EXHIBIT 10.38
CONTRACT NO 1478
RENDERING OF SERVICES FOR ACCEPTANCE, METERING AND TREATMENT OF OIL
Khanty-Mansiysk October 10, 2000
This Contract is entered into by and between Open Joint Stock Company
"Khantymansiyskneftegasgeologiya", represented by Director General Xxxxxx
Xxxxxxxxxx Xxxxxxxx, acting pursuant to its Charter, hereinafter referred to as
"Customer" and LLC "LUKOIL-Western Siberia" represented by Xxxxxxx Xxxxxxxxxx
Pustovalov, Transportation Enterprise "Uraineftegas" Director General, acting
pursuant to Power of Attorney No 5580 dated June 9, 2000 hereinafter referred
to as "Contractor".
1. SUBJECT
1.1. The Contractor shall render services for acceptance of untreated oil,
its treatment, transportation and metering for delivery to OJSC
"Sibnefteprovod", AK "Transneft", as may be requested by the Customer, and the
Customer shall pay for such services under the terms and conditions stipulated
herein.
1.2. In terms of the present Contract untreated oil shall be deemed to
denote untreated oil extracted by the Customer from xxxxx located in the
Customer's Potanai-Kartopinskaya License Area (hereinafter "Xxxxx").
2. RIGHTS AND OBLIGATIONS
2.1. The Customer shall deliver untreated oil to the Contractor through
"Uraineftegas" in-field oil gathering systems.
2.2. The Contractor shall deliver the Customer's treated stock-tank oil
through the Contractor's oil metering unit No.912 (hereinafter "Contractor's
OMU").
2.3. Transportation of stock-tank oil to the points of sale shall be
carried out by the Customer on his own under separate contracts with AK
"Transneft" for 2001.
2.4. The Contractor shall provide to the Customer stock-tank crude for its
further transportation, its quality corresponding to State Standards (GOST)
9965-76 including amendment No. 1 "Degree of Oil Treatment for Oil Refineries",
Technical Specifications (TU) 00-0000-00 "Russian Export Oil". The Contractor
shall submit a standard certificate of quality for each lot of delivered oil.
2.5. The Contractor shall undertake and ensure the provision of the
services in a safe and efficient manner in accordance with all applicable laws
and regulations, including those of the Russian Federation and KMAO.
2.6. The Customer has, and shall maintain in force, valid rights to
explore and develop the Potanai-Kartopinskoye field, and all the Customer's
xxxxx are located in its licensed area.
2.7. The Contractor shall ensure the acceptance, treatment and
transportation of the Customer's oil produced at the Potanai-Kartopinskoye
licensed area during 2001 in the amount of seven hundred and forty thousand
(740,000) tons.
3. OIL METERING
3.1. The metering of untreated oil delivered by the Customer to the
Contractor shall take place at the Customer's OMU. The Customer's OMU flowchart
shall meet the requirements of "OMU Design Regulations", be approved by the
experts' panel of the Flow Metering Research Institute (VNIIR), RF State
Standards Committee, and agreed with the Contractor. The Customer shall be
responsible for the adequate compliance with the provisions stipulated under
this item.
3.2. The metering of untreated oil shall be done in accordance with the
"Procedure for Acceptance of Oil Extracted by OAO KMNGG from the
Potanai-Kartopinskoye field in terms of Quantity and Quality" (1998) and
"Regulations for Operational and Commercial Metering of Crude Oil at Oil
Producing Enterprises" (1995) agreed with VNIIR Institute and also in accordance
with the "Instructions on Oil Metering Unit Operation" agreed with the
Contractor.
3.3. An application for acceptance, treatment, metering and transportation
of oil shall be presented on a monthly basis not later than on the 25 th day of
the previous month. The Customer shall timely advise the Contractor by wire
transferred message or by wireless transmission about all changes in the well
mode operations, which may result in changes of volumes of untreated oil
extracted.
3.4. The Customer and the Contractor shall appoint by means of internal
acts their official representatives to control stock-tank oil metering.
3.5. Three times per month (every ten days) in accordance with agreed time
schedule of checks, the official representatives of the Parties hereto shall
execute an Act of gage-meter calibration and Interim DAAs that shall be signed
by the Parties hereto.
3.6. Operational testing of turbine gage flow meter by the calibrator
shall be exercised pursuant to the time schedule of checks agreed with the
Contractor and signed by the authorized representatives of the Parties hereto.
Time intervals between the operating tests (checks) shall be set in accordance
with Annex 9 "Temporary Regulations for Oil Weight Determination". The Checks
Schedule and Oil DAA forms are attached hereto and are considered an integral
part of this Contract. (Schedules A and B).
3.7. As may be agreed with the Customer or otherwise, the Contractor has
the right to conduct inspection tests of the Customer's OMU with respect to the
reconciliation checks of volumes of untreated oil, volumes of such oil pumped
through, as well as of representative oil sampling followed by execution of
bi-lateral acts duly signed by executive officers of the Parties hereto.
