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EXHIBIT 10.07
NATURAL GAS SUPPLY AGREEMENT
This Agreement is effective October 1, 1998 between Conoco Inc., a Delaware
corporation, ("Conoco") and E. I. du Pont de Nemours and Company, ("DuPont"), a
Delaware corporation.
1. SCOPE OF SERVICE
1.1 Gas Procurement: Conoco will contract for the purchase,
transportation and delivery of all of the natural gas supply
requirements for DuPont's facilities listed on Exhibit A ("Plants"),
including the negotiation, execution and management of such
contracts. The intent will be to minimize DuPont's gas costs
commensurate with the degree of supply security agreed between the
parties. Any contract in excess of a one-year term will require
DuPont's concurrence.
1.2 Scheduling and Dispatching: Conoco will provide all dispatching
services for gas supply to the Plants, including nomination,
scheduling and adjustment of each Plant's daily gas supply delivered
into the Plants' facilities. DuPont will have the right to adjust
its quantities during the Month by notifying Conoco of such
adjustments, and Conoco will use its best efforts to effect such
adjustments.
1.3 Gas Balancing: Conoco will manage and reconcile all transportation
and supplier contracts for DuPont's gas supply, including
maintaining accounts and records of transportation and storage of
the gas, maintaining receipts and deliveries in compliance with the
applicable pipeline imbalance and scheduling tolerances of the
transporters, managing any imbalances within the period allowed for
cure, and determining the validity of any imbalance penalty charge.
This service will include management of that certain Natural Gas
Transfer Agreement, dated December 12, 1991, between DuPont and
Beaumont Methanol Corporation relating to delivery of gas at
DuPont's Beaumont Works Plant in Jefferson County, Texas.
1.4 Transportation Capacity: Conoco will manage any pipeline capacity
owned by DuPont, including monitoring such capacity reallocations
and available open access storage.
1.5 Accounting: Conoco will provide all accounting and administrative
services required in connection with DuPont's gas supply, including
preparing monthly reports, verifying the accuracy of invoices,
monitoring the telemetry readings for the Texas Plants, and
monitoring utility banking and balancing. Conoco will also prepare
monthly invoices for each Plant and periodic reports of gas usage
and costs.
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1.6 Consulting: Conoco will provide consulting services to DuPont in
connection with state and federal regulatory requirements, analyzing
daily, monthly and yearly supply requirements, projecting gas supply
costs, and operating the Plants so as to minimize gas costs.
1.7 Power of Attorney: DuPont will appoint designated personnel of
Conoco as agents and attorneys-in-fact to exercise those powers
necessary to perform the services described in this Contract,
pursuant to the Power of Attorney for Natural Gas Supply attached
hereto as Exhibit B.
2. COMPENSATION
2.1 DuPont will reimburse Conoco for all direct costs incurred by Conoco
in the acquisition, transportation, storage, delivery or other
handling of gas delivered to DuPont, including, but not limited to,
the purchase price for the gas, transportation and distribution
charges, reservation charges, deficiency charges, pipeline imbalance
charges, storage and parking fees, and Taxes imposed with respect to
the gas prior to delivery at the Plant(s).
2.2 The parties anticipate that Conoco will acquire gas supplied to
DuPont pursuant to this Agreement from sources other than Conoco's
own production. However, the parties recognize that Conoco produced
or controlled gas may from time to time be sold to DuPont at
applicable market prices.
2.3 DuPont will pay Conoco a Service Charge of $0.012 per mmbtu of gas
delivered to the Texas Plants and $0.042 per mmbtu of gas delivered
to the non-Texas Plants.
2.4 Conoco will be entitled to receive the Fees payable by Beaumont
Methanol Corporation under the DuPont/BMC Agreement.
3. TERM
3.1 This Agreement will be effective from October 1, 1998 for a primary
term of one year, and shall continue thereafter until terminated by
either party upon not less than 180 days written notice.
3.2 Notwithstanding the foregoing, if either party issues a notice to
terminate this Agreement and DuPont negotiates with a third party to
provide all or part of the supply services contemplated under this
Agreement, Conoco shall have the right to match such third party's
bonafide offer; provided that Conoco matches the offer within 30
days after written notice from DuPont providing reasonable detail of
the terms and conditions of the third party offer.
