
excess of the domestic requirements for those products in Papua New
Guinea will be allocated and supplied by InterOil Limited to EP
InterOil, Ltd., for export by EP InterOil, Ltd. in accordance with
the terms of this Agreement.
C As InterOil Limited wishes to operate the Refinery at maximum
possible capacity; and EP InterOil, Ltd. wishes to supply, export
and sell the maximum possible amount of petroleum products allocated
for export from Papua New Guinea, at the maximum Effective Netback
Price, EP InterOil, Ltd. requires the appointment of a marketer,
distributor and shipper of petroleum products able to market,
distribute or ship (as the case may be) the allocated amounts of the
petroleum products produced at the InterOil Refinery in Papua New
Guinea for export from Papua New Guinea by EP InterOil, Ltd.
D The Shell Group is a major marketer and distributor of petroleum
products throughout the world and hell International Eastern Trading
Company is that part of the Shell Group best placed to:
i) enter into these arrangements to market, distribute or ship
(as the case may be) the allocated amounts of the petroleum
Products produced at the InterOil Refinery that are exported
from Papua
PAGE 4
EXPORT MARKETING AND SHIPPING AGREEMENT
New Guinea by EP InterOil Ltd.; and
(ii) on its reasonable efforts basis, pursue, in the supply and
sale of those petroleum Products it purchased from EP
InterOil, Ltd. for distribution in the export market,
commercial terms that will achieve the highest effective
Netback Price (on an FOB (equivalent basis) for EP InterOil,
Ltd.
E EP InterOil, Ltd. has agreed with Shell International Eastern
Trading Company to engage Shell International Eastern Trading
Company to:
i market, distribute or ship (as the case may be);
ii purchase, from EP InterOil, Ltd. as on-supplier and
seller; and
distribute and sell, all petroleum products produced at the
InterOil Refinery that are allocated for export from Papua New
Guinea (excluding those that are not separately on-supplied or
sold by EP InterOil, Ltd.) and in so doing, to exercise in
good faith all reasonable endeavours to maximise economic
returns to EP InterOil under terms of this Agreement.
It is agreed as follows.
1 DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
As used in this Agreement, the following terms shall have the following meaning:
AFFILIATE with respect to a Party shall mean any Entity directly or indirectly
controlling, controlled by, or under common control with the Party. For the
purposes of this definition, the term "control" (including the terms "controlled
by" and "under common control with") means the possession directly or
indirectly, of the power to direct or cause the direction of the management and
policies of the Entity, whether through the ownership of voting securities or by
contract or otherwise. With respect to the Marketer, "Affiliate" or "affiliated
company" of Marketer means any company (other than Marketer) which is directly
or indirectly affiliated with N.V. Koninklijke Nederlandsche Petroleum
Maatschappij and/or The "Shell" Transport and Trading Company p.l.c.
PAGE 5
EXPORT MARKETING AND SHIPPING AGREEMENT
For the purposes of the foregoing a particular company is directly affiliated
with another company if the latter holds fifty percent (50%) or more of the
shares or similar entitlements carrying the right to vote at a general meeting
(or its equivalent) of the former; and indirectly affiliated with a company
(hereinafter in this paragraph called "the parent company") if a series of
companies can be specified beginning with the parent company and ending with the
particular company, so related that each company is directly affiliated with one
or more of the companies earlier in the series.
AGREEMENT means this Export Marketing and Shipping Agreement between Marketer
and Exporter.
AUTHORITY means any government or any governmental, semi governmental, city,
municipal, civic, administrative, fiscal, statutory or judicial body,
instrumentality, department, commission, authority, tribunal, agency or other
similar entity. It includes any self regulatory organization established under a
statute and any stock exchange.
BASE COMMISSION means, in relation to a Product, that amount specified for that
Product in Schedule 1.
COMMISSION means, in relation to a Product, the commission to be paid by the
Exporter to the Marketer for a supply of that Product under this Agreement,
ascertained in accordance with Clause 16.
CONDITIONS OF PURCHASE means the conditions of purchase set out in Schedule 3,
and as varied from time to time by agreement between the Marketer and the
Exporter.
CONTRACT YEAR means the year starting on the Refinery Completion Date and each
subsequent year under the term of this Agreement starting on the anniversary of
the Refinery Completion Date.
CONTROLLER means, in relation to a person's property:
1. a receiver or receiver and manager of that property; or
2. anyone else who (whether or not as agent for the person) is in possession,
or has control, of that property to enforce a Security Interest.
CUSTOMER means a person or Authority other than the Marketer and members of the
Shell Group.
DELIVERY PERIOD means the second Month (x + 2) after the Month in which its
corresponding Nomination Date falls (x).
DELIVERY POINT means the point at which Product passes the loading hose flange
on the manifold of the Tanker at the moorings of the InterOil Facilities.
EARLIEST NOMINATION DATE means the earliest date on which Nominations for
Product may be submitted to the Offtake Coordinator as specified in Clause 15.
PAGE 6
EXPORT MARKETING AND SHIPPING AGREEMENT
EFFECTIVE NETBACK PRICE means, [Deleted for confidentiality].
END USER means, in relation to Products supplied or sold, a person, entity,
corporation or Authority that has those Products delivered into its own
operational facilities for its own use or delivered into facilities of direct
customers of that person or Authority where those customers have a contract for
the ongoing supply of those Products with that person or Authority. For the
avoidance of doubt, End Users do not include major traders or oil majors
including but not limited to the Exxon Mobil Group of Companies, Texaco Group of
Companies, Caltex Group of Companies, BP Amoco Group of Companies or Chevron
Group of Companies, but do include Shell Group of Companies.
ENTITY means an individual, partnership (whether general or limited), limited
liability company, corporation, trust, estate, unincorporated association,
nominee, joint venture or other entity.
EPC CONTRACT means the contractual documentation for the construction of the
InterOil Refinery.
EPC CONTRACTOR means Xxxxxx Engineering Limited or that subsidiary of Xxxxxx
Engineering Limited, or any contractor, or sub contractor providing work under
the EPC Contract to construct the Refinery.
EXCESS PRODUCT means the amount of Products produced at the InterOil Refinery
that are in excess of the domestic requirements for those Products in Papua New
Guinea and also in excess of committed Term Contracts, and that are available
for lifting for further Term Contracts and spot sales by Exporter or Marketer.
EXPORT means, in relation to a Product, supplying or selling that Product into
the Export Market.
EXPORT PRODUCTS has the meaning given in Clause 3.2.
EXPORT MARKET means any country, territory or place that is not in Papua New
Guinea.
FIRM PROGRAM means the program issued by the Offtake coordinator as specified in
Clause 15(h).
FLOOR PRICE (FP) means, in respect of a Product, the floor price for the
relevant Product as specified in Schedule 1.
FOB means Free on Board as defined in Incoterms 2000.
FORCE MAJEURE means any of the circumstances described in Clause 18 hereto.
FREIGHT means, in relation to a Product:
1. the cost agreed between the Exporter and the Marketer of transporting that
Product to a Customer; or
PAGE 7
EXPORT MARKETING AND SHIPPING AGREEMENT
2. if not agreed, the actual cost of transporting that Product to a Customer;
or
3. if an actual cost is not available, and if not agreed the cost calculated
in accordance with industry practice and based on market conditions of
transporting that Product to the Customer and if necessary verified by an
independent expert, to be jointly appointed by the Parties.
INCOTERMS 2000 means the publication `Incoterms 2000' published by the
International Chamber of Commerce.
IDENTIFIED means advised by a notice in writing from one Party to the other
Party that material discussions are underway for the purpose of supply of
Product.
INITIAL TERMINATION DATE has the meaning given in Clause 2(b).
INTEROIL FACILITIES means the facilities at Napa Napa, Port Moresby National
Capital District and Central Province Papua New Guinea, on and offshore for the
production, transportation and storage of petroleum liquids, including the
InterOil Refinery.
INTEROIL GROUP means IOC and its Affiliates.
INTEROIL REFINERY means the refinery for the production and storage of petroleum
Products and liquids at Napa Napa, Port Moresby, National Capital District and
Central Province Papua New Guinea, owned and/ or operated by InterOil Limited.
IOC means InterOil Corporation, a corporation duly established and existing
under the laws of the province of New Brunswick, Canada.
LATEST NOMINATION DATE means the date on which Nominations for Product may be
submitted to the Offtake Coordinator as specified in Clause 15 of this
Agreement.
LCO means light cycle oil as specified in Schedule 2.
LSWR means low sulphur waxy residue as specified in Schedule 2.
LIABILITIES means claims, losses, liabilities, costs or expenses of any kind.
LOWER FLOOR PRICE means, [Deleted for confidentiality].
MARKETING PLAN has the meaning given in Clause 10.3.
MONTH means a calendar month.
MDO means marine diesel oil, as specified in Schedule 2.
MOPS means "Mean of Xxxxx'x Singapore".
NAPHTHA means petroleum liquids with a initial boiling point of 25degC to a
final boiling point of 170degC or less, and a maximum (xxxx) vapour pressure of
12.5 psi, produced from the InterOil Refinery.
PAGE 8
EXPORT MARKETING AND SHIPPING AGREEMENT
NOMINATED SUPPLY means a supply of Product requested under a Nomination.
NOMINATION means an election made by notification in writing in accordance with
Clause 15 by the Marketer or the Exporter (as the case may be).
NOMINATION DATE means the date on which a nomination is made and which is
determined by Clause 15 of this Agreement.
NOMINATION PERIOD means the period of time as detailed in Clause 15.
OCEANIA ENVELOPE means [Deleted for confidentiality]
OFFTAKE COORDINATOR means the person appointed by the Exporter to perform the
duties specified in Clause 15.
OPEN BOOK PRICE means [Deleted for confidentiality]
PAPUA NEW GUINEA means the territory of The Independent State of Papua New
Guinea, including its territorial waters.
PARTY means a Party to this Agreement for the time being and includes its
successors and permitted assigns.
PORT OF LOADING means the marine jetty of the InterOil Facilities.
PORT REGULATIONS means any Port regulations for Port Moresby Harbour, by a
Government or Governmental appointed body and appropriate marine facility/jetty
guidelines for the use of the InterOil Facilities and the InterOil Tanker
loading facilities to be issued by Exporter to Marketer by no later than
November 30th 2001.
PRODUCTS means all Products, but excluding both Naphtha and LPG, produced by the
InterOil Refinery that are specified in Schedule 1 and that are available for
export.
PRODUCT DELIVERY means the transfer of risk and title to Product from the
Exporter to the Marketer.
REFINER means InterOil Limited.
REFINERY COMPLETION DATE means the date on which Shell Overseas Holdings Limited
(being a member of the Shell Group) receives a notice from IOC which:
1. has attached to it a copy of the certificate of practical completion given
under the EPC Contract; and
2. contains a certification by a director of IOC that the Refinery has
satisfied minimum performance criteria.
A copy of such notice shall also be sent directly to Marketer by IOC.
PAGE 9
EXPORT MARKETING AND SHIPPING AGREEMENT
REPRESENTATIVE means Marketer's Representative, Marketer's Operational
Representative, Exporter's Representative or Exporter's Operational
Representative, as the case may be appointed as such from time to time under
Clause 20.3.
SCHEDULED DATE FOR REFINERY COMPLETION means second half of 2002.
SHELL GROUP means NV Koninklijke Nederlandsche Petroleum Maatschappij and The
Shell Transport and Trading Company, plc and their Affiliates.
SPECIFICATION means in relation to a Product, the specification for that Product
as set out in Schedule 2 or as may be otherwise agreed in writing by Marketer
and Exporter from time to time.
SHIPPING REPORT has the meaning given in Clause 10.2.
SUPPLY COMMENCEMENT COMMITTEE has the meaning given in Clause 9.1(b).
TANKER means the tanker or vessel provided by Marketer to lift Product
hereunder.
TANKER OWNER means any or all of the owner, despondent owner, charterer or
operator of the Tanker.
TARGET PRICE (TP) means, in respect of a Product, the target price for the
relevant Product as specified in Schedule 1.
TAX means any taxes or duties and other charges, levies and impositions,
assessed or charged, or assessable or chargeable, by or payable to any
governmental taxation or excise authority and includes any additional tax or
duty, interest, penalty, charge, fee or other amount imposed or made on or in
relation to a failure to file a relevant return or to pay a relevant tax or
duty.
TENTATIVE NOMINATIONS has the meaning given in Clause 15(d).
TERM CUSTOMER means a customer identified as such in the Marketing Plan and
approved as such as per Clause 12.
TERM CONTRACt means a contract between the Marketer (or Exporter) and a Customer
for the supply or sale of a Product in the Export Market by the Marketer or
Exporter to that Customer and approved under Clause 12(c).
USD means United States Dollar currency.
WORKING DAY means a day other than Saturday Sunday or a day designated by a
competent authority in Papua New Guinea as a public holiday applying in Port
Moresby.
1.2 INTERPRETATION
Headings are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise.
PAGE 10
EXPORT MARKETING AND SHIPPING AGREEMENT
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical forms have a
corresponding meaning.
(d) A reference to a person, corporation, trust, partnership,
unincorporated body or other Entity includes any of them.
(e) A reference to a Clause or Schedule is a reference to a clause of,
or a schedule to, this Agreement.
(f) A reference to an agreement or document (including, without
limitation, a reference to this Agreement) is to the agreement or
document as amended, varied, supplemented, novated or replaced
except to the extent prohibited by this Agreement or that other
agreement or document.
(g) A reference to a Party to this Agreement or another agreement or
document includes the Party's successors and permitted substitutes
or assigns (and, where applicable, the Party's legal personal
representatives).
(h) A reference to legislation or to a provision of legislation includes
a modification or re-enactment of it, a legislative provision
substituted for it and a regulation or statutory instrument issued
under it.
(i) A reference to conduct includes an omission, statement or
undertaking, whether or not in writing.
(j) A reference to an agreement includes any undertaking, deed,
agreement or legally enforceable arrangement, whether or not in
writing, and a reference to a document includes an agreement (as so
defined) in writing, or any certificate, notice, instrument or
document of any kind.
(k) The meaning of general words is not limited by specific words
introduced by including, or for example, or similar expressions.
1.3 CONSENTS OR APPROVALS
If the doing of any act, matter or thing under this Agreement is dependent
on the consent or approval of a Party or is within the discretion of a
Party, the consent or approval may be given or the discretion may be
exercised conditionally or unconditionally or withheld by the Party in its
absolute discretion unless express provision to the contrary has been made
in this Agreement.
PAGE 11
EXPORT MARKETING AND SHIPPING AGREEMENT
1.4 RELATIONSHIP BETWEEN PARTIES
(a) Except as and to the extent expressly provided in this Agreement:
(i) nothing in this Agreement (including any obligations to
consult, communicate, negotiate or otherwise in any way act in
good faith) creates or will be deemed to create between:
A the Marketer on the one part; and
B the Exporter on the other part,
C any relationship of joint venture, partnership, agency,
employment or any other fiduciary relationship of any
kind whatsoever;
(ii) the Marketer has no authority or power to bind, to contract in
the name of, or create a liability against the Refiner or the
Exporter; and
(iii) the Exporter has no authority or power to bind, to contract in
the name of, or create a liability against the Marketer.
(b) The Marketer may be described as an authorised dealer or distributor
of the Products but may not be described by any party as agent of
the Exporter or in any words that may indicate the existence of
agency relationship between the Marketer and Exporter.
1.5 GOVERNING LAW
(a) This Agreement shall be governed by and construed in accordance with
the law of England, and for the purposes specifically of Clause 23.6
below the Parties agrees to submit to the jurisdiction of the courts
of England.
(b) The Parties do not intend that any term of this Agreement should be
enforceable by virtue of the Contracts (Rights of Third Parties) Xxx
0000, by any person who is not a Party to this Agreement.
(c) The United Nations Convention on Contracts for the International
Sale of Goods of Vienna, 11th April 1980, shall not apply to this
Agreement.
1.6 WAIVER
No waiver of any provision of this Agreement nor consent to any departure
therefrom, by either of the Parties shall be effective unless the same
shall be in writing and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which it is given.
No default or delay on the part of
PAGE 12
EXPORT MARKETING AND SHIPPING AGREEMENT
either of the Parties in exercising any rights, powers or privileges
hereunder shall operate as a waiver thereof or of any other right
hereunder; nor shall a single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege.
1.7 VARIATIONS
This Agreement cannot be modified in any way except in writing and signed
by the Parties.