3.8. Estimate of ballast shall be performed in accordance with "Procedure
for Acceptance of Oil Extracted by OAO KMNGG from the Potanai-Kartopinskoye
field in terms of Quantity and Quality" (1998) and "Regulations for Operational
and Commercial Metering of Crude Oil at Oil Producing Enterprises" (1995) on the
basis of the Contractor's lab analyses of the delivered crude oil samples. The
sampling of oil shall be performed by means of the sampler installed at the
Customer's oil reservoir at BPS "Lovinka" and on the basis of the readings of
the flow meter installed at BPS "Potanaiskoye".
3.9. Commercial DAAs of stock-tank oil shall be executed by official
representatives of the Parties hereto three times a month (every ten days)
subject to interim DAAs of untreated oil. Commercial DAAs shall take into
account the adjustment due to ballast content of oil determined by the daily lab
analysis of untreated oil, as well as the adjustments due to gauge flow meter
error reflected in the Registration Forms (Graphs) of the Customer's OMU
performance if such error exceeds the established limits.
3.10. The authorized representatives of the Parties hereto shall exercise,
on a quarterly basis, agreed reconciliation of volumes and weight of oil
delivered during the quarter. Such reconciliation shall be followed by the
execution of a bilateral Reconciliation Act. The delivered oil weight shall be
adjusted by the Contractor on the basis of such Reconciliation Act.
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3.11. Oil delivery into "Sibnefteprovod" shall be exercised by the
Customer under separate contracts irrespective of the Contractor.
4. PAYMENT PROCEDURES
4.1 The Customer shall pay for the services rendered against the invoice
presented by the Contractor within 5 banking days from the date of receiving the
invoice to the following account of the Contractor:
4.2. If agreed by the Contractor, the payment for the services rendered
may be made in cash, liquid securities or as an offset against
counter-deliveries of material assets performed by the Customer to the
Contractor under a separate contract.
4.3 The estimate of the Contractor's cost of services being specified in
Schedule C hereto, as approved by the Contractor, constitutes an integral part
of this Contract. The estimate may be revised by the Contractor as a result of
changes in prices and rates for materials, electricity, heat and other services.
Such revised estimate shall be delivered to the Customer along with the
documents confirming the change in prices and rates not later than 10 days
before the beginning of the month in which the change in the cost of services
shall apply. Modified costs shall apply from the month following the month in
which the Customer received the revised estimate.
4.4 The Contractor, at the Customer's request, shall submit the documents
confirming the change in prices and rates specified in Article 4.3.
4.5 The environmental damage caused by the Customer's oil and gas
gathering system pipelines break-down resulting in oil spills shall be remedied
by the Customer subject to the relevant documents of the authorized bodies. The
Customer shall reimburse the Contractor for the expenses incurred for emissions
of harmful substances resulting from gas flaring, making payments pro rata the
volumes of the Customer's oil delivered for its treatment at the Contractor's
thermochemical plant.
5. CONTRACT DURATION
5.1. This Contract shall take effect on January 1, 2001 and shall remain
in force through December 31, 2001.
6. OBLIGATIONS OF THE PARTIES. SPECIAL CONDITIONS
6.1. In case the payment for the Contractor's services is delayed by the
Customer, the Contractor shall have the right to claim penalties in the amount
of 0.1% from the delayed sum for each day of delay.
6.2. To ensure the timely payment for the services rendered by the
Contractor, the Contractor shall withhold oil in the amount equal to the cost of
the services rendered by the Contractor.
6.3. In case of non-fulfillment or inadequate execution by the Contractor
of his obligations under this Contract, the Contractor shall reimburse the
Customer for all the losses and profit loss.
6.4. In case of untimely or improper acceptance of oil through the
Contractor's fault, the Contractor shall pay the penalties to the Customer in
the amount of 0.1% of the price of oil untimely accepted for each day of delay.
6.5. In case AK "Transneft" imposes restrictions on oil acceptance, the
Customer shall pay to the Contractor for the storage of oil in accordance with
the current "Transneft" rate multiplied by 1.2. Thus the
volumes of oil delivered by the Customer to the Contractor shall be regarded
as oil delivered to the Contractor for storage.
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7. CONFIDENTIALITY
7.1. All information supplied by the Customer to the Contractor shall be
considered confidential, and shall not disclosed to third parties without the
prior written consent of the Customer.
7.2. The obligation of confidentiality shall not extend to information in
the public domain, which is required by applicable law to be disclosed;
provided, however, that the Contractor shall notify the Customer in advance of
any such request for disclosure and of the nature of the information to be
disclosed to meet such request.