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3.3 During the first month following a notice of termination, Conoco
will provide DuPont with copies of all supply and transportation
agreements between Conoco and third parties that relate solely to
gas supply to the Plant(s) and are in effect at the time of notice
of termination. During the last six months of this Agreement, Conoco
will follow DuPont's direction with regard to the continuance or
termination of such agreements as permitted by their terms. Upon
termination of this Agreement, DuPont agrees to receive assignment
of any such agreements still in effect as of the termination date.
4. COMMUNICATIONS
4.1 No less than once per year, appropriate representatives of DuPont
and Conoco will meet to review and agree upon the gas supply
strategy for each Plant, including the appropriate blend of firm and
spot supply contracts and the amount of swing required in the firm
supply contracts, and any transportation requirements.
4.2 No later than ten days prior to each Month, each Plant will notify
Conoco of its anticipated gas supply requirements for the following
Month, including its minimum and maximum daily requirements and any
other operational information which could have a significant effect
on the Plant's gas requirements during the Month. Conoco will
arrange for gas supply to the Plant(s) in accordance with such
notification and information.
4.3 Conoco and DuPont will cooperate in communicating throughout the
Month regarding any material changes in a Plant's gas requirements.
4.4 Upon DuPont's request from time to time, Conoco will provide DuPont
with reports of plant consumption volumes, weighted average cost of
gas, published gas prices, and other industry data.
4.5 Communications to DuPont will be directed to the appropriate
representatives for each Plant and/or business unit, as designated
by DuPont from time to time.
4.6 Payments from DuPont to Conoco will be made per directions on the
invoice. Other communications to Conoco will be directed to the
appropriate representative as listed below. Conoco may modify these
communication instructions at any time upon written notice.
Manager Gas Marketing
Natural Gas & Gas Products
Conoco Inc.
P. O. Xxx 0000 XX0000
Xxxxxxx, XX 00000
000 Xxxxx Xxxxx Xxxxxxx (00000-0000)
Telephone (000) 000-0000
Fax: (000) 000-0000
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5. BILLING AND PAYMENT
5.1 Conoco shall invoice DuPont for gas delivered in the preceding Month
and for any other applicable charges, providing supporting
documentation acceptable in industry practice to support the amount
charged. If the actual quantity delivered is not known by the
billing date, billing will be prepared based on the quantity of gas
confirmed for delivery by the Delivering Transporter. The invoiced
quantity will then be adjusted to the actual quantity on the
following Month's billing or as soon thereafter as actual delivery
information is available.
5.2 DuPont shall remit the amount due by electronic funds transfer (EFT)
initiated on or before 10 days after receipt of Conoco's invoice;
provided that if the tenth day is not a Business Day, the EFT shall
be initiated on or before the next Business Day. If DuPont fails to
remit the full amount payable by it when due, interest on the unpaid
portion shall accrue at a rate equal to the lower of (i) the
then-effective prime rate of interest published under "Money Rates"
by The Wall Street Journal, plus two percent per annum from the date
due until the date of payment; or (ii) the maximum applicable lawful
interest rate. If DuPont, in good faith, disputes the amount of any
such statement or any part thereof, DuPont will pay to Conoco such
amount as DuPont concedes to be correct against Conoco's invoice for
that amount; provided, however, if DuPont disputes the amount due,
DuPont must provide supporting documentation acceptable in industry
practice to support the amount paid or disputed.
5.3 Any party shall have the right, at its own expense, upon reasonable
notice and at reasonable times, to examine the books and records of
the other party to the extent reasonably necessary to verify the
accuracy of any statement, charge, payment, or computation made
under the Agreement. This examination right shall not be available
with respect to proprietary information not directly relevant to
transactions under this Agreement. All invoices and xxxxxxxx shall
be conclusively presumed final and accurate unless objected to in
writing, with adequate explanation and/or documentation, within two
years after the Month of gas delivery. All retroactive adjustments
shall be paid in full by the party owing payment within 30 days of
notice and substantiation of such inaccuracy.
6. QUALITY AND MEASUREMENT
All gas supplied by Conoco shall meet the quality and heat content
requirements of the Delivering Transporters. The unit of quantity
measurement for purposes
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of this Agreement shall be one mmbtu dry. Measurement of gas
quantities hereunder shall be in accordance with the established
procedures of the Delivering Transporter.
