Common use of Procedure C Clause in Contracts

Procedure C. The Operator shall contract the most qualified supplier of goods and services according to cost and quality criteria, and the Operating Committee shall previously approve the engagement. The preliminary approval by the Operating Committee is required for beginning the engagement procedure, which shall ensure advantage of the winning proposal and count on at least three qualified suppliers. The Operator shall ensure that the preliminary approval will be timely for any change in the contracting strategy with no impact on the project schedule. The Operator shall provide to the other Consortium Members a preliminary list of participants of the contracting procedure, which shall be filled out with indications of any Consortium Member upon request to the Operator in no later than fifteen (15) days of receipt of this preliminary list. Before the agreement is executed, the Operator shall submit to the Operating Committee an engagement report, which shall include the competitive analysis of the bidding process and the reasons for choosing the supplier. The Operator shall finish the engagement procedure after approval by the Operating Committee. Any Consortium Member may have access to a copy of the agreements executed by the Operator upon request. The amount limits for determining the ordinary engagement procedure to be used by the Operator, which may be reviewed every five (5) years by the Operating Committee, are the following: Type of Operation Procedure A Procedure B Procedure C Exploration and Assessment Up to USD 50 thousand Between USD 50 thousand and USD 5 million Above USD 5 million Development Up to USD 50 thousand Between USD 50 thousand and USD 10 million Above USD 10 million Production Up to USD 50 thousand Between USD 50 thousand and USD 5 million Above USD 5 million The use of U.S. dollar in the table above is for reference only and does not imply any possibility of recognition of expenditures in foreign currency. To determine the procedure, the exchange rate for purchase in the first business day of the month, which shall establish the amount in the table for such month referred to in section 3.28, shall be taken into account. As guidance to define the procedure to be adopted, the following shall be considered: (i) the date on which the agreement or the purchase order for Procedure A was issued, (ii) the date on which a request for proposal to the suppliers for procedure B was sent, and (iii) the date on which the engagement strategy for preliminary approval of the Operating Committee for procedure C was sent, pursuant to paragraph 3.27.1 of Annex XI. Joinder to goods and services supply agreements previously executed by the Contracted Parties, or by Consortiums in which they participate, and the purchase of goods from the inventories of Contracted Parties, or of Consortiums in which they participate, are extraordinary procedures of contracting of goods and services required for the Operations. Extraordinary engagement procedures may only be adopted in situations in which the impossibility of adopting ordinary procedures and the competitiveness of the prices are evidenced. Engagements through extraordinary procedures shall be previously approved by the Operating Committee. The Operator shall ensure that the preliminary approval will be timely for any change in the contracting strategy with no impact on the project schedule. The contracting of services typically performed by the Operator, directly, through a third party, or its Affiliates, characterizes special procedures of contracting of goods and services required for the operations. The special engagement procedure shall be regulated according to the Internal Regulation of the Operating Committee. Contracting of goods and services by means of a foreign legal entity established by the Contracted Parties aiming at using the tax benefits of the special customs regime for export and import of goods and services intended for the activities of Exploration and Production in the Oil and Gas Deposits – REPETRO, is a specific procedure. The engagement procedure referred to in paragraph 3.33 of this annex shall ensure the Manager’s participation in the procedure of definition of strategy and acquisition of goods and services eligible for the benefit of REPETRO. The specific engagement procedure shall be regulated in the Internal Regulation of the Operating Committee. The execution of contract amendments follows the procedure provided for in the original engagements. Nonetheless, if the amendment is equal or lower than twenty-five percent (25%) of the original amount of the agreement, the prior approval of the Operating Committee for its execution is waived, when originally requested. When the sum of the original contract amount with the amended amount changes the engagement procedure, the procedure provided for the engagement corresponding to the sum of the amount applies. Authorization for Expenditure Before incurring a commitment or expenditure provided for in the previously approved Budget and Work Program, the Operator must issue for the Operating Committee an Authorization for Expenditure in case the amounts involved are greater than USD 7 million, pursuant to paragraphs 3.29 and 3.30 of this annex. The amounts may be reviewed by the Operating Committee with minimum frequency of five (5) years. The Authorization for Expenditure may be resolved upon in ordinary and extraordinary meetings of the Operating Committee or through postal voting, as provided for in the Internal Regulations of the Operating Committee. The preparation of the Authorization for Expenditure shall be based on the Budget and Work Program previously determined by the Operating Committee, and an additional authorization for expenditure shall be required in case the total amount exceeds five percent (5%) of the approved budget. If the amount of a certain line item exceeds ten percent (10%) of the initially authorized amount, a new Authorization for Expenditure shall be required. The Operator is not required to issue an Authorization for Expenditure related to general and administrative expenses listed as individual items of the approved Work and Budget Program. Each Authorization for Expenditure proposed by the Operator shall: identify the Operation to be conducted according to the applicable line item in the Budget and Work Program; describe the Operation in details; include the best estimate of the Operator for the total funds required to conduct the Operation; outline the proposed construction and financial schedule; include additional information to support the Operating Committee’s resolution. Expenditures Above the Expected For the expenses of the approved Budget and Work Program, the Operator shall be entitled to incur an additional expense for each line item of up to ten percent (10%) of the respective approved amount, with no need of new approval by the Operating Committee, as long as the total accrued expenses above the expected for the current calendar year do not exceed five percent (5%) of the total Budget and Work Program. In case the Operator anticipates that the defined limits may be exceeded, a revision of the Budget and Work Program shall be submitted to the Operating Committee. The restrictions in paragraph Error: Reference source not found shall apply without prejudice to the Operator’s obligation of incurring expenses arising from Emergency Operations without prior approval by the Operating Committee.

