PRODUCTION SHARING CONTRACT BETWEEN THE GOVERNMENT OF INDIA AND OIL INDIA LTD.
BETWEEN
THE
GOVERNMENT OF INDIA
AND
OIL
INDIA LTD.
AND
GEOGLOBAL
RESOURCES (BARBADOS) INC.
AND
HINDUSTAN
PETROLEUM CORPORATION LTD.
WITH
RESPECT TO CONTRACT AREA
IDENTIFIED
AS
BLOCK
: RJ-ONN-2004/3
TABLE
OF CONTENTS
|
ARTICLE
|
CONTENTS
|
PAGE
NO.
|
|
Preamble
|
1-2
|
|
|
1
|
Definitions
|
3-12
|
|
2
|
Participating
Interests
|
13
|
|
3
|
License
and Exploration Period
|
14-16
|
|
4
|
Relinquishment
|
17
|
|
5
|
Work
Programme
|
18-21
|
|
6
|
Management
Committee
|
22-26
|
|
7
|
Operatorship,
Operating Agreement and Operating Committee
|
27
|
|
8
|
General
Rights and Obligations of the Parties
|
28-30
|
|
9
|
Government
Assistance
|
31
|
|
10
|
Discovery,
Development and Production
|
32-36
|
|
11
|
Petroleum
Exploration License and Mining Lease
|
37-38
|
|
12
|
Unit
Development
|
39-40
|
|
13
|
Measurement
of Petroleum
|
41
|
|
14
|
Protection
of the Environment
|
42-46
|
|
15
|
Recovery
of Cost Petroleum
|
47-49
|
|
16
|
Production
Sharing of Petroleum
|
50-52
|
|
17
|
Taxes,
Royalties, Rentals, Duties etc.
|
53-56
|
|
18
|
Domestic
Supply, Sale, Disposal and Export of Crude Oil and
Condensate
|
57-58
|
|
19
|
Valuation
of Petroleum
|
59-61
|
|
20
|
Currency
and Exchange Control Provisions
|
62
|
|
21
|
Natural
Gas
|
63-68
|
|
22
|
Employment,
Training and Transfer of Technology
|
69
|
|
23
|
Local
Goods and Services
|
70
|
|
24
|
Insurance
and Indemnification
|
71
|
|
25
|
Records,
Reports, Accounts and Audit
|
72
|
|
ARTICLE
|
CONTENTS
|
PAGE
NO.
|
|
26
|
Information,
Data, Confidentiality, Inspection and Security
|
73-75
|
|
27
|
Title
to Petroleum, Data and Assets
|
76
|
|
28
|
Assignment
of Participating Interest
|
77-79
|
|
29
|
Guarantees
|
80-82
|
|
30
|
Term
and Termination of the Contract
|
83-85
|
|
31
|
Force
Majeure
|
86-87
|
|
32
|
Applicable
Law and Language of the Contract
|
88
|
|
33
|
Sole
Expert, Conciliation and Arbitration
|
89-90
|
|
34
|
Change
of Status of Companies
|
91
|
|
35
|
Entire
Agreement, Amendments and Waiver and miscellaneous
|
92
|
|
36
|
Certificates
|
93
|
|
37
|
Notices
|
94-97
|
|
APPENDICES
|
CONTENTS
|
PAGE
NO.
|
|
Appendix
A
|
Description
of the ▇▇▇▇▇▇▇▇ ▇▇▇▇
|
▇▇
|
|
▇▇▇▇▇▇▇▇
▇
|
Map
of the Contract Area
|
99
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|
Appendix
C
|
Accounting
Procedure to the Contract
|
100-130
|
|
Appendix
D
|
Calculation
of the Investment Multiple for Production Sharing purposes
|
131-132
|
|
▇▇▇▇▇▇▇▇
▇▇
|
Form
of Parent company Financial and Performance Guarantee
|
133-134
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|
Appendix
E2
|
Form
of Company Financial and Performance Guarantee
|
135-136
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|
Appendix-F
|
Procedure
for acquisition of goods and services
|
137-140
|
|
Appendix-G
|
Proforma
of Bank Guarantee to be provided pursuant to Article ▇▇
|
▇▇▇-▇▇▇
|
|
Appendix-H
|
Cost
estimates for Minimum Work Programe
|
144-
|
|
This
Contract made this 2nd
day
of March, 2007, between:
|
|
|
The
President of India, acting through the Joint Secretary, Ministry
of
Petroleum and Natural Gas (hereinafter referred to as “the Government”) of
the FIRST PART;
|
AND
|
M/s
Oil India Limited, a Company incorporated under the Companies Act,
1956
having its corporate office at ▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇
(hereinafter referred to as “OIL”) which expression shall include its
successors and such assigns as are permitted under Article 28 hereof,
of
the SECOND PART;
|
AND
|
M/s
GeoGlobal Resources (Barbados) Inc., a Company incorporated under
the laws
of Barbados, West Indies having its registered office at ▇▇▇, ▇▇▇
- ▇
▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (hereinafter referred
to as
“GGRB”) which expression shall include its successors and such assigns
as
are permitted under Article 28 hereof, of the THIRD PART;
|
AND
|
M/s
Hindustan Petroleum Corpn. Ltd. A company incorporated under the
Companies
▇▇▇, ▇▇▇▇, having its registered office at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇, ▇.▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (hereinafter referred to as “HPCL”) which
expression shall include its successors and such assigns as a re
permitted
under Article 28 hereof, of the FOURTH
PART;
|
WITNESSETH:
WHEREAS
(1) The
Oilfields (Regulation and Development) Act, 1948 (53 of 1948) (hereinafter
referred to as "the Act") and the Petroleum and Natural Gas Rules, 1959, made
thereunder (hereinafter referred to as "the Rules") make provisions, inter
alia,
for the regulation of Petroleum Operations and grant of Licenses and Leases
for
exploration, development and production of Petroleum in India;
(2)
The
Rules
provide for the grant of Licenses and Leases in respect of land vested in a
State Government by that State Government with the prior approval of the Central
Government;
(3)
Rule
5 of
the Rules provides for an agreement between the Central Government and the
Licensee or Lessee containing additional terms and conditions with respect
to
the License or Lease;
(4)
The
Government desires that the Petroleum resources which may exist in India be
discovered and exploited with the utmost expedition in the overall interest
of
India and in accordance with modern oilfield and petroleum industry
practices;
(5) OIL-GGRB-HPCL
have committed that it has/they have, or will acquire and make available, the
necessary financial and technical resources and the technical and industrial
competence and experience necessary for proper discharge and/or performance
of
all obligations required to be performed under this Contract in accordance
with
modern oilfield and petroleum industry practices and will provide guarantees
as
required in Article 29 for the due performance of its obligations hereunder;
and
(6)
As
a
result of discussions between representatives of the Government and
OIL-GGRB-HPCL on the proposal of OIL-GGRB-HPCL, the Government has agreed to
enter into this Contract with OIL-GGRB-HPCL with respect to the Contract Area
identified as - block RJ-ONN-2004/3 and detailed in Appendix A and Appendix
B,
on the terms and conditions herein set forth.
NOW,
THEREFORE, in consideration of the premises and covenants and conditions herein
contained, IT IS HEREBY AGREED between the Parties as follows:
ARTICLE
1
DEFINITIONS
In
this
Contract, unless the context requires otherwise, the following terms shall
have
the meaning ascribed to them hereunder:
1.1 "Accounting
Procedure" means the principles and procedures of accounting set out in Appendix
C.
1.2 “Act”
means Oilfields (Regulation and Development) Act, 1948 as amended from time
to
time.
1.3 "Affiliate"
means a company or a body;
a) which
directly or indirectly controls or is controlled by a Company which is a Party
to this Contract; or
b) which
directly or indirectly controls or is controlled by a company which directly
or
indirectly controls or is controlled by a Company which is a Party to this
Contract.
For
the
purpose of this definition it is understood that “control” means:
i) ownership
by one company of more than fifty percent(50%) of the voting securities of
the
other company; or
ii) the
power
to direct, administer and dictate policies of the other company even where
the
voting securities held by such company exercising such effective control in
that
other company is less than fifty percent(50%) and the term “controlled” shall
have a corresponding meaning.
1.4 "Appendix"
means an Appendix attached to this Contract and made a part
thereof.
1.5
"Appraisal
Programme" means a programme, carried out following a Discovery in the Contract
Area for the purpose of appraising Discovery and delineating the Petroleum
Reservoirs to which the Discovery relates in terms of thickness and lateral
extent and determining the characteristics thereof and the quantity of
recoverable Petroleum therein.
1.6
"Appraisal
Well" means a Well drilled pursuant to an Appraisal Programme.
1.7
“Approved
Work Programme” and “Approved Budget” means a Work Programme or a Budget that
has been approved by the Management Committee pursuant to the provisions of
this
Contract.
1.8
"Arms
Length Sales" means sales made freely in the open market, in freely convertible
currencies, between willing and unrelated sellers and buyers and in which such
buyers and sellers have no contractual or other relationship, directly or
indirectly, or any common or joint interest as is reasonably likely to influence
selling prices and shall, inter alia, exclude sales (whether direct or indirect,
through brokers or otherwise) involving Affiliates, sales between Companies
which are Parties to this Contract, sales between governments and
government-owned entities, counter trades, restricted or distress sales, sales
involving barter arrangements and generally any transactions motivated in whole
or in part by considerations other than normal commercial
practices.
1.9
"Article"
means an article of this Contract and the term "Articles" means more than one
Article.
1.10
“Associated
Natural Gas” or “ANG” means Natural Gas produced in
association with Crude Oil either as free gas or in solution, if such Crude
Oil
can by itself be commercially produced.
1.11
"Barrel"
means a quantity or unit equal to 158.9074 litres (forty two (42) United States
gallons) liquid measure, at a temperature of sixty (60) degrees Fahrenheit
(15.56 degrees Celsius) and under one atmosphere pressure (14.70 psia).
1.12
"Basement"
means any igneous or metamorphic rock, or rocks or any stratum of such nature,
in and below which the geological structure or physical characteristics of
the
rock sequence do not have the properties necessary for the accumulation of
Petroleum in commercial quantities and which reflects the maximum depth at
which
any such accumulation can be reasonably expected in accordance with the
knowledge generally accepted in the international petroleum
industry.
| 1.13 |
“Budget”
means a budget formulated in relation to a Work
Programme.
|
1.14 “Business
Day” means any of the Calendar Day excluding holidays.
1.15 “Calendar
Day” means any of the seven (7) days of a week.
1.16 "Calendar
Month" means any of the twelve (12) months of the Calendar Year.
1.17 "Calendar
Quarter" or “Quarter” means a period of three (3) consecutive Calendar Months
commencing on the first day of January, April, July and October of each Calendar
Year.
1.18 "Calendar
Year" means a period of twelve (12) consecutive Months according to the
Gregorian calendar, commencing with the first (1st)
day of
January and ending with the thirty-first (31st)
day of
December.
1.19 "Commercial
Discovery" means a Discovery of Petroleum reserves which has been declared
as a
Commercial Discovery in accordance with the provisions of Article 10 and/or
Article 21.
1.20 "Commercial
Production" means production of Crude Oil or Condensate or Natural Gas or any
combination of these from the Contract Area (excluding production for testing
purposes) and delivery of the same at the relevant Delivery Point under a
programme of regular production and sale.
1.21
"Company"
for the purpose of this Contract means a company which is a Party to this
Contract and, where more than one Company is Party to the Contract, the term
"Companies" shall mean all such Companies collectively, including their
respective successors and permitted assigns under Article 28.
1.22
"Condensate"
means those low vapour pressure hydrocarbons obtained from Natural Gas through
condensation or extraction and refers solely to those hydrocarbons that are
liquid at normal surface temperature and pressure conditions provided that
in
the event Condensate is produced from a Development Area and is segregated
at
the Delivery Point or transported, then the provisions of this Contract shall
apply to such Condensate as if it were Crude Oil.
1.23
"Contract"
means this agreement and the Appendices mentioned herein and attached hereto
and
made an integral part hereof and any amendments made thereto pursuant to the
terms hereof.
1.24
"Contract
Area" means, on the Effective Date, the area described in Appendix-A and
delineated on the map attached as Appendix B or any portion of the said area
remaining after relinquishment or surrender from time to time pursuant to the
terms of this Contract (including any additional area as provided under Article
11.3).
1.25
"Contract
Costs" means Exploration Costs, Development Costs and Production Costs as
provided in Section 2 of the Accounting Procedure and allowed to be cost
recoverable in terms of Section 3 of the Accounting Procedure.
1.26 "Contract
Year" means a period of twelve (12) consecutive months counted from the
Effective Date or from the anniversary of the Effective Date.
1.27 "Contractor"
means the Company(ies).
1.28
"Cost
Petroleum" means, the portion of the total value of Petroleum Produced and
Saved
from the Contract Area which the Contractor is entitled to take in a particular
period, for the recovery of Contract Costs as provided in Article
15.
1.29
"Crude
Oil" or “Oil” or “Crude” means all kinds of hydrocarbons and bitumen,
both
in
solid
and in liquid form, in their natural state or obtained from Natural Gas by
condensation or extraction, including distillate and Condensate when commingled
with the heavier hydrocarbons and delivered as a blend at the Delivery Point
but
excluding Natural Gas.
1.30 “Deepwater
Area” (for deepwater blocks/areas) means area falling beyond four hundred (400)
metre isobath.
1.31
"Delivery
Point" means, except as otherwise herein provided or as may be otherwise agreed
between the Parties having regard to international practice, the point at which
Petroleum reaches the outlet flange of the delivery facility, either offshore
or
onshore and different Delivery Point(s) may be established for purposes of
sales. Delivery Point(s) shall be approved by the Management Committee.
1.32 "Development
Area" means part of the Contract Area which encompasses one or more Commercial
Discovery(ies) and any additional area that may be required for proper
development of such Commercial Discovery(ies) and established as such in
accordance with the provisions of the Contract.
1.33 "Development
Costs" means those costs and expenditures incurred in carrying out Development
Operations, as classified and defined in Section 2 of the Accounting Procedure
and allowed to be recovered in terms of Section 3 thereof.
1.34 "Development
Operations" means operations conducted in accordance with the Development Plan
and shall include, but not be limited to the purchase, shipment or storage
of
equipment and materials used in developing Petroleum accumulations, the
drilling, completion and testing of Development ▇▇▇▇▇, the drilling and
completion of ▇▇▇▇▇ for Gas or water injection, the laying of gathering lines,
the installation of offshore platforms and installations, the installation
of
separators, tankages, pumps, artificial lift and other producing and injection
facilities required to produce, process and transport Petroleum into main Oil
storage or Gas processing facilities, either onshore or offshore, including
the
laying of pipelines within or outside the Contract Area, storage at Delivery
Point(s), the installation of said storage or Gas processing facilities, the
installation of export and loading facilities and other facilities required
for
the development and production of the said Petroleum accumulations and for
the
delivery of Crude Oil and/or Gas at the Delivery Point and also including
incidental operations not specifically referred to herein but required for
the
most efficient and economic development and production of the said
Petroleum
accumulations
in accordance with modern oilfield and petroleum industry
practices.
1.35 "Development
Plan" means a plan submitted by the Contractor for the development of a
Commercial Discovery, which has been approved by the Management Committee or
the
Government pursuant to Article 10 or Article 21.
1.36 "Development
Well" means a Well drilled, deepened or completed after the date of approval
of
the Development Plan pursuant to Development Operations or Production Operations
for the purposes of producing Petroleum, increasing production, sustaining
production or accelerating extraction of Petroleum including production ▇▇▇▇▇,
injection ▇▇▇▇▇ and dry ▇▇▇▇▇.
1.37 “Directorate
General of Hydrocarbons” or “DGH” means an organisation, including its
successors under the Ministry of Petroleum and Natural Gas.
1.38
"Discovery"
means the finding, during Petroleum Operations, of a deposit of Petroleum not
previously known to have existed, which can be recovered at the surface in
a
flow measurable by conventional petroleum industry testing methods.
1.39
"Discovery
Area" means that part of the Contract Area about which, based upon Discovery
and
the results obtained from a Well or ▇▇▇▇▇ drilled in such part, the Contractor
is of the opinion that Petroleum exists and is likely to be produced in
commercial quantities.
1.40
"Effective
Date" means the later of the date on which this Contract is executed by the
Parties or the date of issue of License
or date from which License has been made effective by
the
Central Government or State Government(s) as the case may be.
1.41 "Environmental
Damage" means soil erosion, removal of vegetation, destruction of wildlife,
pollution of groundwater or surface water, land contamination, air pollution,
noise pollution, ▇▇▇▇ fire, disruption to water supplies to natural drainage
or
natural flow of rivers or streams, damage to archaeological, palaeontological
and cultural sites and shall include any damage or injury to, or destruction
of,
soil or water in their physical aspects together with vegetation associated
therewith, aquatic or terrestrial mammals, fish, avi-fauna or any plant or
animal life whether in the sea or in any other water or on, in or under
land.
1.42 "Exploration
Costs" means those costs and expenditures incurred in carrying out Exploration
Operations, as classified and defined in Section 2 of the Accounting Procedure
and allowed to be recovered in terms of Section 3 thereof.
1.43 "Exploration
Operations" means operations conducted in the Contract Area pursuant to this
Contract in searching for Petroleum and in the course of an
Appraisal
Programme and shall include but not be limited to aerial, geological,
geophysical, geochemical, palaeontological, palynological, topographical and
seismic surveys, analysis, studies and their interpretation, investigations
relating to the subsurface geology including structural test drilling,
stratigraphic test drilling, drilling of Exploration ▇▇▇▇▇ and Appraisal ▇▇▇▇▇
and other related activities such as surveying, drill site preparation and
all
work necessarily connected therewith that is conducted in connection with
Petroleum exploration.
1.44
"Exploration
Period" means the period mentioned in Article 3 during which Exploration
Operations may be carried out by the Contractor as provided in Article 3
hereof.
1.45 “Exploration
Phase” or “Phase” means any of the periods specified in Article 3 in which the
Contractor is required to complete the Minimum Work Programme specified
therein.
1.46 "Exploration
Well" means a Well drilled for the purpose of searching for undiscovered
Petroleum accumulations on any geological entity (be it of structural,
stratigraphic, facies or pressure nature) to at least a depth or stratigraphic
level specified in the Work Programme.
1.47 “Field”
means an Oil Field or a Gas Field or combination of both as the case may
be.
1.48 "Financial
Year" means the period from the first (1st)
day of
April to the thirty-first (31st)
day of
March of the following Calendar Year.
1.49 "Foreign
Company" means a Company within the meaning of Section 591 of the Companies
Act,
1956.
1.50 “Frontier
Area” means any area identified, demarcated and so notified by the Government or
its authorised agency(ies) for the purpose of exploration and exploitation
of
Oil and Gas, which is logistically and technically difficult and lacks
infrastructural and/or marketing facilities, etc.
1.51
"Gas"
means Natural Gas.
1.52 “Gas
Field” means, within the Contract Area, a Natural Gas Reservoir or a group of
Natural Gas Reservoirs within a common geological structure or
feature.
1.53 “Government”
or “Central Government” means Government of India unless otherwise stated.
1.54 “Investment"
shall have the meaning ascribed to that expression in paragraph 3 of Appendix
D.
1.55 "Investment
Multiple" means, the ratio of accumulated Net Cash Income to accumulated
Investment by the Contractor,
as
determined in accordance with Appendix D.
1.56 “Lease”
means a petroleum mining lease referred to in the Rules and shall, unless
otherwise stated therein, exclude right for exploration and exploitation of
coal/ lignite bed methane (CBM).
1.57 “Lessee”
means the Contractor to whom a Lease is issued under the Rules for the
purpose
of carrying out Petroleum Operations in a Development Area or Contract
Area.
1.58 "LIBOR"
means the London Inter-Bank Offer Rate for six-month maturates of United States
Dollars as quoted by the International Swaps and Derivative Association or
such
other bank being a BBA LIBOR contributor panel bank as the Parties may agree.
1.59 “License”
means a petroleum exploration license referred to in the Rules.
1.60 "Licensee"
means the Contractor to whom a License is issued under the Rules for the purpose
of carrying out Petroleum Operations in the Contract Area.
1.61 “Minimum
Work Programme” means with respect to each Exploration Phase, the Work Programme
specified in Article 5 with respect to such Phase.
1.62 "Management
Committee" means the committee constituted pursuant to Article 6
hereof.
1.63 "Month"
means Calendar Month.
1.64 "Natural
Gas" means wet gas, dry gas, all other gaseous hydrocarbons, and all substances
contained therein, including sulphur, carbondioxide and nitrogen but excluding
extraction of helium, which are produced from Oil or Gas ▇▇▇▇▇, excluding those
condensed or extracted liquid hydrocarbons that are liquid at normal temperature
and pressure conditions, and including the residue gas remaining after the
condensation or extraction of liquid hydrocarbons from gas.
1.65 "Net
Cash
Income” shall have the meaning assigned in paragraph 2 of Appendix-
D.
1.66 "Non
Associated Natural Gas" or "NANG" means Natural Gas which is produced either
without association of Crude Oil or in association with such quantities of
Crude
Oil which by itself cannot be commercially produced.
1.67 “Oil
Field” means, within the Contract Area, an Oil Reservoir or a group of Oil
Reservoirs within a common geological structure or feature.
1.68 “Operator”
means one of the Parties comprising the Contractor, appointed as the Operator
pursuant to Article 7.
1.69 “Operating
Agreement” means the joint operating agreement entered by the constituents of
the Contractor in accordance with Article 7, with respect to conduct of
Petroleum Operations.
1.70 “Operating
Committee” means the Committee established by that name in the Operating
Agreement pursuant to Article 7.
1.71 "Participating
Interest" means, in respect of each Party constituting the Contractor, the
undivided share expressed as a percentage of such Party’s participation in the
rights and obligations under this Contract.
1.72 "Parties"
means the parties signatory to this Contract including their successors and
permitted assigns under this Contract and the term "Party" means any of the
Parties.
1.73 "Petroleum"
means Crude Oil and/or Condensate and/or Natural Gas existing in their natural
condition but excluding helium occurring in association with Petroleum or
shale.
1.74 "Petroleum
Operations" means, as the context may require, Exploration Operations,
Development Operations or Production Operations or any combination of two or
more of such operations, including construction, operation and maintenance
of
all necessary facilities, plugging and abandonment of ▇▇▇▇▇, safety,
environmental protection, transportation, storage, sale or disposition of
Petroleum to the Delivery Point, Site Restoration and any or all other
incidental operations or activities as may be necessary.
1.75 “Petroleum
Produced and Saved” means gross Petroleum produced minus impurities such as
water or solids produced along with Petroleum, Petroleum recycled to the
reservoir, Petroleum used in Petroleum Operations or flared or otherwise
unavoidably lost under the provisions of the Contract.
1.76 "Production
Costs" means those costs and expenditures incurred in carrying out Production
Operations as classified and defined in Section 2 of the Accounting Procedure
and allowed to be recovered in terms of Section 3 thereof.
1.77 "Production
Operations" means all operations conducted for the purpose of producing
Petroleum from the Development Area after the commencement of
production
from the Development Area including the operation and maintenance of all
necessary facilities therefor.
1.78 "Profit
Petroleum” means, the total value of Petroleum Produced
and Saved from the Contract Area in a particular period, as reduced by Cost
Petroleum and calculated as provided in Article 16.
1.79 “Recompletion”
means an operation whereby a completion in one zone is abandoned in order to
attempt a completion in a different zone within an existing Well bore.
1.80 "Reservoir"
means a naturally occurring discrete accumulation of Petroleum.
1.81 “Rules”
means the Petroleum and Natural Gas Rules, 1959 and any amendments made thereto
from time to time.
1.82 "Section"
means a section of the Accounting Procedure.
1.83 "Self-sufficiency"
means, in relation to any Year, that the volume of Crude Oil and Crude Oil
equivalent of Petroleum products exported from India during that Year either
equals or exceeds the volume of Crude Oil and Crude Oil equivalent of Petroleum
products imported into India during the same Year, as determined by
Government.
1.84 "Site
Restoration" shall mean all activities required to return a site to its state
as
of the Effective Date pursuant to the Contractor’s environmental impact study
and approved by the Government or to render a site compatible with its intended
after-use (to the extent reasonable) after cessation of Petroleum Operations
in
relation thereto and shall include, where appropriate, proper abandonment of
▇▇▇▇▇ or other facilities, removal of equipment, structures and debris,
establishment of compatible contours and drainage, replacement of top soil,
re-vegetation, slope stabilisation, in-filling of excavations or any other
appropriate actions in the circumstances.
1.85 "Statement"
or "Statements" refers to the statements required to be furnished in accordance
with Appendix-C of this Contract.
1.86 “State
Government” means any government of a state of the Union of India, which has
control over the Contract Area for the purpose of grant of Licenses/ Leases.
In
case the Contract Area covers more than one state, the State Government shall
include all such governments of those states.
1.87 "Subcontractor"
means any company or person contracted by the Contractor or Operator to provide
goods or services with respect to Petroleum Operations.
1.88 “US
$” or
“USD” or “US Dollar” or “United States Dollar” means the currency of the United
States of America.
1.89 "Well"
means a borehole, made by drilling in the course of Petroleum Operations, but
does not include a seismic shot hole.
1.90 "Work
Programme" means a work programme formulated for the purpose of carrying out
Petroleum Operations.
1.91 "Year"
means a Financial Year.
ARTICLE
2
PARTICIPATING
INTERESTS
| 2.1 |
The
initial Participating Interest of the Parties comprising the Contractor
shall be as follows:
|
OIL :
60%
(seventy
five per cent)
GGRB : 25%
(twenty
five per cent)
HPCL : 15%
(fifteen percent)
|
2.2
|
Except
as provided in this Article or elsewhere in this Contract, the rights
and
obligations of the Parties comprising the Contractor shall include
but not
be limited to:
|
(a) the
right
to take Cost Petroleum in accordance with the provisions of Article
15;
(b) the
right
to take its Participating Interest share of Profit Petroleum in accordance
with
the provisions of Article 16;
(c) the
right
to receive its Participating Interest share of any incidental income and
receipts arising from Petroleum Operations; and
(d) the
obligation to contribute its Participating Interest share of costs and expenses
including Contract Costs.
ARTICLE
3
LICENSE
AND EXPLORATION PERIOD
| 3.1 |
The
Exploration Period shall begin on the Effective Date and shall consist
of
two Exploration Phases, first exploration Phase shall be for a period
not
exceeding four (4) consecutive Contract Years and second Exploration
Phase
shall be for a period not exceeding three (3) consecutive Contract
Years,
for a total period not exceeding seven (7) consecutive Contract Years
unless extended pursuant to the terms of this
Contract.
|
| 3.2 |
Except
as otherwise provided in this Contract, the term of the first Exploration
Phase shall not exceed 4 (four) consecutive Contract Years (hereinafter
referred to as the first Exploration
Phase).
|
3.3
Except
as
otherwise provided in this Contract, the term of the second Exploration Phase
shall not exceed 3 (three) consecutive Contract Years from the end of the first
Exploration Phase (hereinafter referred to as the second Exploration
Phase).
3.4
At
the
expiry of any Exploration Phase of the Exploration Period, provided that the
Contractor has completed the Minimum Work Programme for that Exploration Phase,
the Contractor shall have the option, exercisable by giving a written notice
to
the Government at least thirty (30) days prior to the expiry of the relevant
Phase, either:
| (a) |
to
proceed to the next Exploration Phase on presentation of the
requisite guarantees
as provided for in Article 29; or
|
| (b) |
to
relinquish the entire Contract Area except for any Discovery Area
and any
Development Area and to conduct Development Operations and Production
Operations in relation to any Commercial Discovery in accordance
with the
terms of this Contract, and the Contractor shall have no further
obligation in respect of the Minimum Work Programme under Article
5 for
any subsequent Exploration Phases of the Exploration
Period.
|
If
neither of the options provided for in paragraphs (a) and (b) hereof is
exercised by the Contractor, this Contract shall terminate at the end of the
then current Exploration Phase and the License shall be automatically
cancelled.
3.5 If
at the
end of an Exploration Phase the Minimum Work Programme for that phase is not
completed, the time for completion of the said Minimum Work Programme shall
be
extended for a period necessary to enable completion thereof but not exceeding
six (6) months, provided that the Contractor submits his request by giving
a
written notice to the Government at least thirty (30) days prior to the expiry
of the relevant Phase and can show technical or other good reasons for
non-completion of the Minimum Work Programme and the Management Committee gives
its consent to the said extension and provided further that the period of such
extension shall be subtracted from the next succeeding Exploration Phase, if
any. In case the Minimum Work Programme of any particular Exploration Phase
is
completed before stipulated time as provided in the Article 3.2, the time so
saved will be added to the next Exploration Phase, if so requested by the
Contractor giving a notice in writing to the Government thirty (30) days prior
to such early completion of the Phase and in that event the provision of the
Article 3.4 (a) shall apply immediately after such early completion of the
Phase.
3.6
If,
at
the end of an Exploration Phase, execution of any Work Programme is in progress
and which is in addition to the Minimum Work Programme, such Exploration Phase
shall be extended for a period not exceeding six (6) months to enable completion
thereof provided that the Minimum Work Programme for such Phase has been
completed and the
Management Committee gives its consent to the said extension as provided in
the
Article 3.5. In the event of an extension as provided for herein, the notice
referred to in Article 3.4 shall be given at least thirty (30) days prior to
the
expiry of the relevant extension.