2 COMMENCEMENT, TERM AND RENEWAL
(a) This Agreement commences on the date of this Agreement.
(b) Unless extended under paragraph (c), this Agreement will terminate
on the third anniversary of the Refinery Completion Date (the
Initial Termination Date).
(c) Not less than 6 months before the Initial Termination Date, the
Exporter and the Marketer must commence negotiations with each other
in good faith about the extension of this Agreement and the terms on
which such extension may occur. If the Exporter and the Marketer
fail to agree on an extension, this Agreement will terminate on the
Initial Termination Date.
PAGE 13
EXPORT MARKETING AND SHIPPING AGREEMENT
3 GENERAL SCHEME OF ARRANGEMENTS
3.1 EFFECT OF THIS CLAUSE
Due to its generality, this Clause 3 is subject to and must be read in
conjunction with all other terms and conditions in this Agreement.
3.2 GENERAL SCHEME OF ARRANGEMENTS
The Exporter will engage the resources of the Marketer to sell,
distribute, market and ship (as the case may be) into the Export Market
those Export Products produced by the Refiner in Papua New Guinea
allocated for Export from Papua New Guinea (Export Products) by:
(a) the establishment of committees in accordance with Clause 9 and
Nomination procedures in accordance with Clause 15 to, respectively,
coordinate and regulate the ongoing marketing, distribution and
shipping (as the case may be) of those Products;
(b) the sale of Products by the Exporter to the Marketer when a Product
is to be re-supplied or sold by the Marketer in the Export Market
under a Term Contract in accordance with Clause 12;
(c) the sale of Products by the Exporter to the Marketer or a member of
the Shell Group (upon the agreement between them of quantity and
price) when the Marketer (or the relevant member of the Shell Group)
wishes to purchase a Product for its own stocks for general supply
or sale of that Product in the Export Market in accordance with
Clause 13.1;
(d) engaging the Marketer who will use good faith and all reasonable
efforts to sell, market, distribute, and ship all available Export
Products at the highest Effective Netback Price to Exporter for
Export Products;
(e) the sale of Excess Product to the Marketer (or a member of the Shell
Group nominated by the Marketer) in accordance with Clause 13.2;
(f) engaging the Marketer to develop certain export opportunities for
the direct sale of Product by the Exporter, or other members of the
InterOil Group to certain Customers in accordance with Clauses 6.3;
(g) setting incentives for the Marketer to maximise economic returns to
the Exporter by:
(i) providing competitive Nomination and Commission mechanisms in
accordance with Clauses 15 and 16; and
PAGE 14
EXPORT MARKETING AND SHIPPING AGREEMENT
(ii) allowing Marketer to optimise freight of Products and Naphtha;
(h) engaging the Marketer, if the Exporter requests, to ship in
accordance with Clause 7.(e) those Products that the Exporter
exports and sells directly to an End User under Clause 6.2; and
(i) engaging the Marketer, if the Exporter wishes, to source, ship to
the Refinery, and sell to the Exporter in accordance with Clause 7,
product such as LCO or other agreed blendstock for the purposes of
blending with Refinery LSWR to make MDO to a required Specification.
4 EXCLUSIVE EXPORTER
4.1 GRANT OF RIGHTS
The Exporter warrants that it has the exclusive rights during the term of
this Agreement to:
(a) acquire all Product that is not reasonably required by the Refiner
to fulfil its PNG domestic obligations in respect of the supply or
sale of Products in Papua New Guinea; and
(b) export Products from Papua New Guinea.
4.2 UNDERTAKINGS OF EXPORTER
The Exporter undertakes to the Marketer that the Exporter will:
(a) supply to the Marketer all quantities of the Products not reasonably
required by the Refiner to:
(i) fulfil its PNG domestic obligations in respect of the
supply or sale of Products in Papua New Guinea; and
(ii) fulfil its own export sales in accordance with clause
6.2 (a);
(b) not supply or sell any Product acquired or produced by Refiner in
Papua New Guinea into or in the Export Market other than in
accordance with this Agreement; and
(c) not supply or sell Products to persons or Authorities:
(i) with a view to the supply or sale of those Products in
the Export Market; or
(ii) where it knows or could reasonably be expected to know
that the relevant person or Authority is procuring those
Products with
PAGE 15
EXPORT MARKETING AND SHIPPING AGREEMENT
a ultimate view to the supply or sale of those Products
in the Export Market.
5 EXPORT TITLE AND RISK
In respect of all Products produced by the Refiner that are transported
from Papua New Guinea for supply or sale into the Export Market, by the
Exporter, the export of that Product, will, for the purposes of this
Agreement occur at the time when, and at the point where, the title and
risk in the relevant Product is transferred from the Exporter to the
Marketer at the Delivery Point.
The Exporter will obtain all necessary export permits and certificates of
origin with respect to the export of Products.
6 DISTRIBUTION RIGHTS
6.1 DISTRIBUTION RIGHTS OF MARKETER
Subject to Clauses 6.2 and 6.3, the Exporter grants to the Marketer during
the term of this Agreement:
(a) the exclusive right to market, sell and distribute in the Export Market
all Products (excluding MDO); and
(b) the non-exclusive right to market and distribute in the Export Market all
MDO,
in accordance with this Agreement.
6.2 DISTRIBUTION RIGHTS OF EXPORTER
(a) Despite Clause 6.1 the Exporter may:
(i) sell Product on a Term Contract basis to End Users in
the Export Market;
(ii) sell MDO direct to Customers in the Export Market; and
(iii) sell Product to Customers other than those defined as
End Users, if over any six month period Exporter takes
and substantiates the view that Export prices achieved
by Marketer are inadequate (e.g. less than 60% of
exports have achieved Effective Netback Prices at or
above the Target Prices). In this event Exporter may
give Marketer at least two months notice, (taking
cognisance of the fact that Refinery start-up
PAGE 16
EXPORT MARKETING AND SHIPPING AGREEMENT
uncertainties may hamper Target Price being achieved in
the first two months .
(b) The Exporter may take such steps as it considers necessary or
expedient to promote:
(i) the marketing of the Products in the Export Market to
End Users in accordance with the terms of this
Agreement; and
(ii) the distribution of Products under paragraph (a).
6.3 EXCEPTIONS TO DISTRIBUTION RIGHTS OF MARKETER
(a) Despite Clause 6.1, when Marketer or Exporter identifies a marketing
opportunity that may require the Exporter (or another member of the
InterOil Group) to sell a Product and deal directly with a Customer
or potential Customer (or class of them) in the Export Market, for
example when a Party becomes aware of a distribution opportunity in
which it would be advantageous or necessary for the Exporter (or a
member of the InterOil Group) rather than the Marketer to be the
contracting Party to the relevant supply, then both Parties will
enter into good-faith discussions to reach agreement on which Party
will sell to that Customer.
(b) The Exporter and the Marketer may from time to time, as contemplated
in Clause 6.3(a), agree that the Exporter (or another member of the
InterOil Group) sells specified quantities of Product and deals
directly with Customers or potential Customers in the Export Market,
in which circumstances Clause 6.4 will apply.
6.4 COMMISSION FOR INTRODUCTION
Notwithstanding Clauses 6.2 (a) and (b), if the Marketer introduces the
opportunity for the sale of that Product by the Exporter (or another
member of the InterOil Group) to a Customer under Clause 6.3 then:
(a) the Exporter must disclose to the Marketer the material details of
any sale it makes under Clause 6.3, including the relevant Customer,
the quantity of Product supplied and the actual price at which it is
supplied; and
(b) Exporter will pay Marketer an amount equal to the Commission
calculated under Clause 16 as if the Marketer had made a prior
Nomination for that product and Exporter had made no later
Nomination.
PAGE 17
EXPORT MARKETING AND SHIPPING AGREEMENT
7 UNDERTAKINGS OF THE MARKETER RELATING TO DISTRIBUTION
The Marketer undertakes to the Exporter that the Marketer will:
(a) exercise in good faith all reasonable endeavours to maximise the
economic returns to the Exporter under the arrangements anticipated
by this Agreement by pursuing, in the supply and sale by Marketer to
Customers of those Products which the Marketer purchases from the
Exporter, commercial terms with those Customers, that in turn, under
the terms of this Agreement relating to the pricing of Export
Products between the Exporter and the Marketer, will achieve the
Highest Effective Netback Price for the Exporter.
(b) not supply or sell Products to persons or Authorities:
(i) with a view to the supply or sale of those Products
within Papua New Guinea; or
(ii) where it knows or could reasonably be expected to know
that the relevant person or Authority is procuring those
Products with a view to the supply or sale of those
Products within Papua New Guinea.
(c) Not approach an End User, Identified by the Exporter and not
previously Identified by either Party in the Marketing Plan and for
which business is likely to be concluded at or above the Target
Price, with a view to discussing sale of Product to that End User
unless agreed by Exporter.
(d) Marketer must disclose to the Exporter the material details of a
supply it makes under Clause 12, including the relevant Customer,
actual price, the quantity of Product supplied and the actual price
at which Freight, insurance and other costs are supplied.
(e) The Exporter may request the Marketer to ship or arrange the
carriage of Exporter's own Products on a voyage charter basis and,
subject to agreement on a commercial price reflecting actual costs
incurred for such carriage or arrangement (which shall include but
not be limited to Freight, demurrage and insurance (as the case may
be)) and other material terms including those relating to
charterparty terms, risk and insurance of the relevant cargo of
Product which will be done in good faith and according to Industry
practice but always adhering to the Shell Group practices, the
Marketer may not unreasonably refuse to carry or arrange the
carriage of that cargo (but the Exporter acknowledges that the
Marketer may give priority to the carriage of Marketer's own
Products, or petroleum products of members of the Shell Group and
Products the Marketer (or its nominee that
PAGE 18
EXPORT MARKETING AND SHIPPING AGREEMENT
is a member of the Shell Group) has purchased from the Exporter and
that are being carried for delivery to a Customer). For such
Exporter's cargoes where it is mutually agreed that the Marketer
shall arrange for their carriage, the Exporter shall pay a
commission of USD [Deleted for confidentiality] per barrel.
(f) Marketer acknowledges the vital importance of the procurement of LCO
or other agreed blendstock for the purposes of blending with
Refinery LSWR and Marketer agrees to provide all information
available to Marketer regarding location, quality, pricing, and
freight options for such LCO or blendstock as per Clause 10.3.
(g) Following consultation with Exporter, Marketer will provide in good
faith, on a reasonable efforts basis, procurement and freighting of
Light Cycle Oil (or other agreed blendstock) to the InterOil
Refinery for the purpose of blending MDO. Quantities likely to be
shipped are between 6,000 to 12,000 tonnes. Marketer shall make
reasonable endeavours to ensure that deliveries of LCO (or other
agreed blendstocks) are, subject to availability at prices
acceptable to InterOil, made as frequently as required by InterOil,
which is expected to be approximately every four to six weeks.
8 UNDERTAKINGS OF THE EXPORTER RELATING TO DISTRIBUTION
The Exporter undertakes to the Marketer that the Exporter will not supply
or sell Export Products to persons or Authorities:
(a) other than the Marketer or members of the Shell Group, except as
permitted under Clause 6.2 or 6.3;
(b) with a view to the supply or sale of those Export Products within
Papua New Guinea;
(c) where it knows or could reasonably be expected to know that the
relevant person or Authority is procuring those Export Products with
a view to the supply or sale of those Export Products within Papua
New Guinea; and
(d) will not approach an End User, Identified by the Marketer and not
previously Identified by either Party in the Marketing Plan and for
which business is concluded at or above the Target Price, with a
view to discussing sale of Export Product to that End User unless
agreed by Marketer.
PAGE 19
EXPORT MARKETING AND SHIPPING AGREEMENT
9 COMMITTEES
9.1 PRIOR TO COMMENCEMENT OF NORMAL SUPPLY OF PRODUCT BY THE INTEROIL
REFINERY:
(a) (GENERAL CO-OPERATION) Prior to the Refinery Completion Date the
Exporter and the Marketer will use all reasonable endeavours to
ensure an orderly introduction of arrangements for the distribution
of Products by the Marketer for supply or sale within the Export
Market. The generality of this paragraph (a) is not limited by the
following terms in this Clause 9.1.
(b) (FORMATION AND FUNCTIONS OF SUPPLY COMMENCEMENT COMMITTEE) Not less
than 12 months before the Scheduled Date for Refinery Completion,
the Exporter, and the Marketer will establish a committee with the
Refiner (the SUPPLY COMMENCEMENT COMMITTEE) to provide the forum for
consultation between the Exporter, the Marketer and the Refiner
regarding:
(i) the conduct of each Party in relation to the
commissioning and start of operations of the Refinery;
(ii) policies, programs, plans and agreements for assisting
each other in agreed aspects of the commissioning and
start of operations of the Refinery;
(iii) mechanisms for taking and delivering Product produced in
the testing, commissioning and start up phases of the
Refinery, including mechanisms for agreeing or otherwise
determining quantities, prices and delivery
arrangements, before the Refinery Completion Date (which
terms, to the extent possible, it is intended by the
parties will be as close as is practicably possible to
the terms that will apply from the Refinery Completion
Date); and
(iv) have any other functions relating to the commissioning
and start of operations of the Refinery as are agreed
between the Exporter, and the Marketer from time to
time,
with respect to the supply of Product by the Exporter to the
Marketer.
(c) (MEETINGS OF SUPPLY COMMENCEMENT COMMITTEE) The Supply Commencement
Committee will, unless otherwise agreed by the Exporter and the
Marketer, meet not less frequently than:
(i) quarterly until 3 months before the projected date of
the commencement of regular production of Products by
the Refinery; then
PAGE 20
EXPORT MARKETING AND SHIPPING AGREEMENT
(ii) monthly until 1 month before the projected date of the
commencement of regular production of Products by the
Refinery; then
(iii) weekly until the Refinery Commencement Date.
(d) (APPOINTMENT AND POWERS OF REPRESENTATIVES) Each of the Exporter and
the Marketer will be entitled by notice to each other to appoint a
person as a member of the Supply Commencement Committee and from
time to time to remove any person so appointed and to appoint
another person in his or her place. The Exporter will be entitled to
appoint a second person as a member of the Supply Commencement
Committee with the specific purpose of providing relevant
information on InterOil Refinery operations. Each of the Exporter
and Marketer will also be entitled by notice to each other to
appoint any person as an alternate representative for a
representative appointed by it and from time to time to remove any
person so appointed and to appoint another person in his or her
place. An alternate representative shall be entitled to attend any
meeting of the Supply Commencement Committee.
(e) (QUORUM) The quorum for any meeting of the Supply Commencement
Committee will be one representative appointed by each of the
Exporter and the Marketer.
(f) (CONDUCT OF MEETINGS) Meetings of the Supply Commencement Committee
will be held at the times and places and in accordance with any
agendas and other procedural arrangements agreed between the
representatives of the Parties.
(g) (COSTS OF ATTENDANCE AT SUPPLY COMMENCEMENT COMMITTEE MEETINGS)
Costs and expenses incurred by the Exporter or the Marketer relating
to the attendance of its representatives (including alternates) and
advisers at meetings of the Supply Commencement Committee shall be
borne by the Exporter or the Marketer respectively.
9.2 FROM COMMENCEMENT OF NORMAL SUPPLY OF PRODUCT BY REFINERY
(a) (FORMATION AND FUNCTIONS OF SUPPLY COMMITTEE) From the Refinery
Commencement Date the Supply Commencement Committee will be deemed
reconstituted as a permanent committee (the Supply Committee) which
shall provide the forum for consultation between the Exporter and
the Marketer for:
(i) review, consideration and discussion of ongoing planning
and the associated reports issued under Clause 10;
PAGE 21
EXPORT MARKETING AND SHIPPING AGREEMENT
(ii) review of operating issues arising out of the
performance of this Agreement;
(iii) consideration of revisions and impact of the planned
shutdown and maintenance programs of the Refinery or
resources used in distributing Products under this
Agreement;
(iv) review of shortfall or make-up quantities and to
reconcile them, or where necessary to provide for
make-up quantities, all in order to bring supplies and
deliveries in line with agreed principles;
(v) consideration and reconciliation of the Marketer's and
the Exporter's requirements for the Products and actual
Products production;
(vi) if necessary, the review of quality or specifications of
Product and adjustment to these and the price formula if
agreed;
(vii) the review of any matters which may affect the ability
of either Party to undertake its obligations under this
Agreement;
(viii) any other functions relating to the marketing and
distribution of Products as are agreed between the
Exporter and the Marketer from time to time; and
(ix) with respect to the supply of Product by the Exporter to
the Marketer.
