I - -I , I I I . .. -- SOUTHWE~t-SALtPbND B~ijCJ( . I - • .:~.! ..• ' •••••.•. 2014 I TABLE OF CONTENTS ARTICLE PAGE 1. DEFINITIONS 3 2. SCOPE OF THE AGREEMENT, INTERESTS 10 OF THE PARTIES AND CONTRACT AREA 3. EXPLORA TION PERIOD 14 4. MINIMUM EXPLORATION PROGRAMME 16 5. RELINQUISHMENT 19 6. JOINT MANAGEMENT COMMITTEE 20 7. RIGHTS AND OBLIGA nONS OF CONTRACTOR ANDGNPC 24 8. COMMERCIALITY 28 9. SOLE RISK ACCOUNT 34 10. SHARING OF CRUDE OIL 37 11. MEASUREMENT AND PRICING OF CRUDE OIL 43 12. TAXATION AND OTHER IMPOSTS 46 13. FOREIGN EXCHANGE TRANSACTIONS 49 14. SPECIAL PROVISIONS FOR NATURAL GAS 51 15. DOMESTIC SUPPLY REQUIREMENT (CRUDE OIL) 57 16. INFORMATION AND REPORTS: CONFIDENTIALITY 58 17. INSPECTION, SAFETY AND ENVIRONMENTAL PROTECTION 62 18. ACCOUNTING AND AUDITING 64 19. TITLE TO AND CONTROL OF GOODS AND EQUIPMENT 66 20. PURCHASING AND PROCUREMENT 68 ii ARTICLE PAGE 21. -EMPLOYMENT AND TRAINING 69 22. FORCE MAJEURE 70 23. TERM AND TERMINATION 71 24. CONSULTATION, ARBITRATION AND INDEPENDENT EXPERT 75 25. ASSIGNMENT 76 26. MISCELLANEOUS 77 27. NOTICE 80 ANNEX 1 CONTRACT AREA ANNEX 2 ACCOUNTING GUIDE ANNEX 3 SAMPLE AOE CALCULATION ANNEX 4 FORM OF CONFIDENTIALITY AGREEMENT iii THIS PETROLEUM AGREEMENT, made this 18th day of July 2014 by and among: 1. Government of the Republic of Ghana (hereinafter referred to as "the State"), represented by the Minister for Energy and Petroleum (hereinafter referred to as the "Minister"); 2. Ghana National Petroleum Corporation, a public corporation established by the Ghana National Petroleum Corporation Act, 1983 PNDCL 64 (hereinafter referred to as "GNPC"); 3. Brittania-U Ghana Limited, a company incorporated in Ghana and having its registered office at No 12 Airport Bypass P.O Box C2444, Cantonment Accra, Ghana (hereinafter referred to as "Contractor" or "Brittania-U"); and 4. Hills Oil Marketing Company Limited, a company incorporated in Ghana and having its registered office at 181 Adjele Road, Marte Tsuru, East Airport, Accra-Ghana (hereinafter referred to as "Contractor" or "Hills Oil") WITNESSES THAT: 1. All Petroleum existing in its natural state within Ghana is the property of the Republic of Ghana and held in trust by the State on behalf of the people of Ghana. 2. In accordance with the Petroleum Law, the Minister has prepared a reference map showing areas of potential petroleum fields within the jurisdiction of Ghana, divided into numbered areas and each of which is described as a "block". 3. GNPC has by virtue of the Petroleum Law the right to undertake Exploration, Development and Production of Petroleum over all blocks declared by the Minister to be open for Petroleum Operations. 4. GNPC is further authorised to enter into association by means of a Petroleum Agreement with a contractor for the purpose of Exploration, Development and Production of Petroleum. 5. The Contract Area that is the subject matter of this Petroleum Agreement is within the jurisdiction of the Republic of Ghana and has been declared open for Petroleum Operations by the Minister and the State desires to encourage and promote Exploration, Development and Production within the said area. 6. Contractor, having the financial ability, technical competence and professional skills necessary for carrying out the Petroleum Operations herein described, desires to associate with GNPC in the Exploration for, and Development and Production of, the Petroleum resources of the said area. 7. Contractor shall comply with all the applicable laws of Ghana as in effect from time to time including, without limitation. any regulations, policies or directives issued by or I other acts of the Petroleum Commission pursuant to the Petroleum Commission Act, 2011(Act 821) .. 8. The Parties are committed to providing Ghanaian nationals employment at all levels in the Petroleum industry, including technical, administrative and managerial positions, and Contractor accordingly commits to providing and supporting an adequate programme of training for Ghanaian nationals as an integral part of this Agreement. 9. GNPC has aspirations of building operatorship capacity within a period of fifteen (15) years from the Effective Date of this Agreement. Without prejudice to the rights of the Parties under this Agreement, Contractor is committed to supporting GNPC to develop its institutional capacity to enable GNPC to fulfill its aspirations 10. The Parties are committed to providing an annual local content plan for fulfilling the applicable Ghanaian content requirements with respect to the provision of goods and services. NOW THEREFORE, in consideration of the mutual covenants herein contained, it is hereby agreed and declared as follows: 2 ARTICLE 1 DEFINITIONS 1. In this Agreement: 1.1 "Accounting Guide" means the accounting guide which is attached hereto as Annex 2 and made a part hereof; 1.2 "Additional Interest" means the additional interest ofGNPC provided in Article 2.5; 1.3 "Affiliate" means with respect to any person, whether a natural person, corporation, partnership, unincorporated association or other entity, which directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with a Party. For this purpose "control" means the direct or indirect ownership of an aggregate of more than fifty per cent (50%) of voting capital or voting rights of or the entitlement (directly or indirectly) to appoint a majority of the directors or equivalent management body of, or to direct the policies or operations of the other entity; 1.4 "Agreement" means this Agreement between the State, GNPC and Contractor, and includes the Annexes attached hereto, in each case, as amended from time to time; 1.5 "Appraisal" means operations and activities carried out following a Discovery of Petroleum for the purpose of delineating the accumulations of Petroleum to which that Discovery relates in terms of thickness and lateral extent and estimating the quantity of recoverable Petroleum therein and all operations or activities to resolve all uncertainties required for determination of commerciality of such a discovery; 1.6 "Appraisal Programme" means a programme for the conduct of Appraisal; 1.7 "Appraisal Well" means a well drilled pursuant to an Appraisal Programme; 1.8 "Associated Gas" means Natural Gas produced from a well in association with Crude Oil; 1.9 "Barrel" means a quantity or unit of Crude Oil equal to forty-two (42) United States gallons at a temperature of sixty (60) degrees Fahrenheit and at fourteen and sixty-five one- hundredths per square inch at atmospheric (14.65 psia) pressure; 1.10 "Block" means an area of approximately 685 square kilometers as depicted on the reference map prepared by the Minister in accordance with the provisions of the Petroleum Law; 1.11 "bopd" means barrels of oil per Day; 1.12 "Calendar Year" means the period of twelve (12) months of the Gregorian calendar, commencing on January 1 and ending on the succeeding December 31 ; 1.13 "Carried Interest" means an interest held by GNPC pursuant to this Agreement in respect of which Contractor pays for the conduct of Petroleum Operations without any entitlement to reimbursement from GNPC other than for Production Operations; 3 1.14 "Commercial Discovery" means a Discovery which is determined to be commercial in ~ccordance with the provisions of Article 8 of this Agreement; 1.15 "Commercial Production Period" means in respect of each Development and Production Area the period from the Date of Commencement of Commercial Production until the termination of this Agreement or earlier relinquishment of such Development and Production Area; 1.16 "Contract Area" means the area of approximately 2,050 sq.km covered by this Agreement in which Contractor is authorised in association with GNPC to explore for, develop and produce Petroleum, which is described in Annex 1 attached hereto and made a part of this Agreement, but excluding any portions of such area in respect of which Contractor's rights hereunder are from time to time relinquished or surrendered pursuant to this Agreement; . 1.17 "Contractor" means Brittania-U Ghana Limited and includes its respective successors and assignees; 1.18 "Contract Year" means a period of twelve (12) calendar months, commencing on the Effective Date or any anniversary thereof; 1.19 "Crude Oil" means hydrocarbons which are liquid at fourteen and sixty-five one- hundredths per square inch at atmospheric (14.65 psia) pressure and sixty (60) degrees Fahrenheit and includes condensates and distillates obtained from Natural Gas; 1.20 "Date of Commencement of Commercial Production" means, in respect of each Development and Production Area, the date on which production of Petroleum under a programme of regular production, lifting and sale commences as defined in a Development Plan; 1.21 "Date of Commercial Discovery" means the date referred to in Article 8.14; 1.22 "Day" means a day in the Gregorian calendar; 1.23 "Default Rate" means LIBOR plus 3%; 1.24 "Delivery Point" has the meaning given to such term in Article 10.5; 1.25 "Development" or "Development Operations" means the following activities carried out in connection with a Development Plan: the building and installation of facilities for Production, and includes drilling of Development Wells, construction and installation of equipment, pipelines, facilities, plants and systems, in and outside the Contract Area, which are required for achieving Production, treatment, transport, storage and lifting of Petroleum, and preliminary Production activities carried out prior to the Date of Commencement of Commercial Production, and includes all related planning and administrative work, and may also include the construction and installation of approved secondary and tertiary recovery systems; 1.26 "Development Costs" means Petroleum Costs incurred in Development Operations; 1.27 "Development and Production Area" means that portion of the Contract Area reasonably determined by Contractor in consultation with the JMC (or by GNPC if a Sole 4 Risk Operation pursuant to Article 9) on the basis of the available seismic and well data to cover the areal extent of an accumulation or accumulations of Petroleum constituting a Commercia!" Discovery, enlarged in area by ten percent (10%), such enlargement to extend uniformly around the perimeter of such accumulation; 1.28 "Development Period" means in respect of each Development and Production Area, the period from the Date of Commercial Discovery until the Date of Commencement of Commercial Production; 1.29 "Development Plan" means the plan for development of a Commercial Discovery prepared by Contractor in consultation with the Joint Management Committee and approved by the Minister pursuant to Article 8; 1.30 "Development Well" means a well drilled in accordance with a Development Plan for producing Petroleum including wells for pressure maintenance or for increasing the Production rate; 1.31 "Discovery" means finding within a well at the end of drilling during Exploration Operations, one or more accumulations of Petroleum the existence of which, until that finding, was unproved by drilling, and which can be or is recovered at the surface in a flow measurable by conventional international petroleum industry testing methods (and in the case of water depths greater than four hundred (400) metres including Modular Formation Dynamics Testing (also referred to as "MDT" by Schlumberger); 1.32 "Discovery Area" means that portion of the Contract Area, determined by JMC (or by GNPC if a Sole Risk Operation pursuant to Article 9) on the basis of the available seismic and well data to cover the areal extent of the geological structure in which a Discovery is made. A Discovery Area may be modified at any time by JMC (or by GNPC if applicable), if justified on the basis of new information, but may not be modified after the date of completion of the Appraisal Programme and submission of a report under Article 8; 1.33 "Discovery Notice" means a notification to the Minister, Petroleum Commission and GNPC, providing information which shall include, the name and location of the well from which the accumulation(s) have been found, the depth interval(s), estimates of gross and net pay thickness, stratigraphy, and type of reservoir and fluids encountered; 1.34 "EffectiveDa te" shall have the meaning ascribed to it in Article 26.8; 1.35 "Exploration" or "Exploration Operations" means the search for Petroleum by geological, geophysical and other methods and the drilling of Exploration Welles) and includes any activity in connection therewith or in preparation thereof and any relevant processing and appraisal work, including technical and economic feasibility studies, that may be carried out to determine whether a Discovery of Petroleum constitutes a Commercial Discovery; 1.36 "Exploration Costs" means Petroleum Costs incurred, both within and outside Ghana, in conducting Exploration Operations hereunder determined in accordance with the Accounting Guide attached hereto an Annex 2; 1.37 "Exploration Period" means the period commencing on the Effective Date and continuing during the time provided for in Article 3. I within which Contractor is authorized 5 I to cany out Exploration Operations and shall include any periods of extensions provided for in this Agreement. The period shall terminate with respect to any Discovery Area on the of Commercial Discovery in respect of such Discovery Area; Date 1.38 "Exploration Well" means a well drilled in the course of Exploration Operations conducted hereunder during the Exploration Period, but does not include an Appraisal Well; 1.39 "First Extension Period" has the meaning given to such term in Article 3.1 (a) hereof; 1.40 "Force Majeure" means any event beyond the reasonable control of the Party claiming to be affected by such event which has not been brought about directly or indirectly at its own instance or which has not been brought about directly or indirectly at the instance of an Affiliate; provided that the State shall not be considered for this purpose an Affiliate of . GNPC. Force Majeure events may, include but are not limited to, earthquake, storm, flood, lightning or other adverse weather conditions, war, embargo, blockade, riot or civil disorder; 1.41 "Foreign National Employee" means an expatriate employee of Contractor, its Affiliates, or its Sub-contractors who is not a citizen of Ghana; 1.42 "Ghana" means the territory of the Republic of Ghana and includes rivers, streams, water courses, the territorial sea, seabed and subsoil, the contiguous zone, the exclusive economic zone, continental shelf, the airspace and all other areas within the jurisdiction of Ghana; 1.43 "Gross Production" means the total amount of Petroleum produced and saved from a Development and Production Area during Production Operations which is not used by Contractor in Petroleum Operations and is available for distribution to the Parties in accordance with Article 10; 1.44 "Gross Negligence" means any act or failure to act (whether sole, joint or concurrent) which was made in reckless disregard to, harmful consequences such person knew or should have known, such act or failure would have on another person or entity; 1.45 "Indigenous Ghanaian company" means a company incorporated under the Companies Act (Act 179) of Ghana a) having at least fifty-one per cent of its equity owned by a citizen or citizens of Ghana; and b) where practical, Ghanaian citizens holding at least eighty per cent of semor management positions and one hundred per cent of non-managerial and c) other positions. 