7. TAXES
DuPont shall pay or cause to be paid all Taxes on or with respect to
the gas upon and after delivery at the Plant(s). If Conoco is
required to remit or pay Taxes that are DuPont's responsibility
hereunder, DuPont shall reimburse Conoco for such Taxes in
accordance with Article 5. If any Plant is entitled to an exemption
from any such Taxes or charges, DuPont shall furnish the Conoco any
necessary documentation thereof.
8. TITLE, WARRANTY AND INDEMNITY
8.1 Except for gas acquired by Conoco as agent for DuPont, title to gas
delivered to DuPont shall pass from Conoco to DuPont at the inlet
flange of DuPont's facilities at the Plants. Conoco shall have
responsibility for and assume any liability with respect to the gas
prior to its delivery to DuPont at the Plants. Conoco shall have no
responsibility for and no liability with respect to said gas after
its delivery to DuPont at the Plants.
8.2 Conoco warrants that it will have the right to convey and will
transfer good and merchantable title to all gas delivered by it to
DuPont free and clear of all liens, encumbrances, and claims.
8.3 Conoco agrees to indemnify DuPont and save it harmless from all
losses, liabilities or claims, including attorney's fees and costs
of court ("Claims") from any or all persons, arising from or out of
claims of title, personal injury or property damage from the gas or
other charges thereon which attach before title passes to DuPont,
except to the extent that any such Claim, injury, or damage is
caused by the negligence, willful misconduct or breach of this
Agreement by DuPont. DuPont agrees to indemnify Conoco and save it
harmless from all Claims from any or all persons arising from or out
of claims regarding payment, personal injury or property damage from
said gas or other charges thereon which attach after title passes to
DuPont, except to the extent that any such Claim, injury, or damage
is caused by the negligence, willful misconduct or breach of this
Agreement by Conoco.
9. FORCE MAJEURE
9.1 Neither party shall be liable to the other for failure to perform an
obligation under this Agreement to the extent such failure was
caused by Force Majeure; provided that a Force Majeure will excuse a
delay in making payment due hereunder, but not the underlying
obligation to pay. The term "Force Majeure" as employed herein means
any cause not
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reasonably within the control of the party claiming suspension, as
further defined in Section 9.2.
9.2 Force Majeure shall include but not be limited to the following: (i)
physical events such as acts of God, landslides, lightning,
earthquakes, fires, storms or storm warnings such as hurricanes
which result in evacuation of the affected area, floods, washouts,
explosions, breakage or accident or necessity of repairs to
machinery or equipment or lines of pipe; (ii) weather related events
affecting an entire geographic region, such as low temperatures
which cause freezing or failure of xxxxx or lines of pipe; (iii)
interruption of firm transportation and/or storage by transporters;
(iv) acts of others such as strikes, riots, sabotage, insurrections
or wars; and (v) governmental actions such as necessity for
compliance with any court order, law, statute, ordinance, or
regulation promulgated by a governmental authority having
jurisdiction. Each party shall make reasonable efforts to avoid the
adverse impacts of a Force Majeure and to resolve the event or
occurrence once it has occurred in order to resume performance.
9.3 Neither party shall be entitled to the benefit of the provisions of
Force Majeure to the extent the party claiming excuse failed to
remedy the condition and to resume the performance of such covenants
or obligations with reasonable dispatch.
9.4 Notwithstanding anything to the contrary herein, the parties agree
that the settlement of strikes, lockouts or other industrial
disturbances shall be entirely within the sole discretion of the
party experiencing such disturbance.
9.5 The party whose performance is prevented by Force Majeure must
provide notice to the other party. Initial notice may be given
orally; however, written notification with reasonably full
particulars of the event or occurrence is required as soon as
reasonably possible. Upon providing written notification of Force
Majeure to the other party, the affected party will be relieved of
its obligation to the extent and for the duration of the Force
Majeure, and neither party shall be deemed to have failed in such
obligations to the other during such occurrence or event.
10. MISCELLANEOUS
10.1 Confidentiality. DuPont and Conoco agree to maintain the
confidentiality of this Agreement and all information acquired in
the performance of the Agreement relating to the activities or
operations of the other party. DuPont and Conoco each agree not to
divulge any such information to any third party without the express
written consent of the other party, except as required by law.