(b) (MEETINGS OF SUPPLY COMMITTEE) The Supply Committee will, unless
otherwise agreed by the Exporter and the Marketer, meet not less
frequently than Monthly.
(c) (APPOINTMENT AND POWERS OF REPRESENTATIVES) The Exporter and the
Marketer will be entitled by notice to each other to appoint a
person as a member of the Supply Committee and from time to time to
remove that person so appointed and to appoint another person in his
or her place. The Exporter and the Marketer will also be entitled by
notice to each other to appoint any person as an alternate
representative for a representative appointed by it and from time to
time to remove any person so appointed and to appoint another person
in his or her place. An alternate representative shall be entitled
to attend any meeting of the Supply Committee.
(d) (QUORUM) The quorum for any meeting of the Supply Committee will be
one representative appointed by each of the Exporter and the
Marketer.
PAGE 22
EXPORT MARKETING AND SHIPPING AGREEMENT
(e) (CONDUCT OF MEETINGS) Meetings of the Supply Committee will be held
at the times and places and in accordance with any agendas and other
procedural arrangements agreed between the representatives of the
Parties.
(f) (COSTS OF ATTENDANCE AT SUPPLY COMMITTEE MEETINGS) Costs and
expenses incurred by the Refiner, Exporter or the Marketer relating
to the attendance of its representatives (including alternates) and
advisers at meetings of the Supply Committee shall be borne by the
Exporter or the Marketer respectively.
10 ONGOING PLANNING
10.1 WEEKLY FORECAST PRODUCTION AND OTHER INFORMATION.
By the close of business on the Tuesday of each week (or if that Tuesday
is a designated public holiday in Port Moresby, the next day that is not a
designated public holiday in Port Moresby), the Offtake Coordinator
(appointed by the Exporter) will compile and give to each representative
of the Supply Committee or its nominees a report which will include, but
may not be limited to:
(a) the daily net production, planned offtakes (which shall include
domestic and export Nominations) and inventory forecasts for all
Products which are projected to be available for lifting in the
current and next succeeding 2 months unless otherwise agreed, and
highlighting of any breach of operating limits, eg stock out or tank
tops, for each Product. It is anticipated that this will assist in
the identification of potential Excess Product for which Exporter or
Marketer may nominate. Timing for such nomination will be in
accordance with Clause 15 of this Agreement;
(b) loading windows and Tanker details (where known) assigned to other
cargoes loading or discharging at the same primary jetty, eg. firm
arrival slots for crude oil import cargoes;
(c) details of all Nominations made by the Marketer or the Exporter
under this Agreement and the anticipated date of delivery of those
Products under those Nominations.
In addition to the above the Offtake Coordinator will advise each member
of the Supply Committee as soon as practicable of any:
(d) material increase or decrease (of 20% or more over any one-week
period) in forecasts of production of any Product as advised in
Clause 10.1(a);
PAGE 23
EXPORT MARKETING AND SHIPPING AGREEMENT
(e) operational circumstances that will reduce the capacity of any one
of the Product storage tanks at the InterOil Facilities; and at
least 60 days written notice of scheduled maintenance to any of the
InterOil Facilities (including the loading terminal), or scheduled
unavailability of resources which will either impact on production
or impose constraints on Marketer's or Exporter's ability to accrue
and lift Product.
10.2 SHIPPING REPORT
The Marketer will supply to each representative of the Supply Committee a
shipping report for the subsequent three-month period, which details
Tanker movements in the Oceania Envelope. These Tanker movements will
include all Tankers owned or controlled by Marketer and shipping market
intelligence on any other Tankers in the Oceania Envelope which Marketer
considers is relevant to the offtake program of the InterOil Refinery and
which Marketer is at liberty to disclose.
10.3 MARKETING PLANS AND DEVELOPMENT OF TERM CONTRACT ARRANGEMENTS.
(a) The Marketer and the Exporter will on a regular basis consult to
develop and produce a marketing plan (in such format and with such
detail of content as agreed amongst them) relating to the supply,
and sale of Products by the Marketer and the Exporter in the Oceania
Envelope under this Agreement (Marketing Plan).
(b) The Marketing Plan will include but not necessarily be limited to:
(i) the allocation of responsibilities and respective
marketing and distribution coverage between the Marketer
and the Exporter with a view to coordinating and
optimising the supply and sale of Products within the
Oceania Envelope to achieve the highest Effective
Netback Price for Exporter, in accordance with the
arrangements anticipated under this Agreement;
(ii) details of any intended marketing or distribution
arrangements of the Marketer and the Exporter regarding
the sale of Product outside the Oceania Envelope;
(iii) approximations of anticipated vessel and freight
availabilities (and associated tonnage optimisations)
within the Oceania Envelope to market and distribute
Products in the Oceania Envelope;
(iv) identification in writing of potential Term Customers
and End Users by Marketer and Exporter. Prioritisation
and marketing
PAGE 24
EXPORT MARKETING AND SHIPPING AGREEMENT
approach to those potential Customers eg. joint venture
arrangement, Marketer approach or Exporter approach
(with a view to preventing more than one Party talking
to the same potential Customer) and which shall take
into account future long term production forecasts;
(v) specific details of arrangements with respect to the
marketing of MDO. Exporter and Marketer will Identify
potential Customers of MDO and their required
specifications (where known) and discuss blendstock
options that may be required to meet these
specifications. The Parties will further discuss and
agree the technical development required on a case by
case basis;
(vi) Nomination of Term Contract for approval prior to
commitment in accordance with Clause 12.
(c) The Parties will meet on a date to be agreed to discuss the matters
detailed in Clause 10.2 with a view to producing the first Marketing
Plan by no later than 12 months prior to Refinery Completion Date.
(d) The Marketing Plan may be replaced or amended by the Marketer and
the Exporter upon their mutual agreement at any time.
(e) A copy of the Marketing Plan (and any replacement of or amendment to
it) must be given to or exchanged by each representative of the
Supply Committee.
(f) The Marketing Plan will be continuously reviewed and monitored by
the Supply Committee, and the Marketer and the Exporter will use all
their reasonable endeavours to ensure their respective activities
accord to the extent required with the content of the Marketing
Plan.
11 SUPPLY OF PRODUCTS TO MARKETER FOR DISTRIBUTION
Pursuant to Clauses 12 and 13(a) the Exporter will sell and the Marketer
will purchase Products for supply, distribution and sale into the Export
Market on the terms set out in Schedule 3 of this Agreement.
12 DISTRIBUTION BY OPEN BOOK SALES AND APPROVAL FOR SUCH SALES.
(a) The Marketer will actively seek Customers to enter into Term
Contracts.
PAGE 25
EXPORT MARKETING AND SHIPPING AGREEMENT
(b) When the Marketer wishes to enter into a Term Contract with a
certain Customer for the supply or sale in the Export Market of
certain Products to that Customer, the Marketer may propose that
such resupply or sale is made under a Term Contract, in which event
the Marketer will notify the Exporter of all material details of the
Marketer's anticipated contract with that Customer. For the
avoidance of doubt, the material details shall be the identity of
the Customer, and the Product grade, quantities, quality, intended
delivery details and timing and intended pricing terms of the
relevant Products. It is agreed that with respect to the other
contractual terms of the proposed Term Contract, the Marketer shall
have full discretion. The Exporter shall, within 15 Working Days of
receiving that notification (unless otherwise agreed), either
(i) approve those proposed terms; or
(ii) reject those proposed terms; provided that the Term
Contract Customer has previously been identified and
agreed as a priority potential Customer in the Marketing
Plan, otherwise the Exporter reserves the right for
lengthier consideration to ensure Product availability
and pricing terms are favourable for the period of the
proposed Term Contract.
(c) If the Exporter approves the material terms proposed by the Marketer
under Clause 12(b) and the Marketer enters into a contract
substantially on those terms with the Customer, that contract will
be an approved Term Contract.
(d) In respect of such Term Contracts:
(i) the Marketer undertakes that it will provide a full
signed copy of the Term Contract upon request by the
Exporter;
(ii) the Exporter undertakes that it:
(A) will supply the Marketer with all Products
required by the Marketer to supply or sell the
Product to the Customer under that Term Contract;
(B) has the capacity to fulfil the requirements of
that Term Contract;
(C) shall accord priority to fulfilling the
requirements of all Term Contracts over any
Nominations for spot sales, unless Marketer
recommends otherwise; and
(D) shall pay Marketer an amount equal to the
Commission due under Clause 16 in respect of the
supply of that product.
PAGE 26
EXPORT MARKETING AND SHIPPING AGREEMENT
(e) The Marketer shall sell a Product to the Customer under a Term
Contract within the price mandate previously agreed for that Product
between the Exporter and the Marketer.
(f) The FOB price to be paid by the Marketer to the Exporter for a
Product to be re-supplied or sold to a Customer under a Term
Contract shall be the Open Book Price, less any Commission due to
the Marketer from the Exporter. For the avoidance of doubt, Open
Book sales shall take account of all costs reasonably incurred
provided that the risk of such costs being incurred was identified
at the time the Term Contract was proposed.
13 SHELL DISTRIBUTION SYSTEM SALES
13.1 SUPPLY OF PRODUCT TO THE MARKETER AS BUYER (FOR SHELL GROUP'S OWN STOCKS)
(a) The Marketer may make Nominations for Products for its own stocks or
the stocks of other members of the Shell Group for general supply or
sale of that Product in the Export Market to Customers.
(b) The price relating to a supply of a Product under this Clause 13.1,
will be the price agreed between the Exporter and the Marketer, and
Commissions shall apply in accordance with Schedule 1.
(c) The Marketer and members of the Shell Group are free to supply and
resell the Products they purchase under this Clause 13.1 at the
prices and on the terms they think fit.
13.2 EXCESS PRODUCT
(a) The Marketer must purchase from the Exporter:
(i) all Excess Product that the Marketer Nominates for under
clause 15(f), if that Nomination is subsequently accepted in a
Firm Program by Exporter; and
(ii) the Excess Product that the Marketer is obliged to make a
Nomination for under clause 15(i).
(b) All Products sold under this Clause 13 will be purchased by the
Marketer (or at the Marketer's request, by a member of the Shell
Group) for its own stocks for general supply or sale of that Product
in the Export Market and Marketer shall pay the Exporter a price
equal to:
(i) the Nominated Price for that Product if a nomination was made
by the Marketer and accepted by the Exporter; or
PAGE 27
EXPORT MARKETING AND SHIPPING AGREEMENT
(ii) the Floor Price for that Product (excluding Gasoil 0.05%S) or
the Lower Floor Price for Gasoil 0.05%S if no Nomination was
made by the Marketer.
(c) The Marketer is free to supply and resell the Excess Product it
purchases under this Agreement at the prices and on the terms it
thinks fit.
14 STANDARD TERMS OF SALE
All Products sold by the Exporter and purchased by the Marketer under this
Agreement will, unless otherwise agreed between the Parties in relation to
a specific supply, be sold and delivered to the Marketer in accordance
with the Conditions of Purchase set out in Schedule 3.
15 NOMINATIONS FOR PRODUCTS
(a) A Nomination for Product must be submitted to the Offtake
Coordinator in writing by Marketer or Exporter in accordance with
the timing specified in this Clause. Nomination details will include
Product/grade, quantity request, a 7-day lifting window and Customer
details including Price, which Price will show relativity to MOPS
pricing.
Nominations for spot liftings of Excess Product shall also include
the Effective Netback Price and all details available to Marketer.
(b) The Latest Nomination Date for lifting in the Delivery Period (Month
x+2) is:
(i) the 5th day of Month x for Nominations by any PNG domestic
third party, (if that is not a working day, the prior working
day);
(ii) the 8th day of Month x for Nominations by the Exporter, (if
that is not a working day, the prior working day); and
(iii) the 10th day of Month x for Nominations by the Marketer, (if
that is not a working day, the next working day).
(c) The Earliest Nomination Date (such date specified only to provide a
basis for the establishment of First Priority Status of a particular
Nomination for liftings in the Delivery Period) is:
PAGE 28
EXPORT MARKETING AND SHIPPING AGREEMENT
(i) for the Marketer, the first working day after the Latest
Nomination Date applicable for liftings of Product in Month
x+1; and
(ii) for the Exporter, the first working day after the day
stipulated in paragraph (c)(i) above.
(d) Tentative Nominations (including quality, volume and 7 day date
range) for third party domestic lifters will be made on the first
day of month x-1, for liftings in the Delivery Period, such that by
the Earliest Nomination Date the Parties shall have the best
estimate of Excess Product availability or deficits for the Delivery
Period. Tentative Nominations for third party PNG domestic lifters
remaining in the Program after the 5th of Month x shall be
considered firm Nominations for the Delivery Period.
(e) Nominations for Product delivery in the Delivery Period shall be
made within the bounds of the Earliest and Latest Nomination Dates
as defined in (b) and (c) above; this Period shall be referred to as
the Nomination Period. All Nominations shall be considered tentative
and subject to withdrawal by the Parties, until the first working
day prior to the Latest Nomination Date. Any Nominations made after
this date (ie. on the Latest Nomination Date), or Tentative
Nominations not previously withdrawn, shall be considered firm and
may not be modified or withdrawn without the agreement of both the
Exporter and the Marketer. All Tentative Nominations must be the
best indications that the Parties can provide of expected liftings,
to enable early identification of stock issues and the most advanced
notice to allow formulation of shipping and refinery plans.
(f) Tentative Nominations for spot sales of Excess Product (eg. Product
surplus in the Delivery Period), in addition to volume and 7 day
date range, shall include the Effective Netback Price. If such
Tentative Nomination by the Marketer is the first tentative
nomination made during the Nomination Period and exceeds the Target
Price defined for that Product, then that Nomination shall be given
first priority status; (ie. the Commission for such lifting shall be
payable even in the event that the Exporter later nominates a
similar volume with higher Effective Netback Price which results in
exclusion of the Nomination with First Priority Status. eg. due to
lack of Product availability). For the avoidance of doubt, it is
agreed that in the event that the Marketer has already concluded a
contract for sale with its Customer and Exporter has approved such
sale as contemplated under clause 12, and Marketer nominates for
cargo for such sale then the Exporter shall not nominate a competing
nomination for the same Nomination Period.
PAGE 29
EXPORT MARKETING AND SHIPPING AGREEMENT
(g) Withdrawal of a nomination with first priority status by a Party
during the Nomination Period and not replacing such with a similar
volume and equal or higher price during such Period shall render
that Party ineligible for first priority status for the next month.
No such period of ineligibility shall occur if the reason for
withdrawal of a first priority status nomination was not within the
reasonable control of that Party.
(h) An Offtake Coordinator shall be appointed by the Exporter whose role
shall be to:
(i) receive Nominations from all Parties;
(ii) liaise with the Refiner, Marketer and Exporter and keep
them appraised of all developments which can impact on
Supply arrangements;
(iii) confirm to both the Exporter and the Marketer those
Nominations with first priority status;
(iv) coordinate with both the Exporter and the Marketer
during the period between all the Latest Nomination
Dates to target a viable refinery and shipping program,
which shall enable the highest Effective Netback Prices
for Products for both the Exporter and the Marketer; and
(v) develop a Firm Program, published for Months x, x+1 and
x+2 on a rolling basis, and made available to the
parties by the 15th day of Month x (if not a working
day, the following working day) which will confirm
whether additional spot sales of Excess Product are
required in the Delivery Period and allocation of that
sale.
If, after Latest Nomination Dates have passed, the Refinery Program
is adversely affected due to tank tops, and no other means of
alleviating such situation can be identified, the Offtake
Coordinator may, in consultation with Marketer, insert into the Firm
Program for Month X+2 a deemed Nomination on behalf of the Marketer.
Such a Nomination by default shall price the Product to the Marketer
at the Floor Price for that Product (excluding Gasoil 0.05%S) and at
the Lower Floor Price for Gasoil 0.05%S.