1.46 "Initial Exploration Period" has the meaning given to such term in Article 3.1(a) hereof; 1.47 "Initial Interest" means the interest of GNPC in all Petroleum Operations provided for in Article 2.4; I 6 1.48 "International Good Oil Field Practice" means all those uses and practices that are generally accepted in the international petroleum industry as good, safe, economical and efficient in exploring for, developing, producing, processing and transporting Petroleum; 1.49 "Joint Management Committee (JMC)" means the committee established pursuant to Article 6.1 hereof; 1.50 "Market Price" means the market price for Crude Oil realized by Contractor under this Agreement as determined in accordance with Article 11.7 hereof; 1.51 "Minister" means Minister for Energy and Petroleum; 1.52 "Month" means a month of the Calendar Year; 1.53 "Natural Gas" means all hydrocarbons which are gaseous at fourteen and sixty-five one-hundredths per square inch at atmospheric (14.65 psia) pressure and sixty (60) degrees Fahrenheit temperature and includes wet gas, dry gas and residue gas remaining after the extraction of liquid hydrocarbons from wet gas; 1.54 "Non-Associated Gas" means Natural Gas produced from a well other than In association with Crude Oil; 1.55 "Operator" means Brittania-U or the person as may be jointly proposed by the Parties and approved by the Minister, (which approval shall not be unreasonably withheld), being either GNPC or a Contractor Party to conduct Petroleum Operations hereunder on behalf of the Parties; 1.56 "Participating Interest" means for GNPC, the interest held by GNPC in accordance with the provisions of Article 2.4 and Article 2.5 and for the Contractor, the interest held by the Contractor in accordance with the provisions of Article 2.10; 1.57 "Party" means the State, GNPC or Contractor, as the case may be; 1.58 "Paying Interest" means an interest held by GNPC in respect of which GNPC pays for the conduct of Petroleum Operations as expressly provided for in Article 2.5; 1.59 "Petroleum" means Crude Oil or Natural Gas or a combination of both; 1.60 "Petroleum Commission" means a body established by an Act of Parliament (Petroleum Commission Act, 2011) for the regulation and the management of the utilization of petroleum resources in the upstream sector; 1.61 "Petroleum Commission Act" means the Petroleum Commission Act, 2011 (Act 821) as the same may be amended from time to time; 1.62 "Petroleum Costs" means all expenditures made and costs incurred both within and outside Ghana, in conducting Petroleum Operations hereunder determined in accordance with the Accounting Guide attached hereto as Annex 2; 1.63 "Petroleum Income Tax Law" means the Petroleum Income Tax Law, 1987 (PNDCL 188) as the same may be amended from time to time; 7 I 1.64 "Petroleum Law" means the Petroleum (Exploration and Production) Law, 1984 (PNDCL 84) as the same may be amended from time to time; 1.65 "Petroleum Operations" means all activities, both in and outside Ghana, relating to the Exploration for, Development, Production, handling, storage, processing and transportation (to the Delivery Point) of Petroleum contemplated under this Agreement and includes Exploration Operations, Development Operations and Production Operations and all activities in connection therewith; 1.66 "Petroleum Product" means any product derived from Petroleum by any refining or other process; 1.67 "Pre-Award Attachment" means any order, decree, injunction or other decision (however denominated) of any court, arbitral body or other competent authority requested by a Party and issued prior to a final arbitral award issued pursuant to Article 24 of this Agreement that attaches, seizes, freezes or otherwise restricts the use or alienation of any property (whether tangible or intangible) of the other Party pending issuance of the final arbitral award, whether such property is in the possession or control of a Party or of a third party; 1.68 "Production" or "Production Operations" means activities other than Exploration Operations or Development Operations undertaken in order to extract, save, treat, measure, handle, store and transport (to the Delivery Point) Petroleum to storage and/or loading points and to carry out any type of primary, secondary or tertiary operations, including recycling, recompression, injection for maintenance of pressure and water flooding and all related activities such as planning and administrative work and shall also include maintenance, repair, abandonment or decommissioning and replacement of facilities, and well workovers in every case, conducted after the Date of Commencement of Commercial Production of the respective Development and Production Area; 1.69 "Production Costs" means Petroleum Costs incurred in Production Operations; 1.70 "Quarter" means a period of three (3) Months, commencing January 1, April 1, July 1 or October I and ending March 31, June 30, September 30, or December 31, respectively; 1.71 "Second Extension Period" has the meaning given to such term in Article 3.1 (a) hereof; 1. 72 "Sole Expert" means the person appointed to resolve a dispute pursuant to to Articles 24 hereof; 1. 73 "Sole Risk" means an operation conducted at the sole cost, risk and expense of GNPC referred to in Article 9; 1.74 "Specified Rate" means the rate which the Financial Times or if the Financial Times is not so published, then by the Wall Street Journal certifies to be the London Interbank offered rate (LIBOR) in the London Interbank Eurodollar market on thirty (30) day deposits, in effect on the last business day of the last respective preceding Month, plus one per cent (1 %). In the event that neither the Financial Times nor the Wall Street Journal is published, the Parties shall endeavor to agree on a source of certification for UBOR in reference to market practice. If the Parties are unable to agree on a source of certification for 8 LIBOR, any Party may refer the matter to a Sole Expert for certification. If the aforesaid rate is contrary to any applicable usury law, the rate of interest to be charged shall be the maximum rate permitted by such applicable law; . 1.75 "Standard Cubic Foot" or "SCF" means the quantity of gas that occupies one (1) cubic foot at 14.65 psia pressure and sixty (60) degrees Fahrenheit temperature; 1.76 "State" means the Government of the Republic of Ghana including all political subdivisions thereof and specifically excluding GNPC; 1.77 "Subcontractor" means a third party with whom GNPC or Contractor has entered into a contract for the provision of goods or services in connection with the Petroleum Operations; 1.78 "Termination" means termination of this Agreement pursuant to Article 23 hereof; 1.79 "Work Programme" means the annual plan for the conduct of Petroleum Operations prepared pursuant to Articles 4.3, 6.4 and 6.5; and 1.80 "Year" means a continuous twelve (12) Month period. 9 I ARTICLE 2 SCOPE OF THE AGREEMENT, INTERESTS OF THE PARTIES AND CONTRACT AREA 2.1 This Agreement provides for the Exploration for and Development and Production of Petroleum in the Contract Area by GNPC in association with Contractor. 2.2 Subject to the provisions of this Agreement, Contractor shall be responsible for the execution of such Petroleum Operations as are required by the provisions of this Agreement and subject to Article 9, is hereby appointed the exclusive entity to conduct Petroleum Operations in the Contract Area. GNPC shall at all times participate in the management of Petroleum Operations and in order that the Parties may cooperate in the implementation of Petroleum Operations, GNPC and Contractor shall establish a Joint Management Committee, to conduct and manage Petroleum Operations. 2.3 In the event that no Commercial Discovery is made in the Contract Area, or that Gross Production achieved from the Contract Area is insufficient fully to reimburse Contractor in accordance with the terms of this Agreement, then Contractor shall bear its own loss; GNPC and the State shall have no obligations whatsoever to Contractor in respect of such loss. 2.4 GNPC shall have a twenty percent (20%) Initial Interest in all Petroleum Operations under this Agreement. With respect to all Exploration and Development Operations GNPC's Initial Interest shall be a Carried Interest. With respect to all Production Operations GNPC's Initial Interest shall be a Paying Interest. 2.5 In addition to the Initial Interest provided for in Article 2.4, GNPC shall have the option in respect of each Development and Production Area to acquire an additional interest not exceeding five percent (5%) in Petroleum Operations in such Development and Production Area, by contributing to all the Development and Production Costs incurred after the Date of Commercial Discovery, in respect of such Development and Production Area (or make arrangements satisfactory to Contractor to that effect). GNPC shall notify Contractor of the exercise of its option to acquire an Additional Interest within ninety (90) days of the Date of Commercial Discovery. 2.6 If GNPC opts to take an Additional Interest as provided for in Article 2.5 then within six (6) Months of the date of its election, GNPC shall reimburse Contractor for all expenditures attributable to GNPC's Additional Interest incurred from the Date of Commercial Discovery to the date GNPC notifies Contractor of its election together with interest at a rate (the "Contractor Third Party Rate") no higher than (a) the weighted average rate applicable to any third party debt financing pursuant to which the Contractor (or its Affiliates) has financed such Additional Interest from and including the date of the relevant expenditure to and excluding the date the Contractor is reimbursed or (b) if Contractor has no third party debt financing, the Specified Rate. With respect to all Development and Production Costs incurred subsequent to the Date of Commercial Discovery in any Development and Production Area, the Additional Interest shall be a Paying Interest. 10 For the avoidance of doubt GNPC shall only be liable to contribute to Petroleum Costs: a) incurred in respect of Development Operations in any Development and Production Area and to the extent only of any Additional Interest acquired in such Development and Production Area under Article 2.5; and b) incurred in respect of Production Operations in any Development and Production Area both to the extent of: i) its twenty percent (20%) Initial Interest; and ii) any Additional Interest acquired in such Development and Production Area under Article 2.5 2.7 Subject to JMC approval, GNPC may during the Exploration Period contribute to Petroleum Operations by providing relevant services to be approved within the JMC. Upon completion of the work associated with said contribution, GNPC shall invoice the Contractor for the costs incurred and shall provide reasonable supporting documentation in respect of such costs. Contractor shall pay GNPC the invoiced amount within thirty (30) days of receipt of the invoice. GNPC may elect to earn credit for the invoiced amounts incurred toward its share, if any of Development Costs should it elect to hold an Additional Interest pursuant to Article 2.5 above. Such credit shall incur interest at the Specified Rate annually from the respective dates such contributed costs were incurred until they are paid or utilized as credits toward GNPC's share of Development Costs. If during the Exploration Period, GNPC has earned such credit and GNPC elects not to hold an Additional Interest or no Commercial Discovery is made in the Contract Area Contractor shall reimburse GNPC in an amount equivalent to the credit within sixty (60) days following the end of the Exploration Period or Contractor's relinquishment of the entire Contract Area, whichever occurs first. The actual amount of any costs to be invoiced or credit earned by GNPC pursuant to this paragraph must be approved by the JMC prior to provision of the relevant services and shall be the fair market rates at which such services could be obtained under freely competitive conditions at the time of approval. 2.8 Upon notifying Contractor of its decision to acquire an Additional Interest pursuant to Article 2.5, GNPC may at the same time: a) elect to have Contractor advance part or all of GNPC's total proportionate share of Development Costs as they are incurred, including such Costs as will already have been incurred from the Date of Commercial Discovery and which are reimbursable under Article 2.7 on terms (i.e., period of payment and interest rate) no worse than the Contractor Third Party Rate or Specified Rate as applicable; and b) Notify the Contractor and mutually agree in good faith any arrangements for the payment of the balance of GNPC's total proportionate share of Development Costs on terms (i.e. period of payment) no worse than the Contractor Third Party Rate or Specified Rate as applicable. 