3.7
Where
sufficient time is not available prior to the expiry of the Exploration Period
to complete an Appraisal Programme, at the request of the Contractor, the
Government shall extend the Exploration Period for such period, not exceeding
eighteen (18) months, as may be mutually agreed between the Parties for the
Appraisal Programme to be carried out and for the Contractor and the Management
Committee, to comply with the provisions of Article 10 and Article
21.
3.8
If
no
Commercial Discovery has been made in the Contract Area by the end of the
Exploration Period, the Contract shall terminate.
3.9
If
this
Contract is terminated in accordance with its terms, the License shall be
automatically cancelled.
3.10 If
at the
expiry of the Exploration Period a development plan for development of a
Commercial Discovery and an application for Lease is under consideration by
the
Management Committee or Government, as the case may be, pursuant to Articles
10,
11 and 21 respectively, the License shall continue in force with respect to
that
part of the Contract Area to which the application for the Lease relates,
pending a decision on the proposed development plan and the application for
the
Lease, but
|
|
shall
cease to be in force and effect with respect to the remainder of
the
Contract Area.
|
ARTICLE
4
RELINQUISHMENT
|
4.1
|
If
at the end of the first Exploration Phase, the Contractor elects,
pursuant
to Article 3.4, to continue Exploration Operations in the Contract
Area in
the second Exploration Phase, the Contractor shall have the option
to
relinquish a part of the Contract Area in simple geometrical shape.
In
case, the Contractor exercises its option to relinquish a part of
the
Contract Area at the end of the first Exploration Phase, then such
area to
be relinquished shall not be less than twenty five percent (25%)
of the
original Contract Area and the Contractor shall be entitled to retain
the
balance area including any Development Area and Discovery Area in
not more
that three (3) areas of simple geometrical shapes. Notwithstanding
the
provision of this Article 4.1, the Contractor shall be permitted
to retain
the Development Areas and Discovery Areas in accordance with Article
3.4.
|
|
4.2
|
At
the end of the third Exploration Phase, the Contractor shall retain
only
Development Areas and Discovery
Areas.
|
|
4.4
|
If
the Contractor exercises the option provided for in paragraph (b)
of
Article 3.4, the Contractor shall, after any Discovery Areas or
Development Areas have been designated, relinquish all of the Contract
Area not included within the said Discovery Areas or Development
Areas.
|
|
4.5
|
As
and when the Contract is terminated under the provisions of Article
3 or
in accordance with any other provisions of this Contract, the entire
Contract Area remaining with the Contractor shall be deemed to have
been
relinquished by the Contractor as on the date on which the Contract
is
terminated.
|
|
4.6
|
Relinquishment
of all or part of the Contract Area or termination of the Contract
shall
not be construed as absolving the Contractor of any liability undertaken
or incurred by the Contractor in respect of the Contract Area during
the
period between the Effective Date and the date of such relinquishment
or
termination.
|
|
4.7
|
Subject
to Article 14.9, the liability of the Contractor shall be limited
to any
liability undertaken or incurred in respect of, relating to or connected
with the Contract, and/or any claim arising out of or in relation
to the
act of negligence, misconduct, commission or omission in carrying
out
Petroleum Operations during the period between the Effective Date
and the
date of relinquishment of the Contract Area or termination or expiry
of
the Contract, as the case may
be.
|
ARTICLE
5
WORK
PROGRAMME
|
5.1
|
The
Contractor shall commence Petroleum Operations not later than six
(6)
months from the Effective Date.
|
|
5.2
|
In
addition to the Bid Work Programme Commitment in first Exploration
Phase
specified below in Article 5.2.1 and 5.3, the Contractor Shall be
required
to undertake and complete the 2D seismic - API, in grid size of
8
(eight) KM x 8 (eight) KM
covering the entire Contract Area ( herein referred to as "Mandatory
Work
Programme") during first Exploration Phase. In case due to any reason
intrinsic to the Contract Area reason(s), the Contractor is not able
to
cover any part of the contract Area by 2D seismic survey of grid
size
specified in this Article, the Contractor shall submit a proposal
for
substitution of the short fall in the Mandatory Work Programme to
the
Management Committee for approval. The Management Committee shall
consider
and take a reasoned unanimously decision on the proposal of the Contractor
in a timely manner. The Management Committee may ask the contractor
by
giving a reasonable time, any relevant information / details / date
to
enable it to toke a decision on the proposal. The Management Committee
shall ensure that the substituted work programme shall be at least
equal
to the shortfall in the mandatory Work Programme when evaluated in
terms
of efforts and expenditure. In case Management Committee is not able
to
decide unanimously, the matter may be referred for approval of the
Government. In case no proposal is received from the Contractor for
the
substitution and fails to complete Mandatory Work Programme the provision
of Article 5.6 shall apply.
|
|
5.2.1
|
During
the currency of the first Exploration Phase, as per Article 3.2,
the
Contractor shall complete the following Work
Programme:
|
(a) (i)
A
seismic
programme consisting of the acquisition, processing and interpretation of
310
(three hundred ten)
line
kilometers of 2D and 611
(six hundred eleven)
sq kms
of 3D seismic data in relation to the exploration objectives;
| (ii) |
Reprocessing
of 463
(four hundred sixty three)
line kilometer of 2D seismic;
|
| (iii) |
Gravity
magnetic survey (API) of 2500
(two thousand five hundred)
stations;
|
| (iv) |
Any
other Surveys (API) : Geochemical survey of 500
(five hundred)
samples
|
(b) Eight
(8)
Exploration ▇▇▇▇▇ each shall be drilled to at least one of the following depths
:
|
(i)
|
One
(1) Well - 2010
(two thousand ten) meters
|
One
(1)
Well - 2110
(two thousand one hundred ten) meters
One
(1)
Well - 2090
(two thousand ninety) meters
One
(1)
Well - 2510
(two thousand five hundred ten) meters
One
(1)
Well - 2510
(two thousand five hundred ten) meters
One
(1)
Well - 2510
(two thousand five hundred ten) meters
One
(1)
Well - 2510
(two thousand five hundred ten) meters
One
(1)
Well - 2510
(two thousand five hundred ten) meters
|
(ii)
|
to
Basement; and
|
|
(iii)
|
that
point below which further drilling becomes impracticable due to geological
conditions encountered and drilling would be abandoned by a reasonable
prudent operator in the same or similar circumstances. Abandonment
of
drilling under this provision by the Contractor would require unanimous
approval of the Management
Committee.
|
5.3 During
the currency of the second Exploration Phase, as per Article 3.3, the Contractor
shall complete the following Work Programme:
| (a) |
One
(1)
Exploration Well shall be drilled to at least one of the following
depths:
|
| (i) |
One
(1) Well - 2000
(two thousand) meters
|
(ii) to
Basement; and
(iii)
that
point below which further drilling becomes impracticable due to geological
conditions encountered and drilling would be abandoned by a reasonable prudent
operator in the same or similar circumstances. Abandonment of drilling under
this provision by the Contractor, would require unanimous approval of the
Management Committee.
5.4
The
actual depth objective for each of the ▇▇▇▇▇ shall be determined by the
Contractor in the light of the advice of the Management Committee before the
commencement of the drilling. Each Well which reaches the geological objective
for which the depth objective was determined shall be deemed to have been
drilled to the depth objective or to actual total depth, whichever is greater.
The Contractor shall ensure that all relevant subsurface, geological,
geochemical and geophysical information necessary for the attainment of the
exploration objectives in accordance with modern oilfield and petroleum industry
practices is obtained during exploratory drilling.
|
5.5
|
If
the depth/geological objective of the Well is not achieved for any
reason,
a substitute Well shall be drilled of the same specifications as
stipulated in and subject to Articles 5.2 & 5.3, as the case may
be.
|
|
5.6
|
Subject
to Article 31, the Contractor undertakes to complete the Mandatory
Work
Programme and Minimum Work Programme in accordance with Articles
5.2,
5.2.1, 5.3 and 5.5, as the case may be. In the event the Contractor
fails
to fulfill the said Mandatory Work Programme or Minimum Work Programme
or
both by the end of the relevant Exploration Phase or early termination
of
the Contract by the Government for any reason whatsoever, each Company
constituting the Contractor shall pay to the Government, within sixty
(60)
days following the end of the relevant Exploration Phase or early
termination of the Contract, as may be the case, its Participating
Interest share for an amount which, when evaluated in terms of the
Mandatory Work Programme or Minimum Work Programme specified for
the
relevant Phase, is equal to the amount which would be required to
complete
the said Mandatory Work Programme of Minimum Work Programme or both.
For
determination of this amount, available relevant information including
the
Budget and modern oilfield and petroleum industry practices may be
taken
into account.
|
|
5.7
|
If
the Minimum Work Programme for the second Exploration Phase has been
completed earlier than eighteen months from the end of the Phase,
the
Contractor shall meet with the Government to discuss the possibility
of
early relinquishment, unless the Contractor undertakes further work
with
the approval of the Management
Committee.
|
|
5.8
|
In
the event that the Contractor has carried out work in excess of the
Minimum Work Programme in any Exploration Phase, the excess
exploration work
done shall be set off against the Minimum Work Programme for the
following
Exploration Phase.
|
|
5.9
|
As
soon as possible after the Effective Date and thereafter within ninety
(90) days before commencement of each following Year, the Contractor
shall
submit to the Management Committee the Work Programmes and the Budgets
relating to Petroleum Operations to be carried out during the relevant
Year. Work Programme and Budgets for the Exploration Period shall
include
work sufficient to meet the relevant Minimum Work Programme with
respect
to each Exploration Phase specified in this Article
5.
|
|
5.10
|
The
Contractor may propose modifications or revisions to the details
of a
reviewed or an approved Work Programme and Budget, as the case may
be, in
the light of the then existing circumstances and shall submit to
the
Management Committee modifications or revisions to the Work Programme
and
Budget referred to in Article 5.9.
|
5.11
Work
Programmes and Budgets and any modifications or revisions thereto relating
to
Exploration Operations shall be submitted to the Management Committee for review
and advice as provided in Article 6.5. Work Programmes and Budgets related
to
Development Operations and Production Operations and any modifications or
revisions thereto shall be submitted to the Management Committee for approval
as
provided in Article 10 and Article 21.
ARTICLE
6
MANAGEMENT
COMMITTEE
6.1
There
shall be constituted a committee to be called the Management Committee with
functions as stated herein below.
6.2 Government
shall nominate two (2) members representing Government in the Management
Committee, whereas each Company constituting the Contractor shall nominate
one
(1) member each to represent Company in the Management Committee provided that
in case the Contractor constitutes only one Company, that Company shall have
two
(2) members. The Parties shall nominate the members to the Management Committee
within thirty (30) days of the Effective Date.
6.3
Each
Party may nominate alternate members with full authority to act in the absence
and on behalf of the members nominated under Article 6.2 and may, at any time,
nominate another member or alternate member to replace any member nominated
earlier by notice to other members of the Management Committee.
6.4
One
representative of the Government shall be designated as the Chairman of the
Management Committee and the second representative of the Government shall
be
designated as the Deputy Chairman. The member of the Operator, or the member
designated by the Operator where Operator has two (2) members in the Management
Committee shall be designated as the Secretary of the Committee.
6.5
Operator
on behalf of the Contractor with the approval of Operating Committee,
if
constituted under the Article 7.4, or in case of a single Party constituting
the
Contractor, then that Party shall submit following matters to the Management
Committee for review and it shall have advisory functions:
| (a) |
the
annual Work Programmes and Budgets in respect of Exploration Operations
and any revisions or modifications
thereto;
|
| (b) |
annual
work progress and costs incurred
thereon;
|
| (c) |
proposals
for surrender or relinquishment of any part of the Contract Area
by the
Contractor;
|
| (d) |
proposals
for an Appraisal Programme or revisions or additions thereto and
the
declaration of a Discovery as a Commercial
Discovery;
|
| (e) |
any
other matter required by the terms of this Contract to be submitted
to it
for review or advice; and
|
| (f) |
any
other matter which the Contractor decides to submit for review or
advice
including matters concerning inter-Party
relationships.
|
6.6
The
following matters shall be submitted by Operator on behalf of the Contractor
with the approval of Operating Committee, if constituted under the Article
7.4,
or in case of single Party constituting the Contractor, then by that Party
to
the Management Committee for approval:
| (a) |
Annual
Work Programmes and Budgets in respect of Development Operations
and
Production Operations and any modifications or revisions
thereto;
|
(b)
proposals
for the approval of development plans as may be required under this Contract,
or
modifications or revisions to a Development Plan;
(c)
determination
of a Development Area;
(d)
appointment
of auditors along with scope of audit, approval and adoption of audited report
submitted under Article 25.4.3;
(e)
collaboration
with licensees or contractors of other areas;
(f)
claims
or
settlement of claims for or on behalf of or against the Contractor in excess
of
limits fixed by the Management Committee from time to time;
(g)proposal
about abandonment plan/Site Restoration as required to be submitted under
Article 14.10;
(h)
any
other
matter required by the terms of this Contract to be submitted for the approval
of the Management Committee;
(i)
any
other
matter which the Contractor decides to submit to it; and
(j)
any
matter, which Government refers to the Management Committee for its
consideration and reasoned opinion.
6.7 Unless
agreed otherwise by all the members of the Management Committee, the Management
Committee shall meet at least once every six (6) months during the Exploration
Period and thereafter at least once every three (3) months or more frequently
at
the request of any member. The Secretary, with the approval of the Chairman,
shall convene each meeting by notifying the members twenty eight (28) days
prior
to such a meeting (or a shorter period of notice if the members unanimously
so
agree) of the time and place of such meeting and the purpose thereof and shall
include in such notice a provisional agenda for such meeting. The Chairman
shall
be responsible for processing the final agenda for such meeting and the agenda
shall include all items of business requested by the members to be included,
provided such requests are received by the Secretary at least ten (10) days
prior to the date fixed for the meeting. The Secretary shall forward the agenda
to the members at least seven (7) Business Days prior to the date fixed for
the
meeting. Matters not included in the agenda may be taken up at the meeting
by
any member with the unanimous consent of all the members whether present or
not
present at the meeting.
6.8
The
Chairman or the Deputy Chairman, as may be the case, shall preside over the
meetings of the Management Committee and, in their absence, any other member
representing Government and present shall preside over the
meetings.
|
6.9
|
Secretary
to the Management Committee shall be responsible, inter alia, for
preparation of the minutes of every meeting in the English language
and
provision to every member of the Management Committee with two (2)
copies
of the minutes approved by the Chairman within three (3) Business
Days of
the meeting. Unless agreed otherwise by all the members of the Management
Committee, the minutes of a meeting shall be finalised by the Management
Committee within three (3) Business Days thereafter. Members shall
notify
the Chairman and the other members of their approval of the minutes
by
putting their signatures on one copy of the minutes and returning
the same
to the Chairman. Members may suggest any modification to the minutes
while
returning the signed copy. Members may also communicate with the
Chairman
through telex, cable, or facsimile or any other effective mode of
communication agreed by all the members of the Management Committee.
If
the Chairman or any other member does not agree with the modification
to
the minutes suggested by any member, the matter shall be brought
to the
attention of the other members and resubmitted to the Management
Committee
at the next meeting and the minutes shall stand approved as to all
other
matters. If a member fails to respond within the aforesaid three
(3)
Business Day period, unless agreed otherwise by the Management Committee
as herein provided, the minutes shall be deemed to be approved by
such
member.
|
|
6.10
|
Any
member shall be entitled, if either he/she or his/her alternate is
unable
to attend a meeting, to cast his vote by telex, cable, facsimile
transmission or any other effective mode of communication agreed
by all
the members of the Management Committee and received by the Chairman
prior
to the date on which the vote is taken in the course of the meeting
or by
giving a prior written notice to all other members, appoint a member,
with
his/her prior consent, representing another Party in the Management
Committee as its proxy to attend a meeting and to exercise the appointing
member’s right to vote at the meeting whether as directed by the
appointing member or otherwise. A member appointed as a proxy and
attending a meeting shall be present in two separate capacities and
vote
accordingly. All such votes shall have the same effect as if that
member
had been present and so voted at the
meeting.
|
|
6.11
|
In
case of urgency, where Operating Committee has made a recommendation
together with reasons to the Chairman requiring consideration of
a matter
by the Management Committee without delay, Chairman, after being
satisfied
may waive the requirements of notice period for the meeting and
circulation of agenda to such extent as would be consistent with
the
urgency and consideration of the matter by the Management Committee.
Alternatively, Chairman may approve submission of notice and agenda
to
members by telex or facsimile transmission or any other effective
mode of
communication agreed by all the members of the Management Committee,
receipt of which shall be confirmed by telephone by the Chairman
requiring
the members to confirm their decision by these modes of communication
not
later than three (3) Business Days from confirmation
of
|
receipt
of notice and agenda by the member. Any member failing to convey the decision
within the time limits of three (3) Business Days shall be deemed to have voted
in favour of the proposal. The result of any such vote shall be notified by
the
Chairman to all the members.
|
6.12
|
The
meetings of the Management Committee shall be held in India, unless
otherwise mutually agreed by the members of the Management Committee.
All
expenses of the members of the Management Committee attending meetings
shall be borne by the respective Party and shall in no event be cost
recoverable.
|
|
6.13
|
All
matters requiring the approval of the Management Committee shall
be
generally approved by a unanimous vote of the members of the Management
Committee present as well as the views of the members received by
some
other mode of communication. In case, unanimity is not achieved in
decision making process within a reasonable period as may be required
under the circumstances, the decision of the Management Committee
shall be
approved by the majority Participating Interest of seventy percent
(70%)
or more with Government representative having a positive vote in
favour of
the decision.
|
|
6.14
|
There
shall be a quorum of the Management Committee for holding a meeting
and
making decisions with each Party to the Contract represented by at
least
one of its nominated members in the Management Committee either present
in
person or represented as per Article 6.10. If there is no quorum
in a
meeting, the meeting shall stand postponed to the same day and time
in the
next week and if quorum is not present or represented even in the
next
meeting and subject to a Government member being present, the members
present and represented will constitute the quorum and take decisions
and
decisions taken by such quorum shall be final and binding to all
the
absenting Parties or Parties not represented, notwithstanding the
provisions of Article 6.13.
|
|
6.15
|
The
Management Committee, if it considers necessary, may appoint legal,
financial or technical subcommittees comprised of such representatives
as
may be agreed by the Management Committee to consider any matter
requiring
approval or decision of the Management Committee. Such sub-committee
expenses shall form part of Contract Cost with relevant cost
classification as decided by the Management Committee pursuant to
the
Section 2 of the Accounting Procedure and will be cost
recoverable.
|
|
6.16
|
In
the event a Party to the Contract is not entitled to vote in the
Operating
Committee meetings being in default under the Operating Agreement,
and
Operator notifies Chairman of the default by the Party, then the
issue of
exercising voting right by such defaulting Party in the Management
Committee meetings shall be discussed by the Management Committee.
The
Management Committee excluding the defaulting Party, after duly hearing
the views of the defaulting Party on the matter of their default
under
Operating Agreement, shall
|
take
unanimous decision on exclusion or otherwise of the defaulting Party from voting
in the Management Committee meetings. For avoidance of any doubt, it is clearly
understood that unanimous decision by the Management Committee referred to
in
this Article 6.16 excludes defaulting Party from such decision. Accordingly,
if
the Management Committee decides to exclude the defaulting Party from voting
in
the Management Committee, then the said Party shall not be entitled to vote
in
the meetings of the Management Committee under Contract. In that event,
notwithstanding the provisions of Article 6.13, decisions of the Management
Committee shall be made by vote of the members of the Management Committee
excluding the member appointed by the said Party in default and any vote or
purported vote by such member in the Management Committee shall be ignored.
The
said Party in default shall be bound by all decisions of the Management
Committee. The non-defaulting Parties under the Operating Agreement shall
indemnify Government against any claims of whatsoever nature which may arise
due
to exclusion of defaulting Party from voting in the Management
Committee.
ARTICLE
7
OPERATORSHIP,
JOINT OPERATING AGREEMENTAND OPERATING COMMITTEE
|
7.1
|
OIL
shall be the Operator for the purpose of carrying out Petroleum Operations
pursuant to this Contract during the term of the
Contract.
|
|
7.2
|
No
change in the operatorship shall be effected without the consent
of the
Government and such consent shall not be unreasonably
withheld.
|
|
7.3
|
The
functions required of the Contractor under this Contract shall be
performed by the Operator on behalf of all constituent(s) of the
Contractor subject to, and in accordance with, the terms and provisions
of
this Contract and generally accepted modern oilfield and petroleum
industry practices, provided, however, that this provision shall
not be
construed as relieving the constituent(s) of the Contractor from
any of
its obligations or liability under the
Contract.
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7.4 Within
forty five (45) days of the Effective Date or such longer period as may be
agreed to by Government, the Companies constituting the Contractor shall execute
a Joint Operating Agreement. The said agreement shall be consistent with the
provisions of this Contract and shall provide for, among other
things:
(a) the
appointment, resignation, removal and responsibilities of the
Operator;
(b) the
establishment of an Operating Committee comprising of an agreed number of
representatives of the Companies chaired by a representative of the
Operator;
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(c)
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functions
of the said Operating Committee taking into account the provisions
of the
Contract, procedures for decision making, frequency and place of
meetings;
and
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(d)
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contribution
to costs, default, sole risk, disposal of Petroleum and assignment
as
between the Parties to the Joint Operating
Agreement.
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7.4.1 Operator
shall provide to the Government a copy of the duly executed Joint Operating
Agreement within thirty (30) days of its execution date or such longer period
as
may be agreed to by the Government.
7.4.2 In
case a
single Company constitutes the Contractor, the provisions of Article 7.4 and
7.4.1 shall not be applicable. However, in case of increase in the number of
constituents of the Contractor, the provisions of Article 7.4 and 7.4.1 shall
apply from the date of such increase in the number of the
constituents.
ARTICLE
8
GENERAL
RIGHTS AND OBLIGATIONS OF THE PARTIES
8.1
Subject
to the provisions of this Contract, the Contractor shall have the following
rights:
(a) subject
to the provisions of Article 12, the exclusive right to carry out Petroleum
Operations to recover costs and expenses as provided in this Contract. The
right
shall exclude exploitation of coal/lignite bed methane (CBM) by the Contractor
in the Contract Area;
(b) the
right
to use, free of charge, such quantities of Petroleum produced as are reasonably
required for conducting Petroleum Operations in the Contract Area in accordance
with generally accepted modern oilfield and petroleum industry
practices;
(c) the
right
to lay pipelines, build roads, construct bridges, ferries, aerodromes, landing
fields, radio telephones and related communication and infrastructure facilities
and exercise other ancillary rights as may be reasonably necessary for the
conduct of Petroleum Operations subject to such approvals as may be required
and
the applicable laws in force from time to time for the regulation and control
thereof;
(d) the
right
to use all available technical data, seismic and well information, maps, samples
etc. of the Contract Area as on the Effective Date, free of charge, subject
to
nominal copying/reproduction costs for further Petroleum Operations. The
Contractor shall submit the list of all data required by them to Directorate
General of Hydrocarbons (DGH) based on the list of data provided in the
information docket for the block pertaining to the Contract Area as soon as
possible but not later than one hundred and eighty (180) days from the execution
of the Contract and the same, if available and reproducible, shall be made
available to the Contractor in the office of DGH within ninety (90) days from
the submission of such request for data by the Contractor, provided the
Effective Date of the Contract has commenced and the Contractor has furnished
relevant guarantees under Article 29 of the Contract.
(e) such
other rights as are specified in this Contract.
8.2
The
Government reserves the right to itself, or to grant to others the right, to
prospect for and mine minerals or substances other than Petroleum within the
Contract Area; provided, however, that if after the Effective Date, others
are
issued rights, or the Government proceeds directly to prospect for and mine
in
the Contract Area any minerals or substances other than Petroleum, the
Contractor shall use its best efforts to avoid obstruction to or interference
with such operations within the Contract Area and the third parties and/or
the
Government,
as
the
case may be, shall use best efforts to ensure that operations carried out do
not
obstruct or unduly interfere with Petroleum Operations in the Contract
Area.
8.3
The
Contractor shall having due regard to modern oilfield and petroleum industry
practices :
(a)
except
as
otherwise expressly provided in this Contract, conduct all Petroleum Operations
at its sole risk, cost and expense and provide all funds necessary for the
conduct of Petroleum Operations including funds for the purchase or lease of
equipment, materials or supplies required for Petroleum Operations as well
as
for making payments to employees, agents and Subcontractors;
(b)
conduct
all Petroleum Operations within the Contract Area diligently, expeditiously,
efficiently and in a safe and workmanlike manner pursuant to the Work Programme
formulated in accordance with Contract;
(c)
ensure
provision of all information, data, samples etc. which may be required to be
furnished under the applicable laws or under this Contract;
(d)
ensure
that all equipment, materials, supplies, plant and installations used by the
Contractor, the Operator, and Subcontractors comply with generally accepted
standards and are of proper construction and kept in safe and good working
order;
(e)
in
the
preparation and implementation of Work Programmes and in the conduct of
Petroleum Operations, follow modern oilfield and petroleum industry practices
with such degree of diligence and prudence reasonably and ordinarily exercised
by experienced parties engaged in a similar activity under similar circumstances
and conditions;
(f)
the
procedure for acquisition of goods and services, as of the Effective Date,
shall
be as per the Appendix-F of this Contract. Based on economic considerations
and
generally accepted practices in the international petroleum industry with the
objective of ensuring cost and operational efficiency in the conduct of
Petroleum Operations, the Appendix-F to this Contract may be modified or changed
with the prior approval of the Management Committee when circumstances so
justify;
(g)
after
the
designation of a Development Area, pursuant to this Contract, forthwith proceed
to take all necessary action for prompt and orderly development of the
Development Area and for the production of Petroleum in accordance with the
terms of this Contract;
(h)
appoint
a
technically competent and sufficiently experienced representative, and, in
his
absence, a suitably qualified replacement therefor, who shall be resident in
India and who shall have full authority to take such steps as may be necessary
to implement this Contract and whose name(s) shall, on appointment within ninety
(90) days after commencement of the first Contract Year, be made known to the
Government;
(i)
provide
acceptable working conditions, living accommodation and access to medical
attention and nursing care for all personnel employed in Petroleum Operations;
(j)
carry
out
such other obligations as are specified in this Contract, in particular those
specified in Article 14; and
(k)
be
always
mindful of the rights and interests of India in the conduct of Petroleum
Operations.
ARTICLE
9
GOVERNMENT
ASSISTANCE
9.1
Upon
application in the prescribed manner, and subject to compliance with applicable
laws and relevant procedures, the Government or its nominee will:
(a)
use
their
good offices to provide the right of ingress and egress from the Contract Area
and any facilities used in Petroleum Operations, wherever located, and which
may
be within their control;
(b)
use
their
good offices, when necessary, to assist the Contractor in procurement or
commissioning of facilities required for execution of Work Programmes including
necessary approvals, permits, consents, authorisations, visas, work permits,
Licenses including Licenses and Leases, rights of way, easement, surface rights
and security protection at the Contractor’s cost, required pursuant to this
Contract and which may be available from resources within its control;
and
(c)
in
the
event that onshore facilities are required outside the Contract Area for
Petroleum Operations including, but not limited to, storage, loading and
processing facilities, pipelines and offices, use their good offices in
assisting the Contractor to obtain from the authorities of the state in which
such facilities are required, such licenses, permits, authorizations, consents,
security protection at the Contractor’s cost, surface rights and easements as
are required for the construction and operation of the said facilities by the
Contractor.
ARTICLE
10
DISCOVERY,
DEVELOPMENT AND PRODUCTION
10.1
If
and
when a Discovery is made within the Contract Area, the Contractor
shall:
(a)
forthwith
inform the Management Committee and Government of the Discovery;
(b)
promptly
thereafter, but in no event later than a period of thirty (30) days from the
date of the Discovery, furnish to the Management Committee and Government
particulars, in writing, of the Discovery; and
(c)
promptly
run tests to determine whether the Discovery is of potential commercial interest
and, within a period of sixty (60) days after completion of such tests, submit
a
report to the Management Committee containing data obtained from such tests
and
its analysis and interpretation thereof, together with a written notification
of
whether, in the Contractor's opinion, such Discovery is of potential commercial
interest and merits appraisal.
10.2
If
the
Contractor determines to conduct a drill stem or production test, in open hole
or through perforated casing, with regard to any Exploration Well, it shall
notify the Government of the time of such test at least forty eight (48) hours
prior to the proposed test, and the Government shall have the right to have
a
representative present during such test.
10.3
If,
pursuant to Article 10.1 (c), the Contractor notifies the Management Committee
that the Discovery is of potential commercial interest, the Contractor shall
prepare and submit to the Management Committee within one hundred and twenty
(120) days of such notification, a proposed Appraisal Programme with a Work
Programme and Budget to carry out an adequate and effective appraisal of such
Discovery designed to achieve both the following objectives: (i) determine
without delay, and, in any event, within the period specified in Article 10.5,
whether such Discovery is a Commercial Discovery and (ii) determine, with
reasonable precision, the boundaries of the area to be delineated as the
Development Area.
10.4
The
proposed Appraisal Programme shall be reviewed by the Management Committee
within thirty (30) days after submission thereof pursuant to Article 10.3.