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10.2 Assignment. This Agreement shall be binding upon the successors,
assigns, personal representatives and heirs of the respective
parties hereto, and the covenants, conditions, rights and
obligations of this Agreement shall run for the full term of this
Agreement. No assignment of this Agreement, in whole or in part,
will be made without the prior written consent of the non-assigning
party, which consent will not be unreasonably withheld or delayed;
provided, either party may transfer its interest to any parent or
affiliate by assignment, merger or otherwise without the prior
approval of the other party. Upon any transfer and assumption, the
transferor shall not be relieved of or discharged from any
obligations hereunder.
10.3 Severability. If any provision in this Agreement is determined to be
invalid, void or unenforceable by any court having jurisdiction,
such determination shall not invalidate, void, or make unenforceable
any other provision, agreement or covenant of this Agreement.
10.4 Waiver. No waiver of any breach of this Agreement shall be held to
be a waiver of any other or subsequent breach.
10.5 Entire Agreement. This Agreement sets forth all understandings
between the parties respecting the subject matter hereof, and any
prior contracts, understandings and representations, whether oral or
written, relating to such transactions are replaced and superseded
by this Agreement. This Agreement may be amended only by a writing
executed by both parties.
10.6 Laws and Regulation. This Agreement and all provisions herein will
be subject to all applicable and valid statutes, rules, orders and
regulations of any Federal, State, or local governmental authority
having jurisdiction over the parties, their facilities, gas supply,
this Agreement or any provisions thereof.
10.7 No Third Party Beneficiary. There is no third party beneficiary to
this Agreement.
10.8 Further Assurances. The parties agree to execute and deliver from
time to time such further instruments and do such other acts as may
be reasonably necessary to effectuate the purposes of this
Agreement.
11. DEFINITIONS
"BUSINESS DAY" shall mean any day except Saturday, Sunday or Federal
Reserve Bank holidays.
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"CONOCO" shall mean Conoco Inc., a Delaware corporation, issued
Charter No. 523126 by the Secretary of State of the state of
Delaware, with primary offices in Houston, Texas.
"DELIVERING TRANSPORTER" shall mean any Transporter delivering gas
into a Plant's facilities, except that for the Texas Plants,
Delivering Transporter shall mean the Transporter delivering gas to
Longhorn Pipeline Company.
"DUPONT/BMC AGREEMENT" shall mean that certain Natural Gas Transfer
Agreement dated December 12, 1991, between DuPont and Beaumont
Methanol Corporation, relative to the receipt and delivery of gas at
DuPont's Beaumont Plant, located in Jefferson County, Texas.
"MMBTU" shall mean 1,000,000 British thermal units.
"PLANT(S)" shall mean the DuPont owned and operated facilities
listed on Exhibit A.
"MONTH" shall mean a calendar month.
"TAXES" shall mean all taxes, fees, levies, penalties, licenses or
charges imposed by any governmental authority.
As evidence of the parties' agreement to the terms and conditions of this
Agreement, the appropriate representative of each party has executed this
Agreement in the spaces provided below.
E. I. DU PONT DE NEMOURS AND COMPANY
By:
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Name: Xxxxx X. Xxxxxx
Title: Director Global Sourcing,
Raw Materials, Energy & Packaging
Date:
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CONOCO INC.
By:
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Name: R. E. Xxxxxxxx
Title: General Manager - Natural Gas
Date:
---------------------------------
Signature page to that certain Natural Gas Supply Agreement, dated October 1,
1998 between Conoco Inc. and E. I. du Pont de Nemours and Company.