8. ASSIGNMENT
8.1. Neither Party to this Contract shall have the right to assign or
transfer its rights or obligations under this Contract without the prior written
consent of the other Party; provided, however, that the Customer shall have the
right to assign its rights and obligations hereunder to its subsidiary or
affiliated company or any third party without the consent of the Contractor
subject to advance written notice.
9. APPLICABLE LAW; ARBITRATION
9.1. This Contract shall be governed by and construed in accordance with
the law of the Russian Federation, including, but not limited to, the
Khanty-Mansiysk Autonomous Okrug legislation and other industry regulations.
9.2. All disputes and differences arising in connection with this Contract
shall be settled in the first instance by mutual negotiation between the Parties
hereto.
9.3. In the event of disputes all claims shall be considered within 30
days.
9.4. In the event that it is not possible to settle the dispute by means
of negotiations within 30 days after receipt of a claim, such dispute may be
referred to the arbitration court of the Khanty-Mansiysk Autonomous Okrug for
consideration in accordance with the procedure for the settlement of disputes.
9.5. As regards any other provisions that are not stipulated by this
Contract, the Civil Code of the Russian Federation shall apply.
10. FORCE-MAJEURE
10.1. Neither Party to this Contract shall be considered in breach of this
Contract if, and for so long as, prevented from performing by any condition of
force-majeure, which is beyond the control and without the negligence of the
party so affected. Force-majeure shall include riots, wars (declared and
undeclared), civil disturbances, prohibitory resolutions of state bodies issued
after the execution date of this Contract, acts of God (excluding weather
conditions) and other acts or events which the Party could not reasonably
prevent. The Party whose performance hereunder is affected by the event of
force-majeure shall inform the other Party about the occurrence of such
force-majeure event within 3 days of its occurrence; the failure of a Party to
so notify the other Party within such 3-day period shall prevent this Party from
referring to this event of force-majeure as an excuse for the performance of its
obligations hereunder.
A force-majeure event subject to its type and nature should be confirmed
by an official document issued by the body, which is authorized to execute such
documents in accordance with its powers and rights; otherwise the parties shall
not refer to force-majuere event.
10.2. During the period of an event of force-majeure, either Party shall
make its best efforts to perform the work and otherwise execute the terms of the
Contract.
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10.3. Either Party shall remain solely liable for its own property and
personnel in the event of force-majeure, and in the event that work under the
Contract can not be completed due to the force-majeure events, all the expenses
incurred by either Party prior to the occurrence of such events shall be borne
by such Party severally.
11. TERMINATION
11.1. This Contract may terminate in the following instances:
a. If the Contractor or the Customer are at any time in material breach
of their obligations under the Contract, which breach the other
party has not remedied or commenced to remedy within thirty (30)
days from the date of receipt of the written notice from the other
Party specifying such breach.
b. If an event of force-majeure continues for a period in excess of
thirty (30) consecutive days, either Party may terminate the
Contract by giving 5-days' prior written notice to the other Party.
c. If mutually agreed in writing by the Contractor and the Customer.
d. If the Customer failed to make timely payments for the rendered
services within two consecutive months.
11.2. The grounds for termination specified in Article 11.1 hereinabove
shall be the exclusive grounds for the termination of this Contract, and any
attempted termination of this Contract by either Party for reasons other than
those specified in Article 11.1 hereinabove shall be a breach of this Contract,
subjecting the breaching party to liability in accordance with Russian law.
12. NOTICES
12.1. All notices required herein to be given shall be deemed to have been
properly given if made in writing and delivered in person or by registered mail
or sent by facsimile (with confirmation of receipt) to the respective Party at
the address indicated below:
CUSTOMER:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
000000, Xxxxxx Tyumen Oblast, Khanty Mansiysk Autonomous Okrug
Khanty Mansisyk, 00 Xxxxxxxxx Xxxxxx
Attention: Xxxxxx Xxxxxxxx
Fax:
CONTRACTOR:
TE "URAINEFTEGAS" LLC "LUKOIL-WESTERN XXXXXXX"
000000, Xxxxxx-Xxxxxxxxxx Autonomous Okrug,
000-x Xxxxx Xx., Xxxx Xxxx.
Xxx.: Xxxxxxx Xxxxxxxxxx
Fax:
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13. MISCELLANEOUS
13.1. Any amendments to this Contract shall be effective only if executed
in writing by each of the Parties hereto.
13.2. This Contract, which incorporates Schedules A, B and C hereto,
constitutes the entire agreement between the Parties, and supersedes all prior
agreements, whether written or oral, between the Parties regarding the subject
matter hereof.
CUSTOMER: CONTRACTOR:
OJSC "KHANTYMANSIYSKNEFTEGAZGEOLOGIA" LLC "LUKOIL - WESTERN SIBERIA"
/s/ Xxxxxx Xxxxxxxx /s/ M.F. Pustavalov
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Xxxxxx Xxxxxxxx X.X. Xxxxxxxxxx
Director General "Uraineftegas" Director General
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