(j) If, for reasons such as, but not limited to, scheduling errors or
inaccurate inventory readings, or other prompt changes excluding
events or changes caused by Marketer or Marketer's vessel, for month
X+1 or X, and the Refinery Program as a consequence requires one or
more prompt cargo
PAGE 30
EXPORT MARKETING AND SHIPPING AGREEMENT
offtakes to avert the risk of tanktops or throughput curtailment,
and no other means of alleviating such situation can be identified,
the Offtake Coordinator may, in consultation with the Marketer,
insert into the Firm Program for Month X+1 or X a deemed Nomination
on behalf of the Marketer. Such a Nomination shall be priced to the
Marketer at the actual realised FOB Effective Netback
Price.(excluding Commission). The Marketer shall use reasonable
endeavours to realise the highest possible Price.
In developing a Firm Program for the Delivery Period, the Offtake
Coordinator will determine acceptance and rejection of Nominations
according to the following ranking:
(i) Deliveries to PNG domestic third party customers.
(ii) Deliveries to Term Customers.
(iii) Spot Sales of Excess Product.
In establishing such a ranking, the Offtake Coordinator shall be
cognisant of the dependence of any Term Contract lifters and spot
lifters to whom commitment has been made, and shall allow
flexibility within categories a) and b) to the extent that such
flexibility is available, to allow optimisation of all sales by the
Marketer and/or Exporter. (eg. co-loads, dates, shipping
arrangements etc.)
16 COMMISSION
16.1 COMMISSION
Commission must be calculated and paid by the Exporter to the Marketer
when due under this Agreement in accordance with this Clause 16.
16.2 RELATIONSHIP BETWEEN NOMINATIONS AND COMMISSION, AND OTHER CIRCUMSTANCES
RESULTING IN COMMISSION
Amounts of Commission payable will be ascertained as follows:
(a) Term Contract business, depending on the Party Identifying that
business and the Party concluding that business in accordance with
Schedule 1 Table 1.
(b) Spot sales of Excess Product, depending on when the Party nominates,
in accordance with Schedule 1 Table 2.
PAGE 31
EXPORT MARKETING AND SHIPPING AGREEMENT
17 INSURANCE
17.1 INSURANCE
(a) This Clause 17 applies when the Marketer carries or arranges
shipping carriage on behalf of the Exporter of either (i) the
Exporter's Products or feedstocks or (ii) of the Exporter's Products
to the Exporter's Customer and the Exporter has requested that the
Marketer arranges marine cargo insurance on the cargo.
(b) The Marketer shall procure marine cargo insurance with such costs
for Exporter's direct account for a value of one hundred and ten
percent (110%) of the expected invoice value of the Product, which
shall cover the period from the time when the Product passes the
Delivery Point, until the time when Product passes the permanent
hose connection of the vessel at the port of discharge. Such
insurance shall be under the same terms and conditions as a standard
marine insurance policy MAR with Institute Cargo Clauses (A),
Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo)
attached. All deductibles, excess and exclusions applicable in such
insurance policy and Clauses shall be applicable and for the account
of the insured party.
17.2 MARKETER TO ASSIST EXPORTER
If any Product is lost or damaged, the Marketer shall, on the request of
the Exporter, assist the Exporter in the processing of the insurance claim
with costs for Exporter's account.
18 FORCE MAJEURE
18.1 RELIEF FROM OBLIGATIONS
No failure or omission to carry out or to observe any of the terms,
provisions, or conditions or this Agreement shall give rise to any claim
by one Party against the other, or be deemed to be a breach of this
Agreement if the same shall be caused directly by:
(a) war, hostilities, acts of the public enemy or of belligerents,
sabotage, blockade, revolution, insurrection, riot or disorder;
arrest or restraint of rulers, or peoples, civil and governmental
frustration, expropriation, requisition, confiscation or
nationalisation;
(b) embargoes or export or import restrictions; substantial interference
by, or restrictions or onerous regulation imposed by civil or
military authorities,
PAGE 32
EXPORT MARKETING AND SHIPPING AGREEMENT
whether legal or de facto and whether purporting to act under some
constitution, decree, law or otherwise;
(c) Acts of God, fire, earthquake, storm, cyclone, lightning, tidal
wave, or perils of the sea;
(d) accidents of navigation, loss of tanker tonnage due to sinking by
belligerents or to governmental taking whether or not by formal
requisition;
(e) unforeseen accidents or mechanical failures resulting in the shut
down, decrease of capacity throughput or closing of the InterOil
Refinery;
(f) accidents to or closing of harbours, docks, canals, channels,
mooring point, or other assistance to or adjuncts of shipping or
navigation;
(g) rationing or allocation, imposed by applicable law, decree or
regulation beyond Exporter control; or any other event, matter or
thing wherever occurring, and whether or not of the same class or
kind as those set forth, which shall not be reasonably within the
control of the Party affected.
18.2 PAYMENTS
Notwithstanding the provisions of Clause 18.1, Marketer shall not be
relieved of any obligations to make payment for Product delivered
hereunder.
18.3 NOTICE
Any Party who is, by reason of Force Majeure, unable to perform any
obligation or condition required by this Agreement to be performed shall:
(a) promptly notify the other Party of the event of Force Majeure and
the obligations it cannot perform;
(b) notify the other Party when the Force Majeure has terminated or
abated to an extent which will permit resumption or performance to
occur; and
(c) notify the other Party when resumption of performance has occurred.
18.4 REMEDY OF FORCE MAJEURE
Any Party who is, by reason of Force Majeure, unable to perform any
obligation or condition required by this Agreement to be performed shall:
(a) use all reasonable diligence and employ all reasonable means to
remedy or xxxxx the Force Majeure as expeditiously as possible
PAGE 33
EXPORT MARKETING AND SHIPPING AGREEMENT
(b) resume performance as expeditiously as possible after termination of
the Force Majeure or the Force Majeure has abated to an extent that
permits resumption of such performance;
(c) provided that no Party shall, by virtue of this Clause 18, be
required against the will of that Party to adjust or settle any
strike, lockout or other labour dispute and provided further that
under no circumstances shall Exporter be obligated to replace
Product supplies or cargoes lost as a result of an event of Force
Majeure.
18.5 EXTENDED FORCE MAJEURE
If the Force Majeure event is relied upon by the affected Party under this
Clause 18 to excuse its failure to perform under this Agreement shall
persist for a continuous period of more than one hundred and eight (180)
days, then either the other Party as the case may be shall be at liberty
to terminate this Agreement by written notice to the Affected Party
whereupon both parties shall be discharged from all obligations under this
Agreement except for antecedent breaches, if any.
18.6 MITIGATION
The Party that is prevented from carrying out its obligations under this
Agreement as a result of Force Majeure must take all action reasonably
practicable to mitigate any loss suffered by the other Party as a result
of its inability to carry out its obligations under this Agreement.
19 LIMITATION OF LIABILITY
Notwithstanding any other provisions in this Agreement, the Parties agree
as follows:
(a) In no event shall a Party to this Agreement make any claim against
the other Party or its employees, officers, agents, or consultants
on account of any alleged error of judgement made in good faith in
connection with its performance under this Agreement
(b) Neither the Exporter nor the Marketer, shall be liable, one against
the other whether in tort or in contract for any consequential,
indirect or special losses, punitive, exemplary damages of any kind
(including but not limited to loss of profit, loss of use and loss
of interest) arising out of or in any way connected
PAGE 34
EXPORT MARKETING AND SHIPPING AGREEMENT
with the Agreement, its implementation, performance of or failure to
perform the Agreement;
(c) Notwithstanding Clause 19(b), in the event that the Marketer is
liable to the Exporter for breach of Condition 13 due to the late
arrival of Marketer's Tanker arising from Marketer's Gross
Negligence only, Marketer shall, in addition to the direct damages
under Condition 13(d), be liable for any consequential, indirect or
special loss, including loss of profit, based on lost refining and
marketing margin due to any reduced refinery throughput. Marketer's
total liability to the Exporter under this Clause 19(c) and under
Condition 13(d), and in respect to a Tanker loading Naphtha as well
as Product under this Agreement, shall be limited to a maximum of
United States Dollars [deleted for confidentiality] per day (whether
in this Agreement or any other agreement in respect of the same
Tanker loading this or any other cargo).
(d) Notwithstanding Clause 19(b), the Marketer shall not be liable to
the Exporter for any loss, liability, damage, cost or expense
suffered or incurred by the Exporter (to the maximum extent
permitted by Law) directly or indirectly arising from or connected
with the Marketer's performance, non-performance or malfeasance of
its obligations or duties pursuant to its obligations under Clauses
7(e) to (g) inclusive irrespective of the Marketer's fault or
negligence unless any such liability, loss, damage, cost or expense
results from the Marketer's Gross Negligence.
(e) In relation to Clause 19(d) above, the Exporter hereby agrees to
indemnify and hold the Marketer harmless in respect of all claims,
liabilities losses, damages, costs and expenses incurred by a third
party directly or indirectly arising from or connected with the
Marketer's performance, non-performance or malfeasance of its
obligations or duties pursuant to its obligations under Clauses 7(e)
to (g) inclusive irrespective of the Marketer's fault or negligence
unless any such liability, loss, damage, cost or expense results
from the Marketer's Gross Negligence.
(f) In relation to Clause 19(d) and (e) above, in the event that the
Marketer is liable to the Exporter, Marketer's total liability to
the Exporter under this Agreement for its breach of its obligations
under Clauses 7(e) to (g) inclusive shall be limited to the
aggregate of the total fees earned in relation to services rendered
under Clause 7(e) to (g) inclusive.
(g) Nothing herein shall derogate from a Party's obligations to act in
good faith and mitigate and minimise costs and damages for which the
other Party may be liable under this Agreement.
PAGE 35
EXPORT MARKETING AND SHIPPING AGREEMENT
(h) "Gross Negligence" means any act or omission done or omitted to be
done intentionally or with reckless disregard for any damage or loss
such action or omission causes or may cause or which could have been
reasonably foreseen to be caused.
20 NOTICE
20.1 MEANS OF NOTICE
All notices, statements and other communications to be given, submitted or
to be made under this Agreement shall be sufficiently given if in writing
and sent either:
(a) by hand or courier; or
(b) by facsimile with receipt acknowledged,
to the address or facsimile numbers specified in this Agreement under
Clause 20.3.
20.2 CHANGE OF ADDRESS
A Party may change its address for the purposes set forth in Clause 20
upon giving 15 days prior written notice to the other Party.
20.3 REPRESENTATIVES
(a) Each Party hereby appoints the Representatives specified in this
Clause 20.3.
(b) A Party may change its Representatives by notice to the other Party,
and the Exporter may nominate an agent to act for the Exporters
Representative in certain matters, which notice shall be given to
the Marketer.
(c) All notices, statements and other communications given, submitted
and made under this Agreement by the Marketer or by the Exporter or
by the Refiner from time to time or at any time under this Agreement
may be given and received by a single notice by a Representative,
such notice being effective notice to or from the relevant Party.
Exporter's Representatives
The Exporter's Representative and its address and facsimile number are:
Managing Director
E.P. InterOil, Ltd
00000 X-00 Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000, XXX
Telephone: (000) 000-0000
PAGE 36
EXPORT MARKETING AND SHIPPING AGREEMENT
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx Xxxxxx
Marketer's Representatives
The Marketer's Representative and its address and facsimile number are:
NAME: Head of Operations, Chemical Feedstocks
Attn: XXXXX XXXX XX000
TEL x00 000 0000
FAX NO: x00 000 0000
TELEX NO: RS20196
Authority of the Representatives
The Representatives shall have the following authority:
(A) to make agreements concerning the administration or
procedures under the Agreement; and
(B) to render any invoice, Xxxx of Lading or other
documentation as required by the Agreement.
21 ASSIGNMENT
21.1 SUCCESSORS AND ASSIGNS
Subject to this Clause 21, the Agreement shall be binding upon and inure
to the benefit of the Parties, their successors and assigns.
21.2 CONDITIONS OF ASSIGNMENT
This Agreement shall not be assignable by either Party without the
assignee entering into a covenant in writing with the non-assigning
Parties, in a form acceptable to the non-assigning Parties such acceptance
not to be unreasonably withheld, to be bound by the provisions of the
Agreement as if it were a Party to the Agreement.
22 CONFIDENTIALITY
22.1 NON-DISCLOSURE
Neither Party ("Disclosing Party") may in the absence of prior written
consent either before or for a period of 3 years after termination of this
Agreement divulge or suffer its employees, consultants, agents or
representatives to divulge to any person (other than to those of its
officers, employees, consultants, agents or representatives who reasonably
require the information to enable them to properly
PAGE 37
EXPORT MARKETING AND SHIPPING AGREEMENT
perform their duties) any of the contents of this Agreement or any other
information concerning the operations, dealings, transactions, contracts
or commercial or financial affairs of the other Party ("Owning Party").
22.2 EXCLUSIONS
The restrictions imposed by Clause 22.1 do not apply to the disclosure of
information:
(a) to any Affiliate or bona fide intended assignee of the Disclosing
Party upon obtaining a similar undertaking of confidentiality from
that Affiliate or assignee in favour of both Parties;
(b) to independent consultants, legal counsel and contractors of the
Disclosing Party whose duties reasonably require disclosure provided
those consultants, legal counsel and contractors have made a similar
undertaking of confidentiality to the Disclosing Party;
(c) to any bank or financial institution from whom the Disclosing Party
is seeking or obtaining finance, provided those banks or
institutions have made a similar undertaking of confidentiality to
the Disclosing Party;
(d) to the extent required by any applicable laws or regulations having
jurisdiction over the Disclosing Party; or by the regulations of any
recognised stock exchange on which are listed for quotation shares
in the capital of the Disclosing Party or any Affiliate of the
Disclosing Party; or in a prospectus issued by the Disclosing Party
or an Affiliate of the Disclosing Party as required by securities
laws governing the Disclosing Party or such Affiliate; or to the
extent required for the purpose of any litigation arising from this
Agreement; provided that if the Disclosing Party is served with any
notice, demand, request, subpoena or other proceedings seeking
discovery, disclosure or production of this Agreement or any
information which has been previously disclosed to the Disclosing
Party and which is proprietary to the Owning Party, then the
Disclosing Party shall:
(i) forthwith give a copy of the notice, demand, request,
subpoena or other proceedings to the Owning Party;
(ii) comply with any reasonable directions issued by the
Owning Party in respect of the protection or
dissemination of such information, documentation and
agreements (whether or not confidential);
PAGE 38
EXPORT MARKETING AND SHIPPING AGREEMENT
(iii) upon receiving notice from the Owning Party, accept and
give effect to, as far as is possible, any reasonable
representation from the Owning Party in regard to the
conduct of any negotiations, dissemination or
proceedings relating to such information, documentation
and agreements (whether confidential or not); and
(iv) not otherwise do anything to prejudice the protection of
such information, documentation or agreement or which is
inconsistent with paragraphs 1-3 inclusive above; or
(e) to the extent that the same has become generally available to the
public.
23 DISPUTE RESOLUTION
23.1 NOTICE OF DISPUTE
The Party claiming that a dispute, controversy or claim has arisen shall
give notice to the other Party identifying such dispute, controversy or
claim and designating its representative in negotiations, being a senior
officer of the Party with authority to settle the matter, and the other
Party shall promptly give notice in writing designating its representative
in negotiations with similar authority.
23.2 MEETING
Within 10 days of the notice of dispute, the senior officers of each
disputant shall meet to seek to resolve the matter.
23.3 FURTHER ALTERNATIVE DISPUTE RESOLUTION
If the dispute, controversy or claim is not resolved by the senior
officers within such period of 10 days, the Parties shall, within a
further 10 days, seek to agree the process for resolving the matter
through means other than litigation, such as further negotiations,
mediation or conciliation and on:
(a) the procedure and timetable for any exchange of documents and other
information relating to the dispute, controversy or claim;
(b) procedural rules and a timetable for the conduct of the selected
mode of proceedings; and
(c) the procedure for selection and remuneration of any mediator who may
be employed by the Parties.