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EXHIBIT A
TO
NATURAL GAS SUPPLY AGREEMENT
OCTOBER 1, 1998
PLANTS
(CITY, COUNTY/PARISH, STATE)
TEXAS NON-TEXAS EAST NON-TEXAS WEST
----- -------------- --------------
Beaumont, Jefferson Athens, Xxxxxx, GA Antioch, Contra Costa, CA
Corpus Christi, San Xxxxxxxx Xxxxxx Mill Plaza, Wilmington, DE Axis, Mobile, AL
Deer Park, Xxxxxx (4) Belle, Kanawha, WV (3) Xxxxxxxx, Ascension Parish, LA
La Porte, Xxxxxx Cedar Creek, Cumberland, NC (1) De Lisle, Harrison, XX
Xx Xxxxx (Xxxxx), Xxxxxx Xxxxxxxx Works, Salem, NJ East Chicago, Xxxx, IN
Sabine, Orange Chattanooga, Xxxxxxxx, TN El Paso, Woodford, IL
Victoria, Victoria Circleville, Pickaway, OH Flint, Genesee, MI
Edge Moor, New Castle, DE Ft. Madison, Lee, IA
Experimental Station, Wilmington, DE Louisville, Jefferson, KY (2)
Xxxxxxxx, Florence, SC Memphis, Shelby, TN (1)(2)
Front Royal, Xxxxxx, VA Montague, Muskegon, MI
Hopewell, Prince Xxxxxx, VA (1) Mt. Xxxxxxx, Macomb, MI
Kinston, Lenoir, NC Pontchartrain, St.Xxxx Baptist Parish, LA
Martinsville, Xxxxx, VA Troy, Oakland, MI
May, Kershaw, SC
New Johnsonville, Xxxxxxxxx, TN
Niagara Falls, Niagara, NY
Old Hickory, Xxxxxx, TN
Parkersburg, Wood, WV
Repauno, Gloucester, NJ
Research Triangle, Durham, NC
Rochester, Monroe, NY
Seaford, Sussex, XX
Xxxxxxxx, Chesterfield, VA
Xxxxx-Xxxxxxx Research Center, Newark, DE
Toledo, Lucas, OH
Towanda, Bradford, PA
Waynesboro, Augusta, VA
Yerkes, Niagara, NY
Notes:
(1) Includes ICI plants located in the same city.
(2) Includes Protein Technology, Inc. Plants located in the same city.
(3) Includes Praxair Plant also located in the same city.
(4) DuPont Acetylene Plant located within the Rohm & Xxxx facility at Deer
Park.
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EXHIBIT B
POWER OF ATTORNEY FOR NATURAL GAS SUPPLY
E. I. du Pont de Nemours and Company (DuPont), a Delaware corporation with
principal offices in Wilmington, Delaware, hereby appoints certain designated
personnel of Conoco Inc., formerly Continental Oil Company, (Conoco), a Delaware
corporation identified by Charter No. 523126 with principal offices in Houston,
Texas, as DuPont's true and lawful agents and attorneys-in-fact to exercise the
powers listed below in DuPont's name and place, all in support of Conoco's
natural gas supply service to DuPont.
1. Designated Powers:
1.1 To negotiate and execute any contracts for the purchase, sale,
exchange, storage or transportation of natural gas.
1.2 To amend, extend, renew or cancel any contracts relating to natural
gas.
1.3 To do all other things and perform all other acts as may be
necessary, appropriate or convenient for the purchase, acquisition, use or
consumption of natural gas by or on behalf of DuPont, including the
transportation, storage and delivery of natural gas.
1.4 To tender, pay, demand, collect, receive or accept all sums of money
due or payable under or arising from any contract for the purchase, sale,
exchange, storage or transportation of natural gas.
1.5 To do or perform any act or thing necessary, appropriate or
convenient concerning any ruling or regulation by any court, agency or
governmental entity in relation to or in connection with any of the
matters herein.
2. Designated Personnel:
The following personnel of Conoco Natural Gas & Gas Products business unit, and
their successors and assigns, are designated DuPont's agents by this power of
attorney: Vice President and General Manager, Manager Gas Marketing, and
Director Gas Marketing.
3. Adoption and Ratification:
DuPont hereby declares that each and every thing done, acts performed, and
instrument executed and delivered by its said agents and attorneys-in-fact in
connection with the exercise of any the powers designated above shall be good,
valid and effectual to all intents and purposes as if the same had been done,
performed,
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executed or delivered by DuPont in its corporate presence; and DuPont
hereby ratifies whatsoever said agents and attorneys-in-fact shall lawfully do
by virtue hereof.
4. Term
This power of attorney shall be valid as of October 1, 1998 for a primary term
of one year, unless extended by written notice from DuPont.
E. I. DU PONT DE NEMOURS AND COMPANY
By:
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Xxxxx X. Xxxxxx
Director Global Sourcing,
Raw Materials, Energy & Packaging
ATTEST:
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Assistant Secretary
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