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OPERATING SERVICES AGREEMENT
THIS AGREEMENT has been entered into and signed on the nineteenth (19th)
day of November, 1993, by and between MARAVEN S.A., hereinafter called "THE
AFFILIATE," represented herein by its President, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
duly authorized by the Articles of Incorporation - Bylaws of THE AFFILIATE,
and COMPANIA OCCIDENTAL HIDROCARBUROS, INC., hereinafter called "THE
CONTRACTOR," a corporation incorporated and existing under the laws of
California, represented herein by its President, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, duly
authorized by Board Resolutions of THE CONTRACTOR dated November 4, 1993.
1. GENERAL PROVISIONS
1.1 All the Hydrocarbons existing within the territory of Venezuela
are a national resource owned and controlled by the State.
1.2 THE AFFILIATE has the exclusive right to carry on exploitation
operations of the Hydrocarbons in all the area described in
Appendix "A" and outlined in the Appendix "B", both annexed
hereto, hereinafter called "Agreement Area."
1.3 THE AFFILIATE wishes to promote the development of the Agreement
Area, and THE CONTRACTOR wishes to render services within such
area.
LEGEND
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
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1.4 THE CONTRACTOR has the financial capacity, technical ability and
professional expertise necessary to perform the Operating
Services described hereunder.
1.5 THE CONTRACTOR shall perform for THE AFFILIATE, but at the risk
and cost of THE CONTRACTOR, those rehabilitation, development,
production and other activities as are required to achieve the
continuous commercial development of the Hydrocarbons which are
present in the Agreement Area, as further specifically set forth
hereunder and in the Work Program approved by THE AFFILIATE.
It being understood that:
a) The compensation of THE CONTRACTOR for the services hereunder
shall only consist of such compensation established in Clause 8
and shall not include any title to the Hydrocarbons found or
produced in the Agreement Area.
b) The rights of THE CONTRACTOR arising from this Agreement do not
include any right to the economic benefits resulting from the
sale or disposal by THE AFFILIATE of the Hydrocarbons extracted
from the Agreement Area, but only to those economic interests, as
may be granted hereunder as a contractor, for the operational
activities thereof.
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c) The Agreement is entered into with THE CONTRACTOR by reason of
its particular conditions, therefore, it is considered to be a
contract intuito personae. As a result, THE CONTRACTOR may not
merge, associate or modify either the organizational structure or
its share participation without notifying THE AFFILIATE in
writing at least three (3) months in advance to any of the
above-mentioned situations and must provide THE AFFILIATE with
any documents required thereby. THE CONTRACTOR will be informed
by THE AFFILIATE if THE AFFILIATE considers that the occurrence
of any of the above circumstances is not convenient to its
interests concerning this Agreement, and if THE CONTRACTOR
insists in carrying out the decision thereof notwithstanding the
objection from THE AFFILIATE, THE AFFILIATE may terminate this
Agreement and THE CONTRACTOR will have no right to file any
claim.
2. DEFINITIONS
The words and terms as used herein shall have the following meanings,
irrespective of their being used in the singular or plural:
2.1 Agreement: Means the Spanish version of this "Operating Services
Agreement," together with Appendices "A", "B", "C", "D", "E" and
"F", which are
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incorporated hereto. The English version of the Agreement and its
Appendices is used only as a reference and has no effect
whatsoever.
2.2 Agreement Area: Means the Area within the territory of Venezuela
object of this Agreement, as described and outlined in Appendices
"A" and "B".
2.3 Agreement Year: Means a period of twelve (12) months starting on
January 1st and ending the following December 31, according to
the Gregorian Calendar. For the first year of the Agreement, the
Agreement Year means the period commencing the Effective Date of
the Agreement until December 31 of the following Gregorian
Calendar year.
2.4 Effective Date: Means the day this Agreement is signed.
2.5 Associated Company: Means, with respect to a Party to this
Agreement, a company or other entity controlling or being
controlled by the Party; or a company controlling a company or
other entity controlling or being controlled by such Party, it
being understood that control means the ownership by a company or
entity of at least fifty percent (50%) of: (a) the voting shares,
if the company is a stock company; or (b) the controlling rights
or interests,
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if the other entity is not a stock company. Those companies or
entities directly or indirectly controlled by a company or entity
controlling one of the Parties shall also be considered an
Associated Company.
2.6 Starting Date of Operations: Means the date Appendix "F"
(Operations Starting Certificate) is subscribed by THE CONTRACTOR
and THE AFFILIATE. The Starting Date of Operations may not be
later than four (4) months after the Effective Date.
2.7 Day: Means a calendar day.
2.8 Force Majeure: Means any event beyond the control of, and which
is not a direct consequence of gross negligence or willful
misconduct by the affected Party, including, but not limited to,
Acts of God or of third parties; compliance with any request,
ruling, order or decree of governmental authorities,
substantially impeding the performance of the work as provided
hereunder; war, rebellion, sabotage or riots; public insurrection
or disorder; floods or volcanic eruptions, tidal waves,
earthquakes, lightning, fires, explosions or other disasters;
strikes or any other act agreed by the workers; or other similar
occurrences beyond the control of the affected Party and that may
not be avoided or
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prevented by such Party exercising due diligence. Nonetheless,
Force Majeure shall not include occurrences such as:
a) Late delivery of construction equipment or materials to be
supplied by THE CONTRACTOR, resulting from a congestion at a
plant of the manufacturer or any other place; a market
oversold condition, inefficiencies or similar occurrences,
or
b) Late performance by THE CONTRACTOR or its subcontractors
resulting from a shortage of supervisors, workforce,
inefficiencies or similar events and a shortage of services,
or
c) The lack of payment of monetary amounts or the congestion
or lack of transportation or storage capacity.
The foregoing, except when said late delivery or late
performance, described in paragraphs a) and b), or congestion or
lack of capacity described in paragraph c), arise from Force
Majeure [an event other than those described in paragraphs a), b)
and c) above] which is beyond the control of affected Party, as
well as the subcontractors, and an
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acceptable alternative source of services, equipment or materials
is not available.
2.9 Production: Means the Hydrocarbons produced and regularly
transferred to THE AFFILIATE at the Transfer Points and under
the terms indicated in Appendix "A", as it may be modified from
time to time by written agreement of the Parties ("Appendix
"A"), on a regular basis, according to the Work Program approved
by THE AFFILIATE, and that THE AFFILIATE is operationally
capable of receiving. The reception of Hydrocarbons produced
under the specifications of Appendix "A" shall only be refused
in the event of Force Majeure.
2.10 Audit of Environmental Situation: Means the determination of
preexisting environmental conditions at the Starting Date of
Operations.
2.11 Production Date: Means the date when the Crude Oil Production
begins, or, subject to Clause 7.7, the Natural Gas, which date,
for the purposes of this Agreement, coincides with the Starting
Date of Operations.
2.12 Crude Oil: Means the oil or any other hydrocarbon in a liquid
state at environmental conditions, including the liquid
hydrocarbons extracted from natural gas.
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2.13 Natural Gas: Means any gaseous hydrocarbon produced, including,
without limitation, non-associated gas and wet gas, dry gas,
casinghead gas and residual gas remaining after liquid
hydrocarbons extraction from wet gas.
2.14 Hydrocarbons: Means both Crude Oil and Natural Gas.
2.15 Barrel: Means an amount or volumetric unit of Crude Oil of
forty-two (42) United States gallons at a temperature of sixty
degrees (60 degrees) Fahrenheit.
2.16 Quarter: Means the period of three (3) months starting either on
January 1, April 1, July 1 or October 1 of any Agreement Year.
2.17 Current Quarter: Means the pertinent Quarter for purposes of
invoicing and indexing adjustments as provided in Clause 18
hereunder.
2.18 Previous Quarter: Means the Quarter preceding the current
Quarter.
2.19 Crude Oil Transfer Points: Means the point of transfer to THE
AFFILIATE of the risk, safeguard and custody of the Crude Oil
produced in the Agreement Area, as defined in Appendix "A".
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2.20 Gas Transfer Points: Means the point of transfer to THE AFFILIATE
of the risk, safeguard and custody of the Natural Gas produced in
the Agreement Area, as defined in Appendix "A".
2.21 Operating Services: Means all drilling, geological studies and
geophysical surveys, rehabilitation, development, extraction,
production, treatment, hauling, maintenance and other operations
authorized or contemplated hereunder.
2.22 Work Program: Means an annual statement detailing the Operating
Services to be performed in the Agreement Area, as approved by
THE AFFILIATE from time to time, including the corresponding
Budget.
2.23 Minimum Work Program: Means the statement detailing the minimum
commitment of Operating Services to be performed at the Agreement
Area during the first three (3) Agreement Years, including the
corresponding Budget, as established in Appendix "C".
2.24 Budget: Means the estimate of all Capital and Non-Capital Costs
included in the Work Program for the period concerned.
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2.25 Capital and Non-Capital costs:
Capital Costs: Means those expenditures incurred for the
performance of the Operating Services established as such
according to Clause 18 hereunder, Accounting Procedures, provided
they are included in the approved Budget as Capital Costs, or
have been approved in writing by THE AFFILIATE.
Non-Capital Costs: Means those expenditures incurred for the
performance of the Operating Services, established as such
according to Clause 18 hereunder, provided that any such Non-
Capital Costs have been incurred after the Production Date and
are included in the approved Budget or have been approved in
writing by THE AFFILIATE.
2.26 Norms and Regulations: Any law, regulation and other provisions
applicable to the activities to be performed by THE CONTRACTOR
hereunder, including such normal operating practices of THE
AFFILIATE, as have been notified to THE CONTRACTOR.
2.27 Party: Means THE CONTRACTOR or THE AFFILIATE, as the case may be.
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2.28 Applicable Law: Means all the laws of the Republic of Venezuela
which will rule the interpretation, validity and compliance of
this Agreement.
3. DURATION OF AGREEMENT
3.1 This Agreement shall be in effect for twenty (20) Agreement
Years, as from the Effective Date. In the event there is no
Production during the first three (3) Agreement Years, the
Agreement shall fully automatically cease, except as otherwise
provided herein.
3.2 THE CONTRACTOR may request, in writing, the extension of the
Agreement. Such request must be reasoned and submitted at least
six (6) months in advance to the maturity of the term set forth
in paragraph 3.1. THE AFFILIATE may grant or reject, in a
reasonable manner, the extension, as well as put conditions to
it.
3.3 In the event there is no Production at the end of the first three
(3) Agreement Years, but THE AFFILIATE and THE CONTRACTOR, after
having considered all the pertinent operating and financial data,
are of the opinion that Production may be achieved, the period of
three (3) years described in paragraph 3.1 may be extended as
agreed upon by the Parties in writing.
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4. AUTOMATIC TERMINATION
In the event that Production is interrupted at any moment after the
first three (3) Agreement Years, for a period of six (6) consecutive
months, except by reason of Force Majeure, the Agreement shall be
automatically terminated, unless otherwise agreed upon by THE
AFFILIATE and THE CONTRACTOR.
5. WORK PROGRAM AND DISBURSEMENTS
5.1 During the first thirty-six (36) months of the Agreement counted
from the Starting Date of Operations, THE CONTRACTOR shall
perform the Minimum Work Program set forth in Appendix "C".
The total amount to be spent by THE CONTRACTOR to perform the
operations during the referred first thirty-six (36) months, as
provided hereunder, shall not, in the aggregate, be less than the
amount specified below for each one of the three (3) periods of
twelve (12) months:
First twelve (12) months: U.S. *
Second twelve (12) months: U.S. *
Third twelve (12) months: U.S. *
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
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To guarantee the Minimum Work Program, THE CONTRACTOR shall
submit an irrevocable "Stand-By" Letter of Credit, in favor of
THE AFFILIATE and issued or confirmed by a first-class bank
previously approved by THE AFFILIATE. The Stand-By Letter of
Credit must he based on the form established in Appendix "D".