Procedure C. The Operator shall contract the most qualified supplier of goods and services according to cost and quality criteria, and the Operating Committee shall previously approve the engagement. The preliminary approval by the Operating Committee is required for beginning the engagement procedure, which shall ensure advantage of the winning proposal and count on at least three qualified suppliers, if possible. The Operator shall ensure that the preliminary approval will be timely for any change in the contracting strategy with no impact on the project schedule. The Operator shall provide to the other Consortium Members a preliminary list of participants of the contracting procedure, which shall be filled out with indications of any Consortium Member upon request to the Operator in no later than fifteen (15) days of receipt of this preliminary list. Before the agreement is executed, the Operator shall submit to the Operating Committee an engagement report, which shall include the competitive analysis of the bidding process and the reasons for choosing the supplier. The Operator shall finish the engagement procedure after approval by the Operating Committee. Any Consortium Member may have access to a copy of the agreements executed by the Operator upon request. The amount limits for determining the ordinary engagement procedure to be used by the Operator, which may be reviewed every five (5) years by the Operating Committee, are the following: Type of Operation Procedure A Procedure B Procedure C Exploration and Assessment Up to USD 50 USD50 thousand Between USD 50 USD50 thousand and USD 5 USD5 million Above USD 5 USD5 million Development Up to USD 50 USD50 thousand Between USD 50 USD50 thousand and USD 10 USD10 million Above USD 10 USD10 million Production Up to USD 50 USD50 thousand Between USD 50 USD50 thousand and USD 5 USD5 million Above USD 5 USD5 million The use of U.S. dollar in the table above is for reference only and does not imply any possibility of recognition of expenditures in foreign currency. To determine the procedure, the exchange rate for purchase in the first business day of the month, which shall establish the amount in the table for such month referred to included in section 3.283.23, shall be taken into account. As guidance to define the procedure to be adopted, the following shall be considered: (i) the date on which the agreement or the purchase order for Procedure A was issued, (ii) the date on which a request for proposal to the suppliers for procedure B was sent, and (iii) the date on which the engagement strategy for preliminary approval of the Operating Committee for procedure C was sent, pursuant to paragraph 3.27.1 3.22.1. The following are extraordinary procedures of Annex XI. Joinder contracting of goods and services required for the Operations: joinder to goods and services supply agreements previously executed by the Contracted Parties, or by Consortiums in which they participate, and ; the purchase of goods from the inventories of Contracted Parties, or of Consortiums in which they participate, are extraordinary procedures of contracting of goods ; and services required for the Operationswith an exclusive supplier. Extraordinary engagement procedures may only be adopted in situations in which the impossibility of adopting ordinary procedures and the competitiveness of the prices are evidenced. The extraordinary procedure provided for in item “c” of paragraph 3.26 shall only be subject to the confirmation of competitiveness of the prices charged. Engagements through extraordinary procedures shall be previously approved by the Operating Committee. The Operator shall ensure that the preliminary approval will be timely for any change in the contracting strategy with no impact on the project schedule. The goods and service agreements entered into by and between the Assignee before execution of this Agreement are hereby subject to the extraordinary procedures provide for in item “a” of paragraph 3.26. The contracting of services typically performed by the