PAGE 39
EXPORT MARKETING AND SHIPPING AGREEMENT
23.4 EXPERT
If the Parties agree that the matter should be referred to an expert for
resolution, the following procedure shall apply unless otherwise agreed by
the Parties:
(a) either Party shall notify ("Initial Notice") the other Party of the
matter it wishes to be resolved including the name of the person
whom it nominates as the expert;
(b) the recipient of the Initial Notice shall notify the other Party
("Reply") within 3 days if it does not accept the person so
nominated and make a nomination of the person it proposes to be the
expert;
(c) if the Parties are not able to agree on the appointment of the
expert within 7 days of the Initial Notice, either Party may request
the Chairman of the Australian Institute of Petroleum to appoint a
person qualified by education, experience and training in the
subject matter in dispute to be the expert;
(d) the expert so appointed shall promptly fix a reasonable time and
place for receiving submissions or information from the Parties or
from any other persons that the expert may think fit and the expert
may make such further enquires and require such other evidence as he
or she may consider necessary for determining the matter and shall
in accordance with this Agreement determine the matter with all due
diligence and speed;
(e) the expert shall not be deemed not to be an arbitrator but shall
render his decision as an expert;
(f) the determination of the expert shall be final and binding upon the
Parties save in the event of fraud, mistake or miscarriage;
(g) each Party shall bear the costs and expenses of all counsel,
witnesses and employees retained by it but the cost and expenses of
the expert shall be apportioned between the Parties in such
proportions as the expert shall in the circumstances consider
proper; and
(h) if an expert appointed has not arrived at a determination within a
period of 30 days from the date of appointment, either Party may
upon giving notice to the other, terminate the appointment and a new
expert shall be appointed and the point of difference determined in
accordance with the provisions of this Clause.
PAGE 40
EXPORT MARKETING AND SHIPPING AGREEMENT
23.5 ARBITRATION
If either of the Parties does not agree that the dispute be resolved
pursuant to Clause 23.4 then the dispute shall be resolved by arbitration,
and the arbitration shall be:
(a) governed by English law;
(b) carried out under the United Nations Commission on International
Trade Law Arbitration rules and regulations (UNCITRAL);
(c) conducted and presided over by a single arbitrator appointed by the
London Court of International Arbitration (LCIA);
(d) held in London, England and the language of the arbitration shall be
English;
(e) empowered to order interest and costs under an award; and
(f) binding on all parties under arbitration.
23.6 ARBITRATION VENUE AND ENFORCEMENT
Any Party to the dispute under arbitration may commence proceedings or
take any action it deems necessary in the jurisdiction referred to in
Clause 1.5(a) above to enforce a decision of the arbitrator whether
pursuant to:
(a) the general law or legislation of the jurisdiction;
(b) the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards 1958; or
(c) any other treaty making enforcement possible.
23.7 CONFIDENTIALITY OF PROCEEDINGS
Any dispute resolution procedure, other than litigation and any
determination shall be kept confidential between the Parties.
23.8 REPRESENTATION
The Parties may be represented by legal counsel in any dispute resolution
procedure. Each Party shall bear the costs and expenses of all counsel;
witnesses and employees retained by it but the cost and expenses of the
mediator shall be apportioned equally between the Parties.
PAGE 41
EXPORT MARKETING AND SHIPPING AGREEMENT
23.9 CONTINUED PERFORMANCE OF OBLIGATIONS
The referral of a matter to dispute resolution under this Clause 23 shall
not affect the obligations of the Parties in accordance with the terms and
conditions of this Agreement.
EXECUTION PAGE
EXECUTED by EP INTEROIL, LTD )
)
)
) Authorised Signature
)
)
)
) Name: Xxxx X. Xxxxxxx
)
Date: ) Designation: Director
)
)
)
)
)
PAGE 42
EXPORT MARKETING AND SHIPPING AGREEMENT
EXECUTION PAGE
EXECUTED by SHELL INTERNATIONAL
EASTERN TRADING COMPANY owned by SHELL
EASTERN TRADING (PTE) LTD. )
)
) Authorised Signature
)
)
)
) Name:
)
Date ) Designation:
)
)
)
)
)
)
PAGE 43
EXPORT MARKETING AND SHIPPING AGREEMENT
SCHEDULE 1
SUMMARY TABLE OF COMMISSIONS FOR TERM BUSINESS AND TENDERS
TYPE OF SALE COMMISSION PAYABLE
-------------------------------------------------------------------------------- ----------------------------
a) Shell Identifies business and Shell concludes business (Shell or Third Party) CP>TP [deleted for confidentiality]
FPTP
Shell provides Freight or Shell on sells on a C&F basis CPTP
d) Shell Identifies business (Shell or Third Party) first and InterOil CP or = TP InterOil does not nominate higher price [deleted for confidentiality]
InterOil nominates higher price
c) InterOil nominates first FP < or = NP < or = TP Shell does not nominate higher price [deleted for confidentiality]
Shell nominates higher price
a) Shell nominates price < or = TP
b) Shell nominates price > or = TP
d) InterOil nominates first NP > or = TP Shell does not nominate higher price [deleted for confidentiality]
Shell nominates higher price
For Table 2: Shell Nominates means Shell or Third Party Business
3. SUMMARY TABLE FOR PRICING AND FIXED COMMISSION
PAGE 45 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
FIXED
PRODUCT COMMISION LOWER FLOOR PRICE FLOOR PRICE (FOB) TARGET PRICE (FOB)
------------------ --------- ------------------------ ------------------------ -----------------------------
ULP [deleted for [deleted for confidentiality] [deleted for confidentiality]
91 XXX confidentiality]
meeting Australia
spec
or other mutually
agreed grade
JET/KERO [deleted for [deleted for confidentiality] [deleted for confidentiality]
confidentiality]
GASOIL / 0.05%S [deleted for [deleted for confidentiality]. [deleted for confidentiality] [deleted for confidentiality]
Meeting Australia confidentiality]
spec
GASOIL .0.5%S [deleted for [deleted for confidentiality] [deleted for confidentiality]
confidentiality]
MDO [deleted for [deleted for confidentiality] [deleted for confidentiality]
confidentiality]
LSWR [deleted for [deleted for confidentiality] [deleted for confidentiality]
confidentiality]
Notes
For purposes of Table 1, identification of business means the notification in
writing tabled at a marketing planning meting as per Clause 10.2.b.
The following will apply for sales of Gasoil 0.05% S only:
1 For sales of 0.05%S Gasoil above the Floor Price the Commission set out in
Tables 1 and Table 2 will apply.
2. If there are no Nominations above the Floor Price and Marketer Nominates
first bet ween the Floor Price and the Lower Floor Price
PAGE 46 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
then the Fixed Commission for Gasoil will apply .
3 If InterOil nominates first between the Lower Floor Price and the Floor Price
and Shell does not subsequently Nominate a higher price then nil commission will
be paid by Exporter to Marketer.
[deleted for confidentiality].
PAGE 47 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
PRODUCT: AUSTRALIAN UNLEADED MOTOR FUEL
Method Test Specification
ASTM D3606 Benzene content, % vol 3.5 max.
Visual Colour Purple (1) to Bronze
ASTM D130 Corrosion, copper strip, 3 hrs @50 deg C 1 max.
ASTM D1298 or D4052 Density @ 15 deg C kg/l Report
Distillation: Class A*
10% evaporated, deg C 60 max
50% evaporated, deg C 74 min
50% evaporated, deg C 110 max
90% evaporated, deg C 180 max
E.P., deg C 220 max
ASTM D86 Residue, % vol 2 max
IP 30 Doctor test (3) Negative
Calculated FVI See attached schedule
ASTM D381 Gum, existent, mg/l 40 max
ASTM D3237 Lead content, mg/l @ 15 deg C 5 max.
ASTM D2700 Octane number, motor 82 min.
ASTM D2699 Octane number, research 91 min.
ASTM D525 Oxidation stability, minutes 360 min.
ASTM D3231 Phosphorus content, mg/l @ 15 deg C 1.3 max
ASTM D323 Xxxx Vapor Pressure, kPa Report
ASTM D3120 Sulphur content, % mass 0.05 max.
ASTM D2276 Particulates, mg/l 3 max (4)
Visual Appearance Clear & Bright
Aromatics 20min to 48max (ave 45%)
Oxygenates 0.5%volume max
Olefins 20%max(ave18%max by Vol)
NOTES: Steam cracked Naphtha Nil,
Purple is defined as: at least equivalent on visual inspection to a 6.0 mg/l
solution of Mortons Automate Purple B in Iso octane.
Alternatively, a maximum value for mercaptan sulphur of 20 mg/kg as S by ASTM
D3227 shall apply.
PAGE 49 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
PRODUCT: AUSTRALIAN UNLEADED MOTOR FUEL
PETROL VOLATILITY TABLES
Table 1 : Petrol Product Distribution Regions
IRIS MAIN REGION TERMINALS INCLUDED
NSW Low Volatility Zone,
ULPNL ACT Parramatta, Newcastle
ULPNC New South Wales Country Parramatta, Newcastle
ULPNT Northern Territory Darwin, Townsville (Oct -Mar)
Gladstone, Mackay, Cairns,
ULPQN Queensland - North Townsville (Apr - Sep)
XXXXX Xxxxxxxxxx - Xxxxx Xxxxxxxx
XXXXX Xxxxx Xxxxxxxxx Birkenhead, Port Lincoln
ULPTS Tasmania Devonport, Hobart
ULPVC Xxxxxxxx Xxxxxxx, Geelong
ULPWC Western Australia - Central Geraldton
ULPWN Western Australia - North Port Hedland, Dampier,
Broome
ULPWP Western Australia - Perth North Fremantle
ULPWS Western Australia - South Albany, Esperance
PAGE 50 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
Table 2 : Petrol Flexible Volatility Index Controls
IRIS Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
---- --- --- --- --- --- --- --- --- --- --- --- ---
ULPNL See Note 1 (on this page)
2000 67 67 67/102 107 114 120 120 117 110 105 102/62 62
2001 + 62 62 62/102 107 114 120 120 117 110 105 102/62 62
ULPNC 98 100 102 107 114 120 120 117 110 105 102 98
ULPNT 90 94 98 102 102 102 100 98 96 92 90 90
ULPQN 96 98 102 105 108 110 108 106 103 98 96 96
ULPQS See Note 1 (on this page)
2000 98 100 104 108 113 116 116 112 108 104 100/76 76
2001 76 98 76/104 108 113 116 116 112 108 104 100/76 76
2002 76 76 76/104 108 113 116 116 112 108 104 100/67 67
2003 + 67 67 67/104 108 113 116 116 112 108 104 100/67 67
ULPSA 67 67 67/97 104 114 119 119 114 109 100 95/67 67
ULPTS 106 106 112 117 124 127 127 125 121 117 114 110
ULPVC 95 96 102 110 119 124 125 121 116 109 104 99
ULPWC 92 94 98 106 112 118 114 112 108 100 94 92
ULPWN 90 92 94 96 104 108 104 100 94 88 88 88
ULPWP see Note 2 (on this page)
2000 72 72 72 72/107 112 118 119 118 114 108/67 67 67
PAGE 51 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
2001+ 67 67 67 67/107 112 118 119 118 114 108/67 67 67
ULPWS 100 100 108 116 120 122 122 120 118 110 106 100
PAGE 52 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
PRODUCT: UNLEADED MOTOR FUEL
Method Test Specification
ASTM D3606 Benzene content, % vol 5.0 max.
Visual Colour Purple (1)
ASTM D130 Corrosion, copper strip, 3 hrs @50 deg C 1 max.
ASTM D1298 or D4052 Density @ 15 deg C kg/l Report
ASTM D86 Distillation: Class A*
10% evaporated, deg C 65 max
50% evaporated, deg C 77 min
50% evaporated, deg C 115 max
90% evaporated, deg C 183 max
E.P., deg C 228 max
Residue, % vol 2 max
IP 30 Doctor test (3) Negative
Calculated FVI 96 max
ASTM D381 Gum, existent, mg/l 40 max
ASTM D3237 Lead content, mg/l @ 15 deg C 13 max.
ASTM D2700 Octane number, motor 82 min.
ASTM D2699 Octane number, research 91 min.
ASTM D525 Oxidation stability, minutes 240 min.
ASTM D3231 Phosphorus content, mg/l @ 15 deg C 1.3 max
ASTM D323 Xxxx Vapor Pressure, kPa Report
ASTM D3120 Sulphur content, % mass 0.05 max.
ASTM D2276 Particulates, mg/l 3 max (4)
Visual Appearance Clear & Bright
Aromatics 20-48max, avg 45% max
Oxygenates 0.5% vol max
Olefins 20%max (ave 18%) by vol
Notes: Steam Cracked Naphtha Nil.
Purple is defined as: at least equivalent on visual inspection to a 6.0 mg/l
solution of Mortons Automate Purple B in Iso octane.
Alternatively, a maximum value for mercaptan sulphur of 20 mg/kg as S by ASTM
D3227 shall apply.
As outlined in AIP guidelines issued May 1994.
PAGE 53 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
ISSUE 18 - NOVEMBER 1999
Supersedes Issue 17 - October 1998
AVIATION FUEL QUALITY REQUIREMENTS FOR JOINTLY OPERATED SYSTEMS
(AFQRJOS)
This document has the agreement of: AGIP, BP, CALTEX, ELF, ESSO, KUWAIT
PETROLEUM INTERNATIONAL, MOBIL, SHELL, STATOIL, TEXACO AND TOTAL. The Aviation
Fuel Quality Requirements for Jointly Operated Systems (AFQRJOS) for Jet A-1
represent the most stringent requirements of the following two specifications:
(A) British Ministry of Defence Standard XXX XXXX 91-91/Issue 3
(DERD 2494) of 12 November 1999 for Turbine Fuel, Aviation
"Kerosene Type", Jet A-1, NATO Code F-35, Joint Service
Designation AVTUR.
(B) ASTM Standard Specification D 1655 - 99 for Aviation Turbine
Fuels "Jet A-1".
Jet fuel which meets the AFQRJOS is usually referred to as "Jet A-1 to Check
List", or "Check List Jet A-1" and, by definition, meets both of the above
specifications.
The IATA Guidance material which was previously included in the AFQRJOS, has now
been republished as a guide to international grades of jet fuel. This is a very
useful document covering fuel grades, test methods, additives etc. This
document, which still incorporates airline particulate and water limits in Part
3, is available from IATA.
THE AVIATION FUEL QUALITY REQUIREMENTS FOR JOINTLY OPERATED SYSTEMS FOR JET A-1
ARE DEFINED IN THE FOLLOWING TABLE WHICH SHOULD BE READ IN CONJUNCTION WITH THE
NOTES ON PAGE 3 OF THIS DOCUMENT. THE NOTES HIGHLIGHT SOME OF THE MAIN ISSUES
CONCERNING THE SPECIFICATION PARAMETERS. IT SHOULD BE STRESSED THAT CONFORMANCE
TO AFRQRJOS REQUIRES CONFORMANCE TO THE DETAIL OF BOTH SPECIFICATIONS LISTED
ABOVE, NOT JUST THE FOLLOWING TABLE.
PAGE 54 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
JOINT FUELLING SYSTEM CHECK LIST FOR JET A-1 ISSUE 18 - NOVEMBER 1999
Supersedes Issue 17 - October 1998
Embodying the most stringent requirements in the following specifications for
the grade shown: (a) British MoD XXX XXXX 91-91/Issue 3, dated 12 November 1999,
Jet A-1. (b) ASTM D 1655 -99, Jet A-1.
PROPERTY LIMITS TEST METHOD REMARKS
IP ASTM
-------- ------------------ ------------------- -----------------
APPEARANCE Clear, bright and
visually free
from solid matter
and undissolved
water at normal
ambient temperature
COMPOSITION See 1
Total Acidity, mg KOH/g max 0.015 354 D3242
Aromatics, % vol. max 25.0 156 D1319
Sulfur, Total, % mass max 0.30 107 D1266 or or D4294 or D1552
Sulfur, Mercaptan, % mass max 0.0030 342 D2622 or D5453
OR Doctor Test Negative D3227
Hydroprocessed components in Report (incl. 'nil' D4952 See 2
batch, % vol. or '100%) See 3
Severely hydroprocessed Report (incl. 'nil'
components, % vol or '100%)
PAGE 55 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
VOLATILITY
Distillation D86
Initial Boiling Point,(0)C Report
Fuel Recovered
10% vol. at(degree)C max 205
50% vol. at(degree)C Report
90% vol. at(degree)C Report
End Point,(degree)C max 300
Residue, % vol. max 1.5
Loss, % vol. max 1.5
Flash Point,(degree)C min 38 303 D3828 See 4
Density at 15(degree)C, 775 min to 840 max 160 or D1298 or
kg/m(3) 365 D4052
FLUIDITY
Freezing Point, (degree)C max - 47 D2386
or D5901 or D4305
Viscosity at -20(degree)C, cSt 8.0 71 D445 (see 5 ) or D5972
(mm(2)/max
COMBUSTION
Specific Energy, net, MJ/kg 42.8 81 D4529 or D3338 or D4809
min 25 57 D1322
Smoke Point, mm min
OR 19 57 D1322
Smoke Point, mm min 3.0 D1840
AND Naphthalenes, % vol. max
CORROSION
Corrosion, Copper,
classification max 1 154 D130
(2h at 100(degree)C)
PAGE 56 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
STABILITY
Thermal Stability (JFTOT)
Control Temp. 260(degree)C
25.0
Filter Pressure Differential, Less than 3, no
mm Hg max 'Peacock' or
'Abnormal' colour
Tube Deposit
Rating (Visual) max deposits 323 D3241
CONTAMINANTS
Existent Gum, mg/100mL max 7 131 D381
Water Reaction D1094
Interface Rating max 1b D3948 See 6
Microseparometer (MSEP),
rating 70
Fuel with Static Dissipator 85
Additive
min
OR
Fuel without Static
Dissipator Additive min
CONDUCTIVITY
Electrical Conductivity, pS/m 50 min to 450 max 274 D2624 See 7
LUBRICITY
BOCLE wear scar diameter, mm 0.85 D5001 See 8
xxx
XXXX 57 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
ADDITIVES (Names and approval
code from DEF- XXXX
91-91/3 should be quoted on
quality certs).