11 2.9 Contractor's participating Interest in all Petroleum Operations and in all rights under this Agreement shall be eighty per cent (80%) and shall be reduced proportionately at any given time and in any given part' of the Contract Area by the exercise of the option of Additional Interest of GNPC pursuant to Article 2.5 or the Sole Risk Interest of GNPC pursuant to Article 9. For the avoidance of doubt, the Participating Interest of the Contractor Parties shall be divided as at the Effective Date as follows: (a) Brittania-U shall hold a seventy six percent [76%] Participating Interest; (b) Hills Oil shall hold a four percent (4%) Participating Interest; 2.10 Subject to Article 25, the transfer or disposal by the Contractor of all or part of the Contractor's Participating Interest, whether directly or indirectly by assignment, merger, consolidation or sale of stock or other conveyance, other than with or to an Affiliate shall be subject to the following procedure: a) Once the Contractor and a proposed transferee (a third party or a Party) have fully negotiated the final tenns and conditions of a transfer, such final terms and conditions shall be promptly disclosed in full detail to GNPC and the State in a notice from the transferor. GNPC shall have the right to acquire the Participating Interest from the transferor, on the same terms and conditions agreed to by the proposed transferee if, within thirty (30) Days of transferor's notice, GNPC delivers to the transferor, a counter-notice that it accepts the agreed terms and conditions of the transfer without reservations or conditions. If GNPC does not deliver such counter-notice, the transfer to the proposed transferee may be made, subject to the other provisions of this Agreement and the laws and regulations, under terms and conditions no more favourable to the transferee than those set forth in the notice to GNPC and the State, provided that the transfer shall be concluded within one hundred and eighty (180) Days from the date of the notice plus such reasonable additional period as may be required to secure requisite approvals. b) In the event that Contractor's proposed transfer of part or all of its Participating Interest involves consideration other than cash or involves other properties included in a wider transaction then the Participating Interest (or part thereof) shall be allocated a reasonable and justifiable cash value by the transferor in any notification to the State and GNPC which such cash value may be disputed by the State or GNPC. In the event of any dispute between the transferor and the State or GNPC as to the cash value of any consideration paid, the Parties shall meet at a mutually convenient time and place to attempt to resolve the dispute and to agree upon a cash valuation. In the event the Parties fail to reach agreement within ninety (90) calendar days from the date on which such notification is received by GNPC or the State from the transferor, Article 24 of this Agreement shall apply. The State and/or GNPC may satisfy the requirements of this Article 2.10 by agreeing to pay such cash value in lieu of the consideration payable in the said proposed transfer. 2.11 As of the Effective Date, the Contract Area shall cover a total of approximately 2,050 sq. km as depicted by Annex 1 and shall from time to time during the term of this Agreement be reduced according to the terms herein. During the term of the Agreement, Contractor shall pay rentals to the State for that area included within the Contract Area at 12 the beginning of each Contract Year according to the provisions of Article 12.1 (d) below, 13 I I ARTICLE 3 EXPLORATION PERIOD 3.1 The Exploration Period shall begin on the Effective Date and shall not extend beyond seven (7) years except as provided for in accordance with the Petroleum Law. a) The Exploration Period shall be divided into an Initial Exploration Period of three (3) years ("Initial Exploration Period") and two (2) extension periods of one and half (1.5) years each (respectively "First Extension Period" and "Second Extension Period") and where applicable the further periods for which provision is made hereafter. b) Where Contractor has fulfilled its work and expenditure obligations set out in Article 4.3 before the end of the Initial Exploration Period or, as the case may be, the First Extension Period, and has exercised its option by applying to the Minister in writing for an extension, the Minister will be deemed to have granted an extension into the First or, as the case may be, into the Second Extension Period. 3.2 Following the end of the Second Extension Period, subject to the provisions of Article 3.4, Contractor will be entitled to an extension or extensions, by reference to Article 8, of the Exploration Period as follows: a) Where at the end of the Second Extension Period Contractor is drilling or testing any well, Contractor shall be entitled to an extension for such further period as may be reasonably required to enable Contractor to complete such work and assess the results and, in the event that Contractor notifies the Minister that the results from well show a Discovery which merits appraisal, Contractor shall be entitled any such to a further extension for such period as may be reasonably required to carry out an Appraisal Programme and determine whether the Discovery constitutes a Commercial Discovery; b) Where at the end of the Second Extension Period Contractor is engaged in the conduct of an Appraisal Programme in respect of a Discovery which has not been completed, Contractor shall be entitled to a further extension following the end of the Second Extension for such period as may be reasonably required to complete that Appraisal Programme and determine whether the Discovery constitutes a Commercial Discovery; c) Where at the end of the Second Extension Period Contractor has undertaken work not falling under paragraphs (a) or (b) which is not completed, Contractor will be entitled to a further extension following the end of the Second Extension Period for t such period as the Minister considers reasonable for the purpose of enabling such work to be completed. d) Where pursuant to Article 8 Contractor has before the end of the Second Extension Period, including extensions under (a), (b) and (c) above, given to the Minister a notice of Commercial Discovery, Contractor shall, if the Exploration Period would otherwise have been terminated, be entitled to a further extension of the Exploration 14 Period in respect of the Discovery Area during which it must prepare the Development Plan in respect of the Commercial Discovery until either: i) the Minister has approved the Development Plan as set out in Article 8, or ii) in the event that the Development Plan is not approved by the Minister as set out in Article 8 and the matter or matters in issue between the Minister and Contractor have been referred for resolution under Article 24, one (1) Month after the date on which the final decision thereunder has been given. 3.3 Where at the end of the Initial Exploration Period or, as the case may be, at the end of the First Extension Period Contractor has failed to complete its minimum work and expenditure obligations as specified in Article 4 in respect of that period but has made reasonable arrangements to remedy its defaultduring the First or, as the case may be, the Second Extension Period, Contractor shall be entitled to an extension subject to such reasonable terms and conditions as the Minister may stipulate to assure performance of the work. 3.4 Save in respect of a Discovery Area: a) in the circumstances and subject to the limitations set forth in Section 12 (3) of the Petroleum Law; or b) in a case falling within the provisions of Article 3.2 (d) nothing in Article 3.2 shall be read or construed as requiring or permitting the extension of the Exploration Period beyond seven (7) years from the Effective Date except for reasons of Force Majeure. 3.5 The provisions of Articles 3.2 (a), (b) and (c) so far as they relate to the duration of the extension period to which Contractor will be entitled shall be read and construed as requiring the Minister to give effect to the provisions of Article 8 relating to the time within which Contractor must meet the requirements of that Article. I , 15 I ARTICLE 4 MINIMUM EXPLORATION PROGRAMME 4.1 Exploration Operations shall begin as soon as practicable and in any case not later than ninety (90) days after the Effective Date. 4.2 GNPC shall, at the request of Contractor, make available to Contractor such records and information relating to the Contract Area as are relevant to the performance of Exploration Operations by Contractor and are in GNPC's possession, provided that Contractor shall reimburse GNPC for licensing the data and for other costs reasonably incurred in procuring or otherwise making such records and information available to Contractor. 4.3 Subject to the provisions of this Article, in discharge of its obligations to carry out Exploration Operations in the Contract Area, Contractor shall during the several phases into which the Exploration Period is divided carry out the work specified hereinafter: a) Initial Exploration Period: Commencing on the Effective Date and terminating at the end of the third (3rd) Contract Year; Description of Work 1. Re-process 800 kilometers of existing 2D seismic data 11. Acquire and process 1500 square kilometers of new 3D seismic data 111. Drill one (1) exploration well. Minimum Expenditure: Contractor's minimum expenditure for the work in the Initial Exploration Period shall be forty million United States Dollars (US $40,000,000) b) First Extension Period: Commencing at the end of the Initial Exploration Period and terminating eighteen (18) months later. Description of Work 1. Conduct G&G studies ii. Drill one (1) exploration well Minimum Expenditure: Contractor's minimum Expenditure for the work in the First Extension Period shall be thirty million United States Dollars (US $30,000,000). I c) Second Extension Period: Commencing at the end of the First Extension and terminating eighteen months later. I Description of Work 16 1. Continue G&G studies 11. Drill one (1) exploration well Minimum Expenditure: Minimum Expenditure for work in the Second Extension Period shall be thirty million United States Dollars (US $30,000, 000). d) Work and expenditures accomplished in any period in excess of the above obligations may be applied as credit in satisfaction of obligations called for in any other Period. The fulfillment of any work obligation shall relieve Contractor of the corresponding minimum expenditure obligation, but the fulfillment of any minimum expenditure obligation shall not relieve Contractor of the corresponding work obligation. Without prejudice to Article 23.4(e), should the Contractor fail to perform any of its minimum work obligations under Article 4.3 within the relevant Period, the Contractor shall pay to GNPC, any unspent amount of the Minimum Expenditure obligation under Article 4.3(a-c) for the Initial Exploration Period, the First Extension Period or the Second Extension Period as the case may be. 4.4 No Appraisal Wells drilled or seismic surveys carried out by Contractor as part of an Appraisal Programme undertaken pursuant to Article 8 and no expenditure incurred by Contractor in carrying out such Appraisal Programme shall be treated as discharging the minimum work obligations under Article 4.3. 4.5 The seismic programme in Article 4.3(a), when combined with existing data, shall be such as will enable a study of the regional geology of the Contract Area and the preparation of a report thereon with appropriate maps, cross sections and illustrations, as well as a geophysical survey of the Contract Area which, when combined with existing data, shall provide: a) a minimum seismic grid adequate to define prospective drill sites over prospective closures as interpreted from data available to Contractor; and b) a seismic evaluation of structural and stratigraphic conditions over the remaining portions of the Contract Area. 4.6 Each Exploration Well shall be drilled at a location and to an objective depth determined by Contractor in consultation with GNPc. Except as otherwise provided in Articles 4.7 and 4.8 below, the minimum depth of each obligatory Exploration Well shall be whichever of the following is first encountered: a) the depth of 4,500 meters measured from the Rotary Table Kelly Bushing (RTKB); b) the depth at which Contractor encounters geologic basement. 4.7 The minimum depth of one (I) of the obligatory Exploration Wells in Article 4.3 shall be whichever of the following is first encountered: I 17 I a) the depth of 4,500 meters measured from the Rotary Table Kelly Bushing (RTKB); -b) the depth sufficient to penetrate base of Devonian; or c) the depth at which Contractor encounters geological basement 4.8 If in the course of drilling an Exploration Well, the Contractor concludes that drilling to the minimum depth specified in Article 4.6 or 4.7 above is impossible, impracticable or imprudent in accordance with International Good Oil Field Practice then Contractor may plug and abandon the Exploration Well and GNPC shall have the option of either: a) waiving the minimum depth requirement, in which case Contractor will be deemed to have satisfied the obligation to drill such Exploration Well; or b) requiring Contractor to drill a substitute Exploration Well at a location determined by Contractor in consultation with GNPC and to the minimum depth set forth in Article 4.6 or 4.7, except that if in the course of drilling such substitute Exploration Well Contractor establishes that drilling to the minimum depth specified in Article 4.6 or 4.7 above is impossible, impracticable or imprudent in accordance with International Good oil field practice then Contractor may plug and abandon the substitute Exploration Well and will be deemed to have satisfied the obligation to drill one (1) Exploration Well to the minimum depth to which such well had been planned. The above option shall be exercised by GNPC within thirty (30) days from the plugging and abandonment of the Exploration Well, and failure to exercise such option shall constitute a waiver of the minimum depth requirement pursuant to (a) above. 4.9 During the Exploration Period, Contractor shall have the right to perform additional Exploration Operations subject to the terms of this Agreement, applicable law and approval by the JMC, including without limitation performing gravity and magnetic surveys, drilling stratigraphic wells and performing additional geological and geophysical studies, provided the minimum work obligations are completed within the applicable period and provided further that Contractor may elect to perform such additional Exploration Operations in the absence of approval by the JMC at their Sole Risk but only in the event of a subsequent Commercial Discovery associated with such additional Exploration Operations shall the costs of such Exploration Operations be considered allowable Petroleum Costs for AOE purposes. 