The amount of the Stand-By Letter of Credit will be reduced at
the end of each Quarter following the Starting Date of
Operations, pursuant to its terms. For this purpose, THE
CONTRACTOR will report to THE AFFILIATE, within fifteen (15) Days
from the end of each Quarter, the works performed and the amounts
expended, with supporting documentation, in the performance of
the Agreement. THE AFFILIATE, after checking the amounts and
supporting documentation provided by THE CONTRACTOR, will order
the corresponding bank to reduce the Letter of Credit by the
amount actually expended, within fifteen (15) Days from receipt
of said information. At THE AFFILIATE's request, THE CONTRACTOR
must submit any additional supporting documentation, including,
without limitation, any pertinent invoice, contract and document.
THE AFFILIATE shall have the right to object to the amount
reported by THE CONTRACTOR and the reduction of the Stand-By
Letter of Credit by the objected amounts will be suspended until
the objections are duly clarified by the Parties, without
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prejudice of the reduction by THE AFFILIATE of the amounts not
objected. Reductions made in accordance with this clause 5.1 will
not be considered as a waiver by THE AFFILIATE of the right to
submit an objection or claim in the future or to execute the
outstanding balance of the Stand-By Letter of Credit with respect
to works or amounts that further checking demonstrates should not
have given rise to reduction already made, or of any other right
that THE AFFILIATE may have with respect to said amounts.
Default by THE CONTRACTOR of the Minimum Work Program and/or the
above minimum expenditure commitments as provided herein shall
give THE AFFILIATE the right, without prejudice to any other
available right or remedy, to immediately execute the
above-mentioned Letter of Credit for an amount representing the
defaulted minimum guaranteed work commitment of THE CONTRACTOR.
The amounts executed as provided herein shall, in no case, be
reimbursed to THE CONTRACTOR, nor reduced, offset nor otherwise
reduced for any reason whatsoever, including, without limitation,
the receipt of any benefits by THE AFFILIATE, the mitigation of
whatever damage caused by the default of the Minimum Work Program
or the real or possible existence of any claim against third
parties or THE AFFILIATE.
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5.2 In the event that THE CONTRACTOR is unable to comply with the
Minimum Work Program, THE AFFILIATE must be immediately informed
in writing of the reasons causing the non-compliance, and, in
such event, THE CONTRACTOR may be allowed by THE AFFILIATE to
perform the defaulted portion of the Minimum Work Program, or
make the pertinent disbursements during the following year.
Should such situation arise at the end of the third Agreement
Year, THE CONTRACTOR shall be able to obtain an extension of the
"Stand-By" Letter of Credit for the additional term granted to
finish the performance of the defaulted portion and for the
amount corresponding to the defaulted commitment of the Minimum
Work Program. THE AFFILIATE reserves the right to approve or
refuse the request from THE CONTRACTOR to perform the unfinished
portion of the Minimum Work Program during the following year,
within a lapse of time considered to be convenient, without
having to justify its decision.
In the event that, during any Agreement Year following the first
thirty-six (36) months, THE CONTRACTOR shall have performed less
than the agreed Work Program, such unfinished portion, with due
justification and with the written consent from THE AFFILIATE,
may be carried forward to the Work Program for the following
Agreement Year without affecting the rights of THE CONTRACTOR
hereunder. Likewise,
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should THE CONTRACTOR, with prior authorization by THE AFFILIATE,
carry out more of the Work Program agreed on, said additional
portion shall be deducted, with due justification and with the
written consent of THE AFFILIATE, from the Work Program for the
following Year of the Agreement, without affecting the rights of
THE CONTRACTOR under this Agreement.
5.3 At lease three (3) months in advance to the beginning of each
Agreement Year, or as otherwise agreed upon by the Parties, THE
CONTRACTOR shall prepare and submit for approval by THE AFFILIATE
a Work Program for the Agreement Area, setting forth the proposed
Operating Services to be carried out by THE CONTRACTOR during the
following Agreement Year, the estimated cost thereof, the
estimated production to be obtained and the estimated
Hydrocarbons reserves. The Parties hereby agree that the Work
Program for the first Agreement Year shall be prepared and
submitted for THE AFFILIATE's approval within seventy-five (75)
Days following the Effective Date, except as otherwise agreed by
the Parties. THE AFFILIATE may grant or reject, for reasonable
cause, the aforementioned approval of the Work Program, within
the term established in Clause 5.4.
5.4 In the event THE AFFILIATE shall wish to propose a revision of
specific aspects of a Work Program, THE
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CONTRACTOR shall be notified thereby during the forty-five (45)
Days following the reception of the Work Program, specifying in
detail the reasons for such modification. As soon as possible,
the Parties shall meet in order to reach an agreement over the
revisions proposed by THE AFFILIATE. However, any portion of the
Work Program which THE AFFILIATE does not propose to revise
shall be performed as established in the Work Program. In the
event no revision is requested by THE AFFILIATE during the
mentioned period of forty-five (45) Days, the Work Program shall
be deemed approved as submitted by THE CONTRACTOR.
5.5 It is understood that the details of a Work Program may require
changes in view of the prevailing circumstances, and nothing
herein shall limit the right of THE CONTRACTOR to perform such
changes, provided that the general scope of the Work Program is
not modified by such changes and that they are approved in
writing by THE AFFILIATE.
5.6 In the event of emergencies or other special circumstances
requiring immediate action, including, among others, fires,
explosions, blow-outs and oil spills, leaks of toxic and/or
dangerous substances (such as gas, chlorine and ammonia), THE
AFFILIATE must be immediately informed by THE CONTRACTOR, who
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must take the appropriate actions to control the situation or
protect the facilities, people and property. Such actions must be
timely notified to THE AFFILIATE, for purposes of pertinent
coordination.
Any justified expense incurred by THE CONTRACTOR in relation with
such actions, without prejudice to the provisions of Clause 10.17
hereof, shall be included in the Capital Costs.
To meet the situations described above, THE CONTRACTOR must
submit to THE AFFILIATE, within the sixty (60) days following the
Effective Date, the emergency and contingency plans to attend to
any Crude Oil spills.
Notwithstanding the foregoing, and without prejudice to the
obligations of THE CONTRACTOR hereunder, should THE AFFILIATE not
be satisfied with the actions taken by THE CONTRACTOR, or should
he consider it convenient to the interests thereof, THE AFFILIATE
may inform THE CONTRACTOR of a direct intervention and may take
any such action as may be considered advisable, and, in such
event, any expenses incurred by THE AFFILIATE to that purpose
shall be reimbursed by THE CONTRACTOR within the thirty (30) days
following the receipt of the
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corresponding invoice and, without prejudice to the provisions of
Clause 10.17 herein, shall be included within the Capital Costs
of THE CONTRACTOR.
5.7 Nothing in Clause 5 hereof shall be interpreted as allowing THE
CONTRACTOR to make disbursements for less than the minimum
amounts guaranteed, or to perform less than the Minimum Work
Program, as provided in Clause 5.1 hereof (and as detailed in the
Minimum Work Program in Appendix "C"), during the first
thirty-six (36) months of this Agreement, unless a revision to
that purpose is specifically approved in writing by THE
AFFILIATE.
5.8 Without prejudice to the provisions of Clause 5.7, unless it is
specifically otherwise allowed or justified hereunder, the lack
of performance of twenty percent (20%) or more of the Work
Program for any Agreement Year during the term thereof shall be
considered a material breach of the obligations of THE CONTRACTOR
hereunder and shall entitle THE AFFILIATE to immediately
terminate this Agreement without prejudice to any other right or
remedy available to THE AFFILIATE, including, but not limited to,
the right to execute the guarantees given by THE CONTRACTOR.
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6. RIGHTS AND OBLIGATIONS OF THE CONTRACTOR
Other than the provisions hereunder, THE CONTRACTOR shall:
6.1 At its sole expense, finance all the Operating Services without
recourse to THE AFFILIATE, except as otherwise specifically
provided in Clause 8 hereof.
6.2 Prepare and implement the annual Work Program in accordance with
the Norms and Regulations and any other applicable guideline or
instruction and the oil industry practices, including any such
regulations concerning safety, health, labor and environmental
matters applied to the Venezuelan oil industry which are notified
to THE CONTRACTOR. To such purpose, THE CONTRACTOR shall submit
to THE AFFILIATE for approval, sixty (60) Days after the
Effective Date, the following documents:
a) The Program for preventing injuries and/or industrial
diseases.
b) The Plan for protecting the environment, specifying the
steps to be taken for handling atmospheric emissions, solid
residues, toxic waste, or other polluting agents and for
preventing pollution of soil and effluents.
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c) Contingency plan as indicated in Clause 5.6.
d) Emergency plan as indicated in Clause 5.6.
6.3 Unless as otherwise agreed upon by THE AFFILIATE, THE CONTRACTOR
shall be responsible, during the term of this Agreement, for the
maintenance, subject to normal wear and tear, of the facilities
that it has put into service; and, at the appropriate time, but
not later than the termination of this Agreement, for the
abandonment of ▇▇▇▇▇ and for the cleaning and dismantlement of
facilities that it has put into service. Such maintenance,
abandonment, cleaning and dismantlement will be performed in
accordance with Norms and Regulations.
6.4 Perform, together with THE AFFILIATE, an Audit of Environmental
Situation, in the Agreement Area, within a period not exceeding
four (4) months from the Effective Date.
The cost of the audit shall be paid by the Parties in equal
parts. Such audit shall be performed by a juridical person
designated by mutual agreement between the Parties, in writing
and in accordance with the Venezuelan legislation governing the
matter. This expenditure will be a Non-Capital Cost for THE
CONTRACTOR.
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THE CONTRACTOR shall not be liable for the preexisting
environmental conditions. In the event the Ministry of the
Environment and Renewable Natural Resources and/or the Ministry
of Energy and Mines were to order the correction or recovery of
the environment in the Agreement Area because of preexisting
conditions, the execution of such activities will correspond to
THE AFFILIATE.
Prior to the Starting Date of Operations, THE CONTRACTOR shall
perform an Environmental Impact Study as provided in the
Environmental Organic Law, and the cost thereof shall be included
as a Capital Cost in accordance with Clauses 18.5 and 18.11.
6.5 Submit on time to THE AFFILIATE copies of all the geological,
geophysical, drilling, well, production and any such data and
reports as THE CONTRACTOR may obtain and compile during the term
hereof and from time to time. THE CONTRACTOR shall provide on a
routine and timely basis any such reports as are necessary for
THE AFFILIATE to comply with the statutory and internal reporting
requirements thereof, according to the formats provided by THE
AFFILIATE, including, but not limited to, reports of the
estimated Hydrocarbons remaining reserves and the Production at
year end.
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6.6 Cooperate with and support THE AFFILIATE in obtaining any such
third parties' permits and/or right of ways and/or servitude as
are necessary for THE CONTRACTOR to reach or move inside the
Agreement Area in order to perform the Operating Services
provided hereunder. In order to obtain such permits, THE
AFFILIATE shall be notified by THE CONTRACTOR, in writing, at
least two (2) months in advance, of the precise indication of the
zones affected by the Operating Services within the Agreement
Area, as provided in the Work Program. At the end of each
calendar month, an invoice shall be presented by THE AFFILIATE to
THE CONTRACTOR expressing:
a) any payment made by THE AFFILIATE concerning such permits
and rights, in accordance with the rates THE AFFILIATE has
to such purpose, together with the corresponding supporting
vouchers.
b) administration, organization and men-hours expenditures and
costs incurred by THE AFFILIATE to obtain such permits and
rights.
Such amounts shall be reimbursed to THE AFFILIATE by THE
CONTRACTOR within the forty-five (45) Days following the
presentation thereof and shall be charged to the Capital Costs of
THE CONTRACTOR.
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6.7 Give preference to goods and services produced in Venezuela or
rendered by Venezuelans, provided they are offered under similar
quality, price and availability conditions, when and in the
amounts required.
6.8 Pay any such taxes, contributions and duties as are required by
the Venezuelan Laws and Ordinances. THE CONTRACTOR shall comply
with the requirements of the law, specifically those concerning
the filing of returns, determination and withholding of taxes,
and maintenance and exhibition of books and records.
6.9 Promptly respond to and pay the amounts owed, according to
Clause 10 hereunder, and obtain and keep any such insurance
policies as are required by said Clause 10.