The
said Appraisal Programme, together with the Work Programme and Budget submitted
by the Contractor, which may be revised or modified or amended by the Contractor
in light of the Management Committee review, shall be adopted as the Appraisal
Programme and the Contractor shall promptly commence implementation thereof;
and
the annual Budget for the Exploration Period, adopted pursuant to Article 5,
shall be revised accordingly.
10.5
The
Contractor shall in respect of a Discovery of Crude Oil advise the Management
Committee by notice in writing within a period of eighteen (18) months from
the
date on which the notice provided for in Article 10.1 (c) was delivered, whether
such Discovery should be declared a Commercial Discovery or not. Such notice
shall be accompanied by a report on the Discovery setting forth all relevant
technical and economic data including estimated recoverable reserves,
sustainable production levels, estimated development and production
expenditures, prevailing and forecasted prices, and other pertinent technical
and economic factors according to modern oilfield and petroleum industry
practices as well as all evaluations, interpretations and analyses of such
data
and feasibility studies relating to the Discovery prepared by or for the
Contractor, with respect to the Discovery and any other relevant information.
If
the Contractor is of the opinion that Crude Oil has been discovered in
commercial quantities, it shall submit the proposal to the Management Committee
for review that the Discovery be declared a Commercial Discovery. In the case
of
a Discovery of Gas, the provisions of Article 21 shall apply.
10.6
The
Management Committee shall, within forty (40) days of the date of the notice
referred to in Article 10.5, review the proposal of the Contractor and request
any other additional information it may reasonably require so as to complete
the
review of the proposal made by the Contractor. The Contractor shall furnish
the
additional information within thirty (30) days from the date of the request.
The
review by the Management Committee shall be made and conveyed to the Contractor
within the later of (a) ninety (90) days from the date of notice referred to
in
Article 10.5 or (b) forty (40) days of receipt of such other information as
may
be required under this Article.
10.7
If
the
Contractor declares the Discovery a Commercial Discovery after taking into
account the advice of the Management Committee as referred in the Article 10.6,
within two hundred (200) days of the declaration of the Discovery as a
Commercial Discovery, the Contractor shall submit to the Management Committee
a
comprehensive development plan of the Commercial Discovery which
shall:
(a) relate
to
the Discovery Area and contain a Reservoir or part thereof and the boundaries
of
the proposed Development Area;
(b) be
designed to ensure the most efficient, beneficial and timely use of the
Petroleum resources discovered; and
(c) be
prepared in
accordance with sound engineering, economic, safety and environmental principles
recognised in the generally accepted modern oilfield and petroleum industry
practices.
Such
plan
shall contain detailed proposals by the Contractor for the construction,
establishment and operation of all facilities and services for and incidental
to
the recovery, storage and transportation of the Petroleum from the
proposed
Development
Area to the Delivery Point together with all data and supporting information
including but not limited to:
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(i)
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description
of the nature and characteristic of the Reservoir, data, statistics,
interpretations and conclusions on all aspects of the geology, Reservoir
evaluation, Petroleum engineering factors, Reservoir models, estimates
of
reserve in place, possible production magnitude, nature and ratio
of
Petroleum fluids and analysis of producible
Petroleum;
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(ii)
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outlines
of the development project and/or alternative development projects,
if
any, describing the production facilities to be installed and the
number
of ▇▇▇▇▇ to be drilled under such development project and/or alternative
development projects, if any;
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(iii)
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estimate
of the rate of production to be established and projection of the
possible
sustained rate of production in accordance with modern oilfield and
petroleum industry practices under such development project and/or
alternative development projects, if any, which will ensure that
the area
does not suffer an excessive rate of decline of production or an
excessive
loss of Reservoir pressure;
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(iv)
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estimates
of Development Costs and Production Costs under such development
project
and/or alternative development projects, if
any;
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(v)
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Contractor's
recommendations as to the particular project that it would prefer;
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(vi)
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Work
Programme and Budget for development proposals relating to the proposed
Development Area;
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(vii)
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anticipated
adverse impact on the environment and measures to be taken for prevention
or minimisation thereof and for general protection of the environment
in
conduct of operations;
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(viii)
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measures
to be taken for the health and safety of persons employed in Petroleum
Operations;
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| (ix) |
the
information required in Article 21.
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10.8 A
proposed development plan submitted by the Contractor pursuant to Article 10.7
may be approved by the Management Committee within one hundred and ten (110)
days of submission thereof or eighty (80) days of receipt of any additional
information requested by the Management Committee. In case the Management
Committee requires any reasonable additional information, the same shall be
requested by it within eighty (80) days from the submission of the development
plan. The Contractor shall provide such additional information within thirty
(30) days from the request by the Management Committee. If, within a period
of
one hundred and ten (110) days after submission of a proposed development plan
or eighty (80) days from the receipt of any additional information, where asked
by the Management Committee, the Management Committee fails to convey a decision
to the Contractor, the Contractor shall have option to submit the proposal
to
the Government. Also, where, the Management Committee rejects the development
plan of the Contractor, the Contractor can submit the
development
plan
for
the approval of the Government. The Government shall respond on the proposed
development plan submitted by the Contractor within one hundred and ten (110)
days. In case Government refuses to approve the proposed development plan,
it
shall convey the reasons for such refusal and the Contractor shall be given
opportunity to make appropriate modifications to meet concerns of Government
and
the provisions of the foregoing Article and re-submit the plan within ninety
(90) days from the date of receipt of refusal from the Government.
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10.9
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A
Development Plan approved by the Management Committee or Government,
as
may be the case, from time to time shall commit the Contractor to
the
obligations stipulated in Articles 10.10 to
10.12.
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10.10
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Work
Programmes and Budgets for Development and Production Operations
shall be
submitted to the Management Committee as soon as possible after the
approval of a Development Plan under Article 10.8 and thereafter
not later
than 31st December each Year in respect of the Year immediately
following.
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10.11
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The
Management Committee, when considering any Work Programme and Budget,
may
require the Contractor to prepare an estimate of potential production
to
be achieved through the implementation of the said Work Programme
and
Budget for each of the three (3) Years following the Year to which
the
Work Programme and Budget relate. If major changes in yearly estimates
of
potential production are required, these shall be based on evidence
necessitating such changes.
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10.12
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Not
later than the fifteenth (15th)
of January each Year, in respect of the Year immediately following
commencement of Commercial Production, the Contractor shall determine
the
"Programme Quantity" with the approval of the Management Committee.
The
Programme Quantity for any Year shall be the maximum quantity of
Petroleum
based on Contractor's estimates, as approved by the Management Committee,
which can be produced from a Development Area consistent with modern
oilfield and petroleum industry practices and minimising unit production
cost, taking into account the capacity of the producing ▇▇▇▇▇, gathering
lines, separators, storage capacity and other production facilities
available for use during the relevant Year, as well as the transportation
facilities up to the Delivery
Point.
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10.13
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Proposed
revisions to the details of a Development Plan or an annual Work
Programme
or Budget in respect of Development and Production Operations shall,
for
good cause and if the circumstances so justify, be submitted for
approval
to the Management Committee.
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10.14
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In
the event the area encompassing the Commercial Discovery extends
beyond
the Development Area designated in the Development Plan, either within
the
original Contract Area but subsequently relinquished or, outside
the
original Contract Area, the Management Committee may make recommendations
to the Government
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concerning
enlargement of the Development Area, provided the same was not awarded to any
other company by the Government or is not held by any other party or not on
offer by the Government and no application for a License or Lease is pending
with the Government. However, in case the area is held by any other party or
on
offer by the Government or application for License or Lease is pending with
the
Government, the Management Committee shall notify the same to the Government
for
further action on the matter. Government
may consider such request for extension at its sole discretion and on terms
and
conditions, which it may consider fit.
ARTICLE
11
PETROLEUM
EXPLORATION LICENSE AND MINING LEASE
11.1 The
Contractor shall submit an application for grant of License in respect of the
Contract Area, as early as possible, but not later than fifteen (15) Business
Days from the date of execution of this Contract.
11.2
On
submission of a development plan of a Commercial Discovery pursuant to Article
10.7, the Contractor shall submit an application for a Lease in respect of
the
proposed Development Area to the relevant State Government(s).
11.3
Where
a
part of a Reservoir in respect of which a Commercial Discovery has been declared
extends beyond the Contract Area, subject to Article 10.14 such area may be
included in the proposed Development Area, in relation to which application
for
a Lease is made, on terms and conditions as decided by the Central Government;
provided that such area is:
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(a)
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not
subject to a license or lease granted to any other
person;
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(b)
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not
the subject of negotiations/bidding or contract awarded for a license
or
lease; and
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(c)
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available
for licensing (i.e. is not an area over which Petroleum Operations
are
excluded).
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11.4 Where
a
Development Plan has been approved pursuant to Article 10 and the Contractor
has
complied with the terms and conditions of the License and this Contract and
is
not in breach of any of the terms thereof, or the provisions of any law and
subject to normal Government clearances/approvals being obtained by the
Contractor as applicable before grant/issue of the Lease, the Central Government
will assist the Contractor in obtaining the Lease from the relevant State
Government(s) over the Development Area as agreed, subject to Article 11.5
to
enable the Contractor to carry out Petroleum Operations in the Development
Area
in accordance with the Development Plan.
11.5 The
Lease
shall be granted for an initial period of twenty (20) years from the date of
grant thereof subject to:
(a) cancellation
in accordance with its terms or for termination of this Contract in accordance
with its terms;
(b) extension
by mutual agreement between the Parties for five (5) years or such period as
may
be agreed after taking into account the balance recoverable reserve and balance
economic life of the Field/Development
Area
from
the expiry of the initial period provided that in the event of a Commercial
production of Non Associated Natural Gas the extension may be for a period
of
ten (10) years or such period as may be mutually agreed between the Parties
after taking into account the balance recoverable reserves and balance economic
life of the Field/Development Area from the date of expiry of the initial term;
and
(c) the
terms
of this Contract and other terms and conditions as set forth in such Lease
be
consistent with this Contract and the relevant legislation.
ARTICLE
12
UNIT
DEVELOPMENT
12.1
If
a
Reservoir in a Discovery Area is situated partly within the Contract Area and
partly in an area in India over which other parties have a contract to conduct
petroleum operations and both parts of the Reservoir can be more efficiently
developed together on a commercial basis, on receiving information in writing
from any party to these contracts or any information on this from any bonafide
source, the Government may, for securing the more effective recovery of
Petroleum from such Reservoir, by notice in writing to the Contractor, require
that the Contractor:
(a)
collaborate
and agree with such other parties on the joint development of the Reservoir
;
(b)
submit
such agreement between the Contractor and such other parties to the Government
for approval within one hundred and eighty (180) days; and
(c)
prepare
a
plan for such joint development of the said Reservoir, within one hundred and
eighty (180) days of the approval of the agreement referred to in (b)
above.
12.2
If
no
plan is submitted within the period specified in Article 12.1 (c) or such longer
period as the Government and the Contractor and the other parties referred
to in
Article 12.1 may agree, or, if such plan as submitted is not acceptable to
the
Government and the Parties cannot agree on amendments to the proposed joint
development plan, the Government may cause to be prepared, at the expense of
the
Contractor and such other parties a plan for such joint development consistent
with generally accepted modern oilfield and petroleum industry practices which
shall take into consideration any plans and presentations made by the Contractor
and the aforementioned other parties.
12.3
If
the
parties are unable to agree on the proposed plan for joint development, the
Government may call for a joint development plan from an independent agency,
which agency, may make such a proposal after taking into account the position
of
the parties in this regard. Such a development plan, if approved by Government,
shall be binding on the parties, notwithstanding their disagreement with the
plan. However, the Contractor may in case of any disagreement on the issue
of
joint development or the proposed joint development plan, prepared in accordance
with Article 12.2 or within forty five (45) Business Days of the plan approval
as aforesaid in this Article, notify the Government that it elects to surrender
its rights in the Reservoir/Discovery in lieu of participation in a joint
development.
12.4
If
a
proposed joint development plan is agreed and adopted by the parties, or adopted
following determination by the Government, the plan as finally adopted shall
be
the approved joint development plan and the Contractor shall comply with the
terms of the said development plan as if the Commercial Discovery is
established.
12.5
The
provisions of Articles 12.1, 12.2 and Article 12.3 shall apply mutatis
mutandis to
a
Discovery of a Reservoir located partly within the Contract Area, which,
although not equivalent to a Commercial Discovery if developed alone, would
be a
Commercial Discovery if developed together with that part of the Reservoir
which
extends outside the Contract Area to the areas subject to contract for petroleum
operations by other parties.
ARTICLE
13
MEASUREMENT
OF PETROLEUM
| 13.1 |
Petroleum
used for internal consumption for Petroleum Operations, flared, saved
and
sold from the Contract Area shall be measured by methods and appliances
generally accepted and customarily used in modern oilfield and petroleum
industry practices and approved by the Management Committee and the
Government.
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13.2
The
Government may, at all reasonable times, inspect and test the appliances used
for measuring the volume and determining the quality of Petroleum, provided
that
any such inspection or testing shall be carried out in such a manner so as
not
to unduly interfere with Petroleum Operations.
13.3
Before
commencement of production from the Contract Area, the Parties shall mutually
agree on:
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(a)
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methods
to be employed for measurement of volumes of Petroleum
production;
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(b)
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the
point or points at which Petroleum shall be measured and the respective
shares allocated to the Parties in accordance with the terms of this
Contract;
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(c)
|
the
frequency of inspections and testing of measurement appliances and
relevant procedures relating thereto;
and
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(d)
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the
consequences of a determination of an error in
measurement.
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13.4
The
Contractor shall undertake to measure the volume and quality of the Petroleum
Produced and Saved from the Contract Area at the agreed measurement point
consistent with generally accepted modern oilfield and petroleum industry
practices with the frequency and according to procedures agreed pursuant to
Article 13.3. The Contractor shall not make any alteration in the agreed method
or procedures for measurement or to any of the approved appliances used for
that
purpose without the written consent of the Management Committee and the
Government.
13.5
The
Contractor shall give the Government timely notice of its intention to conduct
measuring operations or any agreed alteration for such operations and the
Government shall have the right to be present at and supervise, either directly
or through authorised representatives, such operations.
13.6 The
Contractor shall keep all the records of analysis and measurement of
hydrocarbons calibrations and proving of measurement system and make available
to Government or its authorized agency such records on request.
ARTICLE
14
PROTECTION
OF THE ENVIRONMENT
14.1 The
Government and the Contractor recognise that Petroleum Operations will cause
some impact on the environment in the Contract Area. Accordingly, in performance
of the Contract, the Contractor shall conduct its Petroleum Operations with
due
regard to concerns with respect to protection of the environment and
conservation of natural resources and shall in particular;
(a)
employ
modern oilfield and petroleum industry practices and standards including
advanced techniques, practices and methods of operation for the prevention
of
Environmental Damage in conducting its Petroleum Operations;
(b)
take
necessary and adequate steps to:
(i) prevent
Environmental Damage and, where some adverse impact on the environment is
unavoidable, to minimise such damage and the consequential effects thereof
on
property and people;
(ii) ensure
adequate compensation for injury to persons or damage to property caused by
the
effect of Petroleum Operations; and
(c)
comply
with the requirements of applicable laws and the reasonable requirements of
the
Government from time to time.
14.2 If
the
Contractor fails to comply with the provisions of paragraph (b)(i) of Article
14.1 or contravenes any relevant law, and such failure or contravention results
in any Environmental Damage, the Contractor shall forthwith take all necessary
and reasonable measures to remedy the failure and the effects
thereof.
14.3 If
the
Government in accordance with the laws has good reason to believe that any
works
or installations erected by the Contractor or any operations conducted by the
Contractor are endangering or may endanger persons or any property of any
person, or are causing or may cause pollution, or are harming or may harm fauna
or flora or the environment to a degree which the Government deems unacceptable,
the Government may require the Contractor to take remedial measures within
such
reasonable period as may be determined by the Government and to repair any
such damage.
If the Government deems it necessary, it may also require the Contractor to
discontinue Petroleum Operations in whole or in part until the Contractor has
taken such remedial measures or has repaired any damage caused.
14.4
The
measures and methods to be used by the Contractor for the purpose of complying
with the terms of paragraph (b)(i) of Article 14.1 shall be determined in timely
consultation with the Government upon the commencement of Petroleum Operations
or whenever there is a significant change in the scope or method of conducting
Petroleum Operations and shall take into account the international standards
applicable in similar circumstances and the relevant environmental impact study
carried out in accordance with Article 14.5 below. The Contractor shall notify
the Government, in writing, of the measures and methods finally determined
by
the Contractor and shall cause such measures and methods to be reviewed from
time to time in the light of prevailing circumstances.
14.5
The
Contractor shall cause a person or persons with special knowledge on
environmental matters, to carry out two environmental impact studies in
order:
(a) to
determine at the time of the studies the prevailing situation relating to the
environment, human beings and local communities, the flora and fauna in the
Contract Area and in the adjoining or neighbouring areas; and
(b) to
establish the likely effect on the environment, human beings and local
communities, the flora and fauna in the Contract Area and in the adjoining
or
neighbouring areas in consequence of the relevant phase of Petroleum Operations
to be conducted under this Contract, and to submit, for consideration by the
Parties, methods and measures contemplated in Article 14.4 for minimising
Environmental Damage and carrying out Site Restoration activities.
14.5.1 The
first
of the aforementioned studies shall be carried out in two parts, namely, a
preliminary part which must be concluded before commencement of any field work
relating to a seismographic or other survey, and a final part relating to
drilling in the Exploration Period. The part of the study relating to drilling
operations in the Exploration Period shall be approved by Government before
the
commencement of such drilling operations, it being understood that such approval
shall not be unreasonably withheld.
14.5.2
The
second of the aforementioned studies shall be completed before commencement
of
Development Operations and shall be submitted by the Contractor as part of
the
Development Plan, with specific approval of Government being obtained before
commencement of Development Operations, it being understood that such approval
shall not be unreasonably withheld.
14.5.3
The
studies mentioned in Article 14.5 above shall contain proposed environmental
guidelines to be followed in order to minimize Environmental Damage and shall
include, but not be limited to, the following, to the extent appropriate to
the
respective study taking into account the phase of operations to which the study
relates :
(a) proposed
access cutting;
(b) clearing
and timber salvage;
(c) wildlife
and habitat protection;
(d) fuel
storage and handling;
(e) use
of
explosives;
(f) camps
and
staging;
(g) liquid
and solid waste disposal;
(h) cultural
and archaeological sites;
(i) selection
of drilling sites;
(j) terrain
stabilization;
(k) protection
of freshwater horizons;
(l) blowout
prevention plan;
(m) flaring
during completion and testing of Gas and Oil ▇▇▇▇▇;
(n) abandonment
of ▇▇▇▇▇;
(o) rig
dismantling and site completion;
(p) reclamation
for abandonment;
(q) noise
control;
(r) debris
disposal; and
(s) protection
of natural drainage and water flow.
14.5.4 Subject
to the provision of all applicable laws and notifications on protection of
environment, any new project or expansion or modernization projects for
petroleum operations for which a proposal is submitted by the Contractor, the
Government shall compete the assessment of the project within a period of ninety
(90) days from the receipt of the requisite documents and data from the project
authorities and completion of public hearing. The decision of the Government
on
the proposal of the Contractor for environmental clearance shall be conveyed
within thirty (30) days thereafter. However, wherever forest land is involved;
the Contractor / user agency shall have to obtain approval of the Central
Government through the State Government concerned, under the Forest
(Conservation) Act, 1980. The decision of the Central Government on such
proposal of the contractor / user agency shall be taken within sixty (60) days
from the date of receipt of proposal of the Contractor / user agency from the
State Government. The State Government is required to convey its recommendations
on the proposal complete in all respect to the Central Government or otherwise
within ninety (90) days from the receipt of the same from the
applicant.
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14.6
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The
Contractor shall ensure that:
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(a) Petroleum
Operations are conducted in an environmentally acceptable and safe manner
consistent with modern oilfield and petroleum industry practices and that such
Petroleum Operations are properly monitored;
(b) the
pertinent completed environmental impact studies are made available to its
employees and to its contractors and Subcontractors to develop adequate and
proper awareness of the measures and methods of
environmental
protection to be used in carrying out the Petroleum Operations; and
(c) the
contracts entered into between the Contractor and its contractors and
Subcontractors relating to its Petroleum Operations shall include the provisions
stipulated herein and any established measures and methods for the
implementation of the Contractor's obligations in relation to the environment
under this Contract.
14.7 The
Contractor shall, prior to conducting any drilling activities, prepare and
submit for review by the Government contingency plans for dealing with Oil
spills, fires, accidents and emergencies, designed to achieve rapid and
effective emergency response. The plans referred to above shall be discussed
with the Government and concerns expressed shall be taken into
account.
14.7.1
In
the
event of an emergency, accident, Oil spill or fire arising from Petroleum
Operations affecting the environment, the Contractor shall forthwith notify
the
Government and shall promptly implement the relevant contingency plan and
perform such Site Restoration as may be necessary in accordance with modern
oilfield and petroleum industry practices.
14.7.2
In
the
event of any other emergency or accident arising from the Petroleum Operations
affecting the environment, the Contractor shall take such action as may be
prudent and necessary in accordance with modern oilfield and petroleum industry
practices in such circumstances.
14.8
In
the
event that the Contractor fails to comply with any of the terms contained in
Article 14.7 within a period specified by the Government, the Government, after
giving the Contractor reasonable notice in the circumstances, may take any
action which may be necessary to ensure compliance with such terms and to
recover from the Contractor, immediately after having taken such action, all
costs and expenditures incurred in connection with such action together with
such interest as may be determined in accordance with Section 1.7 of Appendix
C
of this Contract.
14.9
On
expiry
or termination of this Contract or relinquishment of part of the Contract Area,
the Contractor shall:
(a) subject
to Article 27, remove all equipment and installations from the relinquished
area
or former Contract Area in a manner agreed with the Government pursuant to
an
abandonment plan; and
(b) perform
all necessary Site Restoration in accordance with modern oilfield and petroleum
industry practices and take all other action necessary to prevent hazards to
human life or to the property of others or the environment.
14.10 The
Contractor shall prepare a proposal for the restoration of site including
abandonment plan and requirement of funds for this and the annual contribution.
This will be submitted along with the annual Budget for the consideration and
approval of the Management Committee. The annual contribution shall be deposited
by the Contractor in the Site Restoration fund which will be established, in
accordance with the scheme notified by the Government.
14.11 Subject
to Section 3.2 of Accounting Procedure, any Site Restoration fund scheme
formulated by Government and subject to provisions of this Contract, any and
all
costs incurred by the Contractor pursuant to this Article shall be cost
recoverable including but not limited to sinking funds established for
abandonment and restoration of the Contract Area.
14.12
In
this
Article, a reference to Government includes the State Government.
14.13
Where
the
Contract Area is partly located in areas forming part of certain national parks,
sanctuaries, mangroves, wetlands of national importance, biosphere reserves
and
other biologically sensitive areas passage through these areas shall generally
not be permitted. However, if there is no passage, other than through these
areas to reach a particular point beyond these areas, permission of the
appropriate authorities shall be obtained.
14.14 The
obligations and liability of the Contractor for the environment hereunder shall
be limited to damage to the environment which:
(a) occurs
after the Effective Date; and
(b) results
from an act or omission of the Contractor.
ARTICLE
15
RECOVERY
OF COST PETROLEUM
15.1 The
Contractor shall be entitled to recover Contract Costs out of a percentage
of
the total value of Petroleum Produced and Saved from the Contract Area in the
Year in accordance with the provisions of this Article.
15.2 Exploration
Costs incurred by the Contractor in the Contract Area upto the date of first
Commercial Production shall be aggregated, and the Contractor shall be entitled
to recover the aggregate of such Exploration Costs out of the Cost Petroleum
at
the rate of one hundred percent (100%) per annum of such Exploration Costs
beginning from the date of such Commercial Production.
15.3 The
Contractor shall be entitled to recover out of the Cost Petroleum from the
Contract Area the Exploration Costs which it has incurred in any Year after
the
date of Commercial Production at the rate of one
hundred
percent
(100%)
per
annum of such Exploration Costs beginning from the date such Exploration Costs
are incurred.
15.4 Development
Costs incurred by the Contractor in the Contract Area upto the date of first
Commercial Production shall be aggregated, and the Contractor shall be entitled
to recover out of the Cost Petroleum the aggregate of such Development Costs
at
the rate of one hundred percent (100%) per annum of such Development Costs
beginning from the date of such Commercial Production.
15.5 The
Contractor shall be entitled to recover out of the Cost Petroleum from the
Contract Area the Development Costs which it has incurred after the date of
first Commercial Production at the rate of one hundred percent (100%) per annum
of such Development Costs beginning from the date such Development Costs are
incurred.
15.6 The
Contractor shall be entitled to recover in full during any Year the Production
Costs incurred in that Year out of the Cost Petroleum.
15.7 The
Contractor shall be entitled to recover in full during any Year the royalty
payments to the Government/State Government(s) in that Year out of the Cost
Petroleum.
15.8 If
during
any Year the Cost Petroleum is not sufficient to enable the Contractor to
recover in full the Contract Costs due for recovery in that Year in accordance
with the provisions of Articles 15.1 to 15.7 then, subject to the provisions
of
Article 15.12:
(a)
recovery shall first be made of royalty payments; and
(b)
recovery shall next be made of the Production Costs; and
(c)
recovery shall next be made of the Exploration Costs; and
(d)
recovery shall then be made of the Development Costs.
The
unrecovered portions of Contract Costs shall be carried forward to the following
Year and the Contractor shall be entitled to recover such Contract Costs in
such
Year or the subsequent Years as if such Contract Costs were due for recovery
in
that Year, or the succeeding Years, until the unrecovered Contract Costs have
been fully recovered out of Cost Petroleum from the Contract Area.
15.9 The
maximum amount of Cost Petroleum to which the Contractor shall be
entitled,
in
accordance with the provisions of this Article, shall be fifty
one percent
(51%)
of the
total value of the Petroleum Produced and Saved from the Contract
Area.
15.10 For
the
purposes of this Article, as well as Article 16, costs, receipts and income
shall be converted into production unit equivalents, and vice versa viz both
in
physical and monitory terms, using the relevant prices established pursuant
to
Article 19 for Crude Oil and Article 21 for Natural Gas.
15.11
Pending
completion of the calculations required to establish definitively the
Contractor's entitlement to Cost Petroleum from the Contract Area in any Year,
the Contractor shall take delivery, provisionally, of volumes of Crude Oil
or
Natural Gas representing its estimated Cost Petroleum entitlement calculated
with reference to estimated production quantities, costs and prices as
established by the Contractor and approved by the Management Committee. Such
provisional determination of Cost Petroleum shall be made every Quarter on
an
accumulative basis. Within ninety (90) days
of
the end of each Year, a final calculation of the Contractor's entitlement to
Cost Petroleum, based on actual production quantities, costs and prices for
the
entire Year as reflected in audited accounts under Article 25.4.3, shall be
undertaken and any necessary adjustments to the Cost Petroleum entitlement
shall
be agreed upon between the Government and the Contractor within thirty (30)
days
and made within thirty (30) days thereafter.
15.12
Where
more than one Party constitutes the Contractor, the percentage of the total
Cost
Petroleum from the Contract Area which shall be available to each such Party
in
any Year for recovery of its share of Contract Costs shall be determined on
the
basis of the respective Participating Interest of each such Party.
15.13
The
Contractor acknowledges that the cost estimates for Minimum Work Programme
are
the realistic estimate of expenditure. For the purposes of allowing cost
recovery under Article 15 herein read with Section 3 of the Accounting
Procedure, the cost estimates given by the Contractor in the bid documents
towards the Minimum Work Programme in both the Exploration Phases shall
be
taken
as
Bench ▇▇▇▇. Any material difference over the Bench ▇▇▇▇ shall not be allowed
for
cost recovery unless the Government on the recommendation of the Management
Committee agrees that the cost increase is due to change in circumstances after
the Contract comes into effect. For the above purpose, an itemized break-up
of
cost estimates given by the Contractor in the bid documents is placed at
Appendix-H to this Contract.
ARTICLE
16
PRODUCTION
SHARING OF PETROLEUM
16.1
The
Parties to this Contract shall share in the Profit Petroleum in each Year in
accordance with the provisions of this Article. A Party's share of Profit
Petroleum in any Year, shall be calculated on the basis of the Investment
Multiple actually achieved by the Contractor at the end of the preceding Year
for the Contract Area as provided in Appendix-D.
16.2.1
When
the
Investment Multiple of the Contractor at the end of any Year is less than one
and one half (1.5), the Government shall be entitled to take and receive
ninety
one percent (91%) and
the
Contractor shall be entitled to take and receive nine
percent (9%)
of the
total Profit Petroleum from the Contract Area with effect from the start of
the
succeeding Year.
16.2.2
When
the
Investment Multiple of the Contractor at the end of any Year is equal to or
more
than one and one half (1.5) but is less than two (2.0) the Government shall
be
entitled to take and receive sixty
nine percent (69%)
and the
Contractor shall be entitled to take and receive thirty
one percent (31%)
of the
total Profit Petroleum from the Contract Area with effect from the start of
the
succeeding Year.
16.2.3
When
the
Investment Multiple of the Contractor at the end of any Year is equal to or
more
than two (2.0) but is less than two and one half (2.5), the Government shall
be
entitled to take and receive five
percent (5%)
and the
Contractor shall be entitled to take and receive ninety
five percent (95%)
of the
total Profit Petroleum from the Contract Area with effect from the start of
the
succeeding Year.