4.10 During the Exploration Period, Contractor shall deliver to GNPC and the Minister conducted during each Quarter within thirty (30) days reports on Exploration Operations following the end of that Quarter. Further requests for information by the Minister under Section 9(1) of the Petroleum Law shall be complied with within a reasonable time and copies of documents and other material containing such information shall be provided to GNPC. 18 ARTICLES RELINQUSIHMENT 5.1 Except as provided in Article 5.2,8.3,8.10,8.11,8.16,8.19,8.20,8.21,14.7 and 14.11, Contractor shall relinquish portions of the Contract Area in the manner provided hereafter. a) If on or before the expiration of the Initial Exploration Period, Contractor elects to enter into the First Extension Period pursuant to Article 3.3 then subject to Article 5.2 at the commencement of the First Extension Period the area retained shall not exceed eighty percent (80%) of the Contract Area as at the Effective Date; b) If on or before the expiration of the First Extension Period, Contractor elects to enter into the Second Extension Period pursuant to Article 3.3 then subject to Article 5.2 at the commencement of the Second Extension Period the area retained shall not exceed sixty percent (60%) of the Contract Area as at the Effective Date; c) On the expiration of the Second Extension Period, Contractor shall subject to Article 5.2 relinquish the remainder of the retained Contract Area. 5.2 The provisions of Article 5.1 shall not be read or construed as requiring Contractor to relinquish any portion of the Contract Area which constitutes or forms part of either a Discovery Area (excluding a Discovery Area determined by the terms of this Agreement to neither merit appraisal nor to be commercial) or a Development and Production Area. PROVIDED HOWEVER THAT if at the end of the Initial Exploration Period or the First Extension Period as the case may be Contractor elects not to enter into the First or Second Extension Period Contractor shall relinquish the entire Contract Area. I 5.3 Each area to be relinquished pursuant to this Article shall be selected by Contractor and shall be measured as far as possible in terms of continuous and compact units of a size and shape which will permit the carrying out of Petroleum Operations in the relinquished f portions. 5.4 Contractor shall have the right at any time to relinquish all or part of the Contract Area provided it has undertaken the work obligations of the relevant Period during which such relinquishment is made and provided further that provision shall have been made for the decommissioning, abandoning, removing or eliminating movable and immovable assets acquired or used by the Contractor in such relinquished part of the Contract Area (which the Minister elects not to retain) 19 I ARTICLE 6 JOINT MANAGEMENT COMMITTEE 6.1 In order that GNPC may at all times participate in respect of the implementation of Petroleum Operations, GNPC and Contractor shall not later than thirty (30) days after the Effective Date establish a Joint Management Committee (JMC). Without prejudice to the rights and obligations of Contractor for day-to-day management of the operations, the JMC shall oversee, supervise and approve Petroleum Operations and ensure that all approved Work Programmes and Development Plans are complied with and also that accounting for costs and expenses and the maintenance of records and reports concerning the Petroleum Operations are carried out in accordance with this Agreement and the accounting principles and procedures generally accepted in the international petroleum industry. 6.2 The composition of and distribution of functions within the JMC shall be as provided hereinafter. i) The JMC shall be composed of two (2) representatives of GNPC and two (2) representatives of Contractor. GNPC and Contractor shall also designate a substitute or alternate for each member. In the case of absence or incapacity of a member of the JMC, such alternate shall automatically assume the rights and obligations of the absent or incapacitated member. ii) The Chairperson of the JMC shall be designated by GNPC from amongst the members of the JMC. 1 iii) Contractor shall be responsible in consultation with GNPC for the preparation of agenda and supporting documents for each meeting of the JMC and for keeping records of the meetings and decisions of the JMC. GNPC shall have the right to inspect all records of the JMC at any time. Contractor shall circulate the agenda and supporting documents for each meeting to all members and the substitutes or alternates designated pursuant to Article 6.2(i). iv) At any meeting of the JMC three (3) representatives shall form a quorum. 6.3 Meetings of the JMC shall be held and decisions taken as follows. i) All meetings of the JMC shall be held in Accra or such other place as may be agreed upon by members of the JMC. ii) The JMC shall meet at least twice yearly and at such times as the members may agree. iii) A meeting of the JMC may be convened by either Party giving not less than twenty (20) days' notice to the other or, in a case requiring urgent action, notice of such lesser duration as the members may agree upon. iv) Decisions of the JMC shall require unanimity. 20 v) Any member of the JMC may vote by written and signed proxy held by another member; - vi) Decisions of the JMC may be made without holding a meeting if all representatives of both Parties notify their consent thereto in the manner provided in Article 27. vii) GNPC and Contractor shall have the right to bring expert advisors to any JMC meetings to assist in the discussions of technical and other matters requiring expert advice. viii) The JMC may also establish such subcommittees as it deems appropriate for carrying out its functions including: a) a technical subcommittee; b) an audit subcommittee; c) an accounting subcommittee; d) a contracts and procurement subcommittee. ix) Costs and expenses related to attendance by GNPC in or outside Accra, (e.g. travel, transportation, lodging, per diem and insurance) in accordance with applicable laws, regulations and GNPC policies and procedures shall be borne by Contractor and treated as Petroleum Cost. 6.4 The JMC shall oversee Exploration Operations as follows (except those additional Sole Risk Exploration Operations carried out pursuant to Article 4.9 without JMC approval): i) Not later than ninety (90) days before the commencement of each Calendar Year, I Contractor shall prepare and submit to the JMC for its review and approval a detailed Work Programme and Budget covering all Exploration Operations which Contractor proposes to carry out in that Calendar Year and shall also give an indication of Contractor's tentative preliminary exploration plans for the succeeding Calendar Year. Where the Effective Date occurs later than 30 June in any Calendar Year Contractor shall have the option of submitting a single detailed Work Programme and Budget covering the remaining months of the Calendar Year in which the Effective Date occurs and the succeeding Calendar Year. ii) Upon notice to the Minister and GNPC, Contractor may amend any Work Programme or budget submitted to the JMC pursuant to this Article which notice will state why in Contractor's opinion the amendment is necessary or desirable. Any such amendment shall be submitted to the JMC for review and approval. iii) Every Work Programme submitted to the JMC pursuant to this Article 6.4 and every revision or amendment thereof shall be consistent with the requirements set out in Article 4.3 relating to minimum work and expenditure for the period of the Exploration Period in which such Work Programme or budget falls; iv) Contractor shall report any Discovery to GNPC immediately following such Discovery and shall place before the JMC for review its Appraisal Programme (or 21 • any amendment thereto) prior to submission pursuant to Article 8.4 or Article 8.6 thereof to the Minister and the Petroleum Commission. Within thirty (30) days of completion of the Appraisal Programme a JMC meeting to discuss the results of the Appraisal Programme shall be convened to take place before submission of the detailed Appraisal report to the Minister and the Petroleum Commission as provided for in Article 0; v) The JMC will review and approve Work Programmes and budgets and any amendments or revisions thereto, and Appraisal Programmes and any amendments or revisions thereto, submitted to it by Contractor pursuant to this Article, and timely give such advice as it deems appropriate which Contractor shall consider before submitting the Work Programmes, budget and Appraisal Programmes, as applicable, for approvals pursuant to this Agreement or as required by law. vi) After the date of the first Commercial Discovery, Contractor shall seek the concurrence of GNPC's JMC representatives, which concurrence shall not be unreasonably withheld, on any proposal for the drilling of an Exploration Well or Wells not associated with the Commercial Discovery and not otherwise required to be drilled under Article 4.3. If concurrence is not secured by Contractor, Contractor may nevertheless elect to drill the Exploration Well or Wells but only in the event of a subsequent Commercial Discovery associated with the Well or Wells shall the costs of such Well or Wells be considered Petroleum Costs for AOE purposes and I deductible cost for Ghana income tax purposes. 6.5 From the Date of Commercial Discovery the JMC shall have supervision of Petroleum Operations as follows: i. Within sixty (60) days after the Date of Commercial Discovery Contractor shall prepare and submit to the JMC for approval any revisions to its annual Work Programme and budget that may be necessary for the remainder of that Calendar Year and for the rest of the Exploration Period. ii. At least ninety (90) days before the Commencement of each subsequent Calendar Year Contractor shall submit to the JMC for review and approval a detailed Work Programme and budget setting forth all Development and Production Operations which Contractor proposes to carry out in that Calendar Year and the estimated cost thereof and shall also give an indication of Contractor's plans for the succeeding Calendar Year; and iii. Within sixty (60) days of the Date of Commencement of Commercial Production and thereafter not later than one hundred and twenty (120) days before the commencement of each Calendar Year Contractor shall submit to the JMC for its approval an annual production schedule which shall be in accordance with international good oilfield practice, and shall be designed to provide the most efficient, beneficial and timely production of the Petroleum resources. 6.6 Lifting schedules for Development and Production Areas shall be subject to JMC approval. 6.7 The JMC shall review all of Contractors reports on the conduct of Petroleum 22 Operations. 6.8 Contractor's insurance programine and the programmes for training and technology transfer submitted by Contractor and the accompanying budgets for such schemes and programmes shall be subject to JMC approval. 6.9 Any contract to be entered into or awarded by Contractor for the provision of services for Petroleum Operations shall be subject to approval by the JMC. 6.10 If during any meeting of the JMC the Parties are unable to reach agreement concerning any of the matters provided for in Article 6.5, 6.6, 6.7, 6.8, and 6.9 the matter shall be deferred for reconsideration at a further meeting to be held not later than fifteen (15) days following the original meeting: If after such further meeting the Parties are still unable to reach agreement, the matter in dispute shall be referred to the Parties forthwith. Failing agreement within fifteen (15) days thereafter, the matter in dispute shall, at the request of any Party, be referred for resolution under Article 24. 6.11 For the avoidance of doubt, the concurrence or approval of JMC representatives shall not be unreasonably withheld or delayed with respect to any proposal and/or program submitted by Contractor in accordance with this Article 6. l 23 • ARTICLE 7 RIGHTS AND OBLIGATIONS OF CONTRACTOR AND GNPC 7.1 Subject to the provisions of this Agreement, Contractor shall be responsible for the conduct of Petroleum Operations and shall perform its obligations in a workmanlike manner, with due care and expedition and in accordance with International Good Oil Field Practice, including without prejudice to the generality of the foregoing: a) conduct Petroleum Operations with utmost diligence, efficiency and economy, in accordance with best international petroleum industry practices, observing sound technical and engineering practices using appropriate advanced technology and effective equipment, machinery, materials and methods; b) take all practicable steps to ensure compliance with Section 3 of the Petroleum Law; including ensuring the recovery and prevention of waste of Petroleum in the Contract Area in accordance with best international petroleum industry practices; c) prepare and maintain in Ghana full and accurate records of all Petroleum Operations performed under this Agreement; , d) prepare and maintain accounts of all operations under this Agreement in such a manner as to present a full and accurate record of the costs of such Petroleum Operations, in accordance with the Accounting Guide; e) disclose to GNPC and the Minister any operating or other agreement among the Parties that constitute Contractor relating to the Petroleum Operations hereunder, which agreement shall not be inconsistent with the provisions of this Agreement. f) prepare and implement a programme (to be approved by the JMC) to develop GNPC's institutional capacity to become a competent operator; g) provide and be solely responsible for the payment of all costs related or incidental to all services, equipment and supplies necessary for the execution of the activities to be conducted by the Contractor under this Agreement and the related documents; h) prepare and submit in accordance with this Agreement for approval by the JMC (i) the Development Plan and (ii) such other matters as are specified in this Agreement and the related documents as subject to approval by the JMC; i) take all measures consistent with International best Practice (i) to control the flow and prevent loss or waste of Petroleum, (ii) to prevent any injurious ingress of water and damage to Petroleum bearing strata and (iii) to manage reservoir pressure; j) not to flare any Natural Gas except to the extent necessary to mitigate or prevent an emergency or for safe operations as provided in the Development Plan; 24 k) keep the Minister and GNPC promptly advised in wntmg of all material developments which occur, or the occurrence of which is reasonably foreseeable, affecting or likely to affect Petroleum Operations; 1) to take such steps in case of emergency, and make such immediate expenditures as are necessary in accordance with International best Practice, Environmental, Industrial Hygiene and Safety Legislation and/or this Agreement and the related documents for the protection of health, life, the environment and property, and to report in reasonable detail all such steps taken and expenditures made promptly to theJMC; m) notify promptly the Minister and GNPC if the Contractor becomes aware of any unusual event or circumstance occurring in the Contract Area or such other areas where Contractor is undertaking activities contemplated under this Agreement or the related documents that could reasonably be expected to adversely affect the environment; n) implement and administer contracts entered into with Affiliates in the same fashion as it would contracts entered into with non-Affiliate third parties in comparable transactions negotiated, implemented and administered on an arm's-length basis; 0) maintain or decommission, as appropriate, all existing facilities and assets and all other assets used or held for use in connection with Petroleum Operations, in accordance with International Good Oil Field Practice, applicable law and this Agreement; and\ p) perform and observe each other term, covenant and agreement of the Contractor f contained in this Agreement and the related documents. 