6.10 Subject to the terms and provisions hereunder, it shall:
a) perform any such activities as are reasonably required to
accomplish the purpose of this Agreement, according to
Clause 1.5 and as detailed in the Work Program.
b) custody and maintain any Hydrocarbons produced in the
Agreement Area up to the corresponding
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Transfer Points, as well as any other property, plant and
equipment of THE AFFILIATE inside or outside the Agreement
Area, which is under THE CONTRACTOR's guard and custody for
the performance of the Operating Services, in a good and
orderly condition, subject to normal wear and tear.
6.11 Promptly after termination of this Agreement, deliver all those
documents with data and reports, in original if they are
available to THE CONTRACTOR, which have not been previously
delivered to THE AFFILIATE.
6.12 Comply with and cause its subcontractors to comply with:
a) all the laws, regulations and any other applicable
provisions in the Republic of Venezuela.
b) all the norms set forth by THE AFFILIATE concerning its
contractors, including, without limitation, safety,
technical, operational, environmental and labor regulations,
including specifically the Labor Collective Contract as
interpreted by THE AFFILIATE, that is in force and
applicable to the Venezuelan oil industry,
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as notified to THE CONTRACTOR, during the term of this
Agreement.
6.13 While performing the Operating Services, it shall take the
necessary steps for the conservation and safety of life,
property, crops, vegetation, fishing and fisheries, navigation,
protection of the environment, prevention of pollution,
disposition of effluent waters, including sea pollution, and the
personnel safety and health, taking all reasonably necessary
precautions to minimize damages to the environment.
6.14 Keep confidential and take all reasonable measures to make sure
that its employees, Associated Companies, and subcontractors and
its employees do not disclose to third parties, without the
previous written consent from THE AFFILIATE, any information
produced and/or obtained by THE CONTRACTOR in relation to the
Operating Services and/or the Agreement Area, except when the
information must be disclosed:
a) To governmental authorities acting within the scope of their
competence, which will be timely notified to THE AFFILIATE.
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b) In relation with requirements of stock exchanges where THE
CONTRACTOR's or its Associated Companies' share or
instruments are quoted.
c) To Associated Companies, professional consultants, banks, or
financial entities which reasonably require said
information, provided these entities agree in writing to
maintain such information strictly confidential.
6.15 Obtain the authorization from THE AFFILIATE prior to publishing
any information or publicity which is not in the public domain
concerning the Operating Services and/or the Agreement Area. THE
CONTRACTOR shall also demand from the subcontractors thereof to
comply with this requisite.
6.16 Make sure that all Hydrocarbons production transferred to THE
AFFILIATE is of the quality specified in Appendix "A" and in the
adequate volumes for reception in the facilities of THE
AFFILIATE. It is understood that, during a test period of six (6)
months counted from the Production Date, THE AFFILIATE shall
receive the Crude Oil not meeting the quality specifications
established in Appendix "A", and the treatment-related costs
incurred therefor shall be charged to THE CONTRACTOR and imputed
against future credits. These costs shall not be
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recovered by THE CONTRACTOR. The Natural Gas not meeting the
quality specifications established in Appendix "A", subject to
Clause 7.7, may be received by THE AFFILIATE under the same above
conditions concerning Crude Oil.
6.17 Retain control of every leased property and equipment and shall
have the right to freely remove such property from the Agreement
Area, except for those goods which, due to their fixed and
permanent nature, become the property of THE AFFILIATE, without
prejudice to THE CONTRACTOR's rights to continue using them for
the Operating Services.
6.18 Have equal rights as THE AFFILIATE to enter and exit the
Agreement Area at any time, to and from the facilities inside,
without interfering with the activities which THE AFFILIATE may
be performing within the Agreement Area at the Effective Date.
6.19 Have the right to use, and have access to, and THE AFFILIATE
shall always make available, provided it is physically and
legally possible, every geological, geophysical, drilling, well,
production, and other information which THE AFFILIATE may now or
in the future have concerning the Agreement Area, and provided
that it is relevant and necessary to perform the obligations
hereunder. THE CONTRACTOR shall keep
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confidential and take every reasonable step to make sure that its
employees, Associated Companies, and subcontractors and their
employees do not disclose to third parties, without prior written
consent from THE AFFILIATE, any information directly or
indirectly received by THE AFFILIATE hereunder.
6.20 Be entitled to receive operating and capital fees on the basis of
Production, as provided in Clause 8, during the term of the
Agreement.
7. RIGHTS AND OBLIGATIONS OF THE AFFILIATE
In addition to the other provisions of this Agreement, THE AFFILIATE
shall:
7.1 Have title to all the Hydrocarbons produced and be responsible
for the payment of the taxes and impositions related to the
Production.
7.2 Retain title to all original data and information resulting from
the Operating Services, including, but not limited to,
geological, geophysical, petrophysical, engineering, well logs
and well completion reports and any other data compiled by THE
CONTRACTOR during the term of this Agreement.
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7.3 As much as possible, cooperate with THE CONTRACTOR in order to
facilitate the performance of this Agreement.
7.4 Notwithstanding the obligations of THE CONTRACTOR hereunder, be
entitled to inspect the activities of THE CONTRACTOR hereunder
any time, and request all the information and reports it may
consider appropriate.
7.5 During the term of this Agreement, allow the use of the equipment
and materials that, by virtue of this Agreement, shall become its
property, only for the Operating Services hereunder, and, in the
event THE AFFILIATE shall wish to use such equipment for any
other purpose, it may do it to the extent that it does not
interfere with THE CONTRACTOR in the performance of the Operating
Services, and after consulting first with it. Furthermore, THE
AFFILIATE shall have the right to access the Agreement Area to
perform operations related to Hydrocarbons to the extent they do
not interfere with the operations and Work Programs of THE
CONTRACTOR.
7.6 Unless Force Majeure circumstances are involved, take the guard
and custody of all the Crude Oil production meeting the terms
established hereunder, when THE
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CONTRACTOR makes it available at the Hydrocarbons Transfer Point,
on or after the Production Date.
7.7 Provided that THE AFFILIATE shall have agreed to receive specific
volumes of Natural Gas, take the immediate custody of the volumes
agreed when THE CONTRACTOR makes them available at the Gas
Transfer Point. Unless otherwise agreed upon, THE AFFILIATE shall
not be obliged to accept the custody of any amount of Natural Gas
during the term of this Agreement.
The Parties have agreed to the contrary of the provisions herein
in the terms and conditions established in Appendix "A".
7.8 Promptly pay to THE CONTRACTOR every applicable fee as set forth
in Clause 8 and further in Clause 18.
7.9 Exercise due diligence to negotiate and complete those agreements
with third parties, land and real estate owners inside the
Agreement Area as are necessary to obtain the right of entry or
other reasonable rights required by THE CONTRACTOR to perform the
Operating Services hereunder. Any right granted by third parties
to THE AFFILIATE shall be extended to THE CONTRACTOR during the
term of this Agreement. Any payment made by THE AFFILIATE
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concerning such permits and rights shall be reimbursed to THE
AFFILIATE by THE CONTRACTOR within the forty-five (45) days
following the submission of the supporting vouchers of such
costs, which costs will be recovered by THE CONTRACTOR as Capital
Costs.
7.10 Maintain as confidential and take all reasonable measures to
ensure that its employees and Associated Companies do not reveal
to third parties, without the prior written consent of THE
CONTRACTOR, information on know-how and technical, financial, or
other information which is proprietary of THE CONTRACTOR or its
subcontractors.
7.11 Coordinate with THE CONTRACTOR, to the extent possible, the
publication of information or publicity not in the public domain
relating to the Operating Services, provided that THE AFFILIATE
has control over these actions.
8. COMPENSATION OF THE CONTRACTOR
8.1 THE CONTRACTOR shall be compensated every Quarter on the basis of
the volume of Hydrocarbons transferred to THE AFFILIATE at the
Transfer Points, from and including the Production Date, as set
forth in Clause 18.
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8.2 The fees for services Of THE CONTRACTOR, including the recovery
of operating costs, will be paid as Operating Fees on the basis
of the volume of Hydrocarbons transferred to THE AFFILIATE, as
set forth in Clause 18.
8.3 The Capital Costs (and Non-Capital Costs incurred prior to the
Production Date that are included in the Capital Costs) may be
recovered as Capital Fees on the basis of the volume of
Hydrocarbons transferred to THE AFFILIATE, as set forth in Clause
18.
8.4 The Incentives for Production Increases will be paid as
established in Subclause 18.17.
8.5 The Parties understand that THE AFFILIATE and THE CONTRACTOR are
subject to the Law on the Value Added Tax ("IVA") and to the
regulations thereunder, as they may be amended from time to
time, in relation with the services to be rendered and the
compensation and reimbursement to be paid, under this Agreement.
In accordance with the regime in force, THE AFFILIATE will pay
THE CONTRACTOR, in Bolivars, the IVA amounts that THE CONTRACTOR
must pay to the Government in relation to the services rendered
and corresponding compensation under this Agreement. THE
AFFILIATE shall pay this amount to THE CONTRACTOR within the
terms established by Law for the payment of IVA by
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THE CONTRACTOR to the Government, through deposits in an amount
and bank designated by THE CONTRACTOR, unless otherwise agreed.
The amount of IVA to be paid by THE AFFILIATE to THE CONTRACTOR
in independent from and in addition to the compensation and the
reimbursements due for payment to THE CONTRACTOR in accordance
with Clauses 8.1 through 8.4 and Clause 18 of this Agreement.
9. PAYMENTS
9.1 Except as otherwise specifically provided hereunder, all payments
due to THE CONTRACTOR shall be made exclusively in Dollars of the
United States, or, as decided by the Parties, in any other
currency acceptable to THE CONTRACTOR, at a foreign bank to be
agreed upon by the Parties, unless otherwise agreed.
Any Capital Cost and any Non-Capital Costs prior to the
Production Date incurred in Bolivars shall be paid in Dollars
reconciled at the average exchange rate for the sale of that
currency, established by the Banco Central de Venezuela on the
date such Costs were incurred. Whenever these costs shall have
been incurred in any currency other than Bolivars and Dollars,
they shall be converted to Dollars at the exchange rate
prevailing for the sale of this currency established by the Chase
Manhattan Bank, New
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York, Hew York, at 11:00 a.m. on the date the costs were
incurred.
9.2 Every payment required as established hereunder shall be made on
or before the end of the second calendar month following the
Quarter object of the specific invoice.
To such purpose, an updated invoice and two (2) copies reflecting
the Capital Costs and Operating Fees, supported with statements
of account, shall be submitted by THE CONTRACTOR to THE AFFILIATE
within the first fifteen (15) Days following the end of the
corresponding Quarter. THE CONTRACTOR must submit any additional
documentary support as is required by THE AFFILIATE, including,
without limitation, any pertinent invoice, contract and record.
THE AFFILIATE shall be entitled to object to such invoice,
indicating the reasons for its objection, and, in the event an
objection were made within twenty-one (21) days from the receipt
of the invoice by THE AFFILIATE, the payment of any disputed
amount shall be delayed until the objection is duly settled by
the Parties.
The payment of an invoice by THE AFFILIATE shall not be
considered a waiver by THE AFFILIATE of the right to submit a
future objection or claim, or of any
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other right THE AFFILIATE may have concerning such payment. It is
understood that the disputed amounts shall not accrue any
interest whatsoever.
10. LIABILITIES, INDEMNITIES AND INSURANCE
10.1 THE CONTRACTOR shall be liable for all injuries (including death)
of its employees and/or those of its subcontractors, servants,
agents and/or representatives thereof; and/or for the loss or
damage to the properties of THE CONTRACTOR and/or its
subcontractors and/or the properties of its employees, servants,
agents and/or representatives and/or the properties of the
employees, servants, agents and/or representatives of its
subcontractors, unless it demonstrates that the harm or loss or
damage is due to a non-imputable cause.
10.2 Subject to the provision of Clause 10.20 of this Agreement, THE
CONTRACTOR shall be liable for every loss and/or damage to the
facilities, materials and equipment, whether they are inside the
Agreement Area or otherwise, of THE AFFILIATE, provided that
they are under the guard and custody of THE CONTRACTOR as set
forth hereunder, resulting from the performance by THE CONTRACTOR
and/or its subcontractors of any activity hereunder.