16.2.4
When
the
Investment Multiple of the Contractor at the end of any Year is equal to or
more
than two and one half (2.5) but is less than three (3.0), the Government shall
be entitled to take and receive one
percent (1%)
and the
Contractor shall be entitled to take and receive ninety
nine percent (99%)
of the
total Profit Petroleum from the Contract Area with effect from the start of
the
succeeding Year.
16.2.5
When
the
Investment Multiple of the Contractor at the end of any Year is equal to or
more
than three (3.0) but is less than three and one half (3.5), the Government
shall
be entitled to take and receive zero
percent (0%)
and the
Contractor shall be entitled to take and receive
one hundred percent (100%)
of the
total Profit Petroleum from the Contract Area with effect from the start of
the
succeeding Year.
16.2.6
When
the
Investment Multiple of the Contractor at the end of any Year is equal to or
more
than three and one half (3.5), the Government shall be entitled to take and
receive zero
percent (0%)
and the
Contractor shall be entitled to take and receive one
hundred percent (100%)
of the
total Profit Petroleum from the Contract Area with effect from the start of
the
succeeding Year.
16.3 Any
balance left to the credit of the Parties in any Site Restoration account,
opened pursuant to the provision of Article 14.10, after Site Restoration has
been done by the Contractor in accordance with the provisions of this Contract
and the laws in this regard, shall be shared between the Government and the
Contractor as per the Investment Multiple reached at the time of ceasing of
production from the Contract Area.
16.4.1
The
Government shall have the option to take its entitlement to Profit
Petroleum other
than
"ANG" or "NANG" either
in
cash or in kind in any Year. In case of "ANG" or "NANG", as the case may be,
the
Government shall have the option to take its entitlement to Profit Petroleum
in
cash or in kind and such option shall be exercised at interval of every five
(5)
Years from the commencement of first Commercial Production from the Contract
Area.
16.4.2
In
accordance with the Article 16.4.1, The Government shall exercise such option
by
giving a written notice to the Contractor not later than thirtieth
(30th)
June in
the preceding Year in which the entitlement is due. Once the Government has
exercised its option, the same shall continue unless the Government informs
the
Contractor otherwise.
16.4.3
Where
the
Government has informed the Contractor of its intention to take its share in
kind, the Parties shall mutually agree on a procedure for delivery of the
Government’s share of Profit Petroleum and, where relevant, the composition of
the Petroleum which is to be delivered.
16.5The
value
of the Contractor’s Investment Multiple at the end of any Year in respect of the
Contract Area shall be calculated in the manner provided for, and on the basis
of the net cash flows specified in Appendix-D to this Contract. However, the
amount of Profit Petroleum to be shared between the Government and the
Contractor shall be determined for each Quarter on an accumulative basis.
Pending finalisation of accounts, Profit Petroleum shall be shared between
the
Government and the Contractor on the basis of provisional estimated figures
of
Contract Costs, production, prices, receipts, income and any other income or
allowable deductions and on the basis of the value of the Investment Multiple
achieved at the end of the preceding Year. All such provisional estimates shall
be approved by the Management Committee. When it is necessary to convert
monetary units into physical units of production equivalents or vice versa,
the
price or prices determined pursuant to Articles 19 and 21 for Crude Oil,
Condensate and Natural Gas respectively shall be used. Within ninety
(90) days
of
the end of each Year, a final calculation of Profit Petroleum based on
actual
costs,
quantities, prices and income for the entire Year shall be completed and any
necessary adjustments to the sharing of Petroleum shall be agreed upon between
the Government and the Contractor within thirty (30) days and made within thirty
(30) days thereafter.
(Explanation:
The Profit Petroleum due to the Government shall be deposited with “Pay &
Accounts officer or its successor, Ministry of Petroleum & Natural Gas,
Government of India, Shastri Bhavan, New Delhi by 10th of the Month following
each Quarter)
16.6 The
Profit Petroleum due to the Contractor in any Year from the Contract Area shall
be divided amongst the Parties constituting the Contractor, in proportion to
their respective Participating Interest.
ARTICLE
17
TAXES,
ROYALTIES, RENTALS, DUTIES ETC.
17.1
Companies,
their employees, persons providing any materials, supplies, services or
facilities or supplying any ship, aircraft, machinery, equipment or plant
(whether by way of sale or hire) to the Companies for Petroleum Operations
or
for any other purpose and the employees of such persons shall be subject to
all
fiscal legislation in India except where, pursuant to any authority granted
under any applicable law, they are exempted wholly or partly from the
application of the provisions of a particular law or as otherwise provided
herein.
17.2
Pursuant
to the provisions of section 42 of the Income-tax Act, 1961, the allowances
specified herein shall apply in computing income tax payable by a Company on
its
profits and gains from the business of Petroleum Operations in lieu of (and
not
in addition to) corresponding allowances provided for under the heading "Profits
and Gains of Business or Profession" in the Income-tax Act, 1961. Any other
allowances, which are not specified herein, shall be treated in accordance
with
the provisions of Income-tax Act, 1961.
17.2.1
Subject
to the provisions herein below, deductions at the rate of one hundred percent
(100%) per annum shall be allowed for all expenditures, both capital and revenue
expenditures, incurred in respect of Exploration Operations and drilling
operations. The expenditure incurred in respect of Development Operations,
other
than drilling operations, and Production Operations will be allowable as per
the
provisions of the Income-tax Act, 1961. The expenses so incurred are subject
to
the following:
(a)
where
any
expenditure is not solely incurred on Petroleum Operations or is incurred as
part of or in conjunction with any other business, only that proportion of
the
total expenditure which can be proved to the assessing officer to represent
a
fair proportionate part thereof, having regard to all relevant facts and
circumstances, shall be allowed;
(b)
sections
40A and 44C of the Income-tax Act, 1961, shall apply.
17.2.2
A
Company
shall be entitled, for income tax purposes only, to deduct all its unsuccessful
Exploration Costs in contract areas covered by other contracts from the
aggregate value of Petroleum allocable to the Company from any Field(s) in
the
Contract Area in the manner as follows:
(a) unsuccessful
Exploration Costs incurred in contract areas other than the Contract Area where
a Commercial Discovery has been made up to the date of commencement of
Commercial Production shall be aggregated and
the
Company shall be entitled to deduct such costs at the rate of one hundred per
cent (100%) per annum;
(b) unsuccessful
Exploration Costs incurred in contract areas other than the Contract Area where
a Commercial Discovery has been made, after the commencement of Commercial
Production, shall be deductible at the rate of one hundred per cent (100%)
per
annum of such costs beginning from the Year such costs are
incurred.
17.2.3
All
allowable expenditure incurred prior to the Year in which Commercial Production
commences shall be aggregated and the assessed loss for that Year as well as
the
assessed loss, if any, incurred in the assessment year relevant to the Year
in
which Commercial Production commences, or in any subsequent assessment year,
shall be carried forward to succeeding assessment years and set off as provided
in the Income-tax Act, 1961.
17.2.4 For
any
or all accumulated expenditures incurred in respect of Exploration Operations
and drilling operations prior to the date of commercial production, Company(ies)
shall have option to amortize such expenditures over a period of ten (10) years
from the date of first commercial production.
17.2.5
The
profits and gains of the business of the Parties comprising the Contractor
consisting of Petroleum Operations shall, for the purpose of levy of income
tax
under the Income-tax Act, 1961, be computed on the basis of the value,
determined in accordance with Article 19, of its Participating Interest share
of
Crude Oil produced and saved and sold, or otherwise disposed of, from the
Contract Area and from any revenue realised on the sale of Associated or Non
Associated Natural Gas referred to in Article 21 as well as any other gains
or
receipts from Petroleum Operations as reduced by the deductions as specified
herein, and, except as herein provided, all the provisions of the Income-tax
Act, 1961, shall apply.
17.2.6
Company(ies)
shall be eligible for benefits available under section 80 IA of the Income-tax
Act, 1961 as applicable from time to time.
17.3
For
the
purposes of Article 17.2 and section 42 of the Income-tax Act,
1961:
17.3.1
The
following terms used in section 42 of the Income-tax Act, 1961, shall have
the
meanings corresponding to the terms used in this Contract and defined in Article
1 as follows:
(a) "agreement"
means this Contract as defined in Article 1;
(b) "commercial
production" shall have the meaning assigned in Article 1.
17.3.2
The
terms
"assessing officer", "assessed loss", and "assessment year" shall have the
meaning as defined in the Income-tax Act, 1961.
17.3.3
The
other
terms used herein and defined in Article 1 shall have the meaning therein
ascribed.
17.4 Companies
(Lessee) shall be required to pay royalty to the Government (Lessor) for
offshore areas at the rate of ten percent (10%) of the well-head value of Crude
Oil and Natural Gas. In case of an onshore area, Companies shall be required
to
pay to the State Government(s) (Lessor) at the rate of twelve point five zero
percent (12.5%) of the well-head value of Crude Oil and ten percent (10%) of
the
well-head value of Natural Gas. In case of an offshore area falling beyond
four
hundred (400) metre isobath, the rate of royalty payable by Companies (Lessee)
to the Government (Lessor) shall be at the rate of five percent (5%) of the
well-head value of Crude Oil and Natural Gas for the first seven years from
the
date of commencement of Commercial Production in the Field. The valuation of
Crude Oil and Natural Gas shall be as per the Article 19 and Article 21
respectively. The royalty amount due to Government/State Government(s) shall
be
payable latest by the end of the succeeding Month.
17.5
Machinery,
plant, equipment, materials and supplies imported by the Contractor and its
Subcontractors solely and exclusively for use in Petroleum Operations under
this
Contract or similar contracts with the Government where customs duty has been
exempted by the Government shall be exempt from customs duties and export duties
or other charges on re-exportation of the said items in accordance with
applicable legislation.
17.6
The
Government shall have the right to inspect the records and documents of the
physical item or items for which an exemption has been provided pursuant to
Article 17.5 to determine that such item or items are being or have been
imported solely and exclusively for the purpose for which the exemption was
granted. The Government shall also be entitled to inspect such physical items
wherever located to ensure that such items are being used for the purpose herein
specified and any item not being so used shall immediately become liable to
payment of the applicable customs duties.
17.7
Subject
to Article 27, the Contractor and its Subcontractors may sell or otherwise
transfer in India all imported items which are no longer required for Petroleum
Operations, subject to applicable laws including rules, regulations, procedures,
notifications etc. governing customs duties and sale or disposal of such
items.
17.8 Any
sales
tax or tax of similar nature payable on the sale(s) of Petroleum under this
Contract shall be borne/reimbursed by the buyer(s).
17.9
Subject
to the provisions herein above provided, the Contractor shall be liable for
payment of:
(a)
annual
license charges and rental fees and other charges under the
Rules;
(b)
charges
payable by specified industries or in connection with Petroleum Operations
under
applicable legislation;
(c)
payments
for purchase, lease or rental of land or land rights in connection with
Petroleum Operations;
(d) taxes,
fees or charges for specific services rendered on request or to the public
generally;
(e) customs
duties, except for those items subject to exemption as provided in Article
17,
applicable at the rates specified from time to time; and
(f) stamp
duties, registration fees, license fees, taxes such as taxes on property or
assets (not calculated by reference to income or otherwise exempted) or other
levies, fees or charges of a non-discriminatory nature and generally applicable
in India or in the State where Petroleum Operations are being
conducted.
17.10 If
any
change in or to any Indian law, rule or regulation dealing with income tax
or
other corporate tax, export/import tax, excise, customs duty or any other
levies, duties or taxes imposed on Petroleum or dependent upon the value of
Petroleum results in a material change to the expected economic benefits
accruing to any of the Parties after the date of execution of the Contract,
the
Parties shall consult promptly in good faith to make necessary revisions and
adjustments to the Contract in order to maintain such expected economic benefits
to each of the Parties, provided, however, that the expected economic benefits
to the Parties shall not be reduced as a result of the operation of this
Article.
ARTICLE_18
DOMESTIC
SUPPLY, SALE, DISPOSAL AND
EXPORT
OF CRUDE OIL AND CONDENSATE
18.1
Until
such time as the total availability to the Government of Crude Oil and
Condensate from all Petroleum production activities in India meets the total
national demand, each Company comprising the Contractor, shall be required
to
sell in the domestic market in India all of the Company's entitlement to Crude
Oil and Condensate from the Contract Area in order to assist in satisfying
the
national demand.
18.2
If,
during any Year, India attains Self-sufficiency, the Government shall promptly
thereafter, but in no event later than the end of the first Quarter of the
following Year, so advise the Company(ies) by written notice. In such event,
as
from the end of the second Quarter of the following Year, or such earlier date
as the Parties may mutually agree, domestic sale obligation shall be suspended
and the Company shall have the right to lift and export its Participating
Interest share of Crude Oil and Condensate until such time, if any, as
Self-sufficiency shall have ceased to exist. If Self-sufficiency ceases to
exist
during a Year, the Government shall recover its position to ask Company(ies)
under Article 18.1 in respect of the following Year by giving ninety (90) days
notice thereof to the Company(ies) to sell Crude Oil and Condensate in the
Indian domestic market.
18.3 Upon
India achieving Self-sufficiency, the Company(ies) shall be entitled to freely
lift and export any Crude Oil and Condensate pursuant to this Article 18,
subject to Government's generally applicable destination restrictions to
countries with which the Government, for policy reasons, has severed or
restricted trade.
18.4
No
later
than sixty (60) days prior to the commencement of production in a Field, and
thereafter no less than sixty (60) days before the commencement of each Year,
the Contractor shall cause to be prepared and submitted to the Parties a
production forecast setting out the total quantity of Crude Oil that it
estimates can be produced from a Field during the succeeding Year, based on
a
maximum efficient rate of recovery of Crude Oil from that Field in accordance
with modern oilfield and petroleum industry practices. No later than thirty
(30)
days prior to the commencement of each Quarter, the Contractor shall inform
its
estimate of production for the succeeding Quarter and shall endeavour to produce
the forecast quantity for each Quarter.
18.5
Each
Company comprising the Contractor shall, throughout the term of this Contract,
have the right to separately take in kind and dispose of all its share of Cost
Petroleum and Profit Petroleum and shall have the obligation to lift the
said
Petroleum
on a current basis and in such quantities so as not to cause a restriction
of
production or inconvenience to the other Company(ies).
18.6
The
Government shall, throughout the term of this Contract, have the right to
separately take in kind and dispose of its share of Crude Oil and shall have
the
obligation to lift the said Oil on a current basis and in such quantities so
as
not to cause a restriction of production or inconvenience to the
Contractor.
18.7
For
the
purpose of implementing the provisions of this Article, a Crude lifting
procedure and Crude sales agreement based on generally acceptable international
terms shall be agreed upon by the Contractor with buyer(s) no later than six
(6)
months or such shorter period as may be mutually agreed between the Contractor
and buyer(s) with the consent of Government prior to the commencement of
production in a Field. Such lifting procedure shall be made available to all
the
Parties to this Contract.
ARTICLE
19
VALUATION
OF PETROLEUM
19.1
For
the
purpose of this Contract, the value of Crude Oil, Condensate and Natural Gas
(refer Article 21) shall be based on the price determined as provided
herein.
19.2
A
price
for Crude Oil shall be determined for each Month or such other period as the
Parties may agree (hereinafter referred to as "the Delivery Period") in terms
of
United States Dollars per Barrel, on import parity basis (with marine freight
being determined on the basis of nearest port to the Contract Area) for Crude
Oil produced and sold or otherwise disposed of from Contract Area, for each
Delivery Period, in accordance with the appropriate basis for that type of
sale
or disposal specified below. Subject to the provisions of this Article 19,
it is
clearly understood that the actual prices received by the Company(ies) from
the
sales will form the basis for the purposes of cost recovery, Profit Petroleum
sharing and payment of royalty as provided in the Articles 15, 16 and 17
respectively. The basis of valuation given in this Article for the purpose
of
Article 15,16 and 17 shall apply only where Government is of the view that
sale
prices realised by the Company(ies) are not consistent with the price realisable
at Arms Length Sales.
19.3
In
the
event that some or all of a Company's or Contractor’s total sales of Crude Oil
during a Delivery Period are made to third parties at Arms Length Sales, all
sales so made shall be valued at the weighted average of the prices actually
received by a Company, calculated by dividing the total receipts from all such
sales at the Delivery Point by the total number of Barrels of the Crude Oil
sold
in such sales.
19.3.1
Each
Company constituting the Contractor shall separately submit to the designated
nominee of the Government, within fifteen (15) days of the end of each Delivery
Period, a report containing the actual prices obtained in their respective
Arms
Length Sales for any Crude Oil. Such reports shall distinguish between term
sales and spot sales and itemize volumes, customers, prices received and credit
terms, and a Company shall allow the designated nominee(s) of the Government
to
examine the relevant sales contracts.
19.4
For
the
purpose of determining price at Arms Length Sales, the price of the Crude Oil
at
which sale takes place will generally be based on per Barrel of one or more
crude oils which, at the time of calculation, are being freely and actively
traded in the international market and are similar in characteristics and
quality to the Crude Oil in respect of which the price is being determined,
selling price to be ascertained from ▇▇▇▇▇'▇ Crude Oil Market Wire daily
publication ("▇▇▇▇▇'▇"), or the spot market for the same crude oils ascertained
in the same manner, whichever
price
more truly reflects the current value of such crude oils. For any Delivery
Period in which sales take place, the price shall be the arithmetic average
price per Barrel determined by calculating the average for such Delivery Period
of the mean of the high and low FOB prices for each day of the crude oils
selected for comparison adjusted for differences in the Crude Oil and the crude
oils being compared for quality, transportation costs, delivery time, quantity,
payment terms and other contract terms to the extent known and other relevant
factors. In the event that ▇▇▇▇▇'▇ ceases to be published or is not published
for a period of thirty (30) consecutive days, the Parties shall agree on an
alternative daily publication. The Contractor shall make available all the
data
pertaining to pricing of Crude to enable Government to decide that the proposed
sale price by the Contractor/each constituents of the Contractor reflects a
fair
market price for the Crude.
19.4.1
In
the
event that, at the relevant time, no crude oils of similar quality to the Crude
Oil to be sold are being actively traded in the international markets where
prices can be ascertained by international publication, or the official FOB
selling prices and the international spot market price vary widely between
producers, the Parties shall meet in good faith to determine an appropriate
pricing basis.
19.5
The
Contractor shall determine the relevant prices in accordance with this Article
and the calculation, basis of calculation and the price determined shall be
supplied to the Government and shall be subject to agreement by the
Government.
19.6
In
the
event that the Parties fail to reach agreement on any matter concerning
selection of the crude oils for comparison, the calculation, the basis of,
or
mechanism for the calculation of the prices, the prices arrived at, the
adjustment of any price or generally about the manner in which the prices are
determined according to the provisions of this Article within thirty (30) days,
or such longer period as may be mutually agreed between the Parties, from the
date of commencement of Commercial Production or the end of each Delivery Period
thereafter, any Party may refer the matter or matters in issue for final
determination by a sole expert or arbitrator appointed as provided in Article
33.
19.6.1
If
the
matter is referred to the sole expert, within ten (10) days of the said
appointment, the Parties shall provide the expert with all information they
deem
necessary or as the expert may reasonably require.
19.6.2
Within
fifteen (15) days from the date of his appointment, the expert shall report
to
the Parties on the issue(s) referred to him for determination, applying the
criteria or mechanism set forth herein and indicate his decision thereon to
be
applicable for the relevant Delivery Period for Crude Oil and such decision
shall be accepted as final and binding by the Parties.
19.6.3
Any
price
or pricing mechanism agreed by the Parties pursuant to the provisions of this
Article shall not be changed retroactively.
19.7
In
the
event that all sales of Crude Oil in a Delivery Period by a Company constituting
the Contractor are to be made to an Affiliate, the Parties may agree on an
alternative method of valuing the Crude Oil for the purposes of this Contract,
provided that such alternative method results in an internationally competitive
fair market valuation for that Delivery Period. In case of disagreement, the
decision of the Government on determining a Crude price in case of sales to
an
Affiliate shall be final and binding.
19.8
In
the
event that in any Delivery Period there is more than one type of sales referred
to in Articles 19.3 and 19.7, then, for the purpose of calculating Cost
Petroleum and Profit Petroleum entitlement and royalty payments pursuant to
Articles 15, 16 and 17 respectively, a single price per Barrel of Crude Oil
for
all the sales for the relevant Delivery Period shall be used. Such single price
shall be the weighted average of the prices determined for each type of sale,
weighted by the respective volumes of Crude Oil sold in each type of sale in
the
relevant Delivery Period.
19.9 The
provisions specified above for the determination of the price of sales of Crude
Oil shall apply mutatis mutandis to Condensates.
19.10
The
price
of Natural Gas shall be determined as provided in Article 21.
ARTICLE
20
CURRENCY
AND EXCHANGE CONTROL PROVISIONS
20.1
Subject
to the provisions herein, and to compliance with the relevant provisions of
the
laws of general application in India governing currency and foreign exchange
and
related administrative instructions and procedures issued thereunder on a
non-discriminatory basis, each Foreign Company comprising the Contractor shall,
during the term of this Contract, have the right to:
(a) repatriate
abroad, in United States Dollars or any other freely convertible currency
acceptable to the Government and the Foreign Company, the net proceeds of sales
of Petroleum in India;
(b) receive,
retain and use abroad the proceeds of any export sales of Petroleum under the
Contract;
(c) open,
maintain and operate bank accounts with reputable banks, both inside and outside
India, for the purpose of this Contract;
(d) freely
import, through normal banking channels, funds necessary for carrying out the
Petroleum Operations;
(e) convert
into foreign exchange and repatriate sums imported pursuant to (d) above in
excess (if any) of its requirements; and
(f) make
payments outside of India for purchases, services and loans obtained abroad
without the requirement that funds used in making such payments must come from
or originate in India.
Provided,
however, that repatriation pursuant to subparagraphs (a) and (e) and payments
pursuant to subparagraph (f) shall be subject to the provisions of any treaties
and bilateral arrangements between the Government and any country with respect
to payments to or from that country.
20.2
The
rates
of exchange for the purchase and sale of currency by the Companies shall be
the
prevailing rates of general application determined by the Reserve Bank of India
or such other financial body as may be mutually agreed by the Parties and,
for
accounting purposes under this Contract, these rates shall apply as provided
in
Section 1.6 of Appendix-C.
20.3.
A
Party
other than a Foreign Company comprising the Contractor shall be governed by
the
relevant currency and foreign exchange laws and related administrative
instructions and procedures issued thereunder.
20.4 Indian
Companies shall have right to remit their portion of expenditure in foreign
currency(ies) in accordance with the exchange control provisions.
ARTICLE
21
NATURAL
GAS
21.1
Subject
to Article 21.2, the Indian domestic market shall have the first call on the
utilisation of Natural Gas discovered and produced from the Contract Area.
Accordingly, any proposal by the Contractor relating to Discovery and production
of Natural Gas from the Contract Area shall be made in the context of the
Government's policy for the utilisation of Natural Gas and shall take into
account the objectives of the Government to develop its resources in the most
efficient manner and to promote conservation measures.
21.2
The
Contractor shall have the right to use Natural Gas produced from the Contract
Area for the purpose of Petroleum Operations including reinjection for pressure
maintenance in Oil Fields, gas lifting and captive power generation required
for
Petroleum Operations.
21.3
For
the
purpose of sales in the domestic market pursuant to this Article 21, the
Contractor shall have freedom to market the Gas and sell its
entitlement.
21.4 Associated
Natural Gas (ANG)
21.4.1 In
the
event that a Discovery of Crude Oil contains ANG, the Contractor shall declare
in the proposal for the declaration of the said Discovery as a Commercial
Discovery as specified in Article 10, whether (and by what amount) the estimated
production of ANG is anticipated to exceed the quantities of ANG which will
be
used in accordance with Article 21.2 (such excess being hereinafter referred
to
as "the Excess ANG"). In such an event the Contractor shall indicate whether,
on
the basis of the available data and information, it has reasonable grounds
for
believing that the Excess ANG could be commercially exploited in accordance
with
the terms of this Contract along with the Commercial Production of the Crude
Oil
from the Contract Area, and whether the Contractor intends to so exploit the
Excess ANG.
21.4.2 Based
on
the principle of full utilisation and minimum flaring of ANG, a proposed
development plan for an Oil Discovery shall, to the extent practicable, include
a plan for utilisation of the ANG including estimated quantities to be flared,
reinjected, and to be used for Petroleum Operations; and, if the Contractor
proposes to commercially exploit the Excess ANG for sale in the domestic market
in accordance with Government's policy, or elsewhere, the proposed plans for
such exploitation.
21.4.3 If
the
Contractor wishes to exploit the Excess ANG, subject to Article 21.1, the
Contractor shall be free to explore markets for the commercial exploitation
of
the said Excess ANG and submit its proposals for such exploitation to the
Government in accordance with Article 21.4.2.
21.4.4 Where
the
Contractor is of the view that the Excess ANG cannot be commercially exploited
and chooses not to exploit the said Excess ANG, or is unable to find a market
for the Excess ANG pursuant to Article 21.4.3, the Government shall be entitled
to take and utilise such Excess ANG free of any cost/charge.
21.4.5 If
the
Government elects to take the Excess ANG as provided in Article
21.4.4:
(a)
the
Contractor shall deliver such Excess ANG to the Government (or its nominee)
free
of any cost/charge, at the downstream flange of the Gas/Oil separation
facilities;
(b)
the
Contractor shall, based on sound petroleum engineering practices, install such
facilities as would facilitate, insofar as practicable, uninterrupted delivery
of such Excess ANG to the Government or its nominee;
(c)
the
cost
of all facilities installed pursuant to paragraph (b) above shall be borne
by
the Government (or its nominee);
(d)
the
Government or its nominee shall bear all costs including gathering, treating,
processing and transporting costs beyond the downstream flange of the Gas/Oil
separation facilities; and
(e)
the
delivery of such Excess ANG shall be subject to procedures to be agreed between
the Government or its nominee and the Contractor prior to such delivery, such
procedures to include matters relating to timing of off-take of such Excess
ANG.
Parties shall endeavour that such procedures do not restrict Oil production.
21.4.6 The
Excess ANG which is not commercially exploited by the Contractor, or taken
by
the Government or its nominee pursuant to this Article 21, shall be returned
to
the subsurface structure or flared or otherwise disposed off as approved by
the
Government in the context of the Development Plan, provided that flaring will
be
resorted to only for small quantities and as a last resort.
21.4.7 As
soon
as practicable after the submission of the proposed development plan, the
Contractor and the Government or its nominee shall meet to discuss the sale
and/or disposal of any ANG discovered with a view to giving effect to the
provisions of this Article 21 in a timely manner.
21.5
Non
Associated Natural Gas (NANG)
21.5.1 In
the
event of a Discovery of NANG in the Contract Area, the Contractor shall promptly
report such Discovery to the Management Committee and the
Government
and the provisions of Articles 10.1 and 10.2 shall apply. The remaining
provisions of Article 10 would apply to the Discovery and development of NANG
only insofar as they are not inconsistent with the provisions of this Article.
Notwithstanding the provisions of Article 3, the Contractor shall be entitled
to
retain the Discovery Area subject to the provisions of this Article
21.
21.5.2
If,
pursuant to Article 10.1, the Contractor gives notification that the Discovery
is of potential commercial interest, the Contractor shall submit to the
Management Committee, within one (1) year from the date of notification of
the
above said Discovery, the proposed Appraisal Programme, including a Work
Programme and Budget to carry out an adequate and effective appraisal of such
Discovery, to determine (i) without delay, whether such Discovery is a
Commercial Discovery and (ii) with reasonable precision, the boundaries of
the
area to be delineated as the Development Area. Such proposed Appraisal Programme
shall be supported by all relevant data such as Well data, Contractor's best
estimate of reserve range and production potential, and shall indicate the
date
of commencement of the proposed Appraisal Programme.
21.5.3
The
proposed Appraisal Programme together with the Work Programme and Budget
referred to in Article 21.5.2 shall be reviewed by the Management Committee
within sixty (60) days of its submission by the Contractor. The Management
Committee shall offer its comments within the said period. The said Appraisal
Programme together with the Work Programme and Budget submitted by the
Contractor as revised or modified or amended in light of the Management
Committee review and advice, shall be adopted as the Appraisal Programme and
the
Contractor shall promptly proceed with implementation of the said
Programme.
21.5.4
If
on the
basis of the results of the Appraisal Programme, the Contractor is of the
opinion that NANG has been discovered in commercial quantities, it shall submit
to the Management Committee as soon as practicable but not later than three
(3)
years from the date of notification of the aforementioned Discovery, a proposal
for the declaration of the Discovery as a Commercial Discovery. Such proposal
shall take into account the Government’s policies on Gas utilization and propose
alternative options, if any for use or consumption of the NANG and be
accompanied by a report on the Discovery supported by, inter alia, technical
and
economic data, evaluations, interpretations and analyses of such data and
feasibility studies relating to the Discovery prepared by or on behalf of the
Contractor, and other relevant information. If no proposal is submitted to
the
Management Committee by the Contractor within three (3) years from the said
Discovery, the Contractor shall relinquish its rights to develop such Discovery
and the area relating to such Discovery shall be excluded from the Contract
Area.
