AGREEMENT CONCERNING THE METHOD OF APPLICATION OF THE
CONTRACT SIGNED ON 23 OCTOBER 1989 BETWEEN SONATRACH AND
ANADARKO ALGERIA CORPORATION
[Executed 6th March 1997 in Algiers]
AGREEMENT CONCERNING THE METHOD OF APPLICATION OF THE
CONTRACT SIGNED ON 23 OCTOBER 1989 BETWEEN SONATRACH AND
ANADARKO ALGERIA CORPORATION
Between,
The National Enterprise SONATRACH (hereinafter referred to
as "changes SONATRACH"), whose head office is in Algiers,
00, Xxx xx Xxxxxx, Xxxxx, represented by Xx. Xxxxx Xxxxxx-
Xxxxxx Xxxxxxxxxx, General Manager, acting by virtue of the
powers entrusted to him for the purpose of this Agreement,
and,
Anadarko Algeria Corporation, a company incorporated and
existing under the laws of Delaware, USA, and whose
corporate business office is 00000 Xxxxxxxxxx Xxxxx,
Xxxxxxx, Xxxxx 00000, Xxxxxx Xxxxxx, represented by Xx.
Xxxxxx X. Xxxxxxx, Xx., Chairman of the Board of Directors
and Chief Executive Officer, acting for ANADARKO ALGERIA
CORPORATION, LASMO Oil (Algeria) LTD and MAERSK OLIE
ALGERIET A/S.
Whereas the Contract for the Exploration and Exploitation of
Liquid Hydrocarbons between the National Enterprise
SONATRACH and ANADARKO Algeria Corporation was signed on
October 23, 1989.
Whereas it is necessary to further clarify certain
provisions of the Contract in order to avoid differing
interpretations.
Whereas the parties wish to make certain changes in an
amendment to the afore mentioned Contract.
Whereas the parties agree that they shall apply such in
accordance with the provisions of this Agreement.
The parties hereinafter agree:
SECTION I: PAYMENT OF A TRANSPORTATION CHARGE
ARTICLE 1
Each Party to this Agreement agrees to pay a charge for the
transportation of the share of Liquid Hydrocarbons
allocated to it under Article 4.3.A of the Contract signed
October 23, 1989.
It is understood that SONATRACH shall finish, as soon as
possible, the construction of a pipeline for the
transportation of Liquid Hydrocarbons to Haoud-El-Hamra, and
shall ensure the transportation of such Liquid Hydrocarbons
to the Port of Loading.
The Delivery Point of the said Liquid Hydrocarbons shall be
the connection flange with SONATRACH's transportation
system.
ARTICLE 2
For each Calendar Year ANADARKO agrees to pay, for its share
of Liquid Hydrocarbon production mentioned in Article 1
above, a transportation charge expressed in US dollars per
barrel, according to the following formula:
Cn-1
TCn = 1.35 _______
Co
TCn is the transportation charge for year n.
Cn-1 is the index of year n-1, Co is the index for
1996.
The index is the arithmetic average of the monthly values of
the "Consumer Price Index for Urban Consumers" (CPIUC) and
"the Machinery and Equipment Index" (MEI) published by the
Minister of Labor of the United States of America, or, if
one of these indices ceases to be published, any other price
index from the United States of America which the Parties
agree to use instead.
The totality of production volumes to be transported shall
be measured at the connecting flange to SONATRACH's
transportation system, after deduction of the water and
sediments and metering at the Main Gathering Facilities
(CPC).
The Main Gathering Facilities is the location where the
Liquid Hydrocarbons produced from all Pools are measured and
metered in accordance with the article 1, item 3 of Decree
No.88-35, dated February 16, 1988.
The quantities of water and sediment to be deducted shall be
determined with the standard test method for water and
sediment in crude oils, according to the ASTM D96 standard
or any other standard applied by SONATRACH in accordance
with the practice of the international oil industry.
Any transportation loss due to the pipeline transportation
shall be fully deducted and borne by SONATRACH and ANADARKO
in proportion with their share of Liquid Hydrocarbons. Such
transportation loss is set out at zero point fifty per cent
(0.50%) of the quantities of Liquid Hydrocarbons delivered,
measured after deducting the water and sediments. The said
transportation losses shall be determined on a non-
discriminatory basis.
Since the 30" transportation pipeline built by SONATRACH is
a transportation pipeline, the initial filling of this
pipeline with Liquid Hydrocarbons shall be done out of
SONATRACH's share of Liquid Hydrocarbons.
SECTION II: CONSOLIDATION AND CALCULATION OF PRODUCTION AND
COSTS
ARTICLE 3
In accordance with Article 4.3 of the Contract signed
October 23, 1989, the share of production between the
parties as well as the recovery of fifty-one (51) per cent
of exploration costs will be calculated on the basis of the
total amount of Liquid Hydrocarbons produced from all Pools
without differentiating between the origin of such
production (consolidation).
Consequently, and in accordance with Article 4.3.B of the
Contract, the reimbursement of 51% of Exploration Costs
incurred by ANADARKO shall be made within the limits of the
share, equal to forty nine percent (49%) of the total
productions from all Pools less that share of production due
to ANADARKO under Article 4.3.A of the Contract signed on
October 23, 1989.
It is understood that for unitized Pools, the calculation of
the total amount of the said Liquid Hydrocarbon production
shall take into account only the production shares from the
said unitized Pools and allocated to the SONATRACH -
ANADARKO association, created pursuant to the Contract dated
October 23, 1989.