Operator, directly, through a third party, or its Affiliates, Operator characterizes special procedures of contracting of goods and services required necessary for the operationsOperations. The special engagement procedure shall be regulated according to the Internal Regulation of the Operating Committee. Contracting of goods and services by means of a foreign legal entity established by the Contracted Parties aiming at using the tax benefits of the special customs regime for export and import of goods and services intended for the activities of Exploration and Production in the Oil and Gas Deposits – REPETRO, is a specific procedure. The engagement procedure referred to in paragraph 3.33 of this annex shall ensure the Manager’s participation in the procedure of definition of strategy and acquisition of goods and services eligible for the benefit of REPETRO. The specific engagement procedure shall be regulated in the Internal Regulation of the Operating Committee. The execution of contract amendments follows the procedure provided for in the original engagements. Nonetheless, if the amendment is equal or lower than twenty-five percent (25%) of the original amount of the agreement, the prior approval of the Operating Committee for its execution is waived, when originally requested. When the sum of the original contract amount with the amended amount changes the engagement procedure, the procedure provided for the engagement corresponding to the sum of the amount applies. Authorization for Expenditure Before incurring a commitment or expenditure provided for in the previously approved Budget and Work Program, the Operator must issue for the Operating Committee an Authorization for Expenditure in case the amounts involved are greater than USD 7 USD7 million, pursuant to paragraphs 3.29 3.24 and 3.30 of this annex3.25. The amounts may be reviewed by the Operating Committee with minimum frequency of five (5) years. The Authorization for Expenditure may be resolved upon in ordinary and extraordinary meetings of the Operating Committee or through postal voting, as provided for in the Internal Regulations of the Operating Committee. The preparation of the Authorization for Expenditure shall be based on the Budget and Work Program previously determined by the Operating Committee, and an additional authorization for expenditure shall be required in case the total amount exceeds five percent (5%) of the approved budget. If the amount of a certain line item exceeds ten percent (10%) of the initially authorized amount, a new Authorization for Expenditure shall be required. The Operator is not required to issue an Authorization for Expenditure related to general and administrative expenses listed as individual items of the approved Work and Budget Program. Each Authorization for Expenditure proposed by the Operator shall: identify the Operation to be conducted according to the applicable line item in the Budget and Work Program; describe the Operation in details; include the best estimate of the Operator for the total funds required to conduct the Operation; outline the proposed construction and financial schedule; include additional information to support the Operating Committee’s resolution. Expenditures Above the Expected For the expenses of the approved Budget and Work Program, the Operator shall be entitled to incur an additional expense for each line item of up to ten percent (10%) of the respective approved amount, with no need of new approval by the Operating Committee, as long as the total accrued expenses above the expected for the current calendar year do not exceed five percent (5%) of the total Budget and Work Program. In case the Operator anticipates that the defined limits may be exceeded, a revision of the Budget and Work Program shall be submitted to the Operating Committee. The restrictions in paragraph Error: Reference source not found 3.30 shall apply without prejudice to the Operator’s obligation of incurring expenses arising from Emergency Operations without the prior approval by of the Operating Committee.

