1
MEMORANDUM OF AGREEMENT
BETWEEN
PERTAMINA AND KOREA GAS CORPORATION
FOR
PURCHASE AND SALE OF LNG
DURING 1995 - 1999
2
MEMORANDUM OF AGREEMENT
FOR
PURCHASE AND SALE OF LNG DURING 1995-1999
This Memorandum of Agreement ("Agreement") dated September 30, 1994 is made by
and between PERUSAHAAN PERTAMBANGAN MINYAK XXX GAS BUMI NEGARA ("PERTAMINA")
("Seller") and Korea Gas Corporation ("KGC") ("Buyer"), for the sale and
purchase of certain quantities of LNG as described below. Seller and Buyer are
collectively referred to herein as the "Parties".
WHEREAS, Seller and Buyer are parties to an Amended and Restated LNG Sales and
Purchase Contract, effective as of January 1, 1991 ("Arun III Contract") which
is in full force and effect and which is unaffected by this Agreement; and
WHEREAS, Seller and Buyer are parties to the LNG Sales and Purchase Contract
(Korea II), effective as of May 7, 1991 ("Korea II Contract") which is in full
force and effect and which is unaffected by this Agreement ; and
WHEREAS, Seller desires to sell and Buyer desires to purchase certain
quantities of LNG during the period 1995 to 1999.
NOW THEREFORE, in consideration of the mutual promises contained herein, the
Parties agree as follows :
-1-
3
ARTICLE I - TERM
The term of this Agreement shall commence on January 1, 1995 and shall
terminate on December 31, 1999.
ARTICLE II - FIXED QUANTITIES
During each calendar year specified below ("Fixed Quantity Period"), Seller
shall sell and deliver to Buyer and Buyer shall purchase, receive and pay for,
at the applicable Contract Sales Price, the quantity of LNG specified for such
Fixed Quantity Period (each such quantity being called a "Fixed Quantity") as
follows :
Fixed Quantity Fixed Quantities (Number of Cargoes)
-------------- ------------------------------------
Period Ex-Ship F.O.B. Total
------ ------- ------ -----
1995 7 6 13
1996 23 3 26
1997 20 3 23
1998 15 4 19
1999 - 27 27
One Ex-Ship cargo is equivalent to 2,900 Billion BTU's.
One F.O.B. cargo is equivalent to 2,940 Billion BTU's.
ARTICLE III - TRANSPORTATION
(a) Seller shall be responsible for providing transportation for the
Ex-Ship Fixed Quantities specified in Article II above, on an Ex-Ship
basis.
-2-
4
(b) Buyer shall be responsible for providing transportation for the F.O.B.
Fixed Quantities specified in Article II above, on an F.O.B. basis.
(c) In providing transportation hereunder, the Parties shall use LNG
Tankers which are compatible with the Loading Port and the Receiving
Facility and which have the required port clearances, authorizations
and approvals. The Parties shall use their respective best efforts to
obtain such clearances, authorizations and approvals.
ARTICLE IV - CONTRACT SALES PRICE
(a) Ex-Ship Fixed Quantities
The Contract Sales Price for the Ex-Ship Fixed Quantities shall be the
sum of an LNG related portion ("LNG Related Portion") and a transport
related portion ("Transport Related Portion").
The LNG Related Portion shall be 0.159 REP, where REP is the
arithmetic average of the realized export prices, in U.S. Dollars per
barrel, F.O.B. Indonesia, of all field classifications of Indonesian
crude oils (including condensate) then being sold and exported, except
premiums and except such prices for spot sales.
The Transport Related Portion shall be U.S.$0.62/MMBTU as at January
1, 1994, escalating 2.5% per annum thereafter.
(b) F.O.B. Fixed Quantities
The Contract Sales Price for the F.O.B. Fixed Quantities shall be
equal to the LNG Related Portion for the Ex-Ship Quantities referred
to in (a) above, multiplied by a boil-off adjustment factor of 0.9865.
-3-
5
ARTICLE V - SOURCES OF SUPPLY
The Natural Gas to be processed into LNG and sold and delivered hereunder is to
be produced from the areas in East Kalimantan covered by production sharing
contracts between PERTAMINA and its relevant suppliers, and loaded at
PERTAMINA's facility at Bontang, East Kalimantan.
ARTICLE VI - GENERAL TERMS AND CONDITIONS
(a) Ex-Ship Fixed Quantities
All of the terms and conditions of the Arun III Contract shall apply
to the Ex-Ship Fixed Quantities and shall be incorporated in this
Agreement (mutatis mutandis) except for terms which are specifically
excluded below, or which conflict with the terms herein. Capitalized
terms used herein in connection with the Ex-Ship Fixed Quantities
shall have the same meaning as set forth in the Arun III Contract
unless otherwise specifically defined herein.
The following Articles of the Arun III Contract are hereby expressly
excluded from this Agreement :
7.1 Fixed Quantity (save that each of the calendar years
1995-1999 shall be referred to as a "Fixed Quantity Period"
and the quantity of LNG set out for delivery hereunder in
each such calendar year shall be referred to as the "Fixed
Quantity" for such Fixed Quantity Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between Buyer and
Other Purchasers;
7.6 Make-Up LNG;
7.7 Allocation for Make-Good LNG, Make-Up LNG and Restoration
Quantities; and
7.8 Priority Order.
-4-
6
(b) F.O.B. Fixed Quantities
All of the terms and conditions of the Korea II Contract shall apply
to the F.O.B. Fixed Quantities and shall be incorporated in this
Agreement (mutatis mutandis) except for terms which are specifically
excluded below, or which conflict with the terms herein. Capitalized
terms used herein in connection with the F.O.B. Fixed Quantities shall
have the same meaning as set forth in the Korea II Contract unless
otherwise specifically defined herein.
The following Articles of the Korea II Contract are hereby expressly
excluded from this Agreement :
7.1 Fixed Quantity (save that each of the calendar years
1995-1999 shall be referred to as a "Fixed Quantity Period"
and the quantity of LNG set out for delivery hereunder in
each such calendar year shall be referred to as the "Fixed
Quantity" for such Fixed Quantity Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between Buyer and
Other Purchasers;
7.5 Make-Up LNG;
7.7 Allocation for Make-Up LNG and Restoration Quantities; and
7.8 Priority Order.
-5-
7
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed and signed by its duly authorized officer as of this 30th day of
September, 1994.
SELLER : BUYERS :
PERUSAHAAN PERTAMBANGAN MINYAK KOREA GAS CORPORATION
XXX GAS BUMI NEGARA (PERTAMINA)
/s/ X. XXXX'OE /s/ PARK XXXXX-BOO
------------------------- --------------------------
By: X. Xxxx'oe By: Park, Xxxxx-Boo
Title: President Director Title: President
& C.E.O. & C.E.O.
-6-