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10.3 THE CONTRACTOR shall be liable for any loss and/or damage to the
properties Of THE AFFILIATE (other than those of THE AFFILIATE
referred to in Clause 10.2) resulting from the willful misconduct
or grossly negligent acts or omissions of THE CONTRACTOR and/or
its subcontractors, and/or Associated Companies.
10.4 THE CONTRACTOR shall be liable for:
a) Every loss and/or damage to the properties of third parties
and/or every injury (including death) to any person, which
occurs on the occasion or as a result of the performance of
this Agreement.
b) Every damage to natural resources, except Crude Oil,
Natural Gas, and other minerals in situ, before their
extraction to the surface (but not excepting those damages
caused by willful misconduct or gross negligence) and every
damage to the environment, including, but not limited to,
damage or destruction of marine resources, wildlife, timber
resources, estuaries, streams or bodies of water, oceans,
land or air or any other damage which occur on the occasion
or as a result of the performance of this Agreement.
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In case of loss of Hydrocarbons for reasons imputable to THE
CONTRACTOR or its subcontractors (that is, excluding losses
caused by Force Majeure or imputable to third parties), THE
CONTRACTOR shall be responsible vis-a-vis THE AFFILIATE for
the market value of the Hydrocarbons actually lost
(excluding recovered Hydrocarbons), minus THE CONTRACTOR's
compensation established in Clause 8 that THE AFFILIATE
would have paid to THE CONTRACTOR should those Hydrocarbons
have been delivered to it at the corresponding Transfer
Point. THE CONTRACTOR shall pay the corresponding amounts
within thirty (30) Days from the presentation of an invoice
by THE AFFILIATE.
c) Any fine or sanction that is imposed on the occasion or as a
result of the performance of this Agreement, without
prejudice to the right to submit administrative or judicial
claims provided by law.
The liability of THE CONTRACTOR, referred to in paragraphs
a) and b) of this Subclause, is without prejudice to its
right to demonstrate the intervention of a non-imputable
cause.
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10.5 THE CONTRACTOR shall hold harmless and indemnify THE AFFILIATE
from and against any action, cause of action, damages, claims and
suits whatsoever, whether at law or in equity, sentences,
including costs and legal fees that may be rendered against THE
AFFILIATE, arising from any incident referred to in Clauses 10.1,
10.2, 10.3 and 10.4 hereof, based on the terms and subject to the
exceptions established therein.
10.6 THE CONTRACTOR shall hold harmless and indemnify THE AFFILIATE
from and against any loss, damage and expenses, including
attorney fees arising from any claim for infringement of a
patent, copyright or other existing similar rights or to be
granted, with respect to or arising out of the activities carried
out by THE CONTRACTOR or its subcontractors hereunder, the
manufacturing, incorporation or use of any material or equipment
and/or any technique used in such activities.
10.7 THE CONTRACTOR shall indemnify, defend and hold harmless against
any lien and claim over the property of THE AFFILIATE and the
materials, equipment or structures, or the premises on which they
are located, provided these liens and claims are not imputable to
THE AFFILIATE and they arise from or in connection with the
activities developed by THE
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CONTRACTOR or its subcontractors hereunder, including, but not
limited to, workers, materials and other services to be rendered
by THE CONTRACTOR or its subcontractors or suppliers hereunder.
10.8 THE CONTRACTOR shall defend and indemnify THE AFFILIATE against
any claim, action, loss or damage that may affect THE AFFILIATE
resulting from the failure of THE CONTRACTOR to comply with the
obligations hereunder.
10.9 THE AFFILIATE shall include THE CONTRACTOR as co-insured in the
following corporate policies: All Risk Construction, Properties
(fire, explosion, lightning, earthquake, Comprehensive Civil
Liability and Control of ▇▇▇▇▇) and will include the insurers'
waiver to its right to surrogate itself, in relation to the
co-insured.
THE CONTRACTOR shall reimburse THE AFFILIATE for any additional
cost to the insurance premiums due to the above, and such costs
shall be recovered as a Capital Cost, as defined in Clause 18
herein.
10.10 THE AFFILIATE shall defend and indemnify THE CONTRACTOR against
any loss or damage to the properties of THE AFFILIATE covered by
the corporate insurance policies of THE AFFILIATE, without
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prejudice to the provisions of Clauses 10.2 and 10.3 above.
10.11 THE AFFILIATE shall defend and indemnify THE CONTRACTOR against
any loss or damage resulting from any action taken by THE
AFFILIATE with its own resources under the circumstances and as
provided in Clause 5.6 of this Agreement,
10.12 THE CONTRACTOR may carry, under terms and with insurance
companies satisfactory to THE AFFILIATE, the following insurance
policies during the term of this Agreement:
a) All Risk Construction.
b) Properties.
c) Insurance on ▇▇▇▇▇ Control, including:
- Cost of Control (including the cost of control of
underground blowout)
- Redrilling Expenses
- Extraordinary Redrilling Expenses
- Expenses for Making Well Safe
- Expenses for Preparing and Conditioning
- Deliberate Well Firing
- Clean-up, Containment and Pollution
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The amounts to be covered under the insurance policies shall be
equal to the applicable deductibles under the policies referred
to in Clauses 10.9 and 10.10 hereunder and in accordance with the
variations they suffer from time to time. Furthermore, it may
carry insurance for the excess if it considers it convenient.
THE CONTRACTOR may take out, additionally, other insurance
policies which it considers convenient in relation with the
Operating Services. The premiums of said policies will be
considered as Capital Costs if they are approved as part of the
Budget included in the corresponding Work Program.
10.13 THE CONTRACTOR shall further carry and maintain the following
insurance policies under terms and with insurance companies
satisfactory to THE AFFILIATE during the term of this Agreement:
a) Motor Vehicles Liability Insurance covering motor vehicles
owned, leased or used by THE CONTRACTOR, in accordance with
Venezuelan legislation.
b) Workers' Compensation and Employer's Liability Insurance
covering the obligations of THE CONTRACTOR with respect to its
personnel.
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43
c) Any other insurance policy as THE AFFILIATE may require from
time to time according to its corporate policies or the nature
and location of the Operating Services.
d) Third Party Liability Insurance, including death or injury to
persons and accidents and/or damages to the property,
including properties of THE AFFILIATE.
The amounts to be covered by the insurance policies shall be
determined as part of the annual Budget included in the
corresponding Work Program approved by THE AFFILIATE.
10.14 The insurance policies carried and maintained by THE CONTRACTOR
referred to in Clauses 10.12 and 10.13 shall name THE AFFILIATE
and Petroleos de Venezuela, S.A. as co-insured and include a
waiver of the rights of the insurer to subrogation in relation to
the co-insured.
THE CONTRACTOR shall provide THE AFFILIATE with certificates or
other documentary evidence showing that such insurance is
maintained as required hereunder and that the premiums thereof
have been duly paid.
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44
10.15 Except as otherwise expressly provided in this Clause 10, the
obligations of THE CONTRACTOR hereunder shall not be restricted,
limited nor altered by any provision, stipulation or arrangement
with respect to the insurance policies, deductible or limitation
of insurance coverage, nor by any approval of the insurance
policies by THE AFFILIATE.
10.16 THE CONTRACTOR shall obtain and furnish a guaranty issued by a
bank or insurance company satisfactory to THE AFFILIATE, to
guaranty the proper performance by THE CONTRACTOR of all the
legal obligations towards employees. Such guaranty shall be in
accordance with the format to be furnished by THE AFFILIATE and
cover the amount to be determined by THE AFFILIATE prior to the
Starting Date of Operations and shall be in force, through annual
renewals, as from the Starting Date of Operations until fourteen
(14) months after the termination of this Agreement.
10.17 Except as otherwise provided in the second paragraph of Clause
10.9 and the insurance premiums as determined in the annual
Budget approved by THE AFFILIATE, any cost, expense or debt that
may arise according to this Clause 10 may not be recovered by THE
CONTRACTOR as part of the Capital Cost.
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45
10.18 Neither Party shall be liable before the other for indirect
damages or lost profits resulting from the breach of their
respective obligations hereunder.
10.19 For the purposes set forth in Clauses 10.9, 10.10, 10.12, 10.13,
and 10.20, the deductibles and maximum coverage amounts in force
as of the Effective Date of the Agreement are specified
hereafter:
DEDUCTIBLES MAXIMUM COVERAGE
(U.S.$) AMOUNT (U.S.$)
----------- ----------------
Properties *
- Fire and other *
- Earthquake *
- Sabotage and Terrorism *
- Removal of Debris *
- Extinction Expenses *
- Clean Expenses *
Third Party Comprehensive
Liability * *
Control of ▇▇▇▇▇ * *
Construction Risk
- Construction per
Contract * *
- Third Party Liability * *
- Other Adjacent
Properties * *
- Transportation * *
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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46
The above amounts are subject to modification. THE AFFILIATE will
notify THE CONTRACTOR, in writing, the modifications to such
amounts.
10.20 THE CONTRACTOR and/or its subcontractors and/or Associated
Companies shall be responsible for losses and damages, up to the
[amount of] the deductible of THE AFFILIATE's corporate insurance
policies. THE CONTRACTOR and/or its subcontractors and/or
Associated Companies may exonerate themselves of responsibility
for payment of losses or damages that exceed the coverage of such
policies, provided they demonstrate they acted diligently. Any
other losses or damages not covered by the policies mentioned in
this clause will be indemnified in accordance with applicable
law.
10.21 The provisions of this Clause 10 concern the relationship between
the Parties, and they have been agreed without prejudice to the
rights and obligations of each Party with respect to third
parties.
11. PROPERTY
11.1 THE AFFILIATE shall obtain exclusive title to every operating
facility, goods and/or equipment which is a Capital Cost used by
THE CONTRACTOR to perform the
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47
activities hereunder, except any such real property located
outside the Agreement Area, or movables located either inside or
outside the Agreement Area, provided that THE AFFILIATE shall
have specifically authorized THE CONTRACTOR or its
subcontractors to retain title to such property, for reasons of
economy or practical convenience.
Notwithstanding the above, THE CONTRACTOR and its subcontractors
thereof shall retain title to any movables introduced in the
Agreement Area by THE CONTRACTOR to be temporarily used or for a
specific temporary purpose.
11.2 THE CONTRACTOR shall include in the Work Programs and shall
submit to the approval of THE AFFILIATE the leasing plans of the
movables and real property which qualify as Capital Costs and
are required for the performance of the activities hereunder, as
well as the justification thereof. THE AFFILIATE reserves the
right to approve or disapprove such request.
11.3 The ownership of any technology and/or know-how, whether
patented or not, as THE CONTRACTOR may specifically develop
during the performance of the Operating Services shall be common
to THE AFFILIATE and THE CONTRACTOR. Notwithstanding such
common ownership, both THE AFFILIATE and THE CONTRACTOR and
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48
their Associated Companies shall have the right to use such
technology in their own operations at no cost to them. All the
information concerning the technology and/or know-how shall be
delivered to THE AFFILIATE by THE CONTRACTOR.
Any disclosure of such technology or know-how to a third party
other than the Associated Companies of THE AFFILIATE and THE
CONTRACTOR, whether for a consideration or not, shall be subject
to THE CONTRACTOR and THE AFFILIATE entering into a previous
written agreement for such purpose.
12. ARBITRATION
12.1 Any dispute or controversy related to this Agreement that the
Parties cannot settle shall be finally resolved through
arbitration in the City of Caracas, Venezuela.
12.2 The arbitration board shall be conformed by three (3)
arbitrators. Each Party will appoint one (1) arbitrator, who
will jointly appoint the third arbitrator within thirty (30)
Days from the appointment of the second arbitrator. The
arbitration shall be awarded pursuant to the Applicable Law, but
the process shall be governed by
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49
the Rules of the International Chamber of Commerce ("ICC") in
force on the Effective Date.
12.3 The provisions of this Clause 12 will survive the termination of
this Agreement.