7.2 In connection with its performance of Petroleum Operations, Contractor shall have the right within the terms of and pursuant to applicable law and regulations: a) to establish offices in Ghana and to assign to those offices such representatives as it shall consider necessary for the purposes of this Agreement; b) to use public lands for installation and operation of shore bases, and terminals, harbours and related facilities, petroleum storage and processing, pipelines from fields to terminals and delivery facilities, camps and other housing; c) to receive licenses and permission to install and operate such communications and transportation facilities as shall be necessary for the efficiency of its operations; d) to bring to Ghana, provided that reasonable efforts are made to identify Ghanaian personnel with the requisite skill and experience, in accordance with Contractor's plan for training and developing Ghanaian nationals referenced in Article 8.13 (0) and 21.1 such number of Foreign National Employees as shall be necessary for its operations, including employees assigned on permanent or resident status, with or without families, as well as those assigned on temporary basis such as rotational (rota) employees; 25 • e) to provide or arrange for reasonable housing, schooling and other amemties, permanent and temporary, for its employees and to import personal and household effects, furniture and vehicles, for the use of its personnel in Ghana; f) to be solely responsible for provision of health, accident, pension and life insurance benefit plans on its Foreign National Employees and their families; and such employees shall not be required to participate in any insurance, compensation or other employee or social benefit programs established in Ghana; g) to have, together with its personnel, at all times the right of ingress to and egress from its offices in Ghana, the Contract Area, and the facilities associated with Petroleum Operations hereunder in Ghana including the offshore waters, using its owned or chartered means of land, sea and air transportation; and h) to engage such Subcontractors, expatriate and national, including also consultants, and to bring such Subcontractors and their personnel to Ghana as are necessary in order to carry out the Petroleum Operations in a skillful, economic, safe and expeditious manner; and said Subcontractors shall have the same rights as Contractor specified in this Article 7.2 to the extent they are engaged by Contractor , for the Petroleum Operations hereunder. 7.3 Provided that Contractor has complied with all of its obligations under this Agreement, and as long as they appropriately complete applicable procedures and other requirements prescribed by relevant authorities, GNPC shall assist Contractor in carrying out Contractor's obligations expeditiously and efficiently as stipulated in this Agreement, and in particular GNPC shall use its reasonable best efforts to assist Contractor and its Subcontractors to: a) establish supply bases and obtain necessary communications facilities, equipment and supplies; b) obtain necessary approvals to open bank accounts in Ghana; c) subject to Article 21.3 hereof, obtain entry visas and work permits or any other documentation that may be required from time to time for such number of Foreign National Employees of Contractor and its Subcontractors engaged in Petroleum Operations and members of their families who will be resident in Ghana, and make arrangements for their travel, arrival, medical services and other necessary amenities; d) comply with Ghana customs procedures and obtain permits for the importation of necessary materials; e) obtain the necessary permits to transport documents, samples or other forms of data to foreign countries for the purpose of analysis or processing if such is deemed necessary for the purposes of Petroleum Operations; 26 f) assist with the acquisition of any approvals or waivers required from any Government agencies dealing with fishing, meteorology, navigation and communications as required; g) identify qualified Ghanaian personnel as candidates for employment by Contractor in Petroleum Operations; and h) procure access on competitive commercial terms for the storage, processing, transportation and/or marketing of Petroleum produced under this Agreement through facilities owned by the State, GNPC (or its Affiliates) or any third party. 7.4 All reasonable and documented expenses incurred by GNPC in connection with any of the matters set out in Article 7.3 above shall be borne by Contractor. 7.5 GNPC shall render assistance to Contractor in emergencies and major accidents, and such other assistance as may be requested by Contractor, provided that any reasonable expenses involved in such assistance shall be borne by Contractor. J 27 I ARTICLE 8 COMMERCIALITY 8.1 Contractor shall submit a Discovery Notice to the Minister and Petroleum Commission in writing as soon as possible after any Discovery is made, but in any event not later than thirty (30) days after the date any such Discovery is made. 8.2 As soon as possible after the analysis of the test results of such Discovery is complete and in any event not later than one hundred (100) days from the date of such Discovery, Contractor shall by a further notice in writing to the Minister indicate whether in the opinion of Contractor the Discovery merits Appraisal. 8.3 Where the Contractor does not make the indication required by Article 8.1 and 8.2 within the period indicated or indicates that the Discovery does not merit Appraisal, Contractor shall, subject to Article 8.20 below, relinquish the Discovery Area associated with the Discovery. 8.4 Where Contractor indicates that the Discovery merits Appraisal, Contractor shall within one hundred and eighty (180) days from the date of such Discovery submit to the Petroleum Commission for approval and to the Minister for information purposes an Appraisal Programme to be carried out by Contractor in respect of such Discovery. For the avoidance of doubt unless otherwise instructed by the Petroleum Commission, Contractor shall appraise each Discovery where Contractor indicates that such Discovery merits Appraisal. 8.5 In the absence of regulations of general application otherwise governing the process, the Petroleum Commission and the Contractor shall adhere to the following procedure in connection with the submission for approval of an Appraisal Programme. The Petroleum Commission shall within ninety (90) days of submission of the Appraisal Programme, give the Contractor a notice in writing stating: i. whether or not the Appraisal Programme has been approved or conditionally approved; ii. any revisions or improvements required by the Petroleum Commission to be made to the proposed Appraisal Programme, and the reasons thereof; or iii. if conditionally approved, any conditions for approval of the proposed Appraisal I Programme. If the Petroleum Commission does not provide such notice after the ninety (90) Day time I period described above then the Appraisal Programme shall be deemed not approved. In the event of a dispute arising out of this Article 8.5 Contractor may lodge a complaint with the Minister within thirty (30) days after receipt of such notice or the date deemed not approved, as applicable. If such dispute is not resolved by the Minister within thirty (30) days from the date such complaint was lodged, such dispute shall be resolved in accordance with Article 24. If the Petroleum Commission has not given a notice in writing pursuant to this Article, then the arbitration panel shall determine whether the Petroleum Commission's failure to give such notice was reasonable and lawful. If the Petroleum Commission has given a 28 notice in writing pursuant to this Article, and the Parties cannot agree on the revisions or conditions, then the arbitration panel shall determine whether the Petroleum Commission's giving such revisions or conditions proposed was reasonable and lawful. 8.6 Where Contractor seeks to amend an approved Appraisal Programme, it shall submit such amendment to the JMC for review and approval pursuant to Article 6.4(v)before submission to the Petroleum Commission for approval. 8.7 Unless Contractor and the Minister otherwise agree in any particular case, Contractor shall have a period of two (2) years from the date of Discovery to complete the Appraisal Programme. In the event Contractor requires a period of more than the two (2) years to complete the Appraisal Programme, Contractor shall submit request to the Minister for an extension with a firm programme with timelines to justify the request. 8.8 Contractor shall commence the Appraisal Programme within one hundred and fifty (150) days from the date of approval of the Appraisal Programme by the Petroleum Commission. Where the Contractor is unable to commence Appraisal within one hundred and fifty (150) days from the date of approval of the Appraisal Programme by the Petroleum Commission, GNPC shall be entitled to exercise the option provided for in Article 9.1 to enable prompt Appraisal, provided however that after Contractor actually embarks on Appraisal or obtains an extension of time for such work this option may not be exercised. 8.9 Not later than ninety (90) days from the date on which said Appraisal Programme relating to the Discovery is completed, Contractor will submit to the Minister and Petroleum Commission a report-containing the results of the Appraisal Programme. Such report shall include all available technical and economic data relevant to a determination of commerciality, including, but not limited to, geological and geophysical conditions, such as structural configuration, physical properties and the extent of reservoir rocks, areas, thickness and depth of pay zones, pressure, volume and temperature analysis of the reservoir fluids; preliminary estimates of Crude Oil and/or Natural Gas reserves; recovery drive characteristics; anticipated production performance per reservoir and per well; fluid characteristics, including gravity, sulphur percentage, sediment and water percentage and refinery assay pattern. 8.10 Not later than ninety (90) days from the date on which said Appraisal Programme is completed Contractor shall, by a further notice in writing, inform the Minister whether the Discovery in the opinion of Contractor is or is not a Commercial Discovery. 8.11 If Contractor fails to notify the Minister as provided in Article 8.1 or informs the I Minister that the Discovery is not commercial, then subject to Article 8.21 Contractor shall relinquish such Discovery Area; provided, however, that in appropriate cases, before declaring that a Discovery is not commercial, Contractor shall consult with the other Parties and may make appropriate representations proposing minor changes in the fiscal and other provisions of this Agreement which may, in the opinion of Contractor, affect the determination of commerciality. The other Parties may, where feasible, and in the best interests of the Parties agree to make such changes or modifications in the existing arrangements. 29 8.12 If Contractor pursuant to Article 8.10 informs the Minister that the Discovery is a Commercial Discovery, Contractor shall not later than one hundred and eighty (180) days thereafter, prepare and submit to the Minister a Development Plan. 8.13 The Development Plan referred to in Article 8.12 shall be based on detailed engineering studies and shall include: a) Contractor's proposals for the delineation of the proposed Development and Production Area and for the development of any reservoir(s), including the method for the disposal of Associated Gas in accordance with the provisions of Article 14.4; b) the way in which the Development and Production of the reservoir is planned to be financed; . c) Contractor's proposals relating to the spacing, drilling and completion of wells, the production, storage, processing, gas utilization, transportation, delivery facilities and necessary infrastructure developments required for the production, storage and transportation of the Petroleum, including without limitation: i) the estimated number, size and production capacity of production facilities if any; ii) the estimated number of Production Wells; iii) the particulars of feasible alternatives for transportation of the Petroleum, including pipelines; iv) the particulars of onshore installations required, including the type and specifications or size thereof; and v) the particulars of other technical equipment required for the operations; d) the estimate of the reserves together with the estimated annual production profiles throughout the life of the field to be developed pursuant to the Development Plan for Crude Oil and Natural Gas from the Petroleum reservoirs; e) tie-ins with other petroleum fields where applicable; f) information on operation and maintenance; g) a description of technical solutions including enhanced recovery methods; h) estimates of capital and operating expenditures; i) the economic feasibility studies carried out by or for Contractor in respect of alternative methods for Development of the Discovery, taking into account: i) location; ii) water depth (where applicable); 30 iii) meteorological conditions; iv) estimates of capital and operating expenditures; and v) any other relevant data and evaluation thereof; j) the safety measures to be adopted in the course of the Development and Production Operations, including measures to deal with emergencies; k) environmental impact assessments as required by the applicable laws of the Republic of Ghana in effect and as amended from time to time; 1) measures to protect the environment and a contingency plan for handling of emergencies (including the provision and maintenance of equipment stockpiles to respond to an emergency m) Contractor's proposals with respect to the procurement of goods and services obtainable in Ghana; n) Contractor's technology transfer plan 0) Contractor's plan for training and employment of Ghanaian nationals; p) the timetable for effecting Development Operations; and q) a plan for decommissioning and abandonment 8.14 The date of the Minister's approval of the Development Plan shall be the Date of Commercial Discovery. 