ANTIOXIDANT, mg/L
in Hydroprocessed & 17.0 min to 24.0 max See 9
synthetic Fuels 24.0
(Mandatory)
in Non-hydroprocessed Fuels 5.7 See 10
(Optional) max
METAL DEACTIVATOR, mg/L
(Optional) max
STATIC DISSIPATOR, mg/L See 11
First Doping Stadis 450 max
Re-doping 3.0
Antioxidants are mandatory in hydroprocessed fuels and Corrosion inhibitor/lubricity improver
synthetic fuels and MUST be added immediately after is not permitted unless agreed by all the participants in a joint
processing. system.
The types and concentrations of all additives used, Fuel System Icing Inhibitor is not permitted
including 'nil' additions, are to be shown on refinery unless agreed by all the participants in a joint
Certificates of Quality and other quality documents. system.
PAGE 58 OF 3
EXPORT MARKETING AND SHIPPING AGREEMENT
JOINT FUELLING SYSTEM CHECK LIST ISSUE 18 - NOVEMBER
JET A-1 Supersedes Issue 17 - October 1998
MAIN TABLE REMARKS
1. Attention is drawn to XXX XXXX 91-91 Issue 3 which approves the Semi-
Synthetic Jet Fuel (SSJF) produced by SASOL Oil under approval reference
FS (Air)ssjet/1. For SSJF additional testing requirements apply and
reference should be made to Issue 3 of XXX XXXX 91-91. This particular
semi synthetic fuel meets the requirements of this Issue of Check List.
2. The Doctor Test is an alternative requirement to the Sulphur Mercaptan
Content. In the event of conflict between the Sulphur Mercaptan and Doctor
Test results, the Sulphur Mercaptan result shall prevail.
3. The need to report the % vol. of hydroprocessed fuel (including "nil" or
"100%" as appropriate) on refinery Certificates of Quality for Jet A-1
to Check List derives from Annexes A.1.1 to A.1.3 in XXX XXXX 91-91/3
about antioxidant additives (additive dose rate cannot be interpreted
unless the proportion of hydroprocessed fuel is known). Recipients of
Jet A-1 cannot check or demonstrate that fuel complies with Check List
if this information is omitted from refinery Certificates of Quality.
Note that "hydroprocessed" includes hydrotreated, hydrofined and
hydrocracked. Issue 3 of XXX XXXX is introducing an additional
requirement to report the volume % of severely hydroprocessed components
as part of the lubricity requirement coming into force 1 December 2000.
Note also that severely hydroprocessed components are defined as petroleum
derived hydrocarbons that have been subjected to hydrogen partial pressure
of greater than 7000kPa (70bar or 1015psi) during manufacture.
4. Subject to a minimum of 40(Degree)C, results obtained by method ASTM D56
(Tag) may be accepted.
5. See footnotes in individual specifications for viscosity limitations on
the use of ASTM D4305.
6. MSEP is required only in XXX XXXX 91-91/3. Note 6 of that specification
states "No precision data are available for fuels containing SDA; if MSEP
testing is carried out during downstream distribution no specification
limits apply and the results are not to be used as the sole reason for
rejection of a fuel".
7. Conductivity limits are mandatory for product to meet this specification
but see note 7 in XXX XXXX 91-91/Issue 3 for more information.
8. This requirement originates in XXX XXXX 91-91/3 and comes into effect 1
December 2000. The requirement to determine lubricity applies only to
fuels containing more than 95% hydroprocessed material where at least 20%
of this is severely hydroprocessed (see note 3 above) and for all fuels
containing synthetic components. The limit applies only at point of
manufacture.
For important advisory information on the lubricity of aviation turbine
fuels see Annex B of XXX XXXX 91-91/3.
9. Approved antioxidant additives are listed in Annex A.1.4 of XXX XXXX
91-91/3, together with the appropriate RDE/A/- Qualification Reference for
quoting on refinery Certificates of Quality. Note that the list has been
shortened.
10. The approved Metal Deactivator Additive (MDA) appears in Annex A.2.2 of
XXX XXXX 91-91/3. See also Annex A.2.1 about the need to report thermal
stability before and after using when contamination of Jet A-1 by any of
the trace metals listed in this Annex is unproven. Note also in A.2.3 that
maximum doping at point of manufacture is limited to 2mg/L.
PAGE 59
EXPORT MARKETING AND SHIPPING AGREEMENT
11. Re-doping limits for Static Dissipator additive are:
Cumulative concentration Stadis 450 (RDE/A/621)5.0 mg/l Original dosage
not known: Additional concentration Stadis 450 (RDE/A/621) 2.0 mg/l
NOTE: FOR SALES OF DPK THE JET CHECKLIST SPECIFICATION WILL APPLY WITH THE
FOLLOWING EXCEPTIONS:
SMOKE POINT: 20MM MAX
SULPHUR: 0.05%XXX
XXXX VALUE: 20 MAX.
PAGE 60
EXPORT MARKETING AND SHIPPING AGREEMENT
PRODUCT: AUTOMOTIVE DIESEL FUEL
Method Test Specification
------------ --------------------------------- -------------- ------
ASTM D674 Acid number, strong, mg KOH/g Nil
ASTM D674 Acid number, total, mg KOH/g 0.50 max.
ASTM D482 Ash % mass 0.01 max.
ASTM D524 Carbon residue, Ramsbottom on 10% 0.20 xxx
xxxxxxx, % mass
ASTM 4737 Cetane index, calculated 45min.
ASTM D2500 Cloud point, deg C Table
Winter
Summer
ASTM D1500 Colour, ASTM 2 max.
ASTM D130 Copper corrosion, 3 hrs @ 100 deg C 1 max.
ASTM 4052 Density @ 15 deg C, kg/l 0.820 - 0.870
ASTM D86 Distillation, 90% recovered, deg C 357 max.
ASTM D93 Flash point, PMCC, deg C 64 min.
ASTM D2274 Oxidation stability, mg/l 25 max.
ASTM D2276 Particulates, mg/l 3 max.
ASTM D2622 Sulphur, total, % mass 0.5 max.
ASTM D1796 Water and sediment, % vol 0.05 max.
ASTM D445 - IP 71 Viscosity kinematic, mm2 /sec, @ 40 1.9 to 5.0
deg C
Notes: Appearance clear and bright rating 1, D4176, Lubricity HFRR 460
Microns max. IP450, Conductivity p/s/m 100 to 450 D 2624
PAGE 61
EXPORT MARKETING AND SHIPPING AGREEMENT
Table 3 : Islands Product Codes, Destinations and Cloud Point Limits
IRIS Code Destination Season Cloud Point Season Definition
(maximum)
AGOIL Shell Pacific Islands All Year 15(Degree)C
AGOLA Lae, Papua New Guinea All Year 10(Degree)C
AGONC New Caledonia, Summer 10(Degree)C 16 Sep - 15 Mar
Winter 4(Degree)C 16 Mar - 15 Sep
AGOTA Tahiti All Year 10(Degree)C
PAGE 62
EXPORT MARKETING AND SHIPPING AGREEMENT
PRODUCT: AUSTRALIAN AUTOMOTIVE DIESEL FUEL
METHOD TEST SPECIFICATION
---------- ---------------------------------- -------------
ASTM D674 Acid number, strong, mg KOH/g Nil
ASTM D674 Acid number, total, mg KOH/g 0.50 max.
ASTM D482 Ash % mass 0.01 max.
ASTM D4530 Carbon residue, Ramsbottom on 10%
bottoms, % mass 0.16 max
ASTM 4737 Cetane index, calculated 46 min.
ASTM D2500 Cloud point, deg C See table
Winter
Summer
ASTM D1500 Colour, ASTM 2 max.
ASTM D130 Copper corrosion, 3 hrs @ 100 deg C 1 max.
ASTM 4052 Density @ 15 deg C, kg/l 0.820 - 0.860
ASTM D86 Distillation, 90% recovered, deg C 357 max.
ASTM D93 Flash point, PMCC, deg C 64 min.
ASTM D2274 Oxidation stability, mg/l 25 max.
ASTM D2276 Particulates, mg/l 3 max.
ASTM D2622 Sulphur, total, % mass 0.05 max.
ASTM D1796 Water and sediment, % vol 0.05 max.
Viscosity kinematic, mm2 /sec, @ 40
ASTM D445 - IP 71 deg C 1.9 to 4.5
Notes: Apearance clear and bright rating 1, D4176, Distillation 10% recovered
Report, 50% recover Report, Lubricity HFRR 460 Microns max. IP450,
Filterability 1.2 max D2068, conductivity psm 100 to 450 D 2624
PAGE 63
EXPORT MARKETING AND SHIPPING AGREEMENT
24.10 DIESEL CLOUD POINT TABLES
24.11 TABLE 1 : SUPPLY POINTS
IRIS AIP SUPPLY POINTS
----- --- -------------------------------------------------------------
LSDAC AUC Adelaide, (Darwin for Xxxxx Springs and Yulara)
LSDAN AUN Broome, Wyndham, Darwin, Gove, Groote Eylandt, Weipa, Karumba
LSDNS NSW Newcastle, Sydney
AGOQC QC Gladstone, Mackay
AGOQN QFNE Cairns
AGOQS QS Brisbane, Bundaberg
AGOQT QCN Townsville
LSDSA SAS Adelaide, Port Lincoln, Port Pirie
LSDTS TAS Devonport, Hobart
LSDVC VIC Melbourne, Geelong
LSDVW VIC Geelong winter
AGOWC WAC Dampier, Port Hedland
AGOWS WAS Geraldton, Perth, Fremantle, Albany, Esperance
PAGE 64
EXPORT MARKETING AND SHIPPING AGREEMENT
Table 2 : Cloud Point Limits
IRIS Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
---- --- --- --- --- --- --- --- --- --- --- --- ---
LSDAC 15 10 5 2 1 1 1 4 7 11 14 15
LSDAN 15 15 12 9 8 8 8 10 14 15 15 15
LSDNS 9 5 2 0 -1 -1 -1 0 2 5 7 9
AGOQC 15 12 7 4 2 2 2 4 7 12 15 15
AGOQN 15 15 12 7 7 7 7 9 12 15 15 15
AGOQS 00 0 0 0 -0 -0 -0 0 2 7 9 13
AGOQT 15 15 11 7 6 6 6 8 11 15 15 15
LSDSA 8 6 4 2 1 1 1 2 4 5 6 9
LSDTS 3 0 -0 -0 -0 -0 -0 -0 -0 0 2 3
LSDVC 9 6 3 1 0 0 0 1 2 4 6 8
LSDVW 9 6 0 -0 -0 -0 -0 1 2 4 6 8
AGOWC 15 15 9 6 5 5 5 7 11 15 15 15
AGOWS 6 6 6/0 0 0 0 0 0 0/6 6 6 6
PAGE 65
EXPORT MARKETING AND SHIPPING AGREEMENT
MARINE DIESEL OIL
Method Test DMC Specification
----------------- -------------------------- -------------------
ASTM D1298 or Density @ 15 deg C kg/l 0.920 max.
D4052
ASTM D445 Kinematic viscosity at 40
deg C cSt 14.0 max.
ASTM D93 Flash point deg C 64 min.
ASTM D97 Xxxx xxxxx xxx X 00 xxx. (XXX-00)
ASTM D4294 Sulphur content, % mass 2.0 max.
ASTM X000 Xxxxxxxxx % mass 2.5 max.
ASTM D482 Ash content % mass 0.05 max.
DIN 51 790 Vanadium PPM 100 max.
ASTM D5708 95A SI + AL PPM 25 max.
ASTM D4176 / D473 Water & sediment % 0.3 max
Notes:
Predicted specifications calculated using Kutubu as feed
* Pour point suppressant used to make specification
* Refinery will target 16 max if required
** Also makes specification by addition of suppressant
*** Product will be processed to meet specification if required
PAGE 66
EXPORT MARKETING AND SHIPPING AGREEMENT
PAGE 67
EXPORT MARKETING AND SHIPPING AGREEMENT
GRADE: LSWR
TYPE STRAIGHT RUN METHOD
------------------------ ------------ ------
IBP: 280deg c min D86
Flash Point: 65 deg C min D93
Density: 0.93 max D1298
Sulphur: 0.2% max D1522/4294
Water: 0.5% max D95
Sediment: 0.10% max D473
Ash 0.05% max D482
Xxxxxxxxx Carbon Residue 4.5% max X000
Xxxx Xxxxx 00xxxX max.
PAGE 68
EXPORT MARKETING AND SHIPPING AGREEMENT
SCHEDULE 3
CONDITIONS OF PURCHASE BY THE MARKETER
DEFINITIONS
In addition to the definitions in Clause 1 of the Agreement, the following
definitions apply in this Schedule unless the context otherwise requires:
ACCEPTED QUANTITY means the quantity (plus or minus 5% operational tolerance) of
Product agreed upon between Marketer and Exporter pursuant to Condition 8.2
hereto;
AGREED ARRIVAL DATE means the 3-day period entirely within the Date Range,
ALDR-3, in which the Marketer shall present its Tanker for loading at the
Moorings for a lifting;
API means American Petroleum Institute;
ASTM means American Society for Testing and Materials;
ASTM STANDARDS means the standards, practices, tests, methods, classifications,
guides, terminology, measurement tables, procedures and specifications (in so
far as they do not conflict with the Specifications) published by the American
Society for Testing and Materials (xxxx://xxx.xxxx.xxx/), as revised from time
to time.
BARREL ( bbl) means a volume of 42 US standard gallons at 60(degree)F;
XXXX OF LADING DATE has the meaning given in Condition 5.1 hereto;
XXXX OF LADING means a clean, full set of bills of lading in the form requested
by Marketer issued by Exporter for the Product loaded into Marketer's Tankers as
proof of delivery of the Product;
CONDITIONS OF PURCHASE means these terms and conditions for the sale and
purchase of Product, and shall form part of the Agreement;
DATE RANGE has the meaning the period during which a lifting of Product is
intended to occur;
ETA means estimated time of arrival;
IP means Institute of Petroleum;
LIBOR means the Interbank Offering Rate for one month as quoted by Royal Bank of
Scotland PLC, in effect at or about 10:00 am New York time on the due date, or
if not quoted on the due date, the last date it is quoted immediately prior to
the due date of payment for the amount and period overdue;
MOPS means Mean of Xxxxx'x Singapore.
MOORINGS means the facilities for mooring Tankers at the Port of Loading.
PAGE 69
EXPORT MARKETING AND SHIPPING AGREEMENT
NOMINATED QUANTITY means the quantity of Product nominated by Marketer for
lifting pursuant to Condition 8.2(a) hereto;
NOTICE OF READINESS means the notice given to Exporter's Representative by the
master of the Tanker that the Tanker has arrived at the anchorage designated by
Exporter and is ready in all respects to enter the Moorings and that the Tanker
has received all clearances required by applicable laws or regulations
including, without limitation on the foregoing, clearances from Customs and
Health Authorities;
OTHER PARTY means an Entity other than Marketer and Exporter;
OWNING PARTY has the meaning given in Clause 22 of the Agreement;
PLATTS means the Price Reporting arm of Standard and Poor's, New York, United
States of America.