13. EMPLOYMENT AND TRAINING OF PERSONNEL
13.1 THE CONTRACTOR shall obtain, hire, pay and maintain all the
supervisory and administrative personnel, all the skilled and
non-skilled labor, including any personnel hired abroad, as is
necessary to perform the Operating Services. THE CONTRACTOR
shall only hire persons who are physically and mentally fit and
technically competent. As soon as the personnel is hired, THE
CONTRACTOR shall be responsible for the transportation thereof
from the point of origin to the locations of the Operating
Services in Venezuela. THE CONTRACTOR shall further be
responsible for the return transportation of such personnel to
the points of origin. THE CONTRACTOR shall pay all the expenses
related to such personnel, including, but not limited to, any
expense incurred in obtaining the passport, visa and solvency;
hiring expenses; transportation costs and travel expenses. THE
AFFILIATE shall not be responsible for providing housing, goods
or services for the performance of the Operating
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Services to THE CONTRACTOR, its contractors or its
subcontractors.
13.2 THE CONTRACTOR agrees to hire qualified personnel for its
operations, and, once Production begins, it shall undertake the
training of Venezuelan personnel required to fill in labor and
staff positions, including administrative and management
executive positions.
13.3 Costs and expenses incurred in the training of personnel outside
the regular scope of operations shall be included in Capital
Costs, provided that the adequate provisions shall have been
made in the Work Program.
13.4 THE CONTRACTOR is bound to protect, defend and indemnify THE
AFFILIATE against any claim, demand, damage, obligation, cost
and expenses whatsoever resulting or derived from the labor or
work contracts of THE CONTRACTOR, or from any applicable law,
decree or regulation, pertinent or related to such employment,
or the breach of such contracts, laws, decrees or regulations.
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14. ACCELERATED TERMINATION
If at any time after completing the Minimum Work Program for the first
thirty-six (36) months of the Agreement THE CONTRACTOR were to find
evidence of no Crude Oil in the Agreement Area, or that the potential
Crude Oil bearing formations as exist or as are likely to be found are not
capable of commercial production because of the possible investment or
necessary expenses required to undertake such exploitation, THE CONTRACTOR
may request THE AFFILIATE, in writing, to approve the accelerated
termination of this Agreement within sixty (60) Days following the date of
such request.
All the data and information as THE CONTRACTOR may produce to support its
claim that the Agreement Area is not susceptible to Production must be
attached to the request.
Furthermore, THE CONTRACTOR shall promptly provide any additional data and
information as may be required by THE AFFILIATE to better support the
claim of THE CONTRACTOR.
Any refusal by THE AFFILIATE to approve the termination of the Agreement
under these conditions may not be unreasonable.
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52
15. ACCOUNTING AND AUDITS
15.1 All the books and records of THE CONTRACTOR pertinent to the
operations hereunder shall be kept on a calendar-year basis, abide
by the Applicable Law and be available to be audited by THE
AFFILIATE, subject to prior ten (10) Day advance notice.
THE CONTRACTOR must further comply with any reasonable special
instructions or requirements concerning the operations hereunder
as are indicated by THE AFFILIATE with relation to the books and
records thereof and the invoicing processes, budget and
preparation of financial statements.
15.2 Any time during the term of this Agreement, subject to prior ten
(10) Day advance notice, THE AFFILIATE shall have the right to
inspect and audit all the books and accounting of THE CONTRACTOR,
with respect to any Agreement Year, within five (5) years
following the end of such Agreement Year, whether directly or
through independent accountants specifically engaged for that
purpose. THE CONTRACTOR shall include in every subcontract
entered into with respect to this Agreement provisions granting
THE AFFILIATE the same auditing rights as are granted hereunder.
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53
THE CONTRACTOR shall keep and have available to THE AFFILIATE all
the books, records and papers and shall cause its subcontractors
to keep any such records, papers and books as are related to all
the activities hereunder, so that THE AFFILIATE may exercise the
rights granted hereinabove.
16. ASSIGNMENT
16.1 Neither Party shall have the right to assign or delegate their
rights or obligations hereunder without previous consent in
writing from the other Party, except that:
a) Either Party may execute such assignment or delegation to an
Associated Company, provided that the assignor or delegating
Party shall remain responsible for the proper and correct
performance of its obligations hereunder.
b) THE CONTRACTOR may subcontract any part of its operations or
activities hereunder, provided that the subcontracts shall be
subject to reasonable market conditions and shall be awarded to
subcontractors who are technically and financially reliable.
THE CONTRACTOR shall further be responsible for the performance
of
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54
such subcontractors as if the activities were performed by THE
CONTRACTOR itself.
16.2 Unless otherwise agreed upon by the Parties, any subcontract
referring to Capital Costs that in the aggregate exceeds the
amount of * of the United States
(U.S.$ * ) or an equivalent amount in any other currency
shall be subject to a previous written consent by THE AFFILIATE.
16.3 Except when duly justified for economic and technical reasons, THE
CONTRACTOR shall award all subcontracts referred to in Clause
18.8 on the basis of a competitive process of selection. To such
purpose, THE AFFILIATE and THE CONTRACTOR shall establish within
three (3) months following the Effective Date the documents
containing the subcontracting, operating, accounting and
invoicing procedures that are necessary for the adequate
performance of this Agreement.
17. OTHER PROVISIONS
17.1 Every notice required or given by either Party to the other shall
be deemed to have been received when delivered in writing at the
address of the addressee.
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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55
Any such notices shall be address to:
THE CONTRACTOR THE AFFILIATE
COMPANIA OCCIDENTAL ▇▇ ▇▇▇▇▇▇▇, ▇.▇.
HIDROCARBUROS, INC. Av. La Estancia
Av. ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ Edif. Maraven
Edif. EASO, Mezzanina-Ofic. A Chuao, CARACAS 1060
Chacaito, CARACAS, 1050 Venezuela
Venezuela Attn.: Gerente de
Attn.: Gerente General Exploracion
y Produccion
Either Party may substitute or change the address upon written
notice to the other Party.
17.2 Considering the characteristics and nature of the Operating
Services to be performed hereunder, the provisions set forth in
Decree No. 1821 dated August 30, 1991, shall not apply to this
Agreement. Therefore, every term and condition established herein
shall be considered to be special contracting condition for the
purposes of the above-mentioned Decree No. 1821.
17.3 Without prejudice to the obligations of THE CONTRACTOR provided in
Clause 10 herein, any fault or delay by either Party in the
fulfillment of their obligations or duties hereunder shall be
excused only to the extent attributable to Force Majeure.
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17.4 In the event the operations were delayed, restricted or prevented
by reason of Force Majeure, the term of this Agreement and every
right and obligation hereunder shall be extended for a period of
time equal to the period affected by the Force Majeure, up to a
maximum of five (5) years.
17.5 The Party whose ability to comply with its obligations is so
affected shall notify the other Party in writing, indicating the
cause, and both Parties shall exercise their reasonable endeavors
to cease or mitigate the effects of such cause, as the case may
be.
17.6 Except as otherwise provided hereunder, the agreements and pacts
established in Clauses 6.3, 6.8, 6.9, 6.11, 6.14, the
confidentiality obligations set forth in Clause 6.19 and any such
agreements and pacts as are provided in Clauses 10.1, 10.2, 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, 10.16, 11.3 and 15.2 shall survive
the termination of this Agreement in relation with information
received or events which occurred during the term thereof, until
they are completely satisfied as provided therein.
17.7 No provision in this Agreement shall constitute THE CONTRACTOR, or
any of its employees, sub-contractors, or agents, an agent,
representative or employee of
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THE AFFILIATE. THE CONTRACTOR shall be an independent contractor
and shall be responsible for and have the control over the details
and means for performing the Work Program. Any provision herein
granting THE AFFILIATE the right to direct THE CONTRACTOR as to
the details of the performance of the work or to exercise a
control mechanism over THE CONTRACTOR shall not be construed to
reduce or release the obligations of THE CONTRACTOR hereunder.
THE CONTRACTOR is an autonomous company, and its personnel is
hired for its exclusive account. As the employer, THE CONTRACTOR
is solely responsible for the performance of the obligations
assumed towards its personnel by virtue of the Labor Organic Law
and the regulations thereof, the Social Security Law and the
regulations thereof, the INCE Law and the regulations thereof and
any other law, regulation, decree, resolution or order passed by
the competent authority, and by virtue of the individual or
collective contracts entered into with its personnel. Should THE
AFFILIATE be forced to pay an amount of money for any concept, by
virtue of a claim filed by any worker of THE CONTRACTOR before the
judicial authorities or labor administrative authorities or other,
or by professional associations, unions or by third parties,
whether Venezuelan or foreigner against THE CONTRACTOR and/or THE
AFFILIATE, THE
- 57 -
58
CONTRACTOR shall immediately reimburse THE AFFILIATE every such
payment. THE AFFILIATE is authorized by THE CONTRACTOR to deduct
such amount from any amount as may be owed by THE CONTRACTOR to
THE AFFILIATE.
It is agreed by the Parties that THE CONTRACTOR shall be
responsible for settling, under acceptable terms and at its own
discretion, any strike or act planned by the workers of the
CONTRACTOR, provided that such situation shall not affect THE
AFFILIATE or the Venezuelan Oil Industry, and, in such event, THE
AFFILIATE and THE CONTRACTOR shall jointly seek solutions to
remedy the situation as soon as possible.
17.8 It is the intention of the Parties that common reservoirs that may
exist in the Agreement Area and other adjacent areas be the
subject of unified extraction agreements. The Parties will
dedicate their efforts to achieve such agreements.
18. ACCOUNTING PROCEDURES
18.1 The following provisions set forth to implement the payment of
fees between THE CONTRACTOR and THE AFFILIATE are solely and only
for the purpose of calculating the fees of THE CONTRACTOR. Both
THE AFFILIATE and THE CONTRACTOR shall be responsible for
- 58 -
59
the Venezuelan taxes pursuant to the Venezuelan tax laws in force,
and nothing in this Clause 18 shall be construed in any way to be
contrary to such laws and regulations.
18.2 Definitions: The provisions of this Clause 18 shall be followed
and observed in the compliance of the obligations of each Party
hereunder. The definition and terms in this Clause 18 shall have
the meanings herein indicated.
18.3 Accounting and Records: The records and accounting books of THE
CONTRACTOR shall be kept according to accounting systems generally
accepted and recognized, consistent with the current practices and
procedures of the oil industry (PDVSA and its Affiliates) and
according to the Venezuelan practice.
In the event of any inconsistency or doubt between the accounting
systems and practices generally accepted and the current
procedures of the oil industry, the Parties must solve them by
mutual agreement taking into consideration the Accounting Norms
and Procedures from PDVSA which have been notified to THE
CONTRACTOR. THE CONTRACTOR shall organize and prepare reports for
the use of THE AFFILIATE in the performance of its
responsibilities hereunder.
- 59 -
60
18.4 Non-Capital Costs: Non-Capital Costs are those reasonable and
necessary expenses actually incurred by THE CONTRACTOR, related to
the current year operations, provided that they are included as
Non-Capital Costs in the pertinent Budget.
The Non-Capital Costs include, but are not limited to, the
following:
a) Labor, materials and services used in daily oil operations,
including field facilities operations, secondary and tertiary
recovery and other enhanced recovery operations, storage,
handling, hauling and processing operations, measurement, and
other operational activities, including surface and
subsurface equipment repair and maintenance.
b) Office, services and general administration of main and
field offices in Venezuela, general services, including
technical and related services, tangible services, hauling,
lease of special or heavy equipment, personnel expenses,
public relations and any other expenses incurred abroad which
do not qualify as a Capital Cost in accordance with this
Agreement.
- 60 -
61
c) Auxiliary or temporary facilities having less than one (1)
year of [useful] life.
d) Every technical or managerial cost other than those
specifically covered in Clause 18.5.
18.5 Capital Costs: Capital Costs are those reasonable and necessary
disbursements actually made by THE CONTRACTOR for items that
normally have a useful life beyond the year they are incurred,
provided they are included in the pertinent Budget as Capital
Costs and, further provided, in the case of equipment and/or
facilities, that they already be located in the Agreement Area.