ARTICLE 4
The calculation of that share of production allocated to
each of the Parties will be the weighted average, by
tranches, of the fixed percentages set out in Article 4.3A
of the Contract dated October 23, 1989.
SECTION III: ROYALTY AND TAX ON REMUNERATION
ARTICLE 5
SONATRACH agrees to pay Royalties for the totality of the
production as well as the tax on remuneration.
ARTICLE 6
The conditions and methods of payment by SONATRACH of the
tax referred to in Article 5 above shall be detailed in the
amendment referred to in Article 7 below.
It is understood that SONATRACH shall not deduct the amounts
paid for the Royalties and the tax on remuneration from
ANADARKO's share of Liquid Hydrocarbons.
SECTION IV: AMENDMENTS TO THE CONTRACT SIGNED 10/23/89
ARTICLE 7
The Parties agree to conclude and sign an amendment to the
Contract signed October 23, 1989, containing the following
modifications:
(i) Introduction of a clause for International Arbitration
for the settlement of differences.
(ii) The conversion to US dollars of the amounts set out in
Dinars in Articles 5.8.C, 15.5.C, 20.3 and 20.6 of the
contract signed on October 23, 1989, as well as
Articles 5.5.4 and 5.5.12 of Annex B "Accounting
Procedure" to the said Contract.
(iii) Granting to LASMO Oil (Algeria) LTD and MAERSK
OLIE ALGERIET AS the status of Parties to the Contract
signed October 23, 1989 and of SONATRACH's partners, in
accordance with the regulation in effect and the
provisions of Article 24 of the Contract signed October
23, 1989.
ARTICLE 8
The amendment referred to in the above Articles 6 and 7
shall only come into force after approval by the Competent
Authorities in the same form as the Contract signed October
23, 1989.
SECTION V: SERVICES PROVIDED BY THE PARTIES
ARTICLE 9
The Petroleum Operations shall be carried out in Algeria.
Therefore, the Operator's main office will be located in
Hassi Messaoud or any other location in Algeria agreed by
the Parties, and all studies and actions regarding the
Petroleum Operations will be put into effect in Algeria.
ARTICLE 10
Subject to the Management Committee's approval, the Operator
shall however be entitled to use ANADARKO's and/or
SONATRACH's specialized services, located in Algeria or
abroad, through service contracts or sub-contracting.
In this event, the Party approached by the Operator shall
charge its services to the Total Costs.
SECTION VI: DELAY
ARTICLE 11
In the event that the completion of the 1997 Work Program
for the drilling of Exploration xxxxx requires an
extension, SONATRACH agrees to grant such extension up to a
maximum of nine (9) months .
ARTICLE 12
The above extension will be granted subject to the Parties
complying with Algerian laws and regulations.
ARTICLE 13
SONATRACH and ANADARKO could also agree to end the
Exploration Phase provided for by the Contract signed
October 23, 1989, and to conclude a new Exploration
Agreement providing a minimum exploration work commitment to
be performed in the Contractual Area covered by the Contract
dated October 23, 1989, less the areas covering the Pools
discovered under the Contract dated October 23, 1989.
This new Exploration Agreement shall only come into force
after approval by the Competent Authorities in the required
forms.
ARTICLE 14
If the above Article 13 is applied, the provisions of
Article 11 of this Agreement shall not apply.
SECTION 7 : GENERAL PROVISIONS
ARTICLE 15
The parties agree to make every endeavor to obtain optimum
valorization (commercial value), in accordance with the
Algerian laws and regulations, of the Liquid Hydrocarbons
reserves discovered within the framework and the performance
of the Contract signed October 23, 1989.
ARTICLE 16
The Parties agree to use their best efforts to quickly and
fairly resolve the outstanding questions regarding the
Budgets and the exploitation projects within the framework
of the Contract dated October 23, 1989.
SONATRACH agrees to audit, as soon as possible, the
Exploration Costs incurred by ANADARKO within the framework
of the execution of the Contract signed October 23, 1989, in
order to determine the recoverability of those costs.
ARTICLE 17
The Parties agree to commence as soon as reasonably possible
the negotiation of contractual provisions allowing for the
integration of a new gas clause in the Contract signed
October 23, 1989.
For this, SONATRACH shall provide ANADARKO with its typical
gas clause, provided that the Parties shall not be obliged
to reach an agreement regarding the integration of a gas
clause in the Contract dated October 23, 1989.
In case of an agreement between the Parties, such agreement
will comprise an amendment which will take effect after
approval by the Competent Authorities.
ARTICLE 18
The Parties shall agree, as soon as possible, on the method
of application of the Lifting Procedure attached to the
Contract dated October 23, 1989, as Annex E.
ARTICLE 19
SONATRACH and ANADARKO agree that any future question
regarding the application of the Contract signed October 23,
1989, shall be promptly dealt with within the same spirit of
cooperation and good will as the one which prevailed during
the drafting of this Agreement
ARTICLE 20
The terms and expressions in this Agreement and whose first
letter is capitalized have the same meaning as those of the
Contract dated October 23, 1989.
ARTICLE 21
This Agreement shall come into effect and shall be
enforceable by the Parties from the effective date of the
amendment mentioned in Article 7 and 8 hereinabove.
Made in Algiers on _____________________ in eight (8)
originals
For SONATRACH For ANADARKO
The General Manager The Chairman of the
Board
__________________________
_____________________
N.C. Zouioueche X. X. Xxxxxxx Xx.
