OPTION AGREEMENT FOR PARTICIPATION IN EXPLORATION BLOCKS IN ARAB REPUBLIC OF EGYPT
Exhibit
10.2
OPTION
AGREEMENT FOR PARTICIPATION
IN
EXPLORATION BLOCKS IN ARAB REPUBLIC OF EGYPT
THIS
OPTION AGREEMENT FOR PARTICIPATION IN EXPLORATION BLOCKS IN ARAB REPUBLIC OF
EGYPT (hereinafter referred to as this “Option Agreement”) made this
8th
day of January, 2008 with an
effective date of December 31,
2007 (the “Effective
Date”)
BETWEEN:
Gujarat
State Petroleum Corporation
Limited, a company organized and existing under the laws of India having
its registered office at GSPC Bhavan, behind Udyog Bhavan, Xxxxxx-00,
Xxxxxxxxxxx, Xxxxxxx 000000, Xxxxx (hereinafter referred to as “GSPC”)
OF
THE
FIRST PART;
AND
GeoGlobal
Resources (Barbados)
Inc., a company whose registered office is at Xxxxxxxxxxx Place, Broad
Street, Bridgetown, Barbados, West Indies with its corporate head office at
310,
605 – 1st
Street
SW, Calgary, Alberta, T2P 3S9, Canada, (hereinafter referred to as “GGRB”)
OF
THE
SECOND PART
(GSPC
and
GGRB shall hereinafter collectively be referred to as “Parties” and individually as
a
“Party”)
WHEREAS:
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(a)
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The
Parties and Alkor Petroo Limited (“Alkor”) entered
into a
Joint Study & Bid Agreement dated July 13, 2006 (hereinafter referred
to as “JSBA”) for
participation in blocks offered under bid round by Arab Republic
of
Egypt.
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(b)
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The
consortium comprising of GSPC, GGRB and Alkor was successful in their
bids
for two exploration blocks namely the E-GAS Block 6 offshore (also
referred to as “N.
Hap’y”) and the GANOPE Block 8 onshore (also referred to as “South Diyur”)
(N. Hap’y
and South Diyur are hereinafter collectively referred to as the “Exploration
Blocks”).
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(c)
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The
Parties entered into an Assignment Agreement for Exploration Blocks
in
Arab Republic of Egypt dated 8th
January, 2008 (the “Assignment Agreement”)
(attached herewith as Schedule “A”) by which GGRB assigned its entire 30%
(thirty percent) participating interest the Exploration
Blocks.
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(d)
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GGRB
has furnished to GSPC the following bank guarantees (equivalent to
2% of
financial commitment for the first Exploration Phase in Exploration
Blocks) with respect to a 30% participating interest in the Exploration
Blocks:
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(i)
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The
bank guarantee dated July 26, 2007 provided by GGRB in the amount
of
US$270,000 (United States dollars two hundred and seventy thousand)
in
favour of GSPC; and
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(ii)
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The
bank guarantee dated July 26, 2007 provided by GGRB in the amount
of
US$900,000 (United States dollars nine hundred thousand) in favour
of
GSPC.
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(The
bank
guarantees referred to above shall collectively be referred to as the “July 26,
2007 Bank Guarantees”. GSPC has called upon the July 26, 2007 Bank
Guarantees and received the amounts provided for by them).
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(e)
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Upon
execution of the Assignment Agreement, GSPC will repay the amounts
it
received by invocation of the July 26, 2007 Bank Guarantees and direct
that the State Bank of India allocate these funds to two new bank
guarantees to be provided by GGRB in the same amounts as the July
26, 2007
Bank Guarantees, and expiring July 15, 2008 in favour of GSPC (referred
to
as the “January 2008 Bank Guarantees”). GGRB will also give
similar instructions to the State Bank of India.
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NOW
THEREFORE THIS OPTION AGREEMENT
WITNESSETH that in consideration of the Parties entering into the
Assignment Agreement and of the mutual covenants and agreements herein
contained, GSPC and GGRB hereto agree as follows:
1.
Terms and Conditions of Option to Participate:
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(a)
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GGRB
shall have the irrecoverable and exclusive right, commencing on the
Effective Date of this Option Agreement and ending on April 30, 2008,
or
such other date as may be agreed to in writing between the Parties,
to
elect by notice in writing to GSPC, to participate up to a 30% (thirty
percent) participating interest (“Elected Participating
Interest”) in both the Exploration Blocks, and a corresponding
participating interest in the Concession Agreement(s) to the Exploration
Blocks and agreeing to pay their pro rata share (equal to their Elected
Participating Interest) of all costs and expenses incurred from and
after
the Effective Date of this Option Agreement in the Exploration Blocks.
For
avoidance of dout, it is clarified that, in the event of exercise
of
option, GSPC shall have no further obligation under this Option Agreement
and under the Assignment Agreement for the payment of any costs and
expenses with respect to the Elected Participaging Interest from
and after
the date of exercise of the option by
GGRB.
