Common use of Development and Production Clause in Contracts

Development and Production. 1. Within the scope of exploration (prospection and research activities), whenever the Concession Holder establishes the existence of an economically viable oil field, it must develop the respective preliminary demarcation and the general working plan for development and production, which must include the closing plan and the return of the area to its original or equivalent status, and the respective schedule for execution, submitting them to DGEG for discussion, according to the terms of Articles 37 to 39 of DL 109/94. 2. The development and/or production work established for each year will be in the annual plans, duly broken down and budgeted for, to be submitted for discussion by DGEG, according to Articles 31, 32 and 40 of DL 109/94. 3. Within the period of 5 (five) years from the approval date of each general development and production plan, according to the terms of Article 41 of DL 109/94, the Concession Holder must definitively demarcate the boundaries of the oil blocks in which the acknowledged oil fields are located. 4. The period to which the previous number refers may be extended when it is shown to be technically justified, pursuant to Article 41(2) of DL 109/94. 5. The commercial production of an oil field may only be initiated as of the date of approval of the respective general development and production plan. 6. The Concession Holder must perform the work in a regular and continuous manner, employing good oil industry techniques and practices and rigorously observing the technical rules that might be established in the future. 7. Except in the special situations established in Article 72 of DL 109/94, the Concession Holder may freely make use of the oil it produces. 8. The conditions regarding oil development and production activities will be established in the general development and production plan to be agreed to by and between DGEG and the Concession Holder according to the terms of Articles 38 and 39 of DL 109/94.