21.5.5 Where
the
Contractor has submitted a proposal for the declaration of a Discovery as a
Commercial Discovery, the Management Committee shall consider the proposal
of
the Contractor with reference to commercial utilization or commercial
development of the NANG in the domestic market or elsewhere and in the context
of Government’s policy on Gas utilization and the chain of activities required
to bring the NANG from the Delivery Point to potential consumers in the domestic
market or elsewhere. The Management Committee may, within eighty five (85)
days
of the submission of the said proposal, request the Contractor to submit any
additional information on the Discovery, the anticipated markets or any other
related matter, that may reasonably be required to facilitate a review. The
Contractor shall submit the required information within thirty (30) days of
the
request by the Management Committee. The Management Committee will advise the
Contractor of its review within one hundred and thirty five (135) days from
the
submission of proposal or within fifty five (55) days from the receipt of
additional information, as the case may be, on the proposal made by the
Contractor to declare the Discovery as a Commercial Discovery.
21.5.6
If
the
Contractor declares the Discovery a Commercial Discovery after taking into
account the advice of the Management Committee as referred to in the Article
21.5.5, the Contractor shall, within one (1) year of the declaration of the
Discovery as a Commercial Discovery, submit a development plan for the
development of the Discovery to the Management Committee for approval. Such
plan
shall be supported by all relevant information including, inter alia, the
information required in Article 10.7.
21.5.7
Unless
otherwise agreed by the Management Committee, it shall consider the proposed
development plan and give their approval within one hundred and sixty five
(165)
days of submission thereof or eighty five (85) days from the receipt of the
clarifications/additional information from the Contractor. Any
clarification/additional information required by the Management Committee shall
be asked for within eighty five (85) days of receipt of the proposal from the
Contractor. The Contractor shall provide such additional information within
thirty (30) days from the receipt of request by the Management Committee. If
the
Management Committee fails to convey its decision within one hundred and sixty
five (165) days from the submission of the development plan or eighty five
(85)
days from the receipt of the clarifications/additional information, whichever
is
later, the Contractor may submit the development plan for the approval of the
Government. Also, where, the Management Committee rejects the development plan
of the Contractor, the Contractor can submit the development plan for the
approval of the Government.
21.5.8
Where
the
development plan is submitted to the Government for approval pursuant to Article
21.5.7, the Government shall convey its decision within one hundred and fifteen
(115) days from the date of receipt of the proposal from the Contractor.
Government, where it considers necessary, may ask
clarifications/additional
information from the Contractor within eighty five (85) days and shall convey
its decision within fifty five (55) days from the date of receipt of such
clarifications/additional information.
21.5.9 If
the
Government has failed to approve or disapproves the Contractor’s proposed
development plan, within one hundred and fifteen (115) days from receipt or
within fifty five (55) days from the receipt of clarifications/ information
from
the Contractor as mentioned in the Article 21.5.8, the Government shall advise
the Contractor, in writing, of the reasons for such failure or disapproval
and
the Government and the Contractor shall meet to discuss the said development
plan and the reasons for the said failure to approve or disapproval, and use
their best efforts to agree on appropriate modifications thereto to meet the
Government’s concerns or objections. Thereafter, the Contractor shall have the
right to resubmit, within eighty five (85) days of communication from the
Government, the proposed development plan duly amended to meet the Government’s
concerns. Such right of resubmission of the proposed development plan shall
be
exercisable by the Contractor only once. The Government will respond to the
re-submitted plan within one hundred and fifteen (115) days. If
no
such plan is submitted to the Government within the above specified period,
the
Contractor shall relinquish its right to develop such Gas Discovery and such
Discovery shall be excluded from the Contract Area.
21.5.10
In
the
event that the Management Committee or Government, as may be the case, approves
the Contractor’s development plan for the development of such Commercial
Discovery, with such modifications and amendments as the Management Committee
or
Government, as may be the case, may approve, the said Gas Discovery shall be
promptly developed by the Contractor in accordance with the approved plan which
shall be the Development Plan.
21.5.11
The
Contractor will have a two (2) years period, from the date of approval of the
Development Plan by the Management Committee or Government, to tie-up the
market(s) for sale of Non-associated Natural Gas.
21.5.12 In
the
event the Contractor does not commence development of such Discovery within
ten
(10) years from the date of the first Discovery Well, the Contractor shall
relinquish its right to develop such Discovery and the area relating to such
Discovery shall be excluded from the Contract Area.
21.6 Valuation
of Natural Gas
21.6.1 The
Contractor shall endeavour to sell all Natural Gas produced and saved from
the
Contract Area at arms-length prices to the benefits of Parties to the
Contract.
21.6.2 Notwithstanding
the provision of Article 21.6.1, Natural Gas produced from the Contract Area
shall be valued for the purposes of this Contract as follows :
(a) Gas
which
is used as per Article 21.2 or flared with the approval of the Government or
re-injected or sold to the Government pursuant to Article 21.4.5 shall be
ascribed a zero value;
(b) Gas
which
is sold to the Government or any other Government nominee shall be valued on
the
terms and conditions actually obtained including pricing formula and delivery;
and
(Explanation
: However, it is clarified that this provision would apply only when the sale
is
made to the Government or Government nominee under the provisions of the
Contract)
(c) Gas
which
is sold or disposed of otherwise than in accordance with paragraph (a) or (b)
shall be valued on the basis of competitive arms length sales in the region
for
similar sales under similar conditions.
21.7 The
formula or basis on which the prices shall be determined pursuant to Article
21.6 shall
be
approved by the Government prior to the sale of Natural Gas to the
consumers/buyers, within
sixty (60) Business Days from the receipt of proposal or from the date of
receipt of clarification/additional information, where asked for by the
Government. For granting this approval, Government shall take into account
the
prevailing policy, if any, on pricing of Natural Gas including any linkages
with
traded liquid fuels, and it may delegate or assign this function to a regulatory
authority as and when such an authority is in existence and in place.
ARTICLE
22
EMPLOYMENT,
TRAINING AND TRANSFER OF TECHNOLOGY
22.1
Without
prejudice to the right of the Contractor to select and employ such number of
personnel as, in the opinion of the Contractor, are required for carrying out
Petroleum Operations in a safe, cost effective and efficient manner, the
Contractor shall, to the maximum extent possible, employ, and require the
Operator and Subcontractors to employ, citizens of India having appropriate
qualifications and experience, taking into account experience required in the
level and nature of the Petroleum Operations.
22.2
The
Operator shall offer a mutually agreed number of Indian nationals the
opportunity for on-the-job training and practical experience in Petroleum
Operations during the Exploration Period. Not later than six (6) months after
approval of the Development Plan, the Operator shall, in consultation with
the
Government, establish and implement training programmes for staff positions
in
each phase and level of Petroleum Operations including skilled, technical,
executive and management positions, with a view to ensuring employment of
nationals of India and gradual and progressive reduction of foreign
personnel.
22.3
At
the
request of the Government, the Foreign Companies shall separately endeavour
to
negotiate, in good faith, technical assistance agreements with the Government
or
a company nominated by Government for this purpose setting forth the terms
by
which each Foreign Company constituting the Contractor may render technical
assistance and make available commercially proven technical information of
a
proprietary nature for use in India by the Government or the company nominated
by Government. The issues to be addressed in negotiating such technical
assistance agreements shall include, but not be limited to, licensing issues,
royalty conditions, confidentiality restrictions, liabilities, costs and method
of payment.
ARTICLE
23
LOCAL
GOODS AND SERVICES
23.1
In
the
conduct of Petroleum Operations, the Contractor shall:
(a)
give
preference to the purchase and use of goods manufactured, produced or supplied
in India provided that such goods are available on terms equal to or better
than
imported goods with respect to timing of delivery, quality and quantity
required, price and other terms;
(b)
employ
Indian Subcontractors having the required skills or expertise, t o the maximum
extent possible, insofar as their services are available on comparable standards
with those obtained elsewhere and at competitive prices and on competitive
terms; provided that where no such Subcontractors are available, preference
shall be given to non-Indian Subcontractors who utilise Indian goods to the
maximum extent possible, subject, however, to the proviso in paragraph (a)
above; and
(c) ensure
that provisions in terms of paragraphs (a) to (b) above are contained in
contracts between the Operator and its Subcontractors.
23.2
Subject
to Article 8.3(f), the Contractor shall establish appropriate procedures,
including tender procedures, for the acquisition of goods and services which
shall ensure that suppliers and Subcontractors in India are given adequate
opportunity to compete for the supply of goods and services. The tender
procedures shall include, inter alia, the financial amounts or value of
contracts which will be awarded on the basis of selective bidding or open
competitive bidding, the procedures for such bidding, and the exceptions to
bidding in cases of emergency, and shall be subject to the approval of the
Management Committee.
23.3
Within
sixty (60) days after the end of each Year, the Contractor shall provide the
Government with a report outlining its achievements in utilising Indian
resources during that Year in accordance with Section 10 of Appendix C to this
Contract.
23.4 In
this
Article "goods" means equipment, materials and supplies.
ARTICLE
24
INSURANCE
AND INDEMNIFICATION
24.1
Insurance
24.1.1
The
Contractor shall, during the term of this Contract, maintain and obtain
insurance coverage for and in relation to Petroleum Operations for such amounts
and against such risks as are customarily or prudently insured in the
international petroleum industry in accordance with modern oilfield and
petroleum industry practices, and shall furnish to the Government, certificates
evidencing that such coverage is in effect. Such insurance policies shall
include the Government as additional insured and shall waive subrogation against
the Government. The said insurance shall, without prejudice to the generality
of
the foregoing, cover:
(a)
loss
or
damage to all installations, equipment and other assets for so long as they
are
used in or in connection with Petroleum Operations; provided, however, that
if
for any reason the Contractor fails to insure any such installation, equipment
or assets, it shall replace any loss thereof or repair any damage caused
thereto;
(b)
loss,
damage or injury caused by pollution in the course of or as a result of
Petroleum Operations;
(c)
loss
of
property or damage or bodily injury suffered by any third party in the course
of
or as a result of Petroleum Operations for which the Contractor may be
liable;
(d)
any
claim
for which the Government may be liable relating to the loss of property or
damage or bodily injury suffered by any third party in the course of or as
a
result of Petroleum Operations for which the Contractor is liable to indemnify
the Government, or the State Government;
(e)
with
respect to Petroleum Operations offshore, the cost of removing wrecks and
cleaning up operations following any accident in the course of or as a result
of
Petroleum Operations; and
(f)
the
Contractor's and/or the Operator's liability to its employees engaged in
Petroleum Operations.
24.1.2
The
Contractor shall require its Subcontractors to obtain and maintain insurance
against the risks referred to in Article 24.1.1 relating mutatis
mutandis to
such
Subcontractors.
24.2
Indemnity
Subject
to Article 4.7, the Contractor shall indemnify, defend and hold the Government
and the State Government harmless against all claims, losses and damages of
any
nature whatsoever, including, without limitation, claims for loss or damage
to
property or injury or death to persons caused by or resulting from any Petroleum
Operations conducted by or on behalf of the Contractor.
ARTICLE
25
RECORDS,
REPORTS, ACCOUNTS AND AUDIT
25.1
The
Contractor shall prepare and maintain in original at an office in India accurate
and current books, records, reports and accounts of its activities for and
in
connection with Petroleum Operations so as to present a fair, clear and accurate
record of all its activities, expenditures and receipts.
25.2
Based
on
generally accepted and recognised accounting principles and modern petroleum
industry practices, record, books, accounts and accounting procedures in respect
of Petroleum Operations shall be maintained on behalf of the Contractor by
the
Operator, at its business office in India, in accordance with the Accounting
Procedure to this Contract.
25.3 The
Contractor shall submit to the Government regular Statements and reports
relating to Petroleum Operations as provided in Appendix-C.
25.4.1
The
annual audit of accounts shall be carried out on behalf of the Contractor by
a
qualified, independent firm of recognised chartered accountants, registered
in
India.
25.4.2
The
appointment of auditor and the scope of audit should have prior approval of
the
Management Committee.
25.4.3
The
Contractor shall submit the audited accounts to the Management Committee for
approval within sixty (60) days from the end of the Year. The Management
Committee shall consider and approve the auditor's report within thirty (30)
days after the submission of such report.
25.4.4
Copy
of
the auditors report shall be submitted to the Government within thirty (30)
days
after the approval of the Management Committee.
25.5
The
Government shall have the right to audit the accounting records of the
Contractor in respect of Petroleum Operations as provided in the Accounting
Procedure.
25.6
The
accounting and auditing provisions and procedures specified in this Contract
are
without prejudice to any other requirements imposed by any statute in India,
including, without limitation, any specific requirements of the statutes
relating to taxation of Companies.
25.7
For
the
purpose of any audit referred to in Articles 25.5, the Contractor shall make
available in original to the auditor all such books, records, accounts and
other
documents and information as may be reasonably required by the auditor during
normal business hours.
ARTICLE
26
INFORMATION,
DATA, CONFIDENTIALITY,
INSPECTION
AND SECURITY
26.1
The
Contractor shall, promptly after they become available in India, provide the
Government, free of cost, with all data obtained as a result of Petroleum
Operations under the Contract including, but not limited to, geological,
geophysical, geochemical, petrophysical, engineering, Well logs, maps, magnetic
tapes, cores, cuttings and production data as well as all interpretative and
derivative data, including reports, analyses, interpretations and evaluation
prepared in respect of Petroleum Operations (hereinafter referred to as "Data").
Data shall be the property of the Government, provided, however, that the
Contractor shall have the right to make use of such Data, free of cost, for
the
purpose of Petroleum Operations under this Contract as provided
herein.
26.2
The
Contractor may, for use in Petroleum Operations, retain copies or samples of
material or information constituting the Data and, with the approval of the
Government, original material, except that where such material is capable of
reproduction and copies have been supplied to the Government, the Contractor
may, subject to the right of inspection by the Government, export, subject
to
any applicable regulations, samples or other original Data for processing or
laboratory examination or analysis, provided that representative samples
equivalent in quality, size and quantity, or, where such material is capable
of
reproduction, copies of equivalent quality, have first been delivered to the
Government.
26.3
The
Contractor shall keep the Government currently advised of all developments
taking place during the course of Petroleum Operations and shall furnish the
Government with full and accurate information and progress reports relating
to
Petroleum Operations (on a daily, Monthly, Yearly or other periodic basis)
as
Government may reasonably require, provided that this obligation shall not
extend to proprietary technology. The Contractor shall meet with the Government
at a mutually convenient location in India to present the results of all
geological and geophysical work carried out as well as the results of all
engineering and drilling operations as soon as such Data becomes available
to
the Contractor.
26.4
All
Data,
information and reports obtained or prepared by, for or on behalf of, the
Contractor pursuant to this Contract shall be treated as confidential and,
subject to the provisions herein below, the Parties shall not disclose the
contents thereof to any third party without the consent in writing of the other
Parties.
26.5
The
obligation specified in Article 26.4 shall not operate so as to prevent
disclosure:
(a)
to
Affiliates, contractors, or Subcontractors for the purpose of Petroleum
Operations;
(b)
to
employees, professional consultants, advisers, data processing centres and
laboratories, where required, for the performance of functions in connection
with Petroleum Operations for any Party comprising the Contractor;
(c)
to
banks
or other financial institutions, in connection with Petroleum
Operations;
(d)
to
bonafide intending assignees or transferees of a Participating Interest of
a
Party comprising the Contractor or in connection with a sale of the stock or
shares of a Party comprising the Contractor;
(e)
to
the
extent required by any applicable law or in connection with any legal
proceedings or by the regulations of any stock exchange upon which the shares
of
a Party comprising the Contractor are quoted;
(f)
to
Government departments for, or in connection with, the preparation by or on
behalf of the Government of statistical reports with respect to Petroleum
Operations, or in connection with the administration of this Contract or any
relevant law or for any purpose connected with Petroleum Operations;
and
(g)
by
a
Party with respect to any Data or information which, without disclosure by
such
Party, is generally known to the public.
26.6
Any
Data,
information or reports disclosed by the Parties comprising the Contractor to
any
other person pursuant to Article 26.5 (a) to (d) shall be disclosed on the
terms
that such Data, information or reports shall be treated as confidential by
the
recipient. Prompt notice of disclosures made by Companies pursuant to Article
26.5 shall be given to the Government.
26.7
Any
Data,
information and reports relating to the Contract Area which, in the opinion
of
the Government, might have significance in connection with offers by the
Government of acreages, may be disclosed by the Government for such purpose.
Government may also disclose such Data or information for any exploration
programme to be conducted by a third party in adjoining areas with the consent
of the Contractor, for better understanding of regional geological set-up and
such consent by the Contractor shall not be unreasonably withheld.
26.8 Where
an
area ceases to be part of the Contract Area, the Contractor shall hand over
all
the originals and copies of the Data and information with respect to that part
to the Government within a period of one (1) year from the date of
relinquishment or surrender. The Contractor shall, however, be allowed to retain
one copy of the Data in its possession for its own use, where required, and
shall not use the Data for sale or any other purposes. Subject to the provisions
of this Article, the Contractor shall keep all Data/information
confidential.
Explanatory
Note:
Pursuant
to this Article 26, and not withstanding any provisions in the contract to
the
contrary, the Government shall have the right to disclose and freely use all
data and information at it's sole discretion except for data of proprietary
nature such as interpretation report to any party on or after three (3) Years
from acquisition of such data in order to promote exploration and production
activities in the country. For any relinquished areas, the government shall
have
the right to disclose and freely use all the data immediately after such
relinquishment.
26.9
The
Government shall, at all reasonable times, through duly authorised
representatives, be entitled to observe Petroleum Operations and to inspect
all
assets, books, records, reports, accounts, contracts, samples and Data kept
by
the Contractor or the Operator in respect of Petroleum Operations in the
Contract Area, provided, however, that the Contractor shall not be required
to
disclose any proprietary technology. The duly authorised representatives shall
be given reasonable assistance by the Contractor for such functions and the
Contractor shall afford such representatives reasonable use of all facilities
and privileges afforded to its own personnel in the field including the use
of
office space and housing for a period not exceeding 30 mandays in a Year and
thereafter at the cost of Government. The said representatives shall be entitled
to make a reasonable number of surveys, measurements, drawings, tests and copies
of documents, take samples, and make reasonable use of the equipment and
instruments of the Contractor provided that such functions shall not unduly
interfere with the Contractor's Petroleum Operations.
26.10
The
Contractor shall give reasonable advance notice to the Government, or to any
other authority designated by the Government for such purpose, of its programme
of conducting surveys by aircraft or by ships, indicating, inter alia, the
name
of the survey to be conducted, approximate extent of the area to be covered,
the
duration of the survey, the commencement date, and the name of the airport
or
port from which the survey aircraft or ship will commence its
voyage.
26.11
The
Government, or the authority designated by the Government for such purpose,
shall have the right to inspect any aircraft or ship used by the Contractor
or a
Subcontractor carrying out any survey or other operations in the Contract Area
and shall have the right to put on board such aircraft or ship, Government
officers in such number as may reasonably be necessary to ensure compliance
by
the Contractor or the Subcontractor with the security requirements of
India.
ARTICLE
27
TITLE
TO PETROLEUM, DATA AND ASSETS
27.1
The
Government is the sole owner of Petroleum underlying the Contract Area and
shall remain the sole owner of
Petroleum produced pursuant to
the
provisions of this Contract
except as regards that part of Crude Oil, Condensate or Gas the title whereof
has passed to the Contractor or any other person in accordance with the
provisions of this Contract.
27.2
Title
to
Petroleum to which the Contractor is entitled under this Contract, and title
to
Petroleum sold by the Companies shall pass to the relevant buyer party at the
Delivery Point. The Contractor shall be responsible for all costs and risks
prior to and including at the Delivery Point and each buyer party shall be
responsible for all costs and risks associated with such buyer party's share
after the Delivery Point.
27.3
Title
to
all Data specified in Article 26 shall be vested in the Government and the
Contractor shall have the right to use thereof as therein provided.
27.4
Assets
purchased by the Contractor for use in Petroleum Operations shall be owned
by
the Parties comprising the Contractor in proportion to their Participating
Interest provided that the Government shall have the right to require vesting
of
full title and ownership in it, free of charge and encumbrances, of any or
all
assets, whether fixed or movable, acquired and owned by the Contractor for
use
in Petroleum Operations inside or outside the Contract Area, such right to
be
exercisable at the Government’s option upon expiry or earlier termination of the
Contract.
27.5
The
Contractor shall be responsible for proper maintenance, insurance and safety
of
all assets acquired for Petroleum Operations and for keeping them in good
repair, order and working condition at all times, and the costs thereof shall
be
recoverable as Contract Costs in accordance with Appendix-C.
27.6
So
long
as this Contract remains in force, subject to Article 27.5, the Contractor
shall, free of any charge for the purpose of carrying out Petroleum Operations
hereunder, have the exclusive use of assets which have become the property
of
Government.
27.7
Equipment
and assets no longer required for Petroleum Operations during the term of the
Contract shall be sold, exchanged or otherwise disposed of by the Contractor,
provided however that the proceeds of sale shall be credited to Petroleum
Operations as provided in Appendix C, provided that prior written consent of
the
Management Committee shall be obtained for each transaction in excess of US$
50,000 (Fifty thousand United States Dollars) or such other value as may be
agreed from time to time by the Management Committee. The consent of the
Management Committee shall not be unreasonably withheld.
ARTICLE
28
ASSIGNMENT
OF PARTICIPATING INTEREST
28.1 Subject
to the terms of this Article and other terms of this Contract, any Party
comprising the Contractor may assign, or transfer, a part or all of its
Participating Interest, with the prior written consent of the Government, which
consent shall not be unreasonably withheld, provided that the Government is
satisfied that:
(a)
the
prospective assignee or transferee is of good standing, has the capacity and
ability to meet its obligations hereunder, and is willing to provide an
unconditional undertaking to the Government to assume its Participating Interest
share of obligations and to provide guarantees in respect thereof as provided
in
the Contract;
(b)
the
prospective assignee or transferee is not a company incorporated in a country
with which the Government, for policy reasons, has restricted trade or
business;
(c)
the
prospective assignor or transferor and assignee or transferee respectively
are
willing to comply with any reasonable conditions of the Government as may be
necessary in the circumstances with a view to ensuring performance under the
Contract; and
(d)
the
assignment or transfer will not adversely affect the performance or obligations
under this Contract or be contrary to the interests of India.
28.1.1 Subject
to Article 28.7, nothing in this Article 28 shall prevent a Party comprising
the
Contractor from assigning or transferring a part or all of its Participating
Interest to an Affiliate, with the approval of the Management Committee,
provided that;
a)
the
assignee provides an irrevocable, unconditional bank guarantee from a reputed
bank of good standing in India, acceptable to the Government, in favour of
the
Government, for the amount specified in Article 29.2, in a form provided at
Appendix-G;
b)
the
assignee provides a parent financial and performance guarantee issued by the
guarantor which furnished the guarantee pursuant to Article 29 in respect of
the
assignor Party’s obligations under this Contract in favour of the Government, of
the performance of such Affiliate assignee of its obligations under this
Contract;
c) the
prospective Affiliate is not a company incorporated in a country with which
the
Government, for policy reason, has restricted trade or business;
and
d)
the
assignment will not adversely affect the performance or obligations under this
Contract or be contrary to the interest of India.
28.2 In
case
of any change in the status of a Company or its shareholding resulting in a
change in:
a) the
control of the Company; or
b) its
relationship with the company(ies) providing the guarantee under Article 29.1
(a) and 29.1 (b);
the
Company shall seek the consent of the Government for assigning the Participating
Interest under the changed circumstances and the provisions of this Article
28
shall apply, mutatis mutandis, to be obtaining of such consent. For the purpose
of this Article 28.2, control has the same meaning as in Article 1.3.
28.3
An
application for consent to assign or transfer shall be accompanied by all
relevant information concerning the proposed assignment or transfer including
detailed information on the proposed assignee or transferee and its shareholding
and corporate structure, as was earlier required from the Companies constituting
the Contractor, the terms of the proposed assignment or transfer and the
unconditional undertaking referred to in Article.
28.4 The
applicant shall also submit such information relating to the prospective
assignee or transferee of the assignment or transfer as the Government may
reasonably require to enable proper consideration and disposal of the
application.
28.5
No
assignment or transfer shall be effective until the approval of the Government
is received or deemed to have been received. Approval may be given by the
Government on such terms and conditions as it may deem fit. Provided that such
terms and conditions may not increase the obligations of the Parties comprising
the Contractor. Upon assignment or transfer of its interest in this Contract,
the assignor or transferor shall be released and discharged from its obligations
hereunder only to the extent that such obligations are assumed by the assignee
or transferee with the approval of the Government.
28.6 In
the
event that the Government does not give its consent or does not respond to
a
request for assignment or transfer by a Party comprising the Contractor within
one hundred and twenty (120) days of such request and receipt of all information
referred to in Article 28.3 above, consent shall be deemed to have been given
by
the Government.
28.7 An
assignment or transfer shall not be made where the Participating Interest to
be
retained by the proposed assignor or the percentage interest of assignee shall
be less than ten per cent (10%) of the total Participating Interest of all
the
constituents of the Contractor, except where the Government, on the
recommendations of the Management Committee may, in special circumstances,
so
permit.
28.8 Nothing
contained in this Article 28, shall prevent a Party comprising the Contractor
from mortgaging, pledging, charging or otherwise encumbering at its own risk
and
cost all or part of its Participating Interest for the purposes of security
relating to finance to the extent required for performing its obligation under
the Contract, provided that:
i) such
Party shall remain solely liable for all its obligations relating to its
Participating Interest to the exclusion of the other participants
thereto;
ii) the
encumbrance shall be expressly subordinated to the rights of the other Parties
under this Contract. The obligations occurring from the said encumbrance shall
be the sole responsibility of the original Party and shall in no manner
compromise the rights of other Parties to the Contract;
iii) such
Party has given reasonable notice of such encumbrance and furnishes to all
other
Parties (including, for the avoidance of doubt, the Government) a certified
copy
of the executed instrument(s) evidencing the encumbrances;
iv) keeping
in view the national interest of India, prior consent of the Government shall
be
required (which consent shall not be unreasonably withheld) of the list of
potential lenders with whom such Party can consider hypothecation;
v) the
Party
creating the charge shall ensure that such charge shall not in any way affect
the interest of other Parties or result in interference with joint operations.
In the event of any claims or liabilities imposed on other Parties because
of
the creation of such charges, the Party having created charge on its
Participating Interest shall indemnify the other Parties; and
vi) in
case
of foreclosure or default by a borrowing Party, the mortgagee shall not be
deemed to have acquired a right to carry on either by itself or through an
agent, the Petroleum Operation, without the written consent of the Government
of
India.
28.8.1 The
Parties acknowledge that to obtain financing a Party (“Borrower”) will be
required to secure for a permitted chargee the right to receive a copy of any
notice served on the Borrower and the Parties agree that they shall serve a
copy
of any such notice on any such permitted chargee in accordance with the
provisions of Article 37 at the same time as such notice is served on the
Borrower. For the purposes of Article 37 the address for service of notices
of
the permitted chargee shall be that specified in the instrument or instruments
referred to in Article 28.8(iii).
28.8.2 In
case
lender elects to participate directly or through a company other than the
Borrower under the financing arrangement referred to above, the same shall
be
subject to the rights of Government as contained in Article 28.1 of Contract
and
the pre-emptive rights of the Parties as may be contained in Operating
Agreement. Any Party which wishes to exercise the said pre-emptive rights will
explicitly assume the obligation on the same terms and conditions as the
Borrower.
ARTICLE
29
GUARANTEES
29.1
Each
of
the Companies constituting the Contractor shall procure and deliver to the
Government within thirty (30) days from the Effective
Date of this Contract:
(a) an
irrevocable, unconditional bank guarantee from a reputed bank of good standing
in India, acceptable to the Government, in favour of the Government, for the
amount specified in Article 29.2, in a form provided at Appendix-G;
(b) financial
and performance guarantee in favour of the Government from a parent company
acceptable to the Government, in the form and substance set out in Appendix-E1,
or, where there is no such parent company, the financial and performance
guarantee from the Company itself in the form and substance setout in
Appendix-E2;
(c)
a
legal
opinion from its legal advisors, in a form satisfactory to the Government,
to
the effect that the aforesaid guarantees have been duly signed and delivered
on
behalf of the guarantors with due authority and is legally valid and enforceable
and binding upon them;
29.2
The
amount of the guarantee referred to in Article 29.1 (a) above
shall be an amount equal to thirty five percent (35%) of the Company's
Participating Interest share of the total estimated annual expenditure in
respect of the Minimum Work Programme to be undertaken by the Contractor in
the
Contract Area during the relevant Year of a Phase, subject to Article 29.3.
The
total estimated expenditure for the relevant Year for the purpose of furnishing
bank guarantee by the Contractor shall be higher of the cost estimates made
by
the Directorate General of Hydrocarbons (DGH) or budget estimates of the
Contractor as presented by its to the Management Committee.
29.3
The
guarantee referred to in Article 29.2 shall provide that;
(a)
at
the
end of each Year it shall be automatically renewed for an amount equal to a
Company’s Participating Interest share of thirty five percent (35%) of the total
estimated expenditure in respect of the Minimum Work Programme to be undertaken
for the following Year of an Exploration Phase, unless the Contractor has
terminated the Contract in accordance with the terms thereof. The guarantee
shall be renewed at the end of each Year positively thirty (30) days before
the
expiry of the guarantee period.