1. GENERAL CONDITIONS APPLYING
In relation to a supply of Product made, that Product will be supplied and
delivered by the Exporter and purchased and taken by the Marketer (and for the
purposes of construing any inconsistent terms or conditions relating to that
supply, to the extent of that inconsistency the following order of priority will
apply):
(a) where the parties specifically intend to derogate from terms and
conditions determined under this Agreement, as may be agreed between
the parties in writing (including any agreed terms made under a
delivery instruction or a purchase order;
(b) in accordance with the conditions set out in this Schedule; and
(c) in accordance with Incoterms 2000.
2. CARGO QUANTITY
For the purposes of this Agreement the total quantity of such Export Products
shall not exceed 90,000 metric tonnes in any rolling three-month period.
Products are to be delivered by Exporter to Marketer in cargo quantities as
follows:
|-| LPG Mix - 1,000 to 1,400 metric tonne shipments.
|-| Butane - 1,000 to 1,400 metric tonne shipments.
|-| ULP91RON - 2,000 to 4,000 metric tonne shipments.
|-| JET A1 - 1,000 to 8,000 metric tonne shipments.
|-| 0.05% Sulphur Gasoil - 4,000 to 30,000 metric tonne shipments.
|-| MDO - 4,000 to 10,000 metric tonne shipments.
PAGE 70
EXPORT MARKETING AND SHIPPING AGREEMENT
|-| LSWR - 4,000 to 12,000 metric tonne shipments.
Exporter will endeavour to accommodate Marketer's requests to co-load
above quantities with a second and or a third Product so that Shell can
co-load and ship as an economical cargo quantity. Exporter shall also
endeavour to accommodate cargo nominations for quantities outside the
above ranges.
3. DELIVERY TITLE RISK
3.1 DELIVERY
Exporter shall supply and Marketer shall receive each lifting of Product FOB the
Tanker at the Delivery Point.
3.2 TITLE
All title risk and property in respect of each shipment of Product hereunder
shall pass from Exporter to Marketer at the Delivery Point.
3.3 WARRANTY OF TITLE
Exporter hereby irrevocably undertakes and warrants that Exporter has at all
times, including but not limited to the time of delivery of the Product and
cargo (and the passing of their risk and property) in accordance with the
Agreement herein, full, unencumbered and indefeasible title to the Product and
cargo delivered to Marketer under the Agreement and further has the full right
and authority to transfer title to such Product and cargo and to effect delivery
of same to Marketer.
4. PRODUCT PRICE
4.1 Marketer shall pay to Exporter for each barrel of Product delivered FOB
hereunder as follows:
i. Sales under Term Contracts at the Contract Price approved by Exporter
pursuant to Clause 12.
ii. Spot Purchase of Excess Product (including purchases for Shell Group's own
system) at the Nominated Price; or
iii. at the Floor Price for that Product (excluding 0.05%S Gasoil) or the Lower
Floor Price for Gasoil 0.05%S if no nomination was made; or
iv. at the actual realised FOB Effective Netback Price for a prompt cargo as
specified in Clause 15(j);
Less the appropriate commission payable by Exporter to Marketer under Clause 16
of the Agreement.
PAGE 71
EXPORT MARKETING AND SHIPPING AGREEMENT
4.2 PERIOD FOR PRICING QUOTATIONS
The relevant pricing period for Mean of Xxxxx'x Singapore (MOPS) quotations for
the calculation of price payable by Marketer shall be as follows:
a. For purchases at the Floor Price or Lower Floor Price: the simple
average of [deleted for confidentiality] consecutive quotes prior to
Xxxx of Lading Date, the quote prevailing on the Xxxx of Lading Date and
[deleted for confidentiality] consecutive quotes immediately after the
Xxxx of Lading Date where Product is purchased by Marketer at Floor
Price or Lower Floor Price. In the event that there is no quotation
effective for the Xxxx of Lading Date, then the applicable quotations
shall be [deleted for confidentiality] days immediately proceeding and
[deleted for confidentiality] days immediately following the Xxxx of
Lading Date.
b. For Term Contracts: [deleted for confidentiality].
c. For purchases of Excess Product [deleted for confidentiality]t.
4.3 CESSATION OR INTERRUPTION OF PRICE QUOTATIONS
Marketer shall pay to Exporter for each barrel of Product delivered hereunder at
the Product Price stated in the Agreement, provided that if the relevant pricing
quotations are interrupted or cease to be published then Marketer and Exporter
shall meet and use their best endeavours to select an appropriate alternate
price quotation to be used to determine the Product Price and if the Parties
fail to agree upon an alternate price quotation, the Product Price shall be
calculated in accordance with the mechanism set out in Condition 6.2(b) hereto.
4.4 PRICE ROUNDING
In determining the Product Price, fractions of a dollar are to be rounded to the
nearest 3 decimal places.
5 XXXX OF LADING
5.1 XXXX OF LADING DATE
The Xxxx of Lading Date shall be the day on which the particular lifting is
completed and Exporter's loading hose is disconnected.
5.2 LOST XXXX OF LADING
If Marketer does not receive a full set of clean, original Bills of Lading in
the form requested by Marketer in its documentary instructions, or they contain
any inaccuracies, or if they are not received at all, whether as a result of an
act or omission of Exporter, Exporter's Representative or the terminal operator,
Exporter shall:
a. re-affirm the warranties contained in Condition 3.3; and
PAGE 72
EXPORT MARKETING AND SHIPPING AGREEMENT
b. irrevocably and unconditionally indemnify Marketer and hold Marketer
harmless against any claim made against Marketer by any person as a result
of breach by Exporter of any of the warranties set out in Condition 3.3,
and all loss, costs (including, but not limited to legal costs), damages,
and expenses which Marketer may suffer, incur or be put to as a result of
Exporter's failure to deliver the Xxxx of Lading in accordance with the
Agreement. This Indemnification shall be in the form of a Letter of
Indemnity as shown in Appendix "A".
The indemnity contained in Condition 5.2(b) shall terminate upon delivery to and
acceptance by Marketer, of the full set of clean original Bills of Lading or a
full clean replacement set of Bills of Lading.
6 PAYMENT TERMS
6.1 INVOICE FOR LIFTINGS
Exporter or Exporter's Representative shall provide to Marketer, the Exporter's
invoice and such documents including but not limited to the full set of clean
original Bills of Lading, certificate of origin, certificate of quality and
quantity as are reasonably requested by Marketer for each cargo of Product
delivered hereunder.
Each invoice shall show:
i. the total quantity of Product lifted by Marketer at such lifting;
ii. the total sum claimed to be due and owing to Exporter;
iii. bank and account details for Exporter.
6.2 TIME AND METHOD OF PAYMENT
a. Subject to other provisions of this Condition 6.2, Marketer shall make
payment in United States currency by telegraphic transfer to the
Exporter's bank and to the account as directed in Exporter's invoice free
of all charges and without set off, discount, deduction or counter-claim
not later than 30 calendar days after the Xxxx of Lading Date where the
Xxxx of Lading Date shall count as day zero.
b. In the event that, at any time from the commencement of this Agreement,
there is a material change to the methodology of calculating components in
the price formula by the reporting services in Condition 4, for example
the premia reported by Platts, or if any of the reporting service
assessments used as components in the price formula are discontinued, the
Parties shall agree a suitable replacement marker. Should the Parties fail
to agree on a replacement, an independent expert shall be mutually agreed
upon to identify a replacement.
c. Subject to any direction to the contrary specified in an invoice, payments
that come due on a Sunday or Monday bank holiday in New York shall be made
on the following banking day.
PAGE 73
EXPORT MARKETING AND SHIPPING AGREEMENT
Payments that come due on a Saturday or any other bank holiday, except one
falling on a Monday, in New York shall be made on the preceding banking
day.
d. All bank charges incurred at Exporter's bank shall be for Exporter's
account. All bank charges incurred at Marketer's bank shall be for
Marketer's account.
Exporter shall make reasonable endeavours to ensure that all documents required
for payment are sent to Marketer no later than 3 working days prior to the
payment due date failing which payment shall be made 3 working days after
receipt of such requisite documents by Marketer.
6.3 INTEREST REIMBURSEMENT AND INTEREST ON LATE PAYMENTS
a. For any shipment above 20,000 metric tonnes, Exporter may, upon giving
written notice to Marketer and subject to Marketer's written consent,
which shall not be unreasonably withheld, to be given prior to that
shipment's Xxxx of Lading Date, request for payment to be made earlier
than 30 days after the Xxxx of Lading Date as specified in Condition
6.2(a) on a revised payment date, but no earlier than 5 days after the
Xxxx of Lading Date. Exporter shall pay early payment interest to Marketer
for the period from the revised payment date until 30 days after the Xxxx
of Lading Date at LIBOR plus [deleted for confidentiality] per annum
calculated on a daily basis.
b. If payment is not made by Marketer within the times as required herein,
then interest shall be paid on the overdue amount from the due date until
the date of payment at LIBOR plus [deleted for confidentiality] per annum
calculated on a daily basis.
6.4 SET-OFF POLICY
Whenever under this Agreement any sum of money payable by either party remains
unpaid for a period of 30 or more days after receipt of written request for
payment, the unpaid sum may be deducted from any sum due from the debtor Party
to the other Party, provided the amount Set-Off is not in dispute (i.e. the
Party entitled to receive the unpaid amount) under this Agreement. Exercise by
either Party of its rights under this Clause 6.4 shall be without prejudice to
any other rights or remedies available to such Party under this Agreement, or
otherwise howsoever, at law or in equity.
7 LIFTING CRITERIA
7.1 ESSENTIAL CRITERIA
a. Marketer shall arrange the liftings based on information provided by
Offtake Coordinator pursuant to Condition 8.1. For this purpose Offtake
Coordinator Marketer, and Exporter will mutually endeavour to ensure
liftings are scheduled to ensure Product in storage at the Product Storage
Tank does not reach tank tops or refinery production is not reduced to
avoid potential tank tops.
PAGE 74
EXPORT MARKETING AND SHIPPING AGREEMENT
b. Marketer shall use all reasonable efforts to ensure that during any month,
liftings shall occur no later than 3 days prior to forecast tank tops.
c. The above allowances may be varied as advised by Offtake Coordinator from
time to time.
8 SCHEDULING, TANKER NOMINATION AND LOADING
8.1 PRODUCTION FORECASTS
Further to the responsibilities of Offtake Coordinator (pursuant to Clause 10 of
the Agreement), the Offtake Coordinator will provide the information specified
in Clause 10, which shall provide a framework for Nominations.
8.2 NOMINATION PROCEDURES - DATE RANGES AND QUANTITIES
Marketer will nominate for Product liftings in accordance with Clause 15 of this
Agreement.
a. By the 15th day of Month x Offtake Coordinator will advise an indicative
7-day window for liftings nominated and accepted into a Firm Program for
the Delivery Period.
b. On or before the 43rd day prior to the middle day of the indicative 7 day
window for liftings in the Delivery Period, Exporter will user its best
endeavours based on Offtake Coordinator's forecast production to provide a
7 day date range for the next lifting.
c. Pursuant to paragraph b above, the 7-day window shall be referred to as
the accepted 7-day loading date range (ALDR-7), and quantities nominated
by Marketer and agreed to by Exporter shall become `Accepted Quantity'.
d. No later than 33 days prior to the first day of the ALDR-7, Exporter must
narrow this range to a five-day loading window which (unless parties
mutually agree otherwise) shall fall fully within the ALDR-7. Marketer may
also renominate the quantity to be lifted in accordance with limits set in
Condition 2 above, provided the resulting forward Offtake program remains
feasible for the Exporter to perform, or else provided such quantity
changes are accompanied by adjustments to the timing of subsequent ALDRs
as necessary. Any such adjustments shall be mutually agreed and confirmed
in writing. Such 5 day Date Range shall be referred to as the accepted 5
day loading Date Range (ALDR-5).
e. No later than 23 days prior to the first day of the ALDR-5, Exporter shall
further narrow this range to a three-day loading window, which shall be
referred to as the final accepted loading Date Range, "stem", or ALDR-3.
The ALDR-3 shall fall fully within the previously advised ALDR-5 range
unless the Parties mutually agree otherwise.
Exporter is aware that the above notice periods are required to permit Marketer
to plan advance sales and to commit to chartering acceptable Offtake Tankers in
a timely and responsible manner.
PAGE 75
EXPORT MARKETING AND SHIPPING AGREEMENT
In the event that Marketer is obliged to charter a suitable Tanker earlier than
23 days prior to the ALDR-3 notification by Exporter, due to limited supply of
quality Tankers, then the ALDR-3 shall be deemed to be the first three days of
the ALDR-5 unless otherwise agreed by the Parties. The Marketer shall notify the
Exporter in such events.
8.3 NOMINATION AND VERIFICATION OF TANKER
a. No later than 15 days before the first day of the Date Range (ALDR-3),
Marketer shall nominate to Exporter or Exporter's Representative, the
Tanker to be used by Marketer.
b. Exporter shall advise Marketer within 24 hours of such nomination of
Exporter's acceptance or rejection of Marketer's Tanker nomination.
c. Marketer shall ensure that all Tankers nominated, and each Tanker arriving
at the Moorings for loading, shall comply with the specifications set out
in the Port Regulations and appropriate marine facility/jetty guidelines.
d. Without limitation to Marketer's obligations pursuant to Condition 8.3(c),
Marketer shall provide to Exporter or Exporter's Representative
appropriate documentation to enable Exporter or Exporter's Representative
to verify compliance with the Port Regulations and appropriate marine
facility/jetty guidelines at the time of nomination of the Tanker,
provided that if Marketer is not able to supply such documentation,
Marketer shall at the time of confirmation provide a notice of compliance
to Exporter or Exporter's Representative, in a form acceptable to
Exporter, which acceptance shall not be unreasonably withheld.
8.4 TANKER SUBSTITUTION
No later than 3 working days prior to the first day of the relevant Date Range
(ALDR-3) Marketer may nominate a substitute Tanker which meets all the
requirements of the Port Regulations and appropriate marine facility/jetty
guidelines, and Exporter shall advise of acceptance or rejection of that Tanker
within 24 hours of receiving such nomination from Marketer.
8.5 TANKER ARRIVAL
a. Marketer shall use reasonable endeavours to present its Tanker for loading
at the Moorings within the ALDR-3.
b. If, due to an event of Force Majeure, the Tanker is not presented within
ALDR-3 ready to receive the Nominated Quantity of Product or is so
presented but ceases to be able to lift the Nominated Quantity then the
Parties shall negotiate in good faith to try to agree on alternative
arrangements.
8.6 NON-COMPLIANCE WITH TANKER SPECIFICATIONS
Notwithstanding Condition 8.3, Exporter shall not be obliged to load any Tanker
that does not comply with the specifications of the Port Regulations. In
addition, and without liability, Marketer
PAGE 76
EXPORT MARKETING AND SHIPPING AGREEMENT
shall provide access and other assistance to enable Exporter to inspect the
Tanker and any relevant documentation upon its arrival at the Moorings to ensure
the Tanker complies with any Port Regulations and appropriate marine
facility/jetty guidelines which, the intention being, shall be no more onerous
than other regulations in effect at comparable Australian ports.
9 BERTH AND LOADING
9.1 SAFE BERTH
Exporter shall provide, or cause to be provided to Marketer a safe berth at the
Moorings as described in the Port Regulations.
9.2 ALLOWED LAY-TIME.
The Exporter shall be allowed thirty-six (36) hours, Sundays and public holidays
included, as lay-time within which to load the Accepted Quantity for each
lifting hereunder:
i. for Product parcels in excess of 24,500 metric tons.
ii. for Product parcels co-loaded with other products at the InterOil
Facilities, the allowed lay-time will apply for the combined nominated
quantity subject to the Marketer's Tanker being able to co-load with out
delay; and
iii. for Product parcels smaller than 24,500 mt loaded stand-alone.
iv. For Product parcels smaller than 24,500 mt loaded on an MR size Tanker,
the allowed lay-time will equal 36 hours multiplied by the ratio of the
actual cargo loaded and 24,500 mt, but in any event will not be less than
24 hours.