8.15 The Minister shall within ninety (90) Days following submission of the Development Plan give Contractor a notice in writing stating: i) whether or not the Development Plan as submitted has been approved or conditionally approved; ii) any revisions proposed by the Minister to the Development Plan as submitted, and the reasons thereof; or iii) if conditionally approved, any conditions pursuant to which the Development Plan is approved. 8.16 If the Minister does not provide such notice within ninety (90) Days following the submission of the Development Plan by the Contractor and thirty (30) days following a second notice from Contractor requesting the Minister's approval, such Development Plan shall be deemed not approved. 8.18 Where the Development Plan is not approved by the Minister as provided under Article 8.16 above, the Parties shall within a period of thirty (30) days from the date of the notice by the Minister as referred to under Article 8.16 above meet to agree on the revisions or conditions proposed by the Minister to the Development Plan. In the event 31 of failure to agree to the proposed revisions or conditions, within fourteen (14) days following said meeting any matters in dispute between the Minister and the Contractor shall be referred for resolution in accordance with Article 24.7. If the Minister has not given a notice in writing pursuant to Article 8.16, then the arbitration panel shall determine whether the Minister's failure to give such notice was reasonable and lawful. If the Minister has given a notice in writing pursuant to Article 8.l6(ii) or 8. 16(iii), and the Parties cannot agree on the revisions or conditions, then the arbitration panel shall determine whether the Minister's giving such revisions or conditions proposed was reasonable and lawful. 8.19 Where the issue in dispute referred for resolution pursuant to Article 24 is finally decided in favour of Contractor the Minister shall forthwith give the requisite approval to the Development Plan submitted by Contractor. 8.20 Where the issue in question referred for resolution pursuant to Article 24 is finally decided in favour of the Minister in whole or in part, Contractor shall forthwith: i) amend the proposed Development Plan to give effect to the final decision rendered under Article 24, and the Minister shall give the requisite approval to such revised Development Plan; or ii) subject to Article 8.21 below relinquish the Discovery Area. 8.21 Notwithstanding the relinquishment provisions of Articles 8.3 and 8.11 above, if Contractor indicates that a Discovery does not at the time merit appraisal, or after appraisal does not appear to be a Commercial Discovery but may merit appraisal or potentially become a Commercial Discovery at a later date during the Exploration Period, then Contractor need not relinquish the Discovery Area and may continue its Exploration Operations in the Contract Area during the Exploration Period; provided that the Contractor shall explain what additional evaluations, including Exploration work or studies, are or may be planned in order to determine whether subsequent appraisal is warranted or that the Discovery is commercial. Such evaluations shall be performed by Contractor according to a specific time table, subject to its right of earlier relinquishment of the Discovery Area. After completion of the evaluations, Contractor shall make the indications called for under Article 8.4 or 8.1 0 and either proceed with appraisal, confirm commerciality or relinquish the Discovery Area. In any case, if a Discovery is made in the Initial Exploration Period or First Extension Period, the Contractor shall by the end of the subsequent phase (that is the First Extension Period or Second Extension Period as the case may be), take a decision to appraise the Discovery or relinquish such Discovery. Likewise, if the Contractor has completed the appraisal of a Discovery in the Initial Exploration Period or First Extension Period, the Contractor shall by the end of the subsequent phase (that is, the First Extension Period or Second Extension Period as the case may be), take a decision to determine commerciality or relinquish such Discovery. If at the end of the Exploration Period the Contractor has neither indicated its intent to proceed with an Appraisal Programme nor declared the Discovery to be a Commercial Discovery, then the Discovery Area shall be relinquished. 8.21 Upon completion of an Appraisal Programme and before Contractor makes a determination of non-comrnerciality, Contractor may consult with the other Parties and 32 may make appropriate representations proposing minor changes in the fiscal and other _ provisions of this Agreement which may, in the opinion of Contractor, affect the determination of commerciality. The other Parties may, agree to make such changes or modifications in the existing arrangements. In the event the Parties do not agree on such changes or modifications, then subject to Articles 8.20 and 8.22 Contractor shall relinquish the Discovery Area. 8.22 Nothing in Articles 8.4, 8.11, 8.19 or 8.20 above shall be read or construed as requiring Contractor to relinquish: a) any area which constitutes or forms part of another Discovery Area in respect of which: i) Contractor has given the Minister a separate notice stating that such Discovery merits appraisal; or ii) Contractor has given the Minister a separate notice indicating that such Discovery is a Commercial Discovery; or b) any area which constitutes or forms part of a Development and Production Area. 8.23 For the avoidance of doubt, where Contractor makes a Discovery after the expiration of the Exploration Period Contractor shall notify the Minister of such Discovery pursuant to Article 8.1 and surrender such Discovery to GNPC. 8.24 In the event a field extends beyond the boundaries of the Contract Area, the Minister may require the Contractor to exploit said field in association with the third party holding the rights and obligations under a petroleum agreement covering the said field (or GNPC as the case may be). The exploitation in association with said third party or GNPC shall be pursuant to good unitization and engineering principles and in accordance with International Good Oil Field Practice. 33 I ARTICLE 9 SOLE RISK ACCOUNT 9.1 Subject to Article 8.2, GNPC may notify Contractor that at its Sole Risk, it may commence to appraise a Discovery, provided that within thirty (30) days of such notification from GNPC, Contractor may elect to commence to appraise that Discovery within its Work Programme. 9.2 Where an appraisal undertaken under Article 9.1 at the Sole Risk of GNPC results in a determination that a Discovery is a Commercial Discovery, Contractor may develop the Commercial Discovery upon reimbursement to GNPC of all expenses incurred in undertaking the appraisal and after arranging with GNPC satisfactory terms for the payment of a premium equivalent to seven hundred per cent (700%) of such expenses. Such premium shall not be reckoned as cost of Petroleum Operations for the purpose of the Accounting Guide. In the event that Contractor declines to develop said Discovery, Contractor shall relinquish the Development and Production Area established by the Appraisal Programme conducted by GNPC under Article 9.1. 9.3 During the Exploration Period GNPC may, at its Sole Risk, require Contractor to continue drilling to penetrate and test horizons deeper than those contained in the Work Programme of Contractor or required under Article 4. GNPC may also at its Sole Risk require the Contractor to test a zone or zones which Contractor has not included in Contractor's test programme. Notice of any such requirement shall be given to Contractor in writing as early as possible prior to or during the drilling of the well, but in any case not after Contractor has begun work to complete or abandon the well. The exercise by GNPC of this right shall be in an agreed manner such agreement not to be unreasonably withheld or delayed by Contractor which does not prevent Contractor from complying with its work obligations under Article 4.3. 9.4 At any time before commencing deeper drilling as required by GNPC pursuant to Article 9, Contractor may elect to embody the required drilling in its own Exploration Operation, in which case any resulting Discovery shall not be affected by the provisions ofthis Article 9 shall not apply to any resulting discovery. 9.5 Where any Sole Risk deeper drilling required pursuant to this Article 9 results in a Discovery, GNPC shall have the right, at its Sole Risk, to appraise, develop, produce and dispose of all Petroleum from such Discovery and if it desires to do so shall conduct such Sole Risk operations unless GNPC proposes otherwise and Contractor agrees. Provided however that if at the time such Petroleum is tested from the producing horizon in a well, Contractor's Work Programme includes a well or wells to be drilled to the same producing horizon, and provided that the well or wells drilled by Contractor result(s) in a Petroleum producing well producing from the same horizon, Contractor shall, after reimbursing GNPC for all costs associated with its Sole Risk deeper drilling in said well and after arranging with GNPC satisfactory terms for the payment of a premium equivalent to seven hundred per cent (700%) of such expenses, have the right to include production from that well in its total production for the purposes of establishing a Commercial Discovery, and, if a Commercial Discovery is subsequently established, to develop, produce and dispose of the Petroleum in accordance with the 34 provisions of this Agreement Such premium shall not be reckoned as Petroleum Costs for the purposes of the Accounting Guide. 9.6 Alternatively, if at the time such Petroleum is tested from a producing horizon in a well pursuant to a Sole Risk operation Contractor's Work Programme does not include a well to be drilled to said horizon, Contractor has the option to appraise and lor develop, as the case may be, the Discovery for its account under the terms of this Agreement if it so elects within a period of sixty (60) days after such Discovery. In such case, Contractor shall reimburse GNPC for all expenses incurred by GNPC in connection with such Sole Risk operations, and shall make satisfactory arrangements with GNPC for the payment of a premium equivalent to seven hundred percent (700%) of such expenses Such premium shall not be reckoned as Petroleum Costs for the purposes of the Accounting Guide. 9.7 During the term of this Agreement, GNPC shall have the right, at its Sole Risk, and upon six (6) months prior notice to Contractor, to drill one (1) or two (2) wells per Calendar Year within the Contract Area provided that the work intended to be done by GNPC had not been scheduled for a Work Programme to be performed by Contractor and the exercise of such right by GNPC and the arrangement made by GNPC for undertaking such drilling do not interfere with a Work Programme or prevent Contractor from satisfying its work obligations. Within thirty (30) days after receipt of such notice Contractor may elect to drill the required well or wells as part of Contractor's Exploration Operations. 9.8 In the event that a well drilled at the Sole Risk of GNPC in accordance with Article 9.7 above results in a Discovery, GNPC shall notify Contractor and shall have the right to appraise and develop as the case may be or require Contractor to develop, after GNPC declares a Commercial Discovery, such Commercial Discovery for a mutually agreed service fee, so long as Contractor has an interest in the Contract Area, GNPC taking all the interest risk and costs and hence having the right to all Petroleum produced from the Commercial Discovery, provided however that Contractor has the option to appraise and/or develop, as the case may be, the Discovery for its account under the terms of this Agreement if it so elects within a period of sixty (60) days after receipt of GNPC's written notice of such Discovery. 9.9 Contractor shall reimburse GNPC for all expenses incurred by GNPC in connection with such Sole Risk operations, and shall make satisfactory arrangements with GNPC for the payment of a premium equivalent to seven hundred percent (700%) of such expenses before exercising the option under Article 9.7. Such premium shall not be reckoned as Petroleum Costs for the purposes of Accounting Guide. 9.10 In the event that Contractor declines to develop the Commercial Discovery or no agreement is reached on the service fee arrangement as provided for in Article 9.8 above, Contractor shall relinquish the Development and Production Area associated with such Commercial Discovery. 9.11 Sole Risk operations under this Article 9 shall not extend the Exploration Period nor the term of this Agreement provided however that and Contractor shall complete any agreed programme of work commenced by it under this Article at GNPC's Sole Risk, and subject to such provisions hereof as the Parties shall then agree, even though the 35 I Exploration Period as defined in Article 3 or the term of this Agreement may have expired. 