(b)
after
the
completion and due performance of the Minimum Work Programme of a particular
Exploration Phase, the guarantee will be released in favour of the Company
on
presentation to the bank of a certificate from the Government that the
obligation of the Contractor has been fulfilled and the guarantee may be
released, subject to Article 29.4. Such certificate shall be provided within
thirty (30) days from the completion of the Minimum Work Programme and
fulfillment of obligations under the Contract to the satisfaction of the
Government.
29.4
If
the
Contractor elects to proceed to the second Exploration Phase of the Exploration
Period, a bank guarantee for the Phase in terms of Articles 29.1 (a), 29.2
and
29.3 shall be delivered to the Government with the notice of such election
and
if such guarantee is not so delivered, the provisions of Article 29.5 shall
apply.
29.5
If
any of
the documents referred to in Article 29.1 is not delivered within the period
specified herein, this Contract may be terminated by the Government upon ninety
(90) days written notice of its intention to do so.
29.6 Subject
to Article 29.7, notwithstanding any change in the composition or shareholding
of the parent company furnishing a performance guarantee as provided herein,
it
shall, not under any circumstances, be absolved of its obligations contained
in
the guarantees provided pursuant to Article 29.1(b).
29.7 If
:
|
(a)
|
a
Party (“Assignor”) assigns all or a part of its Participating Interest to
a third party (“Assignee”) in accordance with Article 28;
|
|
(b)
|
the
Assignee provides an irrevocable, unconditional bank guarantee from
a
reputed bank of good standing in India, acceptable to the Government,
in
favour of the Government, for an amount equal to the assignee’s
Participating Interest share of the estimated expenditure of the
Minimum
Work Programme of the Exploration Phase current at the Effective
Date of
the assignment;
|
|
(c)
|
the
Assignee provides performance guarantee and legal opinion in terms
of this
Article; and
|
|
(d)
|
the
addendum to the Contract giving effect to the assignment of Participating
Interest is executed by all
Parties;
|
then
the
Government shall release the guarantee given by the assignor under Article
29.1
(a) to the extent of the amount of the guarantee provided by the assignee and
where relevant the guarantee under Article 29.1 (b).
ARTICLE
30
TERM
AND TERMINATION OF THE CONTRACT
30.1
The
term
of this Contract shall be for the period of the License and any Lease granted
thereunder, unless the Contract is terminated earlier in accordance with its
terms, and shall be deemed to have been terminated, if for any reason, the
Contractor ceases to hold such License or Lease.
30.2
Subject
to the provision of Articles 5, 14 and 30.6 and without prejudice to the
provisions of Article 30.7 or any other provisions of this Contract, the
Contractor shall have the right to terminate this Contract:
(a) with
respect to any part of the Contract Area other than a Development Area then
producing, or that prior thereto had produced Petroleum, upon giving ninety
(90)
days written notice of its intention to do so; and
(b)
with
respect to any Development Area in which Petroleum is being produced, or that
prior thereto had produced Petroleum, upon giving at least one hundred and
eighty (180) days written notice of its intention to do so.
30.3
This
Contract may, subject to the provisions herein below and Article 31, be
terminated by the Government upon giving ninety (90) days written notice with
reasons to the other Parties of its intention to do so in the following
circumstances, namely, that the Contractor or a Party comprising the Contractor
(“the Defaulting Party”)
(a)
has
knowingly submitted any false statement to the Government in any manner which
was a material consideration in the execution of this Contract; or
(b)
has
intentionally and knowingly extracted or authorised the extraction of
hydrocarbon not authorized to be extracted by the Contract or without the
authority of the Government except such extractions as may be unavoidable as
a
result of operations conducted hereunder in accordance with generally accepted
modern oilfield and petroleum industry practices which, when so extracted,
were
immediately notified to the Government or
(c)
is
adjudged bankrupt by a competent court or enters into or scheme of composition
with its creditors or takes advantage of any law for the benefit of debtors;
or
(d)
has
passed a resolution to apply to a competent court for liquidation of the Company
unless the liquidation is for the purpose of amalgamation or reconstruction
of
which the Government has been given notice and the
Government
is satisfied that the Company's performance under this Contract would not be
adversely affected thereby and has given its approval thereto; or
(e)
has
assigned any interest in the Contract without the prior consent of the
Government as provided in Article 28; or
(f)
has
failed to make any monetary payment required by law or under this Contract
by
the due date or within such further period after the due date as may thereafter
be specified by the Government; or
(g)
has
failed to comply with or has contravened the provisions of this Contract in
a
material particular; or
(h)
has
failed to comply with any final determination or award made by a sole expert
or
arbitrators subject to Article 33; or
(i)
has
failed to carry out or observe any of the terms and conditions of the License
or
Lease or the provisions of the Acts or Rules in force thereunder, subject
however, to Article 31.
(j)
on
notice
of termination as provided in Article 29.5.
PROVIDED
THAT
where
the
Contractor comprises two or more Parties, the Government shall not exercise
its
rights of termination pursuant to Article 30.3, on the occurrence, in relation
to one or more, but not all, of the Parties comprising the Contractor, of an
event entitling the Government to terminate the Contract,
(a) if
any
other Party or Parties constituting the Contractor (the non-Defaulting Party
or
Parties) satisfies the Government that it, or they, is/are willing and would
be
able to carry out the obligations of the Contractor.
(b) where
the
non Defaulting Party or Parties with the consent of the Government has/have
acquired the Participating Interest of the Defaulting Party pursuant to the
provisions of the Operating Agreement and has/have procured and delivered to
the
Government a guarantee or guarantees as referred to in Article 29.1 in respect
of the Participating Interest of the Defaulting Party acquired by the non
Defaulting Party or Parties.
30.4
This
Contract may also be terminated by the Government on giving the requisite notice
specified above if the events specified in Article 30.3 (c) and (d) occur with
respect to a company which has given a performance guarantee pursuant to Article
29 subject however to Article 30.5.
30.5
If
the
circumstance or circumstances that give rise to the right of termination under
Article 30.3(f) or (g) or (i) or Article 30.4 are remedied (whether by the
Defaulting Company or by another Party or Parties in its behalf) within the
ninety (90) day period, or such extended period as may be granted by the
Government,
following
the notice of the Government's intention to terminate the Contract as aforesaid,
such termination shall not become effective.
30.6
On
termination of this Contract, for any reason whatsoever, the rights and
obligations of the Contractor shall cease but such termination shall not affect
any rights of any Party which may have accrued or any obligations undertaken
or
incurred including obligations under Article 5.6, by the Contractor or any
Party
comprising the Contractor and not discharged prior to the date of
termination.
30.7
In
the
event of termination pursuant to Articles 30.2, 30.3 or 30.4:
|
(a)
|
the
Government may require the Contractor, for a period not exceeding
one
eighty (180) days from the date of termination, to continue, for
the
account and at the cost of the Government, Crude Oil or Natural Gas
production activities until the right to continue such production
has been
transferred to another entity;
|
|
(b)
|
a
Foreign Company, which is a constituent of the Contractor, shall
have to
remove and export all its property subject to Article 27 and the
provisions hereof provided that in the event that ownership of any
property is in doubt, or disputed, such property shall not be exported
unless and until the doubt or dispute has been settled in favour
of the
Foreign Company.
|
30.8
Within
ninety (90) days after the termination of this Contract, pursuant to Article
30.2, 30.3, or 30.4, or such longer period as the Government may agree, the
Contractor shall comply with Article 14.9 and any reasonably necessary action
as
directed by the Government to avoid Environmental Damage or hazards to human
life or to the property of others.
ARTICLE
31
FORCE
MAJEURE
|
31.1
|
Any
non-performance or delay in performance by any Party hereto of any
of its
obligations under this Contract, or in fulfilling any condition of
any
License or Lease granted to such Party, or in meeting any requirement
of
the Act, the Rules or any License or Lease, shall, except for the
payment
of monies due under this Contract or under the Act and the Rules
or any
law, be excused if, and to the extent that, such non-performance
or delay
in performance under this Contract is caused by Force Majeure as
defined
in this Article.
|
|
31.2
|
For
the purpose of this Contract, the term Force Majeure means any cause
or
event, other than the unavailability of funds, whether similar to
or
different from those enumerated herein, lying beyond the reasonable
control of, and unanticipated or unforeseeable by, and not brought
about
at the instance of, the Party claiming to be affected by such event,
or
which, if anticipated or foreseeable, could not be avoided or provided
for, and which has caused the non-performance or delay in performance.
Without limitation to the generality of the foregoing, the term Force
Majeure shall include natural phenomena or calamities, earthquakes,
typhoons, fires, wars declared or undeclared, hostilities, invasions,
blockades, riots, strikes, insurrection and civil disturbances but
shall
not include the unavailability of
funds.
|
|
31.3
|
Where
a Party is claiming suspension of its obligations on account of Force
Majeure, it shall promptly, but in no case later than seven (7) days
after
the occurrence of the event of Force Majeure, notify the Management
Committee in writing giving full particulars of the Force Majeure,
the
estimated duration thereof, the obligations affected and the reasons
for
its suspension.
|
|
31.4
|
A
Party claiming Force Majeure shall exercise reasonable diligence
to seek
to overcome the Force Majeure event and to mitigate the effects thereof
on
the performance of its obligations under this Contract. The Party
affected
shall promptly notify the Management Committee as soon as the Force
Majeure event has been removed and no longer prevents it from complying
with the obligations which have been suspended and shall thereafter
resume
compliance with such obligations as soon as
possible.
|
|
31.5
|
The
Party asserting the claim of Force Majeure shall have the burden
of
proving that the circumstances constitute valid grounds of Force
Majeure
under this Article and that such Party has exercised reasonable diligence
and efforts to remedy the cause of any alleged Force
Majeure.
|
|
31.6
|
Where
a Party is prevented from exercising any rights or performing any
obligations under this Contract due to Force Majeure, the time for
the
performance of the obligations affected thereby and for performance
of any
obligation or the exercise of any right dependent thereon, and the
term of
any Exploration Phase of the Exploration Period or this Contract,
may be
extended to the extent of Force Majeure period or by such period
as may be
agreed by the Management Committee.
|
|
31.7
|
Notwithstanding
anything contained herein above, if an event of Force Majeure occurs
and
is likely to continue for a period in excess of thirty (30) days,
the
Parties shall meet to discuss the consequences of the Force Majeure
and
the course of action to be taken to mitigate the effects thereof
or to be
adopted in the circumstances.
|
ARTICLE
32
APPLICABLE
LAW AND LANGUAGE OF THE CONTRACT
|
32.1
|
This
Contract shall be governed and interpreted in accordance with the
laws of
India.
|
|
32.2
|
Nothing
in this Contract shall entitle the Contractor to exercise the rights,
privileges and powers conferred upon it by this Contract in a manner
which
will contravene the laws of India.
|
|
32.3
|
The
English language shall be the language of this Contract and shall
be used
in arbitral proceedings. All communications, hearing or visual materials
or documents relating to this Contract shall be written or prepared
in
English.
|
|
32.4
|
The
laws will also include amendments, revisions, modifications
etc.
|
ARTICLE
33
SOLE
EXPERT, CONCILIATION AND ARBITRATION
|
33.1
|
The
Parties shall use their best efforts to settle amicably all disputes,
differences or claims arising out of or in connection with any of
the
terms and conditions of this Contract or concerning the interpretation
or
performance thereof.
|
|
33.2
|
Matters
which, by the terms of this Contract, the Parties have agreed to
refer to
a sole expert and any other matter which the Parties may agree to
so
refer, may be referred to a sole expert who shall be an independent
and
impartial person of international standing with relevant qualifications
and experience, appointed by a written agreement between the Parties
and
who shall not, by virtue of nationality, personal connection or commercial
interest, have a conflict between his/her own interest and his/her
duty as
a sole expert. In the event that the Parties fail or are unable to
agree
on a sole expert within thirty (30) days or such longer period as
may be
mutually agreed by Parties, the sole expert shall be appointed by
a body
or an institution or an agency or a person, mutually agreed by Parties.
In
case, there is no agreement on the body or an institution or an agency
or
a person for appointing sole expert or such institution or agency
or body
fails to appoint a sole expert within thirty (30) days or such longer
period as may be mutually agreed by Parties, the matter shall be
referred
to arbitration. Any
sole expert appointed shall be acting as an expert and not as an
arbitrator and the decision of the sole expert on matters referred
to
him/her shall be final and binding on the Parties and shall not be
subject
to arbitration.
|
|
33.3
|
Subject
to the provisions of this Contract, the Parties hereby agree that
any
controversy, difference, disagreement or claim for damages, compensation
or otherwise (hereinafter in this Clause referred to as a “dispute”)
arising between the Parties, which cannot be settled amicably within
ninety (90) days after the dispute arises, may (except for those
referred
to in Article 33.2, which may be referred to a sole expert) be submitted
to conciliation or an arbitral tribunal for final decision as hereinafter
provided.
|
|
33.4
|
The
arbitral tribunal shall consist of three arbitrators. Each Party
to the
dispute shall appoint one arbitrator and the Party or Parties shall
so
advise the other Parties. The two arbitrators appointed by the Parties
shall appoint the third arbitrator.
|
|
33.5
|
Any
Party may, after appointing an arbitrator, request the other Party(ies)
in
writing to appoint the second arbitrator. If such other Party fails
to
appoint an arbitrator within thirty (30) days of receipt of the written
request to do so, such arbitrator may, at the request of the first
Party,
be appointed in accordance with Arbitration and Conciliation Act,
1996.
|
|
33.6
|
If
the two arbitrators appointed by or on behalf of the Parties fail
to agree
on the appointment of the third arbitrator within thirty (30) days
of the
appointment of the second arbitrator and if the Parties do not otherwise
agree, at the request of either Party, the third arbitrator shall
be
appointed in accordance with Arbitration and Conciliation Act,
1996.
|
|
33.7
|
If
any of the arbitrators fails or is unable to act, his successor shall
be
appointed by the Party or person who originally appointed such in
the
manner set out in this Article as if he was the first
appointment.
|
|
33.8
|
The
decision of the arbitral tribunal shall be pronounced within four
(4)
months unless otherwise extended by the Parties, and, in case of
difference among the arbitrators the decision of the majority shall
be
final and binding on the Parties.
|
|
33.9
|
The
arbitration agreement contained in this Article 33 shall be governed
by
the Arbitration and Conciliation Act, 1996 (Arbitration Act). Arbitration
proceedings shall be conducted in accordance with the rules for
arbitration provided in Arbitration
Act.
|
|
33.10
|
The
right to arbitrate disputes under this Contract shall survive expiry
or
the termination of this Contract.
|
|
33.11
|
Prior
to submitting a dispute to arbitration, the Parties may by mutual
agreement submit the matter for conciliation in accordance with Part
III
of the Arbitration and Conciliation Act, 1996. No arbitration proceedings
shall be instituted while conciliation proceedings are pending provided
that a Party may initiate arbitration proceedings in the event that
dispute has not been resolved by conciliation within sixty (60) days
of
the date of agreement by the Parties to submit such dispute to
conciliation.
|
|
33.12
|
The
venue of the sole expert, conciliation or arbitration proceedings
pursuant
to this Article, unless the Parties agree otherwise, shall be New
Delhi,
India and shall be conducted in the English language. Insofar as
practicable, the Parties shall continue to implement the terms of
this
Contract notwithstanding the initiation of proceedings before a sole
expert, conciliator or arbitral tribunal and any pending claim or
dispute.
|
|
33.13
|
The
fees and expenses of a sole expert or conciliator appointed by the
Parties
shall be borne equally by the Parties. The cost and expenses of arbitrator
appointed by a Party in accordance with the provision of this Article
shall be borne by the respective Party and the cost and expenses
of third
arbitrator and other incidental expenditure in relation to arbitration
and
liability thereof shall be at the discretion of the
arbitrators.
|
|
33.14
|
Notwithstanding
anything contrary contained herein above, in the event of dispute
among
Government Company(ies) and with the Government, such disputes shall
be
settled in accordance with guidelines issued on the subject by Government
from time to time.
|
ARTICLE
34
CHANGE
OF STATUS OF COMPANIES
|
34.1
|
The
Parties comprising the Contractor shall notify the Government of
any
change in the management or control of a Company(ies) or the relationship
with any guarantor of the
Company(ies).
|
ARTICLE
35
ENTIRE
AGREEMENT, AMENDMENTS, WAIVER AND MISCELLANEOUS
|
35.1
|
This
Contract supersedes and replaces any previous agreement or understanding
between the Parties, whether oral or written, on the subject matter
hereof, prior to the execution date of this
Contract.
|
|
35.2
|
This
Contract shall not be amended, modified, varied or supplemented in
any
respect except by an instrument in writing signed by all the Parties,
which shall state the date upon which the amendment or modification
shall
become effective.
|
|
35.3
|
No
waiver by any Party of any one or more obligations or defaults by
any
other Party in the performance of this Contract shall operate or
be
construed as a waiver of any other obligations or defaults whether
of a
like or of a different character.
|
|
35.4
|
The
provisions of this Contract shall inure to the benefit of and be
binding
upon the Parties and their permitted assigns and successors in interest.
|
|
35.5
|
In
the event of any conflict between any provisions in the main body
of this
Contract and any provision in the Appendices, the provision in the
main
body shall prevail.
|
|
35.6
|
The
headings of this Contract are for convenience of reference only and
shall
not be taken into account in interpreting the terms of this
Contract.
|
|
35.7
|
Reference
to any law or regulation having the force of law includes a reference
to
that law or regulation as from time to time may be amended, extended
or
re-enacted.
|
|
35.8
|
A
reference in this Contract to the word “including” shall also mean
“including but not limited to”.
|
ARTICLE
36
CERTIFICATES
|
36.1
|
A
Company shall furnish, prior to execution of this Contract, a duly
authorised copy of a resolution properly and legally passed by the
Board
of Directors of the Company authorising its President or any
Vice-President or any other representative to execute this Contract
along
with a certificate duly signed by the Secretary or an Assistant Secretary
of the Company under its seal in this regard and to the effect that
the
Company has the power and authority to enter into this Contract and
to
perform its obligations thereunder and has taken all necessary action
to
authorise the execution, delivery and performance of the
Contract.
|
ARTICLE
37
NOTICES
|
37.1
|
All
notices, statements, and other communications to be given, submitted
or
made hereunder by any Party to another shall be sufficiently given
if
given in writing in English language and sent by registered post,
postage
paid, or by telegram, telex, facsimile, radio or cable, to the address
or
addresses of the other Party or Parties as
follows:
|
(a) If
to the
Government:
Secretary
to the Government of India
Ministry
of Petroleum and Natural Gas
Shastri
Bhavan
▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇
▇▇▇▇▇- ▇▇▇▇▇▇, ▇▇▇▇▇
Facsimile
No.: 91 11 23383585
(b) Mr.
▇.▇.
▇▇▇▇▇▇▇
Chairman
and Managing Director
Oil
India
Ltd.
▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
▇▇▇▇▇
- ▇▇▇▇▇▇
Facsimile
No.: ▇▇▇-▇▇▇▇▇▇▇▇
Telephone
No.: ▇▇▇-▇▇▇▇▇▇▇▇
/ 23074251
(c) ▇▇.
▇▇▇▇
▇▇▇▇ ▇▇▇
GeoGlobal
Resources (Barbados) Inc.
▇/▇
-
▇▇▇, ▇▇▇ - ▇▇▇
▇▇▇▇▇▇
▇▇,
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile
No.: ▇▇
▇▇▇
▇▇▇-▇▇▇▇
Telephone
No.: ▇▇
▇▇▇
▇▇▇-▇▇▇▇
(d) Mr.
M.A.
Tankiwala
Director
(Refineries)
Hindustan
Petroleum Corpn. Ltd.
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇,
▇▇,
▇.▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇
Facsimile
No. : ▇▇-▇▇-▇▇▇▇▇▇▇▇
Telephone
No.: ▇▇-▇▇-▇▇▇▇▇▇▇▇
37.2
Notices
when given in terms of Article 37.1 shall be effective when delivered if offered
at the address of the other Parties as under Article 37.1 during business hours
on working days and, if received outside business hours, on the next following
working day.
37.3
Any
Party
may, by reasonable notice as provided hereunder to the other Parties, change
its
address and other particulars for notice purpose.
IN
WITNESS WHEREOF, the representatives of the Parties to this Contract being
duly
authorised have hereunto set their hands and have executed these presents this
2nd
day of
March, 2007.
|
Signed
for and on
|
|
behalf
of the
|
President
of India
By
: /s/______________
In
presence of: /s/
Signed
for and on behalf
of
OIL By
: /s/ ____
In
presence of: /s/
Signed
for and on behalf
of
GGRB By
: /s/ ____
In
presence of: /s/
Signed
for and on behalf
of
HPCL By
: /s/ ____
In
presence of: /s/
APPENDIX
A
DESCRIPTION
OF THE CONTRACT AREA
The
area
comprising approximately 1330 Sq. Km., Onshore India identified as Block
RJ-ONN-2004/3
described herein and shown on the map attached as Appendix B.
Longitude
and Latitude measurements commencing at points A to I to A are given below
:
|
Coordinates
|
||||||
|
Longitude
|
Latitude
|
|||||
|
Pt.
|
Deg.
|
Min.
|
Sec.
|
Deg.
|
Min.
|
Sec.
|
|
A
|
71
|
36
|
51.00
|
27
|
31
|
56.00
|
|
B
|
71
|
21
|
13.00
|
27
|
49
|
38.00
|
|
C
|
71
|
39
|
27.00
|
27
|
49
|
33.00
|
|
D
|
71
|
43
|
39.00
|
27
|
49
|
33.00
|
|
E
|
71
|
57
|
9.00
|
27
|
56
|
12.00
|
|
F
|
71
|
58
|
24.00
|
27
|
52
|
8.00
|
|
G
|
71
|
52
|
49.00
|
27
|
48
|
8.00
|
|
H
|
71
|
57
|
33.00
|
27
|
43
|
41.00
|
|
I
|
71
|
49
|
30.00
|
27
|
36
|
30.00
|
|
A
|
71
|
36
|
51.00
|
27
|
31
|
56.00
|
Appendix B
Map of Contract Area
APPENDIX
C
ACCOUNTING
PROCEDURE TO
THE
CONTRACT
BETWEEN
THE
GOVERNMENT OF INDIA
AND
OIL
INDIA LTD.
AND
GEOGLOBAL
RESOURCES (BARBADOS) INC.
AND
HINDUSTAN
PETROLEUM CORPORATION LTD.
WITH
RESPECT TO CONTRACT AREA
IDENTIFIED
AS
BLOCK
: RJ-ONN-2004/3
TABLE
OF CONTENTS
Sections Content
Section
1: General
Provisions
|
1.1
Purpose
|
|
1.2
Definitions
|
|
1.3
Inconsistency
|
|
1.4
Documentation and Statements to be
|
|
submitted
by the Contractor
|
|
1.5
Language and units of account
|
|
1.6
Currency exchange rates
|
|
1.7
Payments
|
|
1.8
Arms length transactions
|
|
1.9
Audit and inspection rights of the
|
|
Government
|
|
1.10
Revision of Accounting Procedure
|
Section
2: Classification,
Definition and Allocation of Costs and Expenditures
|
2.1
Segregation of Costs
|
|
2.2
Exploration Costs
|
|
2.3
Development Costs
|
|
2.4
Production Costs
|
|
2.5
Service Costs
|
|
2.6
General and Administrative Costs
|
Section
3: Costs,
Expenses, Expenditures and Incidental Income of the
Contractor
3.1 Costs
recoverable and allowable without
further
approval of the Government:
3.1.1 Surface
Rights
3.1.2
Labour
and Associated Labour Costs
3.1.3 Transportation
Costs
3.1.4
Charges
for Services -
(i)
Third
Parties
(ii)
Affiliates of Contractor
3.1.5 Communications
3.1.6 Office,
Shore Bases and
Miscellaneous
facilities
3.1.7 Environmental
Studies and Protection
3.1.8
Materials
and Equipments
(i) General
(ii) Warranty
(iii)
Value
of
Materials charged to the accounts under the Contract
3.1.9 Duties,
fees and other charges
3.1.10 Insurance
and Losses
3.1.11 Legal
expenses
3.1.12 Training
costs
3.1.13 General
and Administrative
Costs
3.1.14 Royalty,
License fee, surface rentals etc.
3.2
Costs
not
recoverable and not allowable
under
the
Contract
3.3 Other
Costs recoverable and allowable
only
with
Management Committee approval
3.4
Incidental
income and credits
3.5 Non-duplication
of charges and credits
Section
4: Records
and Inventories of Assets
4.1
Records
4.2
Inventories
Section
5: Production
Statement
Section
6: Value
of Production and Pricing Statement
Section
7: Statement
of Costs, Expenditures and Receipts
Section
8: Cost
Recovery Statement
Section
9: Profit
Sharing Statement
Section
10: Local
Procurement Statement
Section
11: End
of Year Statement
Section
12: Budget
Statement
ACCOUNTING
PROCEDURE
SECTION
1
GENERAL
PROVISIONS
1.1 Purpose
Generally,
the purpose of this Accounting Procedure is to set out principles and procedures
of accounting which will enable the Government of India to monitor effectively
the Contractor's costs, expenditures, production and income so that the
Government's entitlement to Profit Petroleum can be accurately determined
pursuant to the terms of the Contract. More specifically, the purpose of the
Accounting Procedure is to:
- classify
costs and expenditures and to define which costs and expenditures shall be
allowable for cost recovery and profit sharing and participation
purposes;
-
specify
the manner in which the Contractor's accounts shall be prepared and approved;
and
-
address
numerous other accounting related matters.
This
Accounting Procedure is intended to apply to the provisions of the Contract
and
is without prejudice to the computation of income tax under applicable
provisions of the Income-Tax ▇▇▇, ▇▇▇▇, as amended.
1.2 Definitions
For
purposes of this Accounting Procedure, the terms used herein which are defined
in the Contract shall have the same meaning when used in this Accounting
Procedure.
1.3 Inconsistency
In
the
event of any inconsistency or conflict between the provisions of this Accounting
Procedure and the other provisions of the Contract, the other provisions of
the
Contract shall prevail.
1.4 Documentation
and Statements to be submitted by the Contractor
1.4.1
Within
ninety (90) days of the Effective Date of the Contract, the Contractor shall
submit to and discuss with the Government a proposed outline of charts of
accounts, operating records and reports, which outline shall reflect each of
the
categories and sub-categories of costs and income specified in Sections 2 and
3
and
shall
be in accordance with generally accepted standards and recognized accounting
systems and consistent with normal petroleum industry practice and procedures
for joint venture operations.
Within
ninety (90) days of receiving the above submission, the Government shall either
provide written notification of its approval of the proposal or request, in
writing, revisions to the proposal.
Within
one hundred and eighty (180) days from the Effective Date of the Contract,
the
Contractor and the Government shall agree on the outline of charts of accounts,
records and reports which shall also describe the basis of the accounting system
and procedures to be developed and used under this Contract. Following such
agreement, the Contractor shall expeditiously prepare and provide the Government
with formal copies of the comprehensive charts of accounts, records and reports
and allow the Government to examine the manuals and to review procedures which
are, and shall be, observed under the Contract.
1.4.2
Notwithstanding
the generality of the foregoing, the Contractor shall make regular Statements
relating to the Petroleum Operations as follows:
(i) Production
Statement (see Section 5 of this Accounting Procedure).
(ii) Value
of
Production and Pricing Statement (see Section 6 of this Accounting
Procedure).
(iii) Statement
of Costs, Expenditures and Receipts (see Section 7 of this Accounting
Procedure).
(iv) Cost
Recovery Statement (see Section 8 of this Accounting Procedure).
(v)
Profit
Sharing Statement (see Section 9 of this Accounting Procedure)
(vi) Local
Procurement Statement (see Section 10 of this Accounting Procedure)
(vii) End
of
Year Statement (see Section 11 of this Accounting Procedure).
(viii) Budget
Statement (see Section 12 of this Accounting Procedure).
1.4.3
All
reports and Statements shall be prepared in accordance with the Contract and
the
laws of India and, where there are no relevant provisions in either of these,
in
accordance with generally accepted practices in the international petroleum
industry.
1.4.4
Each
of
the entities constituting the Contractor shall be responsible for maintaining
its own accounting records in order to comply with all legal requirements and
to
support all returns or any other accounting reports required by any Government
authority in relation to the Petroleum Operations. However, for the purposes
of
giving effect to this Accounting Procedure, the Party constituting the
Contractor who is the Operator shall be responsible for maintaining, at its
business office in India, on behalf of the Contractor, all the
accounts
of the Petroleum Operations in accordance with the provisions of the Accounting
Procedure and the Contract.
1.5 Language
and Units of Account
All
accounts, records, books, reports and Statements shall be maintained and
prepared in the English language using mercantile basis of accounting. The
accounts shall be maintained in United States Dollars, which shall be the
controlling currency of account for cost recovery, and profit sharing purposes.
Metric units and Barrels shall be employed for measurements required under
the
Contract. Where necessary for clarification, the Contractor may also maintain
accounts and records in other languages, currencies and units.
1.6 Currency
Exchange Rates
1.6.1 For
conversion purposes between United States Dollars and Indian Rupees or any
other
currency, the monthly average of the daily mean of the buying and selling rates
of exchange as quoted by the Reserve Bank of India (or any other financial
body
as may be mutually agreed by the Parties) for the Month in which the revenues,
costs, expenditures, receipts or income are recorded, shall be used. However,
in
the case of any single non-US Dollar transaction in excess of the equivalent
of
fifty thousand (50,000) US Dollars, the conversion into US Dollars shall be
performed on the basis of the average of the applicable exchange rates for
the
day on which the transaction occurred.