Procedure C. The Operator shall contract the most qualified supplier of goods and services according to cost and quality criteria, and the Operating Committee shall previously approve the engagement. The preliminary approval by the Operating Committee is required for beginning the engagement procedure, which shall ensure advantage of the winning proposal and count on at least three qualified suppliers. The Operator shall ensure that the preliminary approval will be timely for any change in the contracting strategy with no impact on the project schedule. The Operator shall provide to the other Consortium Members a preliminary list of participants of the contracting procedure, which shall be filled out with indications of any Consortium Member upon request to the Operator in no later than fifteen (15) days of receipt of this preliminary list. Before the agreement is executed, the Operator shall submit to the Operating Committee an engagement report, which shall include the competitive analysis of the bidding process and the reasons for choosing the supplier. The Operator shall finish the engagement procedure after approval by the Operating Committee. Any Consortium Member may have access to a copy of the agreements executed by the Operator upon request. The amount limits for determining the ordinary engagement procedure to be used by the Operator, which may be reviewed every five (5) years by the Operating Committee, are the following: Type of Operation Procedure A Procedure B Procedure C Exploration and Assessment Up to USD 50 thousand Between USD 50 thousand and USD 5 million Above USD 5 million Development Up to USD 50 thousand Between USD 50 thousand and USD 10 million Above USD 10 million Production Up to USD 50 thousand Between USD 50 thousand and USD 5 million Above USD 5 million The use of U.S. dollar in the table above is for reference only and does not imply any possibility of recognition of expenditures in foreign currency. To determine the procedure, the exchange rate for purchase in the first business day of the month, which shall establish the amount in the table for such month referred to in section 3.28, shall be taken into account. As guidance to define the procedure to be adopted, the following shall be considered: (i) the date on which the agreement or the purchase order for Procedure A was issued, (ii) the date on which a request for proposal to the suppliers for procedure B was sent, and (iii) the date on which the engagement strategy for preliminary approval of the Operating Committee for procedure C was sent, pursuant to paragraph 3.27.1 of Annex XI. Joinder to goods and services supply agreements previously executed by the Contracted Parties, or by Consortiums in which they participate, and the purchase of goods from the inventories of Contracted Parties, or of Consortiums in which they participate, are extraordinary procedures of contracting of goods and services required for the Operations. Extraordinary engagement procedures may only be adopted in situations in which the impossibility of adopting ordinary procedures and the competitiveness of the prices are evidenced. Engagements through extraordinary procedures shall be previously approved by the Operating Committee. The Operator shall ensure that the preliminary approval will be timely for any change in the contracting strategy with no impact on the project schedule. The contracting of services typically performed by the Operator, directly, through a third party, or its Affiliates, characterizes special procedures of contracting of goods and services required for the operations. The special engagement procedure shall be regulated according to the Internal Regulation of the Operating Committee. Contracting of goods and services by means of a foreign legal entity established by the Contracted Parties aiming at using the tax benefits of the special customs regime for export and import of goods and services intended for the activities of Exploration and Production in the Oil and Gas Deposits – REPETRO, is a specific procedure. The engagement procedure referred to in paragraph 3.33 of this annex shall ensure the Manager’s participation in the procedure of definition of strategy and acquisition of goods and services eligible for the benefit of REPETRO. The specific engagement procedure shall be regulated in the Internal Regulation of the Operating Committee. The execution of contract amendments follows the procedure provided for in the original engagements. Nonetheless, if the amendment is equal or lower than twenty-five percent (25%) of the original amount of the agreement, the prior approval of the Operating Committee for its execution is waived, when originally requested. When the sum of the original contract amount with the amended amount changes the engagement procedure, the procedure provided for the engagement corresponding to the sum of the amount applies. Authorization for Expenditure Before incurring a commitment or expenditure provided for in the previously approved Budget and Work Program, the Operator must issue for the Operating Committee an Authorization for Expenditure in case the amounts involved are greater than USD 7 million, pursuant to paragraphs 3.29 and 3.30 of this annex. The amounts may be reviewed by the Operating Committee with minimum frequency of five (5) years. The Authorization for Expenditure may be resolved upon in ordinary and extraordinary meetings of the Operating Committee or through postal voting, as provided for in the Internal Regulations of the Operating Committee. The preparation of the Authorization for Expenditure shall be based on the Budget and Work Program previously determined by the Operating Committee, and an additional authorization for expenditure shall be required in case the total amount exceeds five percent (5%) of the approved budget. If the amount of a certain line item exceeds ten percent (10%) of the initially authorized amount, a new Authorization for Expenditure shall be required. The Operator is not required to issue an Authorization for Expenditure related to general and administrative expenses listed as individual items of the approved Work and Budget Program. Each Authorization for Expenditure proposed by the Operator shall: identify the Operation to be conducted according to the applicable line item in the Budget and Work Program; describe the Operation in details; include the best estimate of the Operator for the total funds required to conduct the Operation; outline the proposed construction and financial schedule; include additional information to support the Operating Committee’s resolution. Expenditures Above the Expected For the expenses of the approved Budget and Work Program, the Operator shall be entitled to incur an additional expense for each line item of up to ten percent (10%) of the respective approved amount, with no need of new approval by the Operating Committee, as long as the total accrued expenses above the expected for the current calendar year do not exceed five percent (5%) of the total Budget and Work Program. In case the Operator anticipates that the defined limits may be exceeded, a revision of the Budget and Work Program shall be submitted to the Operating Committee. The restrictions in paragraph Error: Reference source not found 3.35 shall apply without prejudice to the Operator’s obligation of incurring expenses arising from Emergency Operations without prior approval by the Operating Committee.