The Capital Costs include, but are not limited to, the
classification described herein:
a) Drilling of ▇▇▇▇▇: all tangible and intangible costs for
drilling of ▇▇▇▇▇, including drilling of test, delineation,
[and] injection ▇▇▇▇▇, as well as the initial construction of
access roads leading to the ▇▇▇▇▇.
b) Rehabilitation of ▇▇▇▇▇: All the tangible and intangible costs
for the rehabilitation of ▇▇▇▇▇, including redrilling or
recompletion of ▇▇▇▇▇, initial installation of artificial
- 61 -
62
lifting equipment, changes of producing intervals, initial
gravel packing, stimulations and fractures. Every other
rehabilitation shall be considered a Non-Capital Cost.
c) Construction of Service [facilities]: Workshops, energy and
water facilities, warehouses and field roads. Cost of oil
piers and anchorages, treatment plants and equipment, systems
of secondary and/or enhanced recovery, gas plants and steam
systems.
d) Production facilities, including the costs for fuel, hauling
and supplies for construction outside the Agreement Area and
installation in the Agreement Area, and other construction
costs incurred for the erection of platforms and installation
of piping, wellhead equipment, subsurface lifting equipment,
production tubing, sucker rods, surface pumps, flow lines,
gathering equipment, delivery lines and storage facilities,
excluding costs relating to the personnel that will be in
charge of operating such facilities.
e) Equipment: Drilling and surface and subsurface production
tools, equipment and instruments, bares, floating equipment,
automotive equipment,
- 62 -
63
aircraft, construction equipment, furniture and office
equipment, and miscellaneous equipment.
f) Personnel, materials and services used in aerial, geological,
topographical, geophysical and seismic surveys; core drilling
and other non-routine surveys related to production
maintenance.
g) Certain annual costs, including insurance costs, import duties
related to capital items, any national, state, local or
municipal taxes, other than Venezuelan Income Tax and taxes
which provide tax credits against Venezuelan Income Tax,
certificate of occupancy and rights of way, land or real
property rentals and the costs of any geological or geophysical
information acquired, independent technical studies and
independent reserve estimates reports and training of
Venezuelan labor and professional staff outside the normal
scope of operations.
h) Labor, materials and services associated with Capital
projects, and reasonable amount of spare parts and material
inventory associated with Capital projects.
- 63 -
64
18.6 Overhead Allocation: No general overhead costs incurred outside
Venezuela shall be included as Capital or Non-Capital Costs. Only
those costs qualifying as Capital Costs and covered by specific
agreements approved by THE AFFILIATE shall be recovered as
Capital Costs.
18.7 Unrecovered Capital Costs and Interests: The Unrecovered Capital
Costs are that portion of the total Capital Costs spent up to
the end of the previous Quarter that, complying with the
conditions established hereunder, have not yet been recovered as
Capital Fees.
The total Unrecovered Capital Costs as of the end of the preceding
Quarter may accrue interest at *
rate corresponding to five (5) working days previous to the
beginning date of the considered Quarter or the previous Friday,
if such date happens to be either a Saturday, Sunday or a holiday
in the United States of America. The referenced rate shall be the
average of the rates provided at 11:00 a.m. (New York time) by the
following banks, Chase Manhattan Bank, Bankers Trust and Bank of
Tokyo. Such interest (hereinafter called "Interest Rate") shall
be paid as provided in Clause 18.12.
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 64 -
65
18.8 Except where inconvenient from the economic and practical point
of view, any agreement with third parties for the acquisition of
capital goods, technical or other services to be considered as
Capital Costs or as Non-Capital Costs prior to the Production Date
shall be awarded on the basis of competitive tenders, always
trying to assure costs not exceeding the prevailing market levels.
In the event that the services or leased equipment were supplied
by Associated Companies of THE CONTRACTOR, only such costs as are
the lower of,
a) the net cost of services rendered or equipment leased for the
Associated Companies of THE CONTRACTOR which provided them; and
b) the standard commercial fee charged by third parties for
supplying such goods and services
will be recognized.
18.9 After establishing the Production Date, THE CONTRACTOR shall
recover all the costs and fees every quarter as set forth in the
terms and conditions herein and as further specified, on the
basis of the volume of Hydrocarbons transferred to THE AFFILIATE
- 65 -
66
at the Points of Transference, measured in accordance with the
norms ruling the matter.
18.10 All the Costs of THE CONTRACTOR other than Capital and [other
than] Non-Capital Costs prior to the Production Date, including
but not limited to operating costs and fees for the services of
THE CONTRACTOR, may only be recovered through the Operating Fees
("OPFee").
The OPFee shall be calculated according to the Crude Oil
Production delivered to THE AFFILIATE.
If the volume of Crude Oil Production delivered to THE AFFILIATE
is * the OPFee is equal to * .
If the volume of Crude Oil Production delivered to THE AFFILIATE
is * , the OPFee shall be calculated according to
the following formula:
*
If the volume of Crude Oil Production delivered to THE AFFILIATE
is * , the OPFee shall be calculated according to the
following formula:
*
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 66 -
67
WHERE:
*
*
*
*
*
*
*
The OPFee shall be subject to adjustments after the Quarter that
includes the Effective Date hereof as follows:
As of the Quarter following the one that includes the Effective
Date hereof, the "$/Barrel OPFee" of THE CONTRACTOR shall be
adjusted for inflation every Quarter, so that the OPFee shall
reflect an adjusted value every succeeding Quarter.
The inflation adjusted $/Barrel OPFee formula shall be determined
according to the following formula:
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 67 -
68
*
*
*
*
*
*
----------------
(*) The inflation index applicable in determining the OPFee adjusted
for any Quarter after the first Quarter subsequent to the Effective Date
hereof shall be the "Special Index-Energy" (unadjusted) of the "Consumer
Price Index" for all "Urban Consumers" (CPI-U), United States City Average
(based period 1982-1984 = 100) of the "Summary Data from the Consumer Price
Index News Release" as published every month by the "United States
Department of Labor Statistics, Washington, D.C. 20212."
Should the inflation index, as indicated every month in the "News Release"
described above suffer corrections at any time after its publication and
utilization for OPFee adjustments, a suitable reconciliation to the invoices
of the following Quarter shall be applied.
Should the index of the base period (1982-1984 = 100) be revised, it must be
clear that the intent of this indexing provision is to adjust the OPFee in
proportion to the average price level in the Previous Quarter to the Quarter
being invoiced, by using the information of the three (3) months of the
Current Quarter and that of the three (3) months of the Previous Quarter.
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 68 -
69
The procedures hereinabove described shall be applied subsequent
to the Effective Date hereof.
18.11 Capital Costs (and Non-Capital Costs prior to the Production Date,
that by definition are Capital Costs), shall be recovered as
Capital Fees (CFee). It being understood that Capital Fees (CFee)
[are the] cumulative recovery of Capital Costs accounted for up to
the end of the Quarter being invoiced, calculated by the straight-
line method over ten (10) years. It is understood that, under no
circumstances, the compensation formula herein established will
give rise to a double recovery of any Capital Cost.
The Capital Costs incurred after the tenth (10th) Year of the
Agreement shall be recovered by the straight-line method, during
the remainder of the time the Agreement is in force, provided
that the Maximum Total Fee ("MTF") so permits.
The recovery of the CFee for Capital and Non-Capital Costs prior
to the Production Date shall be calculated as of the Production
Date.
18.12 The interest referred to in Clause 18.7 may be charged and
recovered as part of Capital Costs and
- 69 -
70
Non-Capital Costs in the aggregate of Unrecovered Capital Costs,
as follows:
*
*
*
*
No interests on the Capital Costs prior to the Production Date
shall be accrued nor paid. Even though the interests shall be
treated as part of the Capital Costs in the recovery process, no
interests shall be accrued by such interests.
18.13 The total compensation to be received by THE CONTRACTOR in any
Quarter, as set forth in Clauses 18.10, 18.11 and 18.12 shall not
exceed the amount of $/bbl equal to the Maximum Total Fee (MTF)
adjusted as established below.
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 70 -
71
The initial Maximum Total Fee (MTF) payable by THE AFFILIATE in
any Quarter shall be * US$/Bbl adjusted according to the
following paragraphs:
The Maximum Total Fee (MTF) payable by THE AFFILIATE in any
Quarter shall be subject to indexation so that the adjusted value
shall be reflected by the MTF for the subsequent Quarters. Such
indexation adjustment shall be based on the variation upwards or
downwards in the Price of a Basket of Products ("PCP") applicable
to light, medium or heavy crudes, as corresponding in accordance
with the gravity of the Hydrocarbons delivered to THE AFFILIATE,
according to the price formulas stated below:
LIGHT CRUDE is the one the gravity of which is higher or equal to
30 degrees API,
MEDIUM CRUDE is the one the gravity of which ranges between 21.9
degrees and 29.9 degrees API,
HEAVY CRUDE is the one the gravity of which is lower than 21.9
degrees API.
The PCP for LIGHT CRUDES shall be calculated according to the
following formula:
*
* Confidential portion has been omitted pursuant to a request
for confidential treatment and filed separately with the
Commission.
- 71 -
72
The PCP for MEDIUM CRUDES shall be calculated according to the
following formula:
*
The PPB for HEAVY CRUDES shall be calculated according to the
following formula:
*
*
Should any of the components of the basket of products not be
published on a routine basis, or should an anomalous quotation
appear, the Parties shall meet to agree upon a revised Basket of
Products in order to determine the indexation of the Maximum Total
Fee.
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 72 -
73
The initial Maximum Total Fee (MTF) as specified above shall
be adjusted according to the formula stated below, so that, to
adjust the MTF, the first Current Quarter shall be the first
Quarter of 1993 and the first Previous Quarter shall be the fourth
Quarter of 1992, so that each succeeding Quarter reflects the
adjusted level:
*
WHERE:
*
*
*
*
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 73 -
74
18.14 Any unrecovered Capital Fee (CFee) because of limitations of the
Maximum Total Fee (MTF) in any Quarter, may be carried forward for
a later recovery during the term of this Agreement; provided that
this is allowed by the adjusted Maximum Total Fee (MTF).
Any unrecovered Operations Fee because of limitations of the
Maximum Total Fee (MTF) in any Quarter, may be carried forward for
a later recovery during the term of this Agreement, provided that
this is allowed by the adjusted Maximum Total Fee. These
Operating Fees carried forward shall not accrue interests nor
shall they be subject to an inflation indexing adjustment.
In any Quarter, THE CONTRACTOR shall first recover the current
Operating Fees and the previous unrecovered Operating Fees,
followed by any current interest and the previous unrecovered
interests, and finally, the current Capital Fees and the previous
unrecovered Capital Fees to the extent allowed by the prevailing
Maximum Total Fee (MTF).
18.15 Natural Gas Transferences: If no alternate agreement between THE
CONTRACTOR and THE AFFILIATE has been reached, one (1) barrel of
Crude Oil for each 39,600 standard cubic feet of Natural Gas,
measured at 14.7 lpc and 60 degrees F delivered to THE AFFILIATE,
as set forth
- 74 -
75
in Clause 7.7 hereof shall be credited to THE CONTRACTOR as
delivered to THE AFFILIATE.
18.16 Inspection Points: In the event an inspection were necessary to
meet the requirements and regulations on Hydrocarbons production
in the area as established by the Ministry of Energy and Mines, at
one or more points inside or near the Agreement Area, such
inspection shall constitute no transference of Hydrocarbons nor
indicate acceptance of the custody by THE AFFILIATE. This custody
will be accepted only at the Crude Oil and/or Natural Gas
Transference Points and under the terms hereunder.
18.17 Incentive for Production Increment: THE AFFILIATE agrees to pay to
THE CONTRACTOR * Dollars of the United States of America per
barrel (US$*/Bl), for each barrel of Hydrocarbons produced and
delivered to THE AFFILIATE, above the level established by THE
AFFILIATE, which hereinafter shall be considered accumulated
production. This incentive is additional to the Operating Fee and
Capital Fee and independent from the Maximum Total Fee (MTF), and
shall be payable as set forth in Clause 9.2.
Said incentive shall be subject to indexing following the same
procedure established for the Maximum Total Fee ("MTF"), according
to Subclause 18.13 above.