1.6.2
Any
realized or unrealized gains or losses from the exchange of currency in respect
of Petroleum Operations shall be credited or charged to the accounts. A record
of the exchange rates used in converting Indian Rupees or any other currencies
into United States Dollars as specified in Section 1.6.1 shall be maintained
by
the Contractor and shall be identified in the relevant Statements required
to be
submitted by the Contractor in accordance with Section 1.4.2.
1.7
Payments
1.7.1
Subject
to Article 20.3 of the Contract and the foreign exchange laws and regulations
prevailing from time to time, all payments between the Parties shall, unless
otherwise agreed, be in United States Dollars and shall be made through a bank
designated by each receiving Party.
1.7.2
Unless
otherwise specified, all sums due under the Contract shall be paid within forty
five (45) days from the date on which the obligation to pay was
incurred.
1.7.3
All
sums
due by one Party to the other under the Contract during any Month shall, for
each day such sums are overdue during such Month, bear interest compounded
daily
at the applicable LIBOR plus two (2) percentage points.
1.8 Arms
Length Transactions
Unless
otherwise specifically provided for in the Contract, all transactions giving
rise to revenues, costs or expenditures which will be credited or charged to
the
accounts prepared, maintained or submitted hereunder shall be conducted at
arms
length or on such a basis as will assure that all such revenues, costs or
expenditures will not be lower or higher, as the case may be, than would result
from a transaction conducted at arms length on a competitive basis with third
parties.
1.9 Audit
and Inspection Rights of the Government
1.9.1 Without
prejudice to statutory rights, the Government, upon at least twenty (20)
Business Days advance written notice to the Contractor, shall have the right
to
inspect and audit, during normal business hours, all records and documents
supporting costs, expenditures, expenses, receipts and income, such as the
Contractor's accounts, books, records, invoices, cash vouchers, debit notes,
price lists or similar documentation with respect to the Petroleum Operations
conducted hereunder in each Year, within two (2) years (or such longer period
as
may be required in exceptional circumstances) from the end of such
Year.
1.9.2
The
Government may undertake the conduct of the audit either through its own
representatives or through a qualified firm of recognised chartered accountants,
registered in India or a reputed consulting firm, appointed for the purpose
by
the Government and the costs of audit in case of Government auditor(s) shall
be
borne by the Government, where as for outside auditor(s), this shall be borne
by
the Contractor as a General and Administrative Cost.
1.9.3
In
conducting the audit, the Government or its auditors shall be entitled to
examine and verify, at reasonable times, all charges and credits relating to
the
Contractor's activities under the Contract and all books of account, accounting
entries, material records and inventories, vouchers, payrolls, invoices and
any
other documents, correspondence and records considered necessary by the
Government to audit and verify the charges and credits. The auditors shall
also
have the right, in connection with such audit, to visit and inspect, at
reasonable times, all sites, plants, facilities, warehouses and offices of
the
Contractor directly or indirectly serving the Petroleum Operations, and to
physically examine other property, facilities and stocks used in Petroleum
Operations, wherever located and to question personnel associated with those
operations. Where the Government requires verification of charges made by an
Affiliate, the Government shall have the right to obtain an audit certificate
from an internationally recognized firm of public accountants acceptable to
both
the Government and the Contractor, which may be the Contractor's statutory
auditor. Submission of the audit certificate, shall in no way relieve or
diminish the
responsibility
of the Contractor for the compliance with the obligations under the Contract.
1.9.4
Any
audit
exceptions shall be made by the Government in writing and notified to the
Contractor within one hundred and twenty (120) days following completion of
the
audit in question.
1.9.5
The
Contractor shall answer any notice of exception under Section 1.9.4 within
one
hundred and twenty (120) days of the receipt of such notice. Where the
Contractor has, after the said one hundred and twenty (120) days, failed to
answer a notice of exception, the exception shall prevail and deemed to have
been agreed to by the Contractor.
1.9.6
All
agreed adjustments resulting from an audit and all adjustments required by
prevailing exceptions under Section 1.9.5 shall be promptly made in the
Contractor's accounts and any consequential adjustments to the Government's
entitlement to Petroleum shall be made within thirty (30) days therefrom.
1.9.7 Notwithstanding
any reference to a Sole Expert or Arbitration in accordance with the provisions
of the Contract, in case any amount is claimed as due to the Government
resulting from the audit exception but not accepted or settled by the
Contractor, then the Contractor shall deposit such claimed amount in a escrow
account to be opened with a financial institution, failing mutually agreed
agreement with State Bank of India within thirty (30) days from the date when
the amount is disputed by the Contractor. The amount in escrow account along
with any interest accumulated thereon shall be appropriated or adjusted in
accordance with the decision or award of the Sole Expert or Arbitral Tribunal
as
may be or otherwise as mutually agreed to between the Parties.
1.9.8
If
the
Contractor and the Government are unable to reach final agreement on proposed
audit adjustments, either Party may refer any dispute thereon to a sole expert
as provided for in the Contract. So long as any issues are outstanding with
respect to an audit, the Contractor shall maintain the relevant documents and
permit inspection thereof until the issue is resolved.
1.10 Revision
of the Accounting Procedure
By
mutual
agreement between the Government and the Contractor, this Accounting Procedure
may be revised from time to time, in writing, signed by the Parties, stating
the
date upon which the amendments shall become effective.
SECTION
2
CLASSIFICATION,
DEFINITION AND ALLOCATION OF COSTS
AND
EXPENDITURES
2.1 Segregation
of Costs
Costs
shall be segregated in accordance with the purposes for which such expenditures
are made. All costs and expenditures allowable under Section 3, relating to
Petroleum Operations, shall be classified, defined and allocated as set out
below in this Section.
2.2 Exploration
Costs
Exploration
Costs are all direct and allocated indirect expenditures incurred in the search
for Petroleum in an area which is, or was at the time when such costs were
incurred, part of the Contract Area, including expenditures incurred in respect
of:
2.2.1
Aerial,
geophysical, geochemical, palaeontological, geological, topographical and
seismic surveys, analysis and studies and their interpretation.
2.2.2
Core
hole
drilling and water Well drilling.
2.2.3
Labour,
materials, supplies and services used in drilling ▇▇▇▇▇ with the object of
finding Petroleum or in drilling Appraisal ▇▇▇▇▇ provided that if such ▇▇▇▇▇
are
completed as producing ▇▇▇▇▇ or injection Well for enhancing Oil recovery,
the
costs of completion thereof shall be classified as Development
Costs.
2.2.4
Facilities
used solely in support of the purposes described in Sections 2.2.1, 2.2.2 and
2.2.3 above, including access roads, all separately identified.
2.2.5
Any
Service Costs and General and Administrative Costs directly incurred on
exploration activities and identifiable as such and a portion of the remaining
Service Costs and General and Administrative Costs allocated to Exploration
Operations determined by the proportionate share of total Contract Costs
(excluding General and Administrative Costs and Service Costs) represented
by
all other Exploration Costs.
2.2.6
Geological
and geophysical information purchased or acquired in connection with Exploration
Operations.
2.2.7
Any
other
expenditures incurred in the search for Petroleum not covered under Sections
2.3
or 2.4.
2.3 Development
Costs
Development
Costs are all direct and allocated indirect expenditures incurred with respect
to the development of discoveries within the Contract Area including
expenditures incurred on account of:
2.3.1 Geological
and Geophysical information acquired in connection with Development
Operations.
2.3.2
Drilling
Development ▇▇▇▇▇, whether these ▇▇▇▇▇ are dry or producing and drilling ▇▇▇▇▇
for the injection of water or Gas to enhance recovery of Petroleum.
2.3.3
Completing
of Exploration ▇▇▇▇▇ by way of installation of casing or equipment or otherwise
or for the purpose of bringing a Well into use as a producing Well or as a
Well
for the injection of water or Gas to enhance recovery of Petroleum.
2.3.4
Purchase,
installation or construction of production, transport and storage facilities
for
production of Petroleum, such as pipelines, flow lines, production and treatment
units, wellhead equipment, subsurface equipment, enhanced recovery systems,
offshore and onshore platforms, export terminals and piers, harbours and related
facilities and access roads for production activities.
2.3.5
Engineering
and design studies for facilities referred to in Section 2.3.3.
2.3.6
Any
Service Costs and General and Administrative Costs directly incurred in
Development Operations and identifiable as such and a portion of the remaining
Service Costs and General and Administrative Costs allocated to development
activities, determined by the proportionate share of total Contract Costs
(excluding General and Administrative Costs and Service Costs) represented
by
all other Development Costs.
2.4 Production
Costs
Production
Costs are expenditures incurred on Production Operations after the start of
production from the Field (which are other than Exploration and Development
Costs). The balance of General and Administrative Costs and Service Costs not
allocated to Exploration Costs or Development Costs shall be allocated to
Production Costs.
2.5 Service
Costs
Service
Costs are direct and indirect expenditures incurred in support of Petroleum
Operations in the Contract Area, including expenditures on warehouses, piers,
marine vessels, vehicles, motorized rolling equipment, aircraft, fire and
security stations, workshops, water and sewerage plants, power plants, housing,
community and recreational facilities and furniture and tools and
equipment
used in these activities. Service Costs in any Year shall include the costs
incurred in such Year to purchase and/or construct the said facilities as well
as the annual costs of maintaining and operating the same, each to be identified
separately. All Service Costs shall be regularly allocated as specified in
Sections 2.2.5, 2.3.5 and 2.4 to Exploration Costs, Development Costs and
Production Costs and shall be separately shown under each of these categories.
Where Service Costs are made in respect of shared facilities, the basis of
allocation of costs to Petroleum Operations hereunder shall be
specified.
2.6 General
and Administrative Costs
General
and Administrative Costs are expenditures incurred on general administration
and
management primarily and principally related to Petroleum Operations in or
in
connection with the Contract Area, and shall include:
2.6.1
Main
office, field office and general administrative expenditures in India including
supervisory, accounting and employee relations services;
2.6.2
An
annual
overhead charge for services rendered by the parent company or an Affiliate
to
support and manage Petroleum Operations under the Contract, and for staff advice
and assistance including financial, legal, accounting and employee relations
services, but excluding any remuneration for services charged separately under
this Accounting Procedure, provided that:-
(i)
for
the
period from the Effective Date until the date on which the first Development
Plan under the Contract is approved by the Government, this annual charge shall
be the Contractor's verifiable expenditure but shall in no event be greater
than
the following percentages of the total Contract Costs incurred during the
Contract Year in or in connection with the Contract Area and qualifying for
recovery pursuant to Section 3:
Contract
costs in any Annual
overhead charge
Contract
year (in million US$)
0-23%
Over
2-5US
$
60,000 + 2% of Contract Costs
in
excess
of US $ 2 million.
Over
5US
$
120,000 + 1% of Contract
Costs
in
excess of US $ 5 million
(ii)
from
the
date on which the first Development Plan is approved, the charge shall be at
an
amount or rate to be agreed on between the Parties and stated in the Development
Plan.
2.6.3
All
General and Administrative Costs shall be regularly allocated as specified
in
Sections 2.2.5, 2.3.5 and 2.4 to Exploration Costs, Development Costs and
Production Costs respectively, and shall be separately shown under each of
these
cost categories.
SECTION
3
COSTS,
EXPENSES, EXPENDITURES AND INCIDENTAL INCOME
OF
THE CONTRACTOR
3.1 Costs
Recoverable and Allowable Without Further Approval of the
Government
Costs
incurred by the Contractor on Petroleum Operations as per reviewed or approved
Work Programme and Budget by the Management Committee as the case may be,
pursuant to the Contract as classified under the headings referred to in Section
2 shall be allowable for the purposes of the Contract except to the extent
provided in Section 3.2 or elsewhere in this Accounting Procedure, and subject
to audit, as referred to in Articles 25.4.1 to 25.4.4 and Article
25.5, as
provided for herein. Further in case of variation in costs over the
reviewed/approved Work Programme and Budget, as the case may be, or
re-appropriation of costs, shall be submitted to the Management Committee for
review/approval, as the case may be, within thirty (30) days from end of the
relevant Financial Year and subject to the audit and other provisions of the
Contract, such costs shall be allowable for the purposes of the
Contract.
3.1.1 Surface
Rights
All
direct costs necessary for the acquisition, renewal or relinquishment of surface
rights acquired and maintained in force for the purposes of the Contract except
as provided in Section 3.1.9.
3.1.2Labour
and Associated Labour Costs
(a) Contractor's
locally recruited employees based in India
Costs
of
all the Contractor's locally recruited employees who are directly engaged in
the
conduct of Petroleum Operations under the Contract in India. Such costs shall
include the costs of employee benefits and Government benefits for employees
and
levies imposed on the Contractor as an employer, transportation and relocation
costs within India of the employee and such members of the employee's family
as
per the personnel policy of the employer as required by law or customary
practice in India. If such employees are engaged in other activities in India,
in addition to Petroleum Operations, the cost of such employees shall be
apportioned on a time sheet basis according to sound and acceptable accounting
principles.
(b) Assigned
Personnel
Costs
of
salaries and wages, including bonuses, of the Contractor's employees directly
and necessarily engaged in the conduct of the Petroleum Operations under the
Contract, whether temporarily or permanently assigned, irrespective of the
location of such employees, it being understood that in the case of those
personnel only a portion of whose time is wholly dedicated to Petroleum
Operations under the Contract, only that pro rata portion of applicable
salaries, wages, and other costs, as specified in Sections 3.1.2(c), (d), (e),
(f) and (g), shall be charged and the basis of such pro rata allocation shall
be
specified.
(c) The
Contractor's costs regarding holiday, vacation, sickness and disability benefits
and living and housing and other customary allowances applicable to the salaries
and wages chargeable under Section 3.1.2(b) above.
(d) Expenses
or contributions made pursuant to assessments or obligations imposed under
the
laws of India which are applicable to the Contractor's cost of salaries and
wages chargeable under Section 3.1.2(b) above.
(e)
The
Contractor's cost of established plans for employees' group life insurance,
hospitalization, pension, retirement and other benefit plans of a like nature
customarily granted to the Contractor's employees provided, however, that such
costs are in accordance with generally accepted standards in the international
petroleum industry, applicable to salaries and wages chargeable to Petroleum
Operations under Section 3.1.2(b) above.
(f) Personal
income taxes where and when they are paid by the Contractor to the Government
of
India for the employee, in accordance with the Contractor's standard personnel
policies.
(g)
Reasonable
transportation and travel expenses of employees of the Contractor, including
those made for travel and relocation of the expatriate employees, including
their dependent family and personal effects, assigned to India whose salaries
and wages are chargeable to Petroleum Operations under Section 3.1.2(b)
above.
Transportation
cost as used in this Section shall mean the cost of freight and passenger
service and any accountable incidental expenditures related to transfer travel
and authorized under the Contractor's standard personnel policies. The
Contractor shall ensure that all expenditures related to transportation costs
are equitably allocated to the activities which have benefited from the
personnel concerned.
3.1.3 Transportation
Costs
The
reasonable cost of transportation of equipment, materials and supplies within
India and from outside India to India necessary for the conduct of Petroleum
Operations under the Contract, including directly related costs such as
unloading charges, dock fees and inland and ocean freight charges.
3.1.4 Charges
for Services
(i) Third
Parties
The
actual costs of contract services, services of professional consultants,
utilities and other services necessary for the conduct of Petroleum Operations
under the Contract performed by third parties other than an Affiliate of the
Contractor, provided that the transactions resulting in such costs are
undertaken pursuant to Section 1.8 of this Accounting Procedure.
(ii) Affiliates
of Contractor
(a) Professional
and Administrative Services
and Expenses
Cost
of
professional and administrative services provided by any Affiliate for the
direct benefit of Petroleum Operations, including, but not limited to, services
provided by the production, exploration, legal, financial, insurance, accounting
and computer services divisions other than those covered by Section 3.1.4
(ii)(b) which the Contractor may use in lieu of having its own employees.
Charges shall be equal to the actual cost of providing their services, shall
not
include any element of profit and shall not be any higher than the most
favourable prices charged by the Affiliate to third parties for comparable
services under similar terms and conditions elsewhere and will be fair and
reasonable in the light of prevailing modern oilfield and petroleum industry
practices.
(b) Scientific
or Technical Personnel
Cost
of
scientific or technical personnel services provided by any Affiliate of the
Contractor for the direct benefit of Petroleum Operations, which cost shall
be
charged on a cost of service basis. Charges therefor shall not exceed charges
for comparable services currently provided by outside technical service
organizations of comparable qualifications. Unless the work to be done by such
personnel is covered by an Approved Budget and Work Programme, the Contractor
shall not authorize work by such personnel without approval of the Management
Committee.
(c)
Equipment,
facilities and property owned and furnished by the Contractor's Affiliates,
at
rates commensurate with the cost of ownership and operation provided, however,
that such rates shall not exceed those currently prevailing for the supply
of
like equipment, facilities and property on comparable terms in the area where
the Petroleum Operations are being conducted. The equipment and facilities
referred to herein shall exclude major investment items such as (but not limited
to) drilling rigs, producing platforms, oil treating facilities, oil and gas
loading and transportation systems, storage and terminal facilities and other
major
facilities,
rates for which shall be subject to separate agreement with the
Government.
3.1.5 Communications
Cost
of
acquiring, leasing, installing, operating, repairing and maintaining
communication systems including radio, satellite link and microwave facilities
between the Contract Area and the Contractor's nearest base
facility.
3.1.6 Office,
Shore Bases and Miscellaneous Facilities
Net
cost
to the Contractor of establishing, maintaining and operating any office,
sub-office, shore base facility, warehouse, housing or other facility directly
serving the Petroleum Operations. If any such facility services contract areas
other than the Contract Area, or any business other than Petroleum Operations,
the net costs thereof shall be allocated on an equitable and consistent
basis.
3.1.7 Environmental
Studies and Protection
Costs
incurred in conducting the environmental impact assessment studies for the
Contract Area, and in taking environmental protection measures including
abandonment cost or contribution to abandonment funds as may be created for
abandonment and Site Restoration pursuant to the terms of the
Contract.
3.1.8 Materials
and equipment
(i) General
So
far as
is practicable and consistent with efficient and economical operation, only
such
material shall be purchased or furnished by the Contractor for use in the
Petroleum Operations as may be required for use in the reasonably foreseeable
future and the accumulation of surplus stocks shall be avoided. Material and
equipment held in inventory shall only be charged to the accounts when such
material is removed from inventory and used in Petroleum Operations. Costs
shall
be charged to the accounting records and books based on the “First-in, First-out
method”.
(ii) Warranty
In
the
case of defective material or equipment, any adjustment received by the
Contractor from the suppliers or manufacturers or their agents in respect of
any
warranty on material or equipment shall be credited to the accounts under the
Contract.
(iii) Value
of materials charged to the accounts under
the Contract
(a) Except
as
otherwise provided in subparagraph (b) below, materials purchased by the
Contractor for use in the Petroleum Operations shall be valued to include
invoice price less trade and cash discounts, if any, purchase and procurement
fees plus freight and forwarding charges between point of supply and point
of
shipment, freight to port of destination, insurance, taxes, custom duties,
consular fees, other items chargeable against imported material and, where
applicable, handling and transportation costs from point of importation to
warehouse or operating site, and these costs shall not exceed those currently
prevailing in normal arms length transactions on the open market.
(b)
Material
purchased from or sold to Affiliates or transferred to or from activities of
the
Contractor other than Petroleum Operations under the Contract:
(aa) new
material (hereinafter referred to as condition A) shall be valued at the current
international price which shall not exceed the price prevailing in normal arms
length transactions on the open market;
(bb) used
material which is in sound and serviceable condition and is suitable for reuse
without reconditioning (hereinafter referred to as condition B) shall be priced
at not more than seventy five per cent (75%) of the current price of the above
mentioned new materials;
(cc) used
material which cannot be classified as condition B, but which, after
reconditioning, will be further serviceable for original function as good
second-hand condition B material or is serviceable for original function, but
substantially not suitable for reconditioning (hereinafter referred to as
condition C) shall be priced at not more than fifty per cent (50%) of the
current price of the new material referred to above as condition A.
The
cost
of reconditioning shall be charged to the reconditioned material, provided
that
the condition C material value plus the cost of reconditioning does not exceed
the value of condition B material.
Material
which cannot be classified as condition B or condition C shall be priced at
a
value commensurate with its use.
Material
involving erection expenditure shall be charged at the applicable condition
percentage (referred to above) of the current knocked-down price of new material
referred to above as condition A.
When
the
use of material is temporary and its service to the Petroleum Operations does
not justify the reduction in price in relation to materials referred to above
as
conditions B and C, such material shall be priced on a basis that will result
in
a net charge to the accounts under the Contract consistent with the value of
the
service rendered.
3.1.9 Duties,
Fees and Other Charges
Any
duties, levies, fees, charges and any other assessments levied by any
governmental or taxing authority in connection with the Contractor's activities
under the Contract and paid directly by the Contractor except corporate income
tax payable by the constituents of the Contractor.
3.1.10 Insurance
and Losses
Insurance
premia and costs incurred for insurance pursuant to Article 24 of the Contract,
provided that such insurance is customary, affords prudent protection against
risk and is at a premium no higher than that charged on a competitive basis
by
insurance companies which are not Affiliates. Except as provided in Sections
3.2
(ix), Section 3.2(x) and Section 3.2(xi), actual costs and losses incurred
shall
be allowable to the extent not made good by insurance. Such costs may include,
but are not limited to, repair and replacement of property in the Contract
Area
resulting from damages or losses incurred by fire, flood, storm, theft, accident
or such other cause.
3.1.11 Legal
Expenses
All
reasonable costs and expenses, except Section 3.2 (xi) resulting from the
handling, investigating, asserting, defending, or settling of any claim or
legal
action necessary or expedient for the procuring, perfecting, retention and
protection of the Contract Area and in defending or prosecuting lawsuits
involving the Contract Area or any third party claim arising out of Petroleum
Operations under the Contract, or sums paid in respect of legal services
necessary for the protection of the joint interest of Government and the
Contractor, shall be allowable. Such expenditures shall include attorney's
fees,
court costs, costs of investigation and procurement of evidence and amounts
paid
in settlement or satisfaction of any such litigation and claims provided such
costs are not covered elsewhere in the Accounting Procedure. Where legal
services are rendered in such matters by salaried or regularly retained lawyers
of the Contractor or an Affiliate, such compensation shall be included instead
under Section 3.1.2 or 3.1.4 (ii) above as applicable.
3.1.12 Training
Costs
All
costs
and expenses incurred by the Contractor in training as is required under Article
22 of the Contract.
3.1.13 General
and Administrative Costs
The
costs
described in Section 2.6.1 and the charge described in Section 2.6.2 of this
Accounting Procedure.
3.1.14 Royalty,
License fee, surface rentals etc.
Royalty,
License fee, surface rentals, dead rents and other levies and taxes paid to
the
Government of India or State Government or local Government bodies or authority
or agency except income tax paid to the Government.
3.2
Costs
not recoverable and not allowable under the Contract
The
following costs and expenses shall not be recoverable or allowable (whether
directly as such or indirectly as part of any other charges or expense) for
cost
recovery and profit sharing purposes under the Contract :
(i)
costs
and
charges incurred before the Effective Date including costs in respect of
preparation, signature or ratification of this Contract;
Explanatory
Note:
It is
clarified that costs and expenditures, incurred prior to the Effective Date
but
after the execution of the Contract, for making statutory payments in connection
with the Petroleum Operations such as Petroleum Exploration License (PEL) fee
and application fee shall be allowed as Contract Cost and shall be cost
recoverable.
(ii) expenditures
in respect of any financial transaction to negotiate, float or otherwise obtain
or secure funds for Petroleum Operations including, but not limited to,
interest, commission, brokerage and fees related to such transactions, as well
as exchange losses on loans or other financing, whether between Affiliates
or
otherwise;
(iii) costs
of
marketing or transportation of Petroleum beyond the Delivery Point;
(iv)
expenditures
incurred in obtaining, furnishing and maintaining the guarantees required under
the Contract and any other amounts spent on indemnities with regard to
non-fulfillment of contractual obligations;
(v)
attorney's
fees and other costs and charges in connection with arbitration proceedings
and
sole expert determination pursuant to the Contract;
(vi)
fines,
interest and penalties imposed by Courts of law of the Republic of
India;
(vii) donations
and contributions;
(viii) expenditures
on creation of any partnership or joint venture arrangement;
(ix) amounts
paid with respect to non-fulfillment of contractual obligations;
(x)
costs
incurred as a result of failure to insure where insurance is required pursuant
to the Contract, or of failure to follow procedures laid down
by
an
insurance policy or where the Contractor has elected to self insure, or has
under-insured;
(xi)
costs
and
expenditures incurred as a result of misconduct or negligence of the Contractor;
and
(xii) expenses
of the members of the Management Committee as per Article 6.12.
3.3 Other
costs recoverable and allowable only with Management Committee
approval
Any
other
costs and expenditures not included in Section 3.1 or 3.2 of this Accounting
Procedure but which have been incurred by the Contractor for the necessary
and
proper conduct of Petroleum Operations shall be allowed to be recovered only
with the express prior approval in writing of the Management
Committee.
3.4 Incidental
Income and Credits
All
incidental income and proceeds received from Petroleum Operations under the
Contract, including but not limited to the items listed below, shall be credited
to the accounts under the Contract and shall be taken into account for cost
recovery, and Profit Petroleum sharing purposes in the manner described in
Articles 15 and 16 of the Contract:-
(i)
The
proceeds of any insurance or claim or judicial awards in connection with
Petroleum Operations under the Contract or any assets charged to the accounts
under the Contract where such operations or assets have been insured and the
premia charged to the accounts under the Contract;
(ii) Revenue
received from third parties for the use of property or assets, the cost of
which
has been charged to the accounts under the Contract;
(iii) Any
adjustment received by the Contractor from the suppliers/manufacturers or their
agents in connection with defective material, the cost of which was previously
charged by the Contractor to the accounts under the Contract;
(iv)
Rentals,
refunds or other credits received by the Contractor which apply to any charge
which has been made to the accounts under the Contract;
(v)
Prices
originally charged to the accounts under the Contract for materials subsequently
exported from the Republic of India without being used in Petroleum Operations
under the Contract;
(vi) Proceeds
from the sale or exchange by the Contractor of assets, plant or facilities,
the
acquisition costs of which have been charged to the accounts under the
Contract;
(vii) Legal
costs charged to the accounts under Section 3.1.11 of this Accounting Procedure
and subsequently recovered by the Contractor.
3.5 Non-Duplication
of Charges and Credits
Notwithstanding
any provision to the contrary in this Accounting Procedure, it is the objective
of the Parties that there shall be no duplication of charges or credits to
the
accounts under the Contract.
SECTION
4
RECORDS
AND INVENTORIES OF ASSETS
4.1
Records
4.1.1 The
Contractor shall keep and maintain detailed records of property and assets
in
use for or in connection with Petroleum Operations under the Contract in
accordance with normal practices in exploration and production activities of
the
international petroleum industry. Such records shall include information on
quantities, location and condition of such property and assets, and whether
such
property or assets are leased or owned.
4.2 Inventories
4.2.1 The
Contractor shall:
(a)
not
less
than once every twelve (12) Months with respect to movable assets;
and
(b)
not
less
than once every three (3) Years with respect to immovable assets,
take
an
inventory of the assets used for or in connection with Petroleum Operations
in
terms of the Contract and address and deliver such inventory to the Government
together with a written statement of the principles upon which valuation of
the
assets mentioned in such inventory has been based.
4.2.2 The
Contractor shall give the Government at least thirty (30) days notice in writing
in the manner provided for in the Contract of its intention to take the
inventory referred to in Section 4.2.1 and the Government shall have the right
to be represented when such inventory is taken.
4.2.3 When
an
assignment of rights under the Contract takes place, a special inventory shall
be taken by the Contractor at the request of the assignee provided that the
cost
of such inventory is borne by the assignee and paid to the
Contractor.
4.2.4 In
order
to give effect to Article 27 of the Contract, the Contractor shall provide
the
Government with a comprehensive list of all relevant assets when requested
by
the Government to do so.
SECTION
5
PRODUCTION
STATEMENT
5.1 From
the
date of first production of Petroleum from the Contract Area the Contractor
shall submit a monthly Production Statement to Government showing the following
information separately of each producing Field and in aggregate for the Contract
Area:
5.1.1 The
quantity of Crude Oil and Condensate produced and saved.
5.1.2 The
quality and characteristics of such Crude Oil and Condensate produced and
saved.
5.1.3 The
quantity of Associated Natural Gas and Non Associated Natural Gas produced
and
saved.
5.1.4 The
quality, characteristics and composition of such Natural Gas produced and saved
separately.
5.1.5 The
quantities of Crude Oil, Condensate and Natural Gas used for the purposes of
carrying on drilling and production operations and pumping to field storage,
as
well as quantities re-injected.
5.1.6 The
quantities of Crude Oil, Condensate and Natural Gas unavoidably
lost.
5.1.7 The
quantities of Natural Gas flared and vented.
5.1.8 The
size
of Petroleum stocks held on the first day of the Month in question.
5.1.9 The
size
of Petroleum stocks held on the last day of the Month in question.