9.12 GNPC shall indemnify and hold harmless Contractor against all actions, claims, demands and proceedings whatsoever brought by any third party or the State, arising out of or in connection with Sole Risk operations under this Article 9, unless such actions, claims, demands and proceedings are caused by Contractor's gross negligence or willful misconduct. I 36 ARTICLE 10 - SHARING OF CRUDE OIL 10.1 Gross Production of Crude Oil from each Development and Production Area shall (subject to a Calendar Year adjustment developed under the provisions of Article 10.7) be distributed amongst the Parties in the following sequence and proportions: a) Ten percent (10%) of the Gross Production of Crude Oil shall be delivered to the State as ROYALTY, pursuant to the provisions of the Petroleum Law. Upon notice to Contractor, the State shall have the right to elect to receive cash in lieu of its royalty share of such Crude Oil. The State's notice shall be given to Contractor at least ninety (90) days in advance of each lifting period, such periods to be established pursuant to the provisions of Article 10.7. In such case, said share of Crude Oil shall be delivered to Contractor and it shall pay to the State the value of said share in cash at the relevant weighted average Market Price for the relevant period as determined in accordance with Article 11.7; b) After distribution of such amounts of Crude Oil as are required pursuant to Article 10.1 (a), the amount of Crude Oil, if any, shall be delivered to GNPC to the extent it is entitled for Sole Risk operations under Article 9; c) After distribution of such amounts of Petroleum as are required pursuant to Articles 1 0.1 (a) and I 0.1 (b), the remaining Crude Oil produced from each Development and Production Area shall be distributed to Contractor and, subject to Article 1 0.1 (e) below, to GNPC on the basis of their respective Participating Interests pursuant to Article 2; d) The State's AOE (as hereinafter defined), if any, shall be distributed to the State out of the Contractor's share of Crude Oil determined under Article 10.1 (c). The State shall also have the right to elect to receive cash in lieu of the AOE share of Crude Oil accorded to it pursuant to Article 10.2. Notification of said election shall be given in the same notice in which the State notifies Contractor of its election to receive cash in lieu of Crude Oil under Article 1 0.1 (a). In such case, said Crude oil share shall be delivered to Contractor and it shall pay to the State the value of said share in cash at the relevant weighted average Market Price for the relevant period as determined in accordance with Article 11.7; e) In the event that GNPC has failed to pay any amounts due to Contractor pursuant to Article 15.2 of this Agreement ( such amounts with interest thereon in accordance I with Article 26.6 being hereinafter called "Default Amounts") and for so long as any such advances and interest thereon remain uncovered by Contractor, an amount of Crude Oil shall be delivered to GNPC sufficient in value to reimburse it for its share of Production Costs paid by it to that date, until such share of Production Costs has been fully reimbursed to it, after which a volume of Crude Oil shall be delivered to Contractor equivalent in value to the outstanding amounts of the aforesaid Default Amounts until such Default Amounts are fully recovered by Contractor. The value of the Crude Oil for the purpose of this Article 10 shall be the Market Price determined pursuant to Article 11.7 37 10.2 At any time the State shall be entitled to a portion of Contractor's share of Crude Oil then being produced from each separate Development and Production Area (hereinafter referred to as "Additional Oil Entitlements" or "AOE") on the basis of the after-tax inflation-adjusted rate of return ("ROR") which Contractor has achieved with respect to such Development and Production Area as of that time. Contractor's ROR shall be calculated on its NCF and shall be determined separately for each Development and Production Area at the end of each Month in accordance with the following computation- (a) Definitions: "NCF" means Contractor's net cash flow for the Month for which the calculation is being made, and shall be computed in accordance with the following formula: NCF = x - y - z where "x" equals all revenues received during such Month by Contractor from the Development and Production Area, including an amount computed by multiplying the amount of Crude Oil taken by Contractor during such Month in accordance with Articles 1 0.1 (d) and 10.1 (e); excluding such Crude Oil taken by Contractor for payment of interest in respect of Petroleum Costs incurred by Contractor on GNPC's behalf, by the Market Price applicable to such Crude Oil during the Month when lifted, plus any other proceeds specified in the Accounting Guide received by Contractor, including, without limitation, the proceeds from the sale of any assets to which Contractor continues to have title. For the avoidance of doubt, "x" shall not include revenues from Crude Oil lifted by Contractor which is part of another Party's entitlement (e.g. Royalty, AOE Oil delivered to Contractor because the State has elected to receive cash in lieu of Crude Oil, Crude Oil purchased by Contractor from GNPC or the State) but shall include revenues from Crude Oil owned by Contractor but lifted by another Party (e.g. Crude Oil purchased by GNPC or the State from Contractor). "y" equals one-twelfth e /iz) of the income tax paid by the Contractor to the State with respect to the Calendar Year in respect of the Development and Production Area. If there are two (2) or more Development and Production Areas, the total income tax paid by Contractor in accordance with the Petroleum Income Tax Law 1987 shall for purposes of this calculation be allocated to the Development and Production Area on the basis of hypothetical tax calculations for the separate Development and Production Areas. The hypothetical tax calculation for each Development and Production Area shall be determined by allocating the total amount of tax incurred for each Calendar Year by Contractor under the Petroleum Income Tax Law to each Development and Production Area based on the ratio that the chargeable income from a given Development and Production Area bears to the total chargeable income of Contractor. The chargeable income of Contractor is determined under section 2 of the Petroleum Income Tax Law and the chargeable income of a Development and Production Area shall be calculated by deducting from the gross income derived from 1 or allocated to that Area those expenses deductible under section 3 of the Petroleum 38 Income Tax Law which are reasonably allocable to that Area. A negative chargeable income for an Area shall be treated as zero for purposes of this allocation and not more (or less) than the total income tax paid by Contractor shall be allocated between the Areas. "z" equals all Petroleum Costs specified in the Accounting Guide and expended by Contractor during such Month with respect to the. Development and Production Area, including any Petroleum Costs paid by Contractor on GNPC's behalf, and not reimbursed by GNPC within the month, provided that all Petroleum Costs for Exploration Operations not directly attributable to a specific Development and Production Area shall for purposes of this calculation be allocated to the Development and Production Area having the earliest date of Commencement of Commercial Production; and provided further that for the purpose of the ROR calculation Petroleum Costs shall not include any amounts in respect of interest on loans obtained for the purposes of carrying out Petroleum Operations. "F An", "SAn", "TAn" and "ZAn" means First Account, Second Account, Third Account and Fourth Account, respectively, and represent amounts as of the last day of the Month in question as determined by the formulae in (b) below. "FAn-I", "SAn-I". "TAn-I", and "ZAn-I", respectively, mean the lesser of (i) the FAn, SAn, TAn, or ZAn, as the case may be, as of the last day of the Month immediately preceding the Month in question, or (ii) zero. Stated otherwise, F An-I shall equal FAn as of the last day of the Month immediately preceding the Month in question if such FAn was a negative number, but shall equal zero if such FAn was a positive number. Likewise, SAn-1 shall equal SAn as of the last day of the Month immediately preceding the Month in question if such SAn was a negative number, but shall equal zero if such SAn was a positive number. Likewise TAn-1 shall equal TAn as of the last day of the Month immediately preceding the Month in question if such TAn was a negative number, but shall equal zero if such TAn was a positive number. Likewise, ZAn-1 shall equal ZAn as of the last day of the month immediately preceding the Month in question if such ZAn was a negative number, but shall equal zero if such ZAn was a positive number. In the ROR calculation for the first Month of Petroleum Operations, FAn-I, SAn-I, TAn-J and ZAn-J shall be zero. "i" for the month in question equals one (1) subtracted from the quotient of the United States Industrial Goods Wholesale Price Index ("USIGWPI) for the Month second preceding the Month in question (e.g. use August data for October's computation) as first reported in the International Financial statistics of the International Monetary Fund, divided by the USIGWPI for the same second preceding Month of the immediately preceding Calendar Year as first reported in the International Financial Statistics of the International Monetary Fund. If the USIGWPI ceases to be published, a substitute U.S. Dollar-based price index shall be used. "n" refers to the nth Month in question. "n-l " refers to the Month immediately preceding the nth Month I b) Formulae: 39 I ( ( (0.125 + i»)) FAn = FAn_I 1 + 12 . + NCF ( ( (0.175 + i»)) SAn = SAn_I 1 + 12 + NCF In the calculation of SAn an amount shall be subtracted from NCF identical to the value of any AOE which would be due to the State if reference were made hereunder only to the FAn. ( ( (0.225 + -» TA" = TA,,_, 1 + 12 + NCF In the calculation of TAn an amount shall be subtracted from NCF identical to the value of any AOE which would be due to the State if reference were made hereunder only to the FAn and SAn. ( ( (0.275 + -» ZAn = ZAn_I 1 + 12 + NCF In the calculation of ZAn an amount shall be subtracted from NCF identical to the value of any AOE which would be due to the State if reference were made hereunder only to the FAn, SAn and TAn. c) Prospective Application: The State's AOE measured in barrels of oil will be as follows: i) If FAn, SAn, TAn and ZAn are all negative, the State's AOE for the Month in question shall be zero; ii) If FAn is positive and SAn, TAn and ZAn are all negative, the State's AOE for the Month in question shall be equal to the absolute amount resulting from the following monetary calculation: 5%. of the FAn for that Month divided by the weighted average Market Price as determined in accordance with Article 11.7. iii) If both FAn and SAn are positi ve, but both TAn and ZAn are negati ve, the State's AOE for the Month in question shall be equal to an absolute amount resulting from the following monetary calculation: , 40 the aggregate of 5% of FAn for that Month plus 15% of the SAn for that Month all divided by the weighted average Market Price as determined in accordance with Article 11.7. iv) If FAn, SAn and TAn are all positive but ZAn is negative, the State's AOE for the Month in question shall be equal to the absolute amount resulting from the following monetary calculation: the aggregate of 5% of the FAn for that Month plus 15% of the SAn for that Month plus 18% of the TAn for that Month all divided by the weighted average Market Price as determined in accordance with Article 11.7. v) If FAn, SAn, TAn and ZAn are all positive, the State's AOE for the Month in question shall be equal to the absolute amount resulting from the following monetary calculation: the aggregate of 5% of the FAn for that Month plus .15% of the SAn for that Month plus 18% of the TAn for that Month plus 20% of the ZAn for that Month all divided by the weighted average Market Price as determined in accordance with Article 11.7. d) The AOE calculations shall be made in U.S. Dollars with all non-dollar expenditures converted to U.S. Dollars in accordance with Section 1.3.5 of Annex 2. When the AOE calculation cannot be definitively made because of disagreement on the World Market Price or any other factor in the formulae, then a provisional AOE calculation shall be made on the basis of best estimates of such factors, and such provisional calculation shall be subject to correction and revision upon the conclusive determination of such factors, and appropriate retroactive adjustments shall be made. e) The AOE shall be calculated on a monthly basis, with the AOE to be paid commencing with the first Month following the Month in which the FAn, SAn, TAn, or ZAn, (as applicable) becomes positive. Because the precise amount of the AOE for a Calendar Year cannot be determined with certainty until after the end of that Calendar year, deliveries (or payments in lieu) of the AOE with respect to a Month shall be made during such Calendar Year based upon the Contractor's good faith estimates of the amounts owing, with any adjustments following the end of the Calendar Year to be settled pursuant to the procedures agreed to pursuant to Article 10.7. Final calculations of the AOE shall be made within thirty (30) days following the filing by the Contractor of the annual tax return for such Calendar year pursuant to the Petroleum Income Tax Law, and the amount of the AOE shall be appropriately adjusted in the event of a subsequent adjustment of the amount of tax owing on such term. 10.3 GNPC shall act as agent for the State in the collection of all Petroleum or money accruing to the State under this Article and delivery or payment to GNPC by Contractor shall discharge Contractor's liability to deliver the share of the State. I 41 10.4 The State or GNPC, having met the requirements of Article 15.1, may elect, in accordance with terms and conditions to be mutually agreed by the Parties, that all or part of the Crude Oil to be distributed to the State or to GNPC pursuant to this Article shall be sold and delivered by the State or GNPC to Contractor or its Affiliate for use and disposal and in such case Contractor or its Affiliate shall pay to the State or to GNPC, as the case may be, the Market Price for any Crude Oil so sold and delivered. Market Price for purposes of this Article 10.4 shall be the amounts actually realized by Contractor or said Affiliate on its resales of said Crude Oil in arm's length commercial transactions, or for its other resales or dispositions of said Crude Oil, based upon world market prices determined in the manner specified in Article 11.7(b). 