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(b)
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GGRB
shall, immediately upon exercise of option by GGRB as envisaged under
Clause 1(a) of this Agreement, reimburse GSPC, all costs and expenses
incurred by GSPC with respect to the Elected Participating Interest
after
the Effective Date from the Option Bank Guarantees referred to in
paragraph 1(d) below. In the event, the Option Bank Guarantees are
not sufficent to make this reimbursement, GGRB will pay GSPC directly
the
additional amounts so as to fully reimburse GSPC.
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(c)
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GGRB
shall not be charged or liable to pay for any matters with respect
to
Exploration Blocks prior to the Effective Date of this Option Agreement.
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(d)
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The
Parties agree that if GGRB elects to participate in the Exploration
Blocks
within the time frame agreed to in paragraph 1(a) above, GGRB shall
further provide GSPC bank guarantees (representing 100% of the financial
commitment for the first Exploration Phase in Exploration Blocks)
with
respect to their Elected Participating Interest. For further clarity,
GGRB
shall have the obligation to provide, in relation to the initial
Exploration Period of the Exploration Blocks, bank guarantees in
proportion to the Elected Participating Interest of (i) US$150,000,000
(United States dollars one hundred and fifty million) for N. Hap’y; and
(ii) US$45,000,000 (United States dollars forty-five million) for
South
Diyur (as may be applicable). These bank guarantees are
referred to as the “Option Bank Guarantees”.
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(e)
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Upon
delivery of the Option Bank Guarantees, GSPC shall release the January
2008 Bank Guarantees to GGRB.
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(f)
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If
GGRB fails to provide the Option Bank Guarantees within ten (10)
days of
the receipt by GSPC of GGRB’s notice of election to participate as
stipulated in Clause 1(a), such failure shall be deemed to be a
termination of GGRB’s right to earn or retain any interest in the
Exploration Blocks.
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(g)
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If
GGRB fails to elect to participate as stipulated in Clause 1(a),
or fails
to provide the Option Bank Guarantees, then the January 2008 Bank
Guarantees shall be forfeited and GGRB shall waive any and all rights
whatsoever in respect of them.
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2.
Further Assurance:
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(a)
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GSPC
has received the amount provided for in the July 26, 2007 Bank Guarantees.
It is agreed between the Parties that the amount received by GSPC
will be
repaid and directed by GSPC to fund the January 2008 Bank Guarantees
by
GGRB in favour of GSPC. GGRB will give similar direction to the State
Bank
of India.
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(b)
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In
the event of exercise of its option under Clause 1(a) to acquire
Elected
Participating Interest and upon the delivery of the Option Bank Guarantees
referred to in Clause 1(d), GSPC hereby agrees to provide GGRB the
necessary documentary support such as a Power of Attorney, authorization,
affidavit, undertaking and such other document(s) and full co-operation,
as may be required, to execute and/or amend the Concession Agreements
for
the Exploration Blocks, the Assignment Agreement and any other
documentation as may be required to reflect that GGRB has been transferred
from GSPC, the GGRB Elected Participating Interest.
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(c)
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In
the event of exercise of its option under Clause 1(a) to acquire
Elected
Participating Interest and upon the delivery of the Option Bank
Guarantees, GGRB and GSPC shall co-operate and undertake all necessary
action (including liasioning with the Government of the Arab Republic
of
Egypt, GANOPE, E-GAS, contractors, etc) as may be required to give
effect
to the assignment of the GGRB Elected Participating Interest, in
favour of
GGRB.
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(d)
GGRB and GSPC agree to act in good faith and not to undertake any
action
which is prejudicial to interest of GGRB, GSPC or Alkor under the
Concession Agreement the JSBA, or any related agreements.
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(e)
Each of the Parties represent that they have the necessary powers
and
authority to enter into this Option Agreement and perform the obligations
envisaged herein.
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3.
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Amendment:
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No
amendment to this Option Agreement shall be valid and binding unless set forth
in writing and duly executed by the Parties.
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4.
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Governing
Law and Arbitration:
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(a)
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This
Option Agreement shall be governed by laws of India.
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(b)
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Any
dispute arising in connection with or with respect to validity of
this
Option Agreement shall be finally resolved through arbitration in
accordance with the provisions of the Arbitration and Conciliation
Act,
1996. Proceedings of arbitration shall be held in Ahmedabad and shall
be
conducted in English. Each Party shall appoint one arbitrator and
the two
arbitrators so appointed shall appoint the third arbitrator.
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5.
Counterpart Execution:
This
Option Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same understanding, and any Party
may enter into this Option Agreement by executing a counterpart.
EXECUTED
in Gandhinagar,
Gujarat
by:
/s/ M.Y. Xxxxxxxx
XX
(P&D)
Signed
for and on behalf
of
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GUJARAT
STATE PETROLEUM CORPORATION LIMITED
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by:
/s/ Xxxxx X. Xxxx,
Executive
Vice President and Chief Financial Officer
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Signed
for and on behalf of
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GEOGLOBAL
RESOURCES (BARBADOS)
INC.
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