5.1.10 The
quantities of Natural Gas reinjected into the Petroleum Reservoir.
5.1.11 The
number of days in the Month during which Petroleum was produced from each
Field.
5.1.12
The
Gas-Oil ratio for each Reservoir and Field for the relevant Month.
5.1.13 Water
production, water injection and Reservoir pressure data for each Reservoir
and
Field.
5.2
All
quantities shown in this Statement shall be expressed in both volumetric terms
(barrels of Oil and cubic metres of Gas) and in the case of Oil in weight
(metric tonnes).
5.3 For
the
purpose of reporting Field production quantities pursuant to this Section,
the
Contractor shall agree with the Management Committee on the exact area to be
designated as Development Area.
5.4
The
Government may direct in writing that the Contractor include other reasonable
particulars relating to the production of Petroleum in its monthly Production
Statement, and the Contractor shall comply with such direction.
5.5 The
Production Statement for each Month shall be submitted to Government no later
than fifteen (15) days after the end of such Month.
SECTION
6
VALUE
OF PRODUCTION AND PRICING STATEMENT
6.1 The
Contractor shall, for the purposes of Article 19 of the Contract, prepare a
Statement providing calculations of the value of Crude Oil and Condensate
produced and saved during each Month. This Statement shall contain the following
information:
6.1.1 The
quantities, prices and receipts realised therefor by the Contractor as a result
of sales of Crude Oil and Condensate to third parties made during the Month
in
question.
6.1.2 The
quantities, prices and receipts realised therefor by the Contractor as a result
of sales of Crude Oil and Condensate made during the Month in question, other
than to third parties, if any.
6.1.3 The
quantities of Crude Oil and Condensate appropriated by the Contractor to
refining or other processing without otherwise being disposed of in the form
of
Crude Oil or Condensate.
6.1.4 The
value
of stocks of Crude Oil and Condensate on the first day of the Month in
question.
6.1.5 The
value
of stocks of Crude Oil and Condensate on the last day of the Month in
question.
6.1.6 The
percentage volume of total sales of Crude Oil and Condensate made by the
Contractor during the Month that are Arms Length Sales to third
parties.
6.1.7 Information
available to the Contractor, insofar as required for the purposes of Article
19
of the Contract, concerning the prices of competitive crude oils produced by
the
main petroleum producing and exporting countries including contract prices,
discounts and premia, and prices obtained on the spot markets.
6.2
The
Contractor shall, for the purpose of Article 21 of the Contract, prepare a
Statement providing calculations of the value of Associated Natural Gas and
Non
Associated Natural Gas produced, flared internally used, saved and sold during
each Month. This Statement shall contain all information of the type specified
in Section 6.1 for Crude Oil as is applicable to Gas and such other relevant
information as may be required by Government.
6.3
The
Statements required pursuant to Sections 6.1 and 6.2 shall include a detailed
breakdown of the calculation of the prices of Crude Oil, Condensate, Associated
Natural Gas and Non Associated Natural Gas pursuant to the provisions of
Articles 19 and 21.
6.4
The
Value
of Production and Pricing Statement for each Month shall be submitted to
Government not later than thirty (30) days after the end of such
Month.
SECTION
7
STATEMENT
OF COSTS, EXPENDITURES AND RECEIPTS
7.1 The
Contractor shall prepare with respect to each Quarter a Statement of Costs,
Expenditures and Receipts under the Contract using mercantile basis of
accounting. The Statement shall distinguish between Exploration Costs,
Development Costs and Production Costs and shall separately identify all
significant items of costs and expenditure as itemised in Section 3 of this
Accounting Procedure within these categories. The Statement of receipts shall
distinguish between income from the sale of Petroleum and incidental income
of
the sort itemised in Section 3.4 of this Accounting Procedure. If the Government
is not satisfied with the degree of disaggregation within the categories, it
shall be entitled to request a more detailed breakdown. The Statement shall
show
the following:
7.1.1 Actual
costs, expenditures and receipts for the Quarter in question.
7.1.2 Cumulative
costs, expenditures and receipts for the Year in question.
7.1.3 Latest
forecast of cumulative costs, expenditures and receipts at the Year
end.
7.1.4 Variations
between budget forecast and latest forecast and explanations
thereof.
7.2
The
Statement of Costs, Expenditures and Receipts of each Quarter shall be submitted
to Government not later than thirty (30) days after the end of such
Quarter.
SECTION
8
COST
RECOVERY STATEMENT
8.1
The
Contractor shall prepare with respect to each Calendar Quarter a Cost Recovery
Statement containing the following information:
8.1.1
Unrecovered
Contract Costs carried forward from the previous Quarter, if any.
8.1.2
Contract
Costs for the Quarter in question.
8.1.3 Total
Contract Costs for the Quarter in question (Section 8.1.1 plus Section
8.1.2).
8.1.4
Quantity
and value of Cost Petroleum taken and disposed of by the Contractor for the
Quarter in question.
8.1.5
Contract
Costs recovered during the Quarter in question as per Article 15.
8.1.6 Total
cumulative amount of Contract Costs recovered up to the end of the Quarter
in
question.
8.1.7
Amount
of
Contract Costs to be carried forward into the next Quarter.
8.2 The
Cost
Recovery Statement for each Quarter shall be submitted to Government not later
than thirty (30) days after the end of such Quarter.
SECTION
9
PROFIT
SHARING STATEMENT
9.1 The
Contractor shall prepare with respect to each Quarter a Profit Sharing Statement
containing the following information:
9.1.1 The
calculation of the applicable net cash flows as defined in Appendix D for the
Quarter in question.
9.1.2 The
value
of the Investment Multiple applicable in the Quarter in question.
9.1.3
Based
on
Section 9.1.2 and Article 16, the appropriate percentages of Profit Petroleum
for the Government and the Contractor in the Quarter in question.
9.1.4
The
total
amount of Profit Petroleum to be shared between the Government and the
Contractor in the Quarter in question.
9.1.5 Based
on
Sections 9.1.3 and 9.1.4, the amount of Profit Petroleum due to the Government
and the Contractor as well as to each constituent of the Contractor in the
Quarter in question.
9.1.6 The
actual amounts of Petroleum taken or payment received by Government and the
Contractor as well as by each constituent of the Contractor during the Quarter
in question to satisfy their entitlements pursuant to Section
9.1.5.
9.1.7
Adjustments
to be made, if any, in future Quarters in the respective amounts of Profit
Petroleum due to the Government and the Contractor as well as to each
constituent of the Contractor on account of any differences between the amounts
specified in Sections 9.1.5 and 9.1.6, as well as any cumulative adjustments
outstanding from previous Quarters.
9.2
The
Profit Sharing Statement shall be submitted to Government not later than thirty
(30) days after the end of such Quarter. Any amount due or adjustment required
in profit sharing among the Parties shall be made within thirty (30) days from
the submission of the Statement to the Government.
SECTION
10
LOCAL
PROCUREMENT STATEMENT
10.1 In
furtherance of the obligation in Article 23 of the Contract for the Contractor
to give preference to the procurement of Indian goods and services, the
Contractor shall prepare in respect of each Year a local procurement statement,
containing the following information:
(a) The
amount of expenditure incurred by the Contractor directly, or indirectly through
its Subcontractors, on goods supplied, produced or manufactured in
India;
(b) the
amount of expenditure incurred by the Contractor directly, or indirectly through
its Subcontractors, on services provided by Indian entities;
(c) the
respective percentages that the expenditures recorded under items (a) and (b)
above represent of the Contractor’s total expenditures;
(d) a
detailed description of the procedures adopted during the Year to identify
and
purchase goods and services from Indian suppliers; and
(e) a
detailed exposition of how the local purchases for the Year as recorded under
items (a) and (b) above compared with the projected purchases included in the
budget statement for that Year (pursuant to Section 12.1.3), with explanations
for any significant variations;
10.2 The
local
procurement statement shall be submitted to the Government within sixty (60)
days after the end of each Year.
SECTION
11
END
OF YEAR STATEMENT
11.1
The
Contractor shall prepare a definitive End of Year Statement. The Statement
shall
contain aggregated information in the same format as required in the Production
Statement, Value of Production and Pricing Statement, Statement of Costs,
Expenditures and Receipts, Cost Recovery Statement and Profit Sharing Statement,
but shall be based on actual quantities of Petroleum produced, income received
and costs and expenditures incurred. Based upon this Statement, any adjustments
that are necessary shall be made to the transactions concerned under the
Contract.
[Explanation
: End of year Statement shall further contain the item wise justification for
the variation between the actual costs and expenditure incurred and included
in
the statement of costs, expenditure and receipts vis-à-vis the Budgets for
corresponding line items.]
11.2
The
End
of Year Statement for each Year shall be submitted to Government within ninety
(90) days
of
the end of such Year.
SECTION
12
BUDGET
STATEMENT
12.1
The
Contractor shall prepare a Budget Statement for each Year. This Statement shall
distinguish between budgeted Exploration Costs, Development Costs and Production
Costs and shall show the following:
12.1.1 Forecast
costs, expenditures and receipts for the Year in question.
12.1.2
A
schedule showing the most important individual items of total costs,
expenditures and receipts for the said Year.
12.1.3 Estimated
amounts to be spent in the Year on procuring goods and services in
India.
12.2
The
Budget Statement shall be submitted to Government with respect to each Year
not
less than ninety (90) days before the start of the said Year provided that
in
the case of the Year in which the Effective Date falls, the Budget Statement
shall be submitted within ninety (90) days of the Effective Date.
APPENDIX-D
CALCULATION
OF THE INVESTMENT MULTIPLE
FOR
PRODUCTION SHARING PURPOSES
1.
In
accordance with the provisions of Article 16, the share of the Government and
the Contractor respectively of Profit Petroleum from the Contract Area in any
Year shall be determined by the Investment Multiple earned by the Contractor
from the then Petroleum Operations at the end of the preceding Year. These
measures of profitability shall be calculated on the basis of the appropriate
net cash flows as specified in this Appendix D.
2.
The
"Net
Cash Income" of the Contractor from their Petroleum Operations in any particular
Year is the aggregate value for the Year of the following:
(i) Cost
Petroleum entitlement of the Contractor as provided in Article 15;
plus
(ii) Profit
Petroleum entitlement of the Contractor as provided in Article 16;
plus
(iii) the
Contractor’s all incidental income (of the type specified in section 3.4 of the
Accounting Procedure) arising from Petroleum Operations;
less
(iv) the
Contractor’s Production Costs and royalty payments (Article 17) incurred on or
in the Contract Area;
3. The
"Investment" made by the Contractor in the Contract Area in any particular
Year
is the aggregate value for the Year of:
(i)
the
Contractor’s Exploration Costs incurred on or in the Contract Area pursuant to
Article 15
plus
(ii) the
Contractor’s Development Costs incurred on or in the Contract Area.
4.
For
the
purposes of the calculation of the Investment Multiple, costs or expenditures
which are not allowable as provided in the Accounting Procedure shall be
excluded from Contract Costs and be disregarded.
5.
The
Investment Multiple ratio earned by the Contractor as at the end of any Year
shall be calculated by dividing the aggregate value of the addition of each
of
the annual Net Cash Incomes (accumulated, without interest, up to and including
that Year starting from the Year in which Production Costs were first incurred
or Production first arose) by the aggregate value of the addition of each of
the
annual Investments (accumulated, without interest, up to and including that
Year
starting from the Year in which Exploration and Development Costs were first
incurred).
6.
Profit
Petroleum from the Contract Area in any Year shall be shared between the
Government and the Contractor in accordance with the value of the Investment
Multiple earned by the Contractor as at the end of the previous Year pursuant
to
Articles 16.2 to 16.5.
APPENDIX-E1
FORM
OF PARENT COMPANY FINANCIAL AND PERFORMANCE GUARANTEE
(to
be
furnished pursuant to Article 29.1 (b) of the Contract)
WHEREAS_____________________________________
a company duly organised and existing under the laws of___________________
having its registered office at____________________ (hereinafter referred to
as
'the Guarantor' which expression shall include its successors and assigns)
is
[the indirect owner of one hundred percent (100%) of the capital stock of XYZ
Company and direct owner of its parent company;] and
WHEREAS
XYZ Company is signatory to a Production Sharing Contract in respect of an
(offshore) (onshore) area identified as Block
___________________________________ (hereinafter referred to as 'the Contract')
made between the Government of India (hereinafter referred to as 'the
Government'), and XYZ Company (hereinafter referred to as XYZ which expression
shall include its successors and permitted assigns); and
WHEREAS
the Guarantor wishes to guarantee the performance of XYZ Company or its
Affiliate Assignee under the Contract as required by the terms of the
Contract;
NOW,
THEREFORE this Deed hereby provides as follows:
1.
The
Guarantor hereby unconditionally and irrevocably guarantees to the Government
that it will make available, or cause to be made available, to XYZ Company
or
any other directly or indirectly owned Affiliate of XYZ Company to which any
part or all of XYZ Company's rights or interest under the Contract may
subsequently be assigned ('Affiliate Assignee'), financial, technical and other
resources required to ensure that XYZ Company or any Affiliate Assignee can
carry out its obligations as set forth in the Contract.
2. The
Guarantor further unconditionally and irrevocably guarantees to the Government
the due and punctual compliance by XYZ Company or any Affiliate Assignee, of
any
obligations of XYZ Company or any Affiliate Assignee under the
Contract.
3. The
Guarantor hereby undertakes to the Government that if XYZ Company, or any
Affiliate Assignee, shall, in any respect, fail to perform its obligations
under
the Contract or commit any breach of such obligations, then the Guarantor shall
fulfil or cause to be fulfilled the said obligations in place of XYZ Company
or
any Affiliate Assignee, and will indemnify the Government against all
losses,
damages,
costs, expenses or otherwise which may result directly from such failure to
perform or breach on the part of XYZ Company.
4. This
guarantee shall take effect from the Effective Date and shall remain in full
force and effect for the duration of the said Contract and thereafter until
no
sum remains payable by XYZ Company, or its Affiliate Assignee, under the
Contract or as a result of any decision or award made by any expert or arbitral
tribunal thereunder.
5. This
guarantee shall not be affected by any change in the articles of association
and
bye-laws of XYZ Company or the Guarantor or in any instrument establishing
the
Company or Guarantor.
6. The
liabilities of the Guarantor shall not be discharged or affected by (a) any
time
indulgence, waiver or consent given to XYZ Company; (b) any amendment to the
Contract or to any security or other guarantee or indemnity to which XYZ Company
has agreed; (c) the enforcement or waiver of any terms of the Contract or of
any
security, other guarantee or indemnity; or (d) the dissolution, amalgamation,
reconstruction or reorganisation of XYZ Company.
7. This
guarantee shall be governed by and construed in accordance with the laws of
India.
IN
WITNESS WHEREOF the Guarantor, through its duly authorised representatives,
has
caused its seal to be duly affixed hereto and this guarantee to be duly executed
the _____________ day of _________________ 200_.
APPENDIX-E2
FORM
OF COMPANY FINANCIAL AND PERFORMANCE GUARANTEE
(to
be
furnished pursuant to Article 29.1 (b) of the Contract)
WHEREAS____XYZ
Company ______________________________________ duly organised and existing
under
the laws of___________________ having its registered office
at_________________________ (hereinafter referred to as 'the Guarantor' which
expression shall include its successors and assigns) is signatory to a
Production Sharing Contract in respect of an (offshore) (onshore) area
identified as Block ___________________________________ (hereinafter referred
to
as 'the Contract') made between the Government of India (hereinafter referred
to
as 'the Government'), and XYZ Company (hereinafter referred to as XYZ which
expression shall include its successors and permitted assigns); and
WHEREAS
the Guarantor wishes to guarantee its performance under the Contract as required
by the terms of the Contract;
NOW,
THEREFORE this Deed hereby provides as follows:
1.
The
Guarantor hereby unconditionally and irrevocably guarantees to the Government
that it will make available, or cause to be made available, financial, technical
and other resources required to ensure that XYZ Company can carry out its
obligations as set forth in the Contract.
2. The
Guarantor further unconditionally and irrevocably guarantees to the Government
the due and punctual compliance by it of any obligations under the
Contract.
3. The
Guarantor hereby undertakes to the Government that it shall fulfill or cause
to
be fulfilled all its obligations under the Contract, and if it fails to perform
its obligations under the Contract or commits any breach of such obligations,
then it shall indemnify the Government against all losses, damages, costs,
expenses or otherwise which may result directly from such failure to perform
or
breach on its part.
4. This
guarantee shall take effect from the Effective Date and shall remain in full
force and effect for the duration of the said Contract and thereafter until
no
sum remains payable by XYZ Company, under the Contract or as a result of any
decision or award made by any expert or arbitral tribunal
thereunder.
5. This
guarantee shall not be affected by any change in the articles of association
and
bye-laws of XYZ Company or in any instrument establishing the Company.
6. The
liabilities of the Guarantor shall not be discharged or affected by (a) any
time
indulgence, waiver or consent given to XYZ Company; (b) any amendment to the
Contract or to any security or other guarantee or indemnity to which XYZ Company
has agreed; (c) the enforcement or waiver of any terms of the Contract or of
any
security, other guarantee or indemnity.
7. This
guarantee shall be governed by and construed in accordance with the laws of
India.
IN
WITNESS WHEREOF the Guarantor, through its duly authorised representatives,
has
caused its seal to be duly affixed hereto and this guarantee to be duly executed
the _____________ day of _________________ 200__.
APPENDIX-F
PROCEDURE
FOR ACQUISITION OF GOODS AND SERVICES
I OBJECTIVES
The
objectives of these procedures are to:
| (a) |
ensure
that the goods and services acquired by the Operator for carrying
out the
Petroleum Operations are acquired at the optimum cost taking into
consideration all relevant factors including price, quality, delivery
time
and the reliability of potential
suppliers.
|
| (b) |
ensure
that goods and services are delivered in a timely manner taking into
consideration the consequences of delays in the acquisition of these
goods
and services on the project as a
whole.
|
| (c) |
ensure
that the provisions of Article 23 of the Contract are
implemented.
|
II PRINCIPLES
The
principles upon which these procedures are based are:
| (a) |
The
Parties must be satisfied that the Operator is working to an agreed
procedure for acquiring goods and services which is auditable and
in
accordance with the provisions of the
Contract.
|
| (b) |
The
Operator must have the ability to acquire goods and services expeditiously
so that the project schedules in respect of Approved Work Programmes
are
maintained.
|
III PROCEDURES
The
procedures to be adopted by the Operator for the acquisition of goods and
services shall be as follows:
|
Procedure
A
|
Procedure
B
|
Procedure
C
|
|
|
Applicable
to Exploration, Appraisal, Development and Production
operations
|
$
50,000 to less than $ 200,000
|
$
200,000 to less than $ 500,000
|
Equal
to or more than $ 500,000
|
For
contracts valued at less than US$ 5000
The
Operator will be at liberty to determine the procurement procedures and methods
to procure goods and services valued at less than US Dollars five thousand
(US$5000).
For
Contracts valued at US$ 5000 and above but less than US$
50,000
The
Operator will be at liberty to determine the preferred method of acquiring
goods
and services valued at US Dollars five thousand (US$ 5000) and above but less
than US Dollars fifty thousand (US$ 50,000) provided that at least three (3)
quotations from selected suppliers (including at least one (1) Indian supplier)
will be obtained. For items valued at greater than US Dollars twenty thousand
(US$ 20,000), Operator is required to report to the Operating Committee if
the
quote accepted exceed the lowest quote by more than twenty (20) percent.
Operator will promptly report to the Operating Committee the Operator’s reasons
for not selecting the lowest quote.
Procedure
A:
Operator
shall:
| (1) |
provide
the constituents of the Contractor with a list of all the entities
approved by the Operating Committee as per Appendix-F (V) for the
applicable category of the contract along with other entities, if
any,
from whom the Operator proposes to invite
tender;
|
| (2) |
add
to such list the entities whom other Party requests for adding within
five
(5) Business Days on receipt of such
lists;
|
| (3) |
if
and when any Party so requests, Operator shall evaluate any entity
listed
in (1) and (2) above to assure that entity is qualified as based
on the
qualification criteria agreed in accordance with Appendix-F(IV) to
perform
under the contract;
|
| (4) |
complete
the tendering process within a reasonable period of
time;
|
| (5) |
circulate
to all constituents of the Contractor a comparative bid analysis
stating
Operator’s choice of the entity for award of contract. Provide also
reasons for such choice in case entity chosen is not the lowest
bidder;
|
| (6) |
inform
all the constituents of the Contractor of the entities to whom the
contract has been awarded; and
|
| (7) |
upon
the request of a Party, provide such Party with a copy of the final
version of the contract awarded.
|
Procedure
B:
Operator
shall:
| (1) |
provide
the Parties with a list of all the entities approved by the Operating
Committee as per Appendix-F (V) for the applicable category of the
contract,
|
along
with other entities, if any, from whom the Operator proposes to invite
tender;
| (2) |
add
to such list the entities whom a Party requests for adding within
five (5)
Business Days on receipt of such
list;
|
| (3) |
if
and when any Party so requests, Operator shall evaluate any entity
listed
in (1) and (2) above to assure that entity is qualified as based
on the
qualification criteria agreed in accordance with Appendix-F (IV),
to
perform under the contract;
|
| (4) |
complete
the tendering procedure within a reasonable period of
time;
|
| (5) |
circulate
to all constituents of the Contractor a comparative bid analysis
stating
Operator’s choice of the entity for award of contract. Provide also
reasons for such choice in case the entity chosen is not the lowest
bidder. If the bid selected is not the lowest bid, obtain prior approval
of the Operating Committee for award of
contract;
|
| (6) |
award
the contract accordingly and inform all the members of the Management
Committee of the entities to whom the contract has been awarded;
and
|
| (7) |
upon
the request of a Party, provide such Party with a copy of the final
version of the contract awarded.
|
Procedure
C:
Operator
shall:
| (1) |
publish
invitations for parties to pre-qualify for the proposed contract
in at
least three (3) daily national Indian newspaper. Provide to Non-Operating
Companies, a list of responding parties and an analysis of their
qualifications for the contract being contemplated to be awarded.
Include
those who qualify, as per the prequalification criteria approved
as per
Appendix-F (IV) in the list of entities from whom Operator proposes
to
invite tender for the said
contract;
|
| (2) |
provide
the members of the Management Committee with a total list of all
the
entities selected as (1) above and all the entities approved by the
Operating Committee as per Appendix-F (V) for the applicable category
of
the contract, along with other entities, if any, from whom the Operator
proposes to invite tender;
|
| (3) |
add
to such entities whom a Party requests for adding within five (5)
Business
Days on receipt of such list;
|
| (4) |
if
and when any Party so requests, Operator shall evaluate any entity
listed
in (2) and (3) above to assure that entity is qualified as based
on the
qualification criteria agreed in accordance with Appendix-F(IV),
to
perform under the contract;
|
| (5) |
prepare
and dispatch the tender documents to the entities as finally listed
and to
Parties;
|
| (6) |
after
the expiration of the period allowed for tendering, consider and
analyse
the details of all bids received;
|
| (7) |
prepare
and circulate to the constituents of the Contractor a comparative
bid
analysis stating Operator’s recommendation as to the entity to whom the
contract
|
should
be
awarded, the reasons therefor, and the technical, commercial and contractual
terms to be agreed upon;
| (8) |
obtain
the approval of the Operating Committee to the recommended bid. However,
failing Operating Committee approval any Company may refer the issue
to
the Management Committee for decision;
and
|
| (9) |
award
the contract accordingly and upon the request of a Party, provide
such
Party with a copy of the final version of the
contract;
|
| IV. |
A
set of vendor qualifications criteria for each major category
contract/supply shall be proposed by the Operator and approved by
the
Operating Committee within thirty (30) days of its submission. In
the
event the Operating Committee fails to approve vendor qualification
criteria within thirty (30) days of the date the same is first submitted
by the Operator, the matter shall be referred to the Management Committee
for decision. The Operating Committee may revise the qualification
criteria.
|
| V. |
It
is anticipated that, in order to expedite joint operations, contracts
will
be awarded to qualified vendors/contractors who are identified as
approved
vendors for the specified activities. A list of such approved vendors
shall first be established as
follows:
|
Operator
shall:
| (1) |
provide
the constituents of the Contractor with a list of the entities from
whom
Operator proposes to invite tender for contracts;
and
|
| (2) |
add
to such list entities whom a Company requests for adding within fourteen
(14) days on receipt of such list; and
|
| (3) |
obtain
approval of the Operating Committee. Such list shall thereafter be
maintained by the Operator. The Operating Committee may add to or
delete
vendors from such list.
|
APPENDIX-G
PERFORMA
OF BANK GUARANTEE TO BE PROVIDED
PURSUANT
TO ARTICLE 29
1. In
consideration of Government of India (hereinafter referred to as “Government”)
having entered into a Production Sharing Contract for the block ________dated
________ (hereinafter referred to as “Contract”, which expression shall include
all the amendments agreed to between the Government and the Contractor,
thereto), with M/s __________________ having its registered office at
_____________ (hereinafter referred to as ___________, which expression unless
repugnant to the context or meaning thereof include all its successors,
administrators, executors and assigns), which is a constituent of the
Contractor, and the Government have agreed that the ____________ Company shall
furnish to Government a bank guarantee (hereinafter referred to as “Guarantee”)
towards its obligations as provided in the Contract for US$(for Foreign
Companies)/US$ equivalent in Indian Rupees (for Indian Companies) for the
performance of its obligations under the Contract.
| 2. |
We
__________(name of the Bank) registered under the Law of __________
and
having its registered office at _____________ (hereinafter referred
to as
“the Bank”, which expression shall unless repugnant to the context or
meaning thereof includes all its successors, administrators, executors
and
assigns) do hereby guarantee and undertake to pay immediately on
the fist
demand in writing and any/all money(s) to the extent of Indian Rupees/US$
_______(in figures) and (Indian Rupees/US$ ______ in words) without
any
demur, reservation, contest or protest and/or without any reference
to the
Company. Any such demand made by Government on the Bank by serving
a
written notice shall be conclusive and binding, without any proof,
on the
Bank as regards the amount due and payable, notwithstanding any dispute(s)
pending before any court, tribunal, arbitrator, sole expert, conciliator
or any other authority and/or any other matter or thing whatsoever,
as
liability under these presents being absolute and unequivocal. We
agree
that the Guarantee herein contained shall be irrevocable and shall
continue to be enforceable until it is discharged by Government in
writing. This Guarantee shall not be determined, discharged or affected
by
the liquidation, winding up, dissolution or insolvency of the Contractor
and shall remain valid, binding and operative against the
Bank.
|
3. The
Bank
also agree that Government at its option shall be entitled to enforce this
Guarantee against the Bank as a principal debtor, in the first instance, without
proceeding against the __________ Company and notwithstanding any security
or
other guarantee that Government may have in relation to the ____________
Company’s liabilities.
4. The
Bank
further agree that Government shall have fullest liberty without our consent
and
without affecting in any manner our obligations hereunder to vary any
of the terms and conditions of the said Contract or to extend time of performance by the said
__________ Company from time to time or to postpone for any time or from time
to
time exercise of any of the powers vested in Government against the said
___________ Company and to forebear or enforce any of the terms and conditions
relating
to the said Contract and we shall not be relieved from our liability
by
reason
of any such variation, or extension being granted to the said __________ Company
or
for
any forbearance, act or omission on the part of Government or any
indulgence
by
Government to the said ___________ Company or any such matter or thing
whatsoever which under the law relating to sureties would, but for this
provision, have effect of so relieving us.
5. The
Bank
further agree that the Guarantee herein contained shall remain in full
force
during
the period that is taken for the performance of the Contract and all dues of
Government under or by virtue of this Contract have been fully paid and its
claim satisfied or discharged or till Government discharges this Guarantee
in
writing, whichever is earlier.
6. This
Guarantee shall not be discharged by any change in our constitution, in the
constitution of _________ Company or that of the Contractor.
7. The
Bank
confirm that this Guarantee has been issued with observance of appropriate
laws
of the country of issue.
8. The
Bank
also agree that this Guarantee shall be governed and construed in accordance
with Indian Laws and subject to the exclusive jurisdiction of Indian courts
at
_________, India.
9. Notwithstanding
any thing contained herein above, our liabilities under this Guarantee is
limited to Indian Rupees/US$ ____________(in figures) Indian Rupees/US$
_______________ (in words) and our Guarantee shall remain in force upto and
including sixty (60) days after the expiry date/extended date. Any claim
under
this Guarantee must be received before the expiry of sixty (60) days or
before the
expiry of sixty (60) days from the extended date if any. If no such claim has
been
received
by us within sixty (60) days after the said date/extended date the Government’s
right under this will cease. However, if such a claim has been received by
us
within and upto sixty (60) days after the said date/extended date, all
the
Government’s rights under this Guarantee shall be valid and shall not cease
until
we have
satisfied that claim.
In
witness whereof, the Bank through its authorised officers has set its hand
and
stamp on this _______ day of __________ 200_ at ______________.
The
seal
of___________________ was hereto duly affixed by______________ this__________
day of ___________200_ in accordance with its bye-laws and this Guarantee was
duly signed by_________________ and ________________ as required by the said
bye-laws.
________________________
________________________
Secretary
President & Director
Witness:
Appendix H
Cost Estimates
Page 1
Appendix H
Cost Estimates
Page 2
Appendix H
Cost Estimates
Page 3
Appendix H
Cost Estimates
Page 4
Appendix H
Cost Estimates
Page 5