9.3 COMMENCEMENT OF LAY-TIME OR DEMURRAGE.
i. If the Tanker arrives during ADLR-3, lay-time or time on demurrage shall
commence upon arrival in berth or when six (6) hours has expired following
tendering of a Notice of Readiness, whichever occurs first. Arrival in
berth shall mean the Tanker being all fast alongside the berth.
ii. If the Tanker arrives before the first day of the ADLR-3 and tenders NOR
before such date, Lay-time or time on demurrage shall not commence until
the Tanker is all fast in the berth or at 0600 hours local time on the
first day of the ADLR-3 whichever is earlier.
iii. If the Tanker arrives after the end of the ADLR-3, Lay-time shall commence
upon arrival in berth, that is, all fast.
Lay-time or, if the Tanker is on demurrage time on demurrage, shall continue
until all cargo hoses have been disconnected upon final termination of loading.
PAGE 77
EXPORT MARKETING AND SHIPPING AGREEMENT
9.4 LAY-TIME AND DEMURRAGE EXCLUSIONS.
Any delay or time consumed due to any of the following shall not count as
lay-time or, if the Tanker is on demurrage, as time on demurrage.
1. On an inward passage moving from anchorage or other waiting place,
including but not limited to awaiting daylight, tide, tugs or pilot from
the time Tanker weighs anchor until Tanker is all fast in berth.
2. By reason of local law regulations or intervention by local authorities
including awaiting customs and immigration clearance and pratique, or due
to Tanker owner or Tanker Operator or local authority prohibiting loading
at night.
3. In any deballasting or handling of slops, cleaning of tanks, pumps,
pipelines, bunkering, or for any other purposes of the vessel only unless
same is carried out concurrent with loading of Product such that no loss
of time is involved.
4. Due to overflow, breakdown, inefficiency, repairs or other conditions
whatsoever attributable to the vessel, such that the Tanker is unable to
receive the shipment at a rate consistent with being able to accept 150psi
pressure at the ship's manifold over the total period taken for the
loading.
5. Due to Tanker being in breach of Port Regulations.
6. Due to vessel fire or explosion, labour dispute, strike go slow, work to
rule, lockout, stoppage or restraint of labour involving the master,
officers or crew of the Tanker.
7. Due to awaiting cargo documentation instructions from the Marketer.
8. Due to delay in or suspension of loading directed by the Exporter due to
an unsafe condition of the Tanker. (The Marketer will exercise due
diligence to arrange re-berthing and recommencement of loading promptly
once the Tanker's deficiency has been corrected and the time period of
exclusion will be that period between the time of cargo delivery hose
disconnection and cargo hose reconnection).
9. Due to any other delay sought or caused solely by the Marketer, Tanker
owner or Tanker operator for Tanker purpose.
10. Due to escape or discharge of Oil, containment or clean-up of an Oil Spill
or grave and imminent danger of the same which creates or would create a
serious pollution damage on or from the Tanker.
PAGE 78
EXPORT MARKETING AND SHIPPING AGREEMENT
9.5 LAY-TIME AND DEMURRAGE INCLUSIONS
Time spent or lost due to any of the following shall count as lay-time, or if
the Tanker is on demurrage as time on demurrage:
1. Any delay to the Tanker after the expiration of six (6) hours from NOR
before arrival in berth or any delay to the Tanker after arrival in berth
due to fire, explosion, strike, lock-out or stoppage of labour, breakdown
of machinery or equipment in or about the InterOil Facilities or
unavailability of cargo or unavailability of berth unless Force Majeure is
declared by the Exporter in accordance with Clause 18 of this Agreement.
2. Due to any other delay solely for the Exporter or InterOil Facility's
purposes.
9.6 LAY-TIME AND DEMURRAGE INCLUSIONS AT HALF RATE.
Any delay lost due to weather or an event of Force-Majeure shall count as
lay-time or time on demurrage and if such demurrage is incurred, demurrage shall
be paid at half the rate specified in this Agreement.
10 DEMURRAGE
a. The Exporter shall be liable for demurrage costs for time on demurrage to
the extent that the time period between commencement and termination of
lay-time, or if the vessel is on demurrage, time on demurrage, less any
exclusions defined in Condition 9.3 exceeds the allowed lay-time specified
in Condition 9.2
b. Exporter shall pay to Marketer demurrage, as determined in (a) above at
the rate per day (or pro rata for part of a day) equal to the actual
demurrage rate payable by Marketer to the Tanker owner pursuant to the
charter party between Marketer and the Tanker owner or if the Tanker is
time-chartered, a rate that was agreed between Exporter or Exporter's
Representative and Marketer at the time the Tanker was nominated or
accepted for the lifting.
c. The demurrage claim determined in accordance with this Condition 10, shall
be agreed no later than three months from the date documents supporting
such claim are sent to Exporter. Payment for demurrage claims must be paid
no later than one month from the date of such agreement.
In the event of a delay beyond either of these deadlines (which aggregate
period shall not under any circumstances exceed 4 months unless otherwise
agreed in writing,) late payment interest shall be payable (at the rate
defined in the payment clause) on the full demurrage amount agreed or if
not so agreed, then claimed by Marketer, from the deadline and paid with
final settlement.
PAGE 79
EXPORT MARKETING AND SHIPPING AGREEMENT
Marketer shall submit to Exporter within 90 days of the Xxxx of Lading
Date, the Marketer's demurrage claim together with a copy of the charter
party.
d. Other than for demurrage and for deadfreight as specified in this
Condition 10, Exporter shall not be liable for any other losses or
damages, direct or indirect, which Marketer may suffer as a result of the
Tanker not being loaded within the Laytime.
11 DEADFREIGHT
In the event the Exporter is unable to load 95% of the Accepted Quantity in
ADLR-3 without incurring demurrage due to shortage of available quantity, the
Exporter shall compensate Marketer for any demurrage waiting for available cargo
as per above. Alternatively, subject to Marketer's and Exporter's agreement,
Exporter may short-load Tanker and pay associated deadfreight charges to
Marketer. Marketer and Exporter agree to act in good faith to identify and
choose the more cost effective means (between demurrage and deadfreight) to
mitigate costs to Exporter associated with cargo shortage. Notwithstanding such
identification of the more cost effective means, it is recognised that Marketer
may not intentionally be able to delay Tanker beyond ADLR-3 to await loading of
95% of Accepted Quantity. Should this be the case, mutual agreement between
Marketer and Exporter is not required as contemplated above and Marketer can
order Tanker to sail with deadfreight after Laytime has been fully spent with
such actual deadfreight cost being reimbursed by Exporter. Exporter is not
liable to pay deadfreight if due to Force Majeure.
12 ACCEPTANCE OF PORT REGULATIONS
The Exporter shall provide Marketer with a full and complete set of the Port
Regulations and Exporter's marine facility operational requirements once these
have been finalised, for Marketer's review and acceptance.
Marketer shall cause copies of the same to be provided to the owners and the
Master of the Tanker nominated and accepted under Condition 8.3 or the
Regulations or, if applicable, substituted pursuant to Condition 8.4. Marketer
shall use all reasonable endeavours to ensure that the Master and the owners of
the Tanker comply in all respects with the requirements set out in the Port
Regulations and Exporter's marine facility guidelines and operational
requirements; such regulations and requirements not to be more onerous than
those applicable to loading from oil refineries in Australia.
PAGE 80
EXPORT MARKETING AND SHIPPING AGREEMENT
13 MARKETER'S TANKER ARRIVES LATE AND CAUSES POTENTIAL TANK TOPS OR TANK
TOPS
a. Where Marketer's Tanker is or will be late for the Agreed Loading Date
Range (ALDR-3) and in Exporter's reasonable opinion this is likely to
directly cause production at the InterOil Refinery to be curtailed, then
Exporter may request Marketer to use an alternative acceptable Tanker
capable of arriving within Agreed Arrival Date to avoid reaching terminal
tank-tops.
b. If Marketer's Tanker has not arrived prior to three days before tank tops,
and Exporter can find an alternative buyer with a suitable tanker at short
notice, Exporter can sell a marketable quantity of Product sufficient to
make ullage for Product production prior to late arrival of Marketer's
Tanker.
c. If action taken in (b) is unable to alleviate the potential tank tops and
shut-in is unavoidable, Exporter can then take further action to minimise
impact on production at the InterOil Refinery by the late arrival of
Marketer's Tanker. Such action may include reducing production or shutting
down the InterOil Refinery partially or completely and/or selling the full
nominated quantity to a third Party buyer (latter action must in all
scenarios be preceded by consultation with, and formal notification of
specific intent to Marketer).
d. As a consequence of Marketer's Tanker arriving late and causing Exporter
to take action to avoid shut in by selling Product to a third Party, and
provided such late arrival occurs as a consequence of Marketer's Gross
Negligence, Marketer shall pay Exporter direct damages equal to Exporter's
direct incremental costs, for arms length transactions, for alternative
sale of Product being an amount representing the difference between the
actual FOB equivalent price received for such Product and the price that
would have been payable in sale to Marketer.
e. Exporter shall act in good faith and use its reasonable endeavours to
minimise the costs and losses and provided further in each case that
evidence in reasonable detail in support of Exporter's claim for
reimbursement of each such cost or loss shall be furnished to Marketer;
f. Where the Marketer's Tanker fails to tender a valid notice of readiness
within the relevant Agreed Arrival Date, then for any resultant production
quantities curtailed by Marketer's Tanker arriving after such loading Date
Range owing to reasons other than Force Majeure, Exporter may short-load
Marketer's Tanker to the extent of the quantities curtailed but only to
the extent required to avoid impact on the volume of subsequent loadings.
Marketer shall be entitled to verify the above amounts and information and
for this purpose, Exporter shall provide such co-operation and assistance
as Marketer may reasonably require
g. Payments associated with this Condition 13 will be due 30 days after
Exporter submits fully documented details of claim to Marketer.
PAGE 81
EXPORT MARKETING AND SHIPPING AGREEMENT
h. Notwithstanding Clause 19(b) of the Agreement in the event that the
Marketer is liable to the Exporter for breach of Condition 13 due to the
late arrival of Marketer's Tanker arising from Marketer's Gross
Negligence, Marketer shall, in addition to the direct damages under
Condition 13(d), be liable for any consequential, indirect or special
loss, including loss of profit, based on lost refining and marketing
margin due to any reduced refinery throughput. Marketer's total liability
to the Exporter under this Condition 13, and in respect to a Tanker
loading Naphtha as well as Product under this Agreement, shall be limited
to a maximum of United States Dollars [deleted for confidentiality] per
day (whether in this Agreement or any other agreement in respect of the
same Tanker loading this or any other cargo).
14 QUANTITY/QUALITY DETERMINATION
14.1 PRIMA FACIE CONCLUSIVE
The quantity and quality of the Product in each shipment shall be determined by
measurement, sampling and testing in accordance with internationally recognised
industry standards at the InterOil Facilities loading terminal by an independent
inspector appointed by the Marketer but acceptable to the Exporter. The
determinations of such independent inspector, in the absence of fraud or
manifest error, shall be final and binding upon both Parties. The original cargo
suppliers shall prepare and sign certificates as to the quantity and a
certificate as to the quality of the oil loaded upon completion of loading of
the cargo. Such certificates shall be countersigned by the independent inspector
to signify his agreement with the figures stated therein. Exporter or Exporter's
Representative shall advise Marketer by telex, cable or facsimile of the
quantity and quality recorded on such certificates as soon as possible after
completion of loading of the cargo. The costs of such independent inspection
shall be shared equally between Exporter and Marketer.
A sufficient quantity of the relevant representative samples shall be correctly
taken at the loading terminal and kept in accordance with internationally
recognised methodology and practice. The samples, so obtained will be retained
by Exporter for at least one hundred and twenty (120) days after loading unless
otherwise required or a dispute arises in connection therewith, in which event
such samples shall be retained for as long as the Parties require.
14.2 NOTIFICATION OF CLAIMS
Any claims as to shortage in the quantity or defects in the quality of Product
loaded into the Tanker shall be communicated to Exporter or Exporter's
Representative immediately after such shortage or quality defects are
discovered. Such communications shall be followed by a formal written notice of
claim with all necessary details to properly process the claim. If no
notification or formal written notice of claim is received within 70 days from
the date of the occurrence of the claim, such claims shall be deemed to have
been waived.
PAGE 82
EXPORT MARKETING AND SHIPPING AGREEMENT
14.3 QUALITY SPECIFICATIONS
Product delivered by Exporter to Marketer shall conform with the agreed
specification for that Product as per Schedule 2.
15 POLLUTION
15.1 POLLUTION INSURANCE
The Marketer shall ensure that each Tanker arranged by Marketer shall, all at no
cost to Exporter:
a. have on board all certificates of currency of insurance and financial
responsibility in respect of oil pollution necessary for the required
voyage, such as, but not limited to a certificate of insurance required
under the International Convention on Civil Liability for Oil Pollution
Damage:
b. the Tanker owners shall be members of the International Tanker Owners
Pollution Federation Limited; and
c. maintain with respect to the Tanker the standard level of oil pollution
liability insurance available from the International Group of P&I Clubs on
the date such Tanker is accepted, and the standard level of excess oil
pollution liability insurance available through market underwriters on
such date currently USD one billion.
15.2 POLLUTION AT SEA
(a) The Marketer shall exercise all reasonable diligence to prevent any
pollution of the sea or any other environment.
(b) The Marketer shall comply with all the applicable laws, rules,
regulations and conditions relating to pollution, and shall ensure
(except to the extent legally permitted) that no trash, waste, oil,
bilge water or other pollutants will be discharged or allowed to
escape into the sea.
16 TAXES, DUES, DUTIES, IMPOSTS
16.1 PORT CHARGES.
Any wharfage, harbour dues port charge, pilotage, line launches, tugs or similar
charges (collectively "port charges") levied at the InterOil Facilities in
respect of Product exported by the Marketer whether chargeable on the cargo
loaded or on the Tanker shall be for the account of Marketer, unless the Parties
agree otherwise in writing.
PAGE 83
EXPORT MARKETING AND SHIPPING AGREEMENT
16.2 NEW IMPOSTS
Subject to Condition 16.1, in the event any additional tax, dues, duty or impost
is levied at the InterOil Facilities in respect to Products bought by the
Marketer whether chargeable on the cargo loaded or on the Tanker, the Parties
shall as soon as reasonably practicable meet to agree on the responsibility for
payment of the levy, and failing agreement, such additional levy will be shared
equally, by the Exporter and the Marketer.
17. ADDITIONAL CONDITIONS
The following shall be as per the Export Marketing and Shipping Agreement main
terms:-
17.1 Force Majeure shall be as per Clause 18;
17.2 Governing law shall be as per Clause 1.5;
17.3 Waiver shall be as per Clause 1.6;
17.4 Assignment shall be as per Clause 21;
17.5 Confidentiality shall be as per Clause 22;
17.6 Dispute Resolution shall be as per Clause 23;
17.7 Notice and Representative s shall be as per Clause 20.
PAGE 84
EXPORT MARKETING AND SHIPPING AGREEMENT
APPENDIX "A"
FORMAT OF LETTER OF INDEMNITY TO BE USED
FROM: EP InterOil, Ltd. incorporated in the Cayman Islands of Xxxxxx House,
South Church Street, Georgetown, Grand Cayman, Cayman Islands, British West
Indies.
TO: SHELL INTERNATIONAL EASTERN TRADING COMPANY, owned by Shell Eastern
Trading Pte Ltd
IN CONSIDERATION of your paying for the cargo of
_________________________________U.S. Barrels/Metric Tons of (type of crude oil
and / or product) _________________________which sailed from (Port)
___________on (Tanker and date) __________________________________________loaded
with such cargo when the (document) _______________________________________for
such cargo has not been delivered to you at the time payment is due under our
contract dated
______ref:______________________________________________________________.
We hereby warrant to you that at the time property passed as specified under the
terms of the above contract we had the right to sell the said cargo to you and
we had unencumbered title to the said cargo.
We hereby irrevocably and unconditionally undertake to indemnify you and hold
you harmless against any claim made against you by anyone as a result of breach
by us of any of our warranties as set out above, and all losses, costs
(including, but not limited to costs as between attorney or solicitor and own
client), damages, and expenses which you may suffer, incur or be put to which
are not too remote as a result of our failure to deliver the above document(s)
in accordance with the contract.
This indemnity shall terminate on delivery by us of the aforesaid document(s)
and their acceptance by you.
This indemnity shall be governed by and construed in accordance with the laws
and legal jurisdiction governing the aforesaid contract and all disputes,
controversies or claims arising out of or in relation to this indemnity or the
breach, termination or validity hereof not settled by negotiation shall be
resolved with the procedure provided in such contract.
PAGE 85