10.5 Ownership and risk of loss of all Crude Oil produced from the Contract Area which is purchased, and all of its percentage Interest or other Crude Oil lifted, by Contractor shall pass to Contractor at the outlet flange ("Delivery Point") of the marine terminal or other storage facility for loading into tankers or other transportation equipment referred to in Article 11.1. 10.6 Subject to the provisions of Article 15 hereof, Contractor shall have the right freely to export and dispose of all the Petroleum allocated and/or delivered to it pursuant to this Article. 10.7 The Parties shall through consultation enter into supplementary agreements concerning Crude Oil lifting procedures, lifting and tanker schedules, loading conditions, Crude Oil metering, and the settlement oflifting imbalances, if any, among the Parties at the end of each Calendar Year. The Crude Oil to be distributed or otherwise made available to the Parties in each Calendar Year in accordance with the preceding provisions of this Article shall insofar as possible be in reasonably equal monthly quantities. 10.8 To assist in the making of the AOE calculation in accordance with Article 10.2, there is attached as Annex 3 to this Agreement a worked example of the calculation using hypothetical figures, rates and thresholds, for the purpose of illustration only 42 ARTICLE 11 MEASUREMENT AND PRICING OF CRUDE OIL 11.1 Crude Oil shall be delivered by Contractor to storage tanks or other suitable holding facility constructed, maintained and operated in accordance with applicable laws and good oilfield practice. Crude Oil shall be metered or otherwise measured for quantity and tested for quality in such storage tanks for all purposes of this Agreement. Any Party may request that measurements and tests be done by an internationally recognized inspection company. Contractor shall arrange and pay for the conduct of any measurement, or test so requested provided, however, that in the case of (1) a test requested for quality purposes and/or (2) a test requested on metering (or measurement) devices, or where the test results demonstrate that such devices are accurate within acceptable tolerances agreed to by the Parties or if not established by the Parties, then in accordance with International Good Oil Field Practice, the Party requesting the test shall reimburse Contractor for the costs associated with the test or tests. 11.2 GNPC or its authorized agents shall have the right: a) to be present at and to observe such measurement of Crude Oil; b) to examine and test whatever appliances are used by Contractor therefor; c) to appoint an independent Surveyor to inspect, measure and determine the quality of Crude Oil. d) to install or require Contractor to install equipment for the purpose of determining the quantity and quality of Crude Oil. 11.3 In the event that GNPC considers Contractor's methods of measurement to be inaccurate GNPC shall notify Contractor to this effect and the Parties shall meet within ten (10) days of such notification to discuss the matter. Where after thirty (30) days the Parties cannot agree over the issue they shall refer for resolution under Article 24 the sole question of whether Contractor's method of measuring Crude Oil is accurate and reasonable. Retrospective adjustments to measurements shall be made where necessary to give effect to the decision rendered under Article 24. 11.4 If upon the examination or testing of appliances provided for in Article 11.2 any such appliances shall be discovered to be defective: a) Contractor shall take immediate steps to repair or replace such appliance; and b) subject to the establishment of the contrary, such error shall be deemed to have existed for three (3) months or since the date of the last examination and testing, whichever occurred more recently. 11.5 In the event that Contractor desires to adjust, repair or replace any measuring appliance, it shall give GNPC reasonable notice to enable GNPC or its authorized agent to be present. 43 I 11.6 Contractor shall keep full and accurate accounts concerning all Petroleum measured as aforesaid and provide GNPC with copies thereof on a monthly basis, not later than ten of each month. (10) days after the end 11.7 The Market Price for Crude Oil delivered to Contractor hereunder shall be established with respect to each lifting or other period as provided elsewhere in this Agreement as follows: a) on Crude Oil sold by Contractor in "arm's length commercial transactions"(defined in Article 11.7(c) below), the Market Price shall the price actually realized by Contractor on such sales; b) on sales of Crude Oil by Contractor not in an arm's length commercial transaction, on exports by Contractor without sale or on sales under Article 15.2, the Market Price shall be determined by reference to world market prices of comparable Crude Oils sold in ann's length transactions for export in the major world petroleum markets, and adjusted for oil quality, location, timing and conditions of pricing, delivery and payment; provided that in the case of sales under Article 15.2 where such sales relate to part only of Contractor's entitlement, prices actually realized by Contractor in sales of the balance of its proportionate share falling within Article 11.7(a) above shall be taken into account in determining Market Price. For purposes of this Article 11. 7 (b), "comparable Crude Oils" shall mean Crude Oils of similar API gravity, sulphur content, and acidity, and if Contractor cannot identify comparable Crude Oils for the purposes of this Article, the Parties may agree on an alternative method for establishing a comparable Crude Oil. c) sales in "arm's length commercial transactions" shall mean sales to purchasers independent of the seller, which do not involve Crude Oil exchange or barter transactions, government to government transaction, sales directly or indirectly to Affiliates, or sales involving consideration other than payment in u.s. Dollars or currencies convertible thereto, or affected in whole or in part by considerations other than the usual economic incentives for commercial arm's length Crude Oil sales; d) the price of Crude Oil shall be expressed in u.s. Dollars per barrel, F.O.B. the point of delivery by Contractor; e) if Crude Oils of various qualities are produced from the Contract Area, the market Price shall be determined separately for each type sold and/or exported by Contractor, only to the extent that the different quality grades remain segregated through to the point where they are sold, and if grades of different quality are commingled into a common stream, Contractor and GNPC shall agree on an equitable methodology for assessing relative value for each grade of Crude Oil comprising the blend and shall implement the agreed methodology for having the producer(s) of higher quality Crude Oil(s) be reimbursed by the producer(s) of lower quality Crude Oil(s);. 11.8 Contractor shall provide to GNPC information in accordance with Section 7 of the Accounting Guide on each lifting which shall include the buyer of the cargo, sales basis with respect to Benchmark crude oil, the pricing basis, the differential, any deductions 44 and the Market Price determined by it for each lifting not later than thirty five (35) days after the end of such lifting. For the purposes of this Article 11.8 the obligation of Contractor shall be joint and several. . 11.9 If GNPC considers that the Market Price notified by Contractor was not correctly determined in accordance with the provisions of Article 11.7, it shall so notify Contractor not later than thirty (30) days after notification by Contractor of such price, and GNPC and Contractor shall meet not later than twenty (20) days thereafter to agree on the correct Market Price. 11.10 In the event that GNPC and Contractor fail to agree upon the commencement of meetings for the purpose described in Article 11.9 above, the Market Price shall be referred for determination in accordance with Article 24 of this Agreement. 11.11 Pending a determination under Article 11.10 the Market Price will be deemed to be the last Market Price agreed or determined, as the case may be, or if there has been no such previous agreement or determination, the price notified by Contractor for the lifting in question under Articlell.8Error! Reference source not found. Should the determined price be different from that used in accordance with the foregoing then the difference plus interest at the Specific Rate as stated in Article 26.6 shall be paid in cash by or to Contractor, as the case may be within thirty (30) days of such determinati on. 45 ARTICLE 12 TAXATION AND OTHER IMPOSTS 12.1 Subject to applicable laws and regulations, the tax, duty, fee and other imposts that shall be imposed by the State or any entity or any political subdivision on Contractor, its Subcontractors or its Affiliates in respect of activities related to Petroleum Operations and the sale and export of Petroleum shall include but not limited to the following: a) Taxes in accordance with the Petroleum Income Tax Law 1987 (PNDC L188) and income tax shall be levied at the rate of thirty-five per cent (35 %); b) Notwithstanding Article 12.1 (a), tax in respect of income andlor gain (in either , calculated in accordance with Ghanaian law) resulting from the direct or case indirect sale, transfer or assignment of (a) a partial or the entire interest in this Agreement, (b) assets acquired or used in Petroleum Operations under this Agreement, or (c) shares of Contractor at the rate determined by Ghanaian law in effect at the time of the sale, transfer or assignment. c) Payments for rental of Government property, public lands or for the provisions of specific services requested by Contractor from public enterprises; provided, however, that the rates charged Contractor for such rentals or services shall not exceed the prevailing rates charged to other members of the public who receive similar services or rentals; d) Surface rentals payable to the State pursuant to Section 18 of the Petroleum Law per square kilometre of the area remaining at the beginning of each Contract Year as part ofthe Contract Area, in the amounts as set forth below. Phase of Operation Surface Rentals Per Annum Initial Exploration Period US $ SOper sq. km. 1 st Extension Period us $ 75 per sq. km. 2nd Extension Period US $ 100 per sq. km. Development & Production Area US $ 200 per sq. km. These rentals shall be pro-rated where the beginning of a Period and the end of a Period or the creation of a Development and Production Area occurs during the course of a Calendar Year. 12.2 Save for withholding tax at the rate provided for under applicable law from the aggregate amount due to a resident Subcontractor or non-resident Subcontractor, Contractor shall not be obliged to withhold any amount in respect of tax from any sum due from Contractor to any Subcontractor in respect of work and services for or in connection with this Agreement. , 46 12.3 Contractor shall not be liable for any export tax on Petroleum exported from Ghana and no duty or other charge shall be levied on such exports. Vessels or other means of transport used in the export of Contractors Petroleum from Ghana shall not be liable for any tax, duty or other charge by reason of their use for that purpose 12.4 Subject to the local purchase obligations hereunder, Contractor and Subcontractors may import into Ghana all plant, equipment and materials to be used solely and exclusively in the conduct of Petroleum Operations without payment of customs and other duties and taxes on imports save administrative fees and charges; PROVIDED THAT: a) GNPC shall have the right of first refusal for any item imported duty free under this Article which is later sold in Ghana; and b) where GNPC does not exercise its right of purchase Contractor may sell to any other person subject to the relevant law. 12.5 Contractor shall not be liable to pay VAT in respect of plant, equipment and materials, and related services supplied in Ghana, to be used solely and exclusively in the conduct of Petroleum Operations. 12.6 Foreign National Employees of Contractor or its Affiliates, and of its Subcontractors, shall be permitted to import into Ghana free of import duty their personal and household effects in accordance with Section 22.7 ofPNDCL 64; provided, however, that no property imported by such employee shall be resold by such employee in Ghana except in accordance with Article 12.2. 12.7 Subject to GNPC's rights under Article 19, Contractor, Subcontractors and Foreign National Employees shall have the right to export from Ghana all items imported duty free pursuant to Article 12.4 Such exports shall be exempt from all customs and other duties, taxes, fees and charges on exports save minor administrative charges. 12.8 Parties will negotiate in good faith to ensure that Contractor is afforded tax credits for corporate taxes paid in Ghana. However no adverse effect should occur to the economic rights of GNPC or the State. 12.9 The Ghana Income Tax law applicable generally to individuals who are not employed in the petroleum industry shall apply in the same fashion and at the same rates to employees, of Contractor, its Affiliates and its Subcontractors provided, however, that Foreign National Employees of Contractor, its Affiliates and its Subcontractors, as permitted under Section 28 of the Petroleum Income Tax Law, shall be exempt from the income tax and withholding tax liabilities unless they are resident in Ghana for more than thirty (30) continuous days or sixty (60) days in aggregate in any Calendar Year. 12.10 Subject to guidelines to be issued by the Minister, the Contractor shall make contributions to a decommission fund based on estimated costs of abandonment in proportion to its Participating Interest. Such contributions shall be allowed as deduction from assessable income from the year of assessment the contributions commenced. In the year of assessment in respect of which decommission has been completed in accordance with an 47 I I approved decommission plan, the surplus funds shall be treated as chargeable income and subject to tax. The amount left after the tax shall be subject to Additional Oil Entitlement at the highest rate at which the Contractor paid AbE during the period of contributions to the relevant decommission fund. Any surplus after payment of the tax and AOE shall revert to the Contractor. 12.11 Notwithstanding the