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
- 75 -
76
ACCUMULATED PRODUCTION INCENTIVE
(MMBls) (US$/Bl)
52.0 *
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
19. TERM AND APPLICABLE LAW
19.1 This Agreement shall be in force as of the Effective Date.
19.2 This Agreement shall be construed and governed by the Laws of the
Republic of Venezuela, which are defined in Clause 2.29 as the
Applicable Law.
19.3 This Agreement shall not be amended nor modified in any way except
by mutual agreement in writing of the Parties.
19.4 In witness whereof, the Parties have signed two (2) identical
copies of this Agreement, in the City of Caracas, on the
nineteenth (19th) day of the month of November, 1993.
By THE AFFILIATE By THE CONTRACTOR
(Signed) (Signed)
-------------------------- --------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President President
- 76 -
77
APPENDIX "A"
DESCRIPTION OF AGREEMENT AREA
AREA
The area of the agreement is located in the State of Zulia, comprises 391,973.51
hectares and is included within the area which corners are defined by U.T.M.
coordinates as indicated in the map included as Appendix "B".
TRANSFER POINTS AND CONDITIONS OF TRANSFER
TRANSFER POINT CONDITION
-------------- ---------
Crude oil
Alpuf Flow Station for the Stabilized crude with less
Alturitas, San Julian, San than 0.5% BS&W 23-30 degrees API.
▇▇▇▇, Machiques, Totumos,
and Alpuf fields.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Plant for Stabilized crude with less
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ field. than 0.5% BS&W 23-30 degrees API.
Natural Gas
Alpuf Flow Station for the Less than 20 ppm of H(2)S.
Alturitas, San Julian, San
▇▇▇▇, Machiques, Totumos,
and Alpuf fields.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Plant for Less than 20 ppm of H(2)S.
the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ field.
The Affiliate accepts to
receive all the available
treated Natural Gas.
A - 1
78
OPERATORSHIP CONDITIONS
The Contractor will be responsible for the construction, operation and
maintenance of all necessary production, separation, measurement, treating,
storage, dehydration, and disposal facilities in order to transport the crude to
the transfer points.
While the construction of the Alpuf Flow Station is in progress (6 months
maximum), the Parties will agree, in writing, the dehydration costs in Punta de
Palmas and other basic services which Maraven will charge the Contractor.
A - 2
79
APPENDIX "B"
MAP OF AGREEMENT AREA
B - 1
80
APPENDIX "C"
MINIMUM WORK PROGRAM AGREED UPON
ACTIVITIES 1st YEAR 2nd YEAR 3rd YEAR TOTAL
---------- -------- -------- -------- -----
* * * *
* * * * *
* * * * *
* * * * *
* * *
*
* * *
* * *
* *
* *
* * *
* * *
* * *
* * *
* *
* * * * *
* * * *
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
C - 1
81
Service to ▇▇▇▇▇ consists of hydraulic pump/ESP change outs. Rehabilitation to
▇▇▇▇▇ consists of asphaltene/restimulation jobs. Technical advising includes
VSD/ESP consultants. All others will be inhouse staff.
MM $
--------------------------------------------------------------
ACTIVITIES 1st YEAR 2nd YEAR 3rd YEAR TOTAL
---------- -------- -------- -------- -----
CAPITAL
* * * * *
* * * * *
* * * * *
* * * * *
*
*
*
* * * * *
* * * * *
*
*
* * *
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
C - 2
82
MM $
--------------------------------------------------------------
ACTIVITIES 1st YEAR 2nd YEAR 3rd YEAR TOTAL
---------- -------- -------- -------- -----
CAPITAL (cont.)
---------------
* * * * *
* * * * *
Subtotal * * * *
EXPENDITURES
------------
* * * * *
* * * * *
* * * * *
* * * * *
* * * * *
* * * * *
* * * * *
* * * * *
* * * * *
-------- -------- -------- ------
Subtotal * * * *
-------- -------- -------- ------
TOTAL * * * *
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
C - 3
83
APPENDIX "D"
FORM OF THE IRREVOCABLE GUARANTY FOR THE
GUARANTEED PORTION OF THE WORK PROGRAM
FOR THE FIRST THIRTY-SIX (36) MONTHS
FROM: BANK
TO: THE AFFILIATE
We hereby establish our irrevocable "Stand-By" Letter of Credit No. ________ in
favor of Maraven S.A. ("THE AFFILIATE"), for the account of (Name and address
of THE CONTRACTOR) up to a total amount of U.S.$_____________ to secure the
satisfactory performance of the Minimum Work Program obligations of (Name of THE
CONTRACTOR), as provided in the Operating Services Agreement for (Area Name)
entered into by (THE CONTRACTOR) and (THE AFFILIATE) on (Date of Execution).
TERMS
I. This "Stand-By" Letter of Credit is available for payment at sight by us,
against submission of a tested telex advising bank, stating that the
advising bank has received a certificate or tested telex from THE AFFILIATE
stating:
QUOTE
(1) We demand payment for U.S.$(to be indicated by THE AFFILIATE) since
(Name of THE CONTRACTOR) has defaulted its obligations within the
Minimum Work Program, as provided in the Operating Services Agreement
for (Area Name) entered into between (THE CONTRACTOR) and ourselves on
(date of execution).
(2) The amount demanded hereby represents the overdue obligations of THE
CONTRACTOR, according to the aforementioned Agreement.
UNQUOTE
II. The amount under this "Stand-By" Letter of Credit shall be reduced in such
amounts as are to be indicated by (THE AFFILIATE) at the end of each
calendar quarter from the date on which this "Stand-By" Letter of Credit
becomes effective, in accordance with paragraph "C", "Other Conditions,"
below, provided that we (Bank) receive a telex from (THE AFFILIATE),
stating:
QUOTE
We hereby authorize (Bank) to reduce the amount under your "Stand-By"
Letter of Credit No. __________ in an amount equal to U.S.$ (to be
indicated by THE AFFILIATE), that represents the portion of the
obligations already performed by (THE
D - 1
84
CONTRACTOR), of the Minimum Work Program, as set forth in the Operating
Services Agreement entered into between (THE CONTRACTOR) and ourselves on
(Date of Execution). It is understood that the above-mentioned "Stand-By"
Letter of Credit shall be in force for the remaining balance of U.S.$(to be
inserted).
UNQUOTE
OTHER CONDITIONS
A. We (Bank) are bound by this "Stand-By" Letter of Credit to pay in an
irrevocable and absolute manner to THE AFFILIATE upon submission of the
document mentioned under Condition 1 above.
B. All Bank fees related to this Letter of Credit are for the account of (THE
CONTRACTOR).
C. This Letter of Credit shall be in force for a period of thirty-seven (37)
months as of the Starting Date of Operations, but not later than
________________, ___________, as notified to us through a tested telex by
the advising bank, in which the advising bank states that it has received
from THE AFFILIATE a certificate or tested telex containing the Starting
Date of Operations or a statement indicating that the operations will not
start on the proposed Starting Date of Operations for reasons imputable to
THE CONTRACTOR, in accordance with the form of Annex I.
D. We shall make the payment under the "Stand-By" Letter of Credit in Dollars
of the United States of America upon submission of the document required
and without requesting any evidence or condition concerning the accuracy of
the statements made in such document, and irrespective of whether (THE
CONTRACTOR) has previously filed a bankruptcy, reorganization or delay
procedure.
E. This Credit is subject to the uniform rules and practices for documentary
credits (revision 1983) of the International Chamber of Commerce,
Publication 400, except with respect to Article 19 of such rules.
Thereupon, in the event our activities were interrupted by the reasons
established in said article, we (Bank) are bound to pay on the first
banking day following the interruption of such causes the amount to be
indicated by THE AFFILIATE via telex, as mentioned in Condition 1 above, up
to an amount not to exceed the one indicated in this "Stand-By" Letter of
Credit, if the term of this "Stand-By" Letter of Credit shall have expired
during the interruption of our activities.
F. References to the Operating Services Agreement or to its terms or
conditions are made herein only for identification purposes and such
document is not incorporated to this "Stand-By" Letter of Credit.
D - 2
85
G. This tested telex is the operative instrument of credit and shall not be
further confirmed by mail.
D - 3
86
APPENDIX "D"
ANNEX I
STARTING OPERATIONS CERTIFICATE
I, _________________, the bearer of Identity Card No. ________________, acting
on behalf of Maraven S.A., hereby confirm that the Letter of Credit No. _______
issued in our favor for the account of Compania Occidental de Hidrocarburos,
Inc., will become effective on ____________, 199__, because [the Starting
Date of Operations took place on ______________, 199___ (or) the works did not
commence on the proposed Starting Date of Operations for reasons imputable to
THE CONTRACTOR].
In witness whereof, the undersigned subscribed this certificate or authorizes
this tested telex on _________, 199___.
By:
-----------------------------
Maraven S.A.
D - 4
87
APPENDIX "F"
STARTING OPERATIONS CERTIFICATE
I, ________________, the bearer of Identity Card No. _______________, acting on
behalf of (THE AFFILIATE), party of the first part; and ___________________,
acting an behalf of THE CONTRACTOR, party of the second part, in his capacity as
_______________, hereby confirm, as provided in Clause 2.6 of the Operating
Services Agreement for the Unit ______, entered into between the PARTIES, that
the Operating Services corresponding to the mentioned AGREEMENT will start at
_____ on the _____ day of the month of ____________________ 199____.
In witness whereof, the undersigned subscribed this CERTIFICATE on the _______
day of the month of __________________, 199__.
By THE AFFILIATE By THE CONTRACTOR
-------------------------------- ---------------------------------
F-1
88
The undersigned, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Bearer of Venezuelan Identity
Card No. 5.062.225, a Certified Public Interpreter for the English Language of
the Republic of Venezuela, as evidenced by and Official License issued unto her
and published in Official Gazette No. 32686 of March 16th 1983 and registered
at the Main Bureau of Public Registry of Federal District under No. 495, Folio
286, of Protocol 2, Volume 2 on February 24th, 1983 hereby certify that the
attached original document written in Spanish has been submitted to her for
translation and the following is a true English version thereof.
ADDENDUM No. 1
TO THE OPERATING SERVICES AGREEMENT FOR UNIT D.Z.O.
This Addendum No. 1 to the Operation of Services Agreement for Unit DZO
(hereinafter referred to as the "Addendum") has been held and undersigned on
December seventh (7th) 1994 by MARAVEN, S.A.(hereinafter referred to as "THE
SUBSIDIARY"), on one part, represented by its President ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
duly authorized as per Bylaws of THE SUBSIDIARY and COMPANIA OCCIDENTAL DE
HIDROCARBUROS, INC. on the other (hereinafter referred to as "THE CONTRACTOR"),
corporation organized and existing under the laws of California, USA,
represented by its President and General Manager, Mr. Carlos del Solar, duly
authorized as per power of attorney registered before the
Legend
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
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First Mercantile Registry Office of the Judicial Circumscription of Federal
District and State of Miranda, on May 12, 1994, under No. 58, Volume 3-C PRO:
1. GENERAL PROVISIONS.
1.1. THE SUBSIDIARY AND THE CONTRACTOR undersigned an Operation of
Services Agreement on November 19, 1993 (hereinafter referred to as "THE
AGREEMENT"), under which THE CONTRACTOR operates, under the terms and
conditions therein agreed, the unit DZO (hereinafter referred to as THE UNIT).
1.2. The terms defined on Clause 2 of the Agreement that shall be
used on this Addendum and that are not defined herein, shall have the same
meaning assigned by them on the Agreement. On Article two (2) of this
Addendum, the term "Production of Crude Oil" shall be used with the term
"Production" on Sub clause 2.9 of the Agreement, but referred only to Crude Oil
and not to Natural Gas.
1.3. In compliance with Sub clause 19.3 of the Agreement, the
Parties have decided to undersign this Addendum in order to reflect certain
explanations and amendments to the Agreement consistent with the mutual
intention of the Parties and a more efficient operation of the Unit.
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2. TRANSFERENCE POINT AND CRUDE OIL TRANSPORTATION
2.1 Unless the parties agree the contrary, The Transference Point
of Crude Oil to all fields, with the exception of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, shall be
relocated to Matapalo and the Transference Point of Natural Gas for all fields
shall be relocated to Los ▇▇▇▇▇▇. Therefore, THE CONTRACTOR shall be
responsible for any additional expansion, as well as of the operation,
maintenance and repairs of the facilities required for the transportation on
Hidrocarbons in the Agreement Area to the Transference Points.
2.2 In the same manner THE CONTRACTOR agrees to be responsible
for:
i) the construction of a pumping station in Matapalo, in
order to allow the delivery to THE SUBSIDIARY'S crude transportation system,
The Production of Crude Oil in excess to the present capacity of twenty six
thousand barrels per day.
ii) The expansion of the capacity of the transportation
system for the Production of Crude Oil between the Matapalo Station and
Platform PE-2-9, in the event the production exceeds the Transportation
capacity of 40 thousand barrels per day, which is estimated to have that
transportation system, once THE CONTRACTOR builds the pumping station referred
to on the preceding 2.2.(i). The obligation of THE SUBSIDIARY of receiving
the Production of Crude Oil, in excess of 40 thousand barrels per day, shall be
subject to the construction and
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adequate conditions of operations by THE CONTRACTOR, of the referred expansion
to the transportation system between Matapalo Station and Platform PE-2-9.
2.3 The payments incurred by THE CONTRACTOR in fulfillment of the
additional obligations assumed in 2.1 and 2.2 herein shall qualify as Capital
Costs, subject to the conditions stated on Clause 18.5 of the Agreement.
2.4 It is expressly understood that the operation, maintenance and
repair of the transportation system between Matapalo and Platform PE-2-9
referred to in 2.2 (ii) herein shall be of the sole responsibility of THE
SUBSIDIARY, once THE CONTRACTOR constructs it and places it in adequate
operating conditions.
2.5 It is expressly understood that the transportation system THE
CONTRACTOR agrees to expand herein indicated shall be for the exclusive use of
the Production of Unit DZO during the term of the Agreement.
3. REMUNERATION PARAMETERS
3.1 Taking into account the Effective Date and Operations Starting
Date under the Agreement, the Parties agree that the initial Maximum Total Fee
(MTF) of US $*/Barrel (* of the United States of America per
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
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barrel) set forth on sub clause 18.13 of the Agreement, shall be adjusted in
accordance with the formula contained on the same clause, therefore during the
First Trimester in course shall be the First Trimester of 1994 and the previous
First Trimester shall be the fourth Trimester of 1993. For the effect of
adjustment for the Incentive in Production Increase of US $*/Barrel (* of the
United States of America per Barrel) set forth on Sub clause 18.17 of the
Agreement, the first Trimester in course shall continue being the first
Trimester of 1993 and the previous first Trimester shall continue being the
fourth Trimester of 1992. The change made to the Agreement herein was agreed
between the Parties due to commercial and extraordinary causes. The Parties
agree that the reference dates for the Incentive in Production Increase
aforementioned, shall not be the object of any modification in the future.
3.2 The provisions set forth on 3.1 herein shall be effective as
of Effective Date of the Agreement. The remuneration adjustments to THE
CONTRACTOR that shall take place in compliance with this Addendum, shall be
made within thirty (30) days upon reception of the invoice corresponding to the
fourth (4) Trimester of 1994.
4. SECONDARY RECOVERING PROJECT.
4.1 THE CONTRACTOR is bound to execute a secondary recovery
project at ▇▇▇▇▇▇▇▇▇ Oil Field, similar to the secondary case referred to in
the August
* Confidential portion has been omitted pursuant to a request for
confidential treatment and filed separately with the Commission.
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1993 offer rendered to THE SUBSIDIARY, as long as the parties determine that
such project is feasible from the technical and economical point of view for
both Parties. During the two (2) years following the execution of this
Addendum THE CONTRACTOR agrees to carry out feasibility studies necessary in
order to make a decision on whether or not to proceed with the referred project
on secondary recovery. In the event such study has been made and the decision
of not to proceed with the referred project on secondary recovery, THE
SUBSIDIARY may request THE CONTRACTOR, when so deemed convenient, that the
above mentioned feasibility studies be updated, updating them and taking the
respective decision, in a term no longer than six (6) months as from the date
the requirement is made in writing to THE SUBSIDIARY. In the event it is
required, the magnitude of the secondary recovery project shall depend on the
performance of ▇▇▇▇▇▇▇▇▇ oil field and of the results of the pilot project of
water injection that THE CONTRACTOR shall carry out as of the first semester
1995. The above mentioned secondary recovery project shall be considered
feasible from the economical point of view for THE CONTRACTOR only if the
internal return rate for THE CONTRACTOR is equal or higher to * per cent
* calculated based on an economic analysis with constant oil prices and
costs not subject to inflation, and at a Product Price Budget equal to the
average of the three (3) Trimesters previous to the date in which the decision
is taken. In the event the Parties do not reach an agreement in relation to
the technical feasibility of the secondary recovery project the decision shall
be referred to an independent oil
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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consulting firm, chosen by mutual consent of the parties. In such case the
professional fees regarding such advise shall be shared by both parties.
4.2. The non fulfillment of the obligations herein set forth on
numeral four (4) from the part of THE CONTRACTOR shall be considered as a
substantial non fulfillment of its obligations, as set forth on Clause 5.8.
of the Agreement.
5. OTHER PROVISIONS
5.1 The parties agree to modify, according to the present
Addendum, the gravity minimum requirement contained on Attachment "A" of the
Agreement in order to allow the delivery of Crude Oil within a range of 22
degrees to 30 degrees API, with the objective of not limiting the production
and development of ▇▇▇▇▇▇▇▇▇ Oil Field.
5.2. The additional activities referred to in this Addendum are
obligatory for THE CONTRACTOR, which shall provide additional amounts that may
result necessary for its execution. Without prejudice of such obligation, the
amount of the minimum installment referred to in Clauses 5.1 and 5.7 of the
Agreement, shall continue to be US $ * .oo.
5.3. The parties agree to modify, according to the present
Addendum, Sub Clause 6.6 of the Agreement, which shall be drafted as follows:
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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"THE CONTRACTOR shall conduct and negotiate on behalf of THE SUBSIDIARY, with
its cooperation and support, the obtantion of any permit and/or right of pass,
and/or right of way to third parties needed so that THE CONTRACTOR reaches the
Agreement Area, or on the premises in order to carry out Operation Services set
forth on the Agreement. THE CONTRACTOR shall inform THE SUBSIDIARY in writing,
with at least two (2) months of Operation among the Agreement Area in
compliance with the Labor Program. Subject to the conditions herein set forth,
only the payments made by THE CONTRACTOR to third parties regarding such
permits and rights, duly sustained with their respective vouchers, shall be
recovered by THE CONTRACTOR as Capital Cost.
All payments made by THE CONTRACTOR to third parties as set forth on Sub Clause
6.6, shall be made previous authorization of THE SUBSIDIARY in writing. THE
SUBSIDIARY, shall communicate in writing and in each case, its approval or
objections within the following fifteen (15) working days upon reception of the
approval request from THE CONTRACTOR. Should THE CONTRACTOR does not receive
written communication from THE SUBSIDIARY, during the above mentioned fifteen
(15) working days term, it shall be understood that such payments have been
authorized.
With the exception of a case of negligence from any of the Parties, any delay
in the Operations Services caused by the delay in the obtation of the terms and
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rights referred to in this sub clause, shall not be considered chargeable to
any of the Parties".
5.4 The parties agree to modify according to the present Addendum,
sub clause 7.9 of the Agreement, which shall be drafted as follows:
"THE SUBSIDIARY shall cooperate with THE CONTRACTOR and shall support the same,
in order to negotiate and complete those agreements with third parties, land
owners and real estate owners among the Area of the Agreement, required in
order to enter the area or other reasonable rights required by THE CONTRACTOR
in order to carry on with the Operation Services herein. Such rights granted
by third parties to THE SUBSIDIARY, shall be extended to THE CONTRACTOR for the
duration of this Agreement. Any other reimbursement or administration costs,
organization and man hour incurred by THE SUBSIDIARY in relation to the
referred support or for the obtainment of the aforementioned rights, shall be
on THE CONTRACTORS account, which shall reimburse them to THE SUBSIDIARY within
the next forty five (45) days upon presentation of vouchers referring those
costs, which in turn shall be recovered by THE CONTRACTOR as Capital Costs".
5.5 The parties agree to clarify, in accordance with the last
paragraph of Sub clause 18.14 of the Agreement, that the interest referred to
on Sub clauses
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18.7 and 18.12 of the Agreement shall be totally charged to and recovered
during each following trimester, as long as the Maximum Total Fee (MTF) so
permits it.
5.6 The parties agree, according to the present Addendum, to
clarify Sub clause 18.10 of the Agreement, which shall be drafted as per terms
set forth on Attachment "A" herein, which is part of the same.
5.7 With the exception of clarifications and amendments to the
Agreement herein made, the Parties ratify and confirm the other terms of the
Agreement.
5.8 This Addendum shall not amend or modified in any aspect, with
the exception of mutual written consent between the Parties.
In witness thereof the Parties have signed two copies of the same tenor and
sole effect, in the city of Caracas, on December seven (7) 1994.
By THE SUBSIDIARY By THE CONTRACTOR
(Signed illegible) By: (Signed illegible) By: ▇▇▇▇▇▇ del Solar
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ - President President and General Manager
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ATTACHMENT A
OF ADDENDUM No. 1
TO
OPERATION SERVICES AGREEMENT FOR UNIT D.Z.O.
In accordance with what is set forth on Article 5.6 of the Addendum, THE
SUBSIDIARY and THE CONTRACTOR agree to clarify the terms contained on clause
18.10, which shall be drafted as follows:
"18.10 All cost of THE CONTRACTOR, different to Capital Costs and Non
Capitalized Costs previous to the Production Date, included with no limitation,
operations costs and THE CONTRACTOR'S services fees, may be recovered only
through Operations Fee (OPFee).
OPFee shall be subject to adjustments after the Trimester which includes the
Effective Date of this Agreement as follows:
As of the following Trimester of that which includes the Effective Date of the
Agreement the "US$/Barrel OPFee of THE CONTRACTOR shall be adjusted on a
trimester basis due to inflation, in which manner the OPFee in each Following
Trimester reflects the adjusted value.
The formula US$/Barrel OPFee adjusted due to inflation shall be determined in
accordance with the following formula:
*
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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*
The procedures above described shall be applied subsequently to the Effective
date of this Agreement.
The above resulting amount of OPFee (N) shall be applied to the three following
formulas.
The OPFee shall be calculated according to the Crude Oil Production delivered
to THE SUBSIDIARY.
Formula 1: Should the Crude Oil Production volume delivered to THE
SUBSIDIARY is * .
Formula 2: Should the Crude Oil Production volume delivered to THE
SUBSIDIARY is * , the OPFee shall be calculated
as per the following formula:
*
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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Formula 3: Should the Crude Oil Production Volume delivered to THE
SUBSIDIARY is higher than Po, the OPFee shall be calculated as
per the following formula:
*
*
(*) The applicable inflation index in order to determine OPFee (N) adjusted to
any Trimester after the Trimester containing the Effective Date of this
Agreement shall be the Special Index Energy (unadjusted) from the Consumer
Price Index for all Urban Consumers (CPI-U), United States City Average (base
period 1982 - 1984 = 100) from the Summary Data from the
* Confidential portion has been omitted pursuant to a request for confidential
treatment and filed separately with the Commission.
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Consumer Price Index News Release as published monthly by the ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇.
Should the Inflation Index, as indicated monthly in News Release above
described suffers corrections at any time after its publication and use for the
adjustments of OPFee (N), the acceptable reconciliation shall be applied in the
following Trimester.
Should the index for the base period (1982 - 1984 = 100) is revised it must be
clear that the intention of this indention provision is made in order to adjust
in proportion the OPFee (N) to the average of price level of IV Trimester 93 in
the Trimester invoiced using the information of three months of the Trimesters
in course and the Information of the three months of the IV Trimester 93":
The foregoing is a faithful translation of the attached document written in
Spanish, which I have made upon request of the interested, not prejudging about
content or form, in Marcaibo, State of Zulia, Republic of Venezuela on November
10th 1997.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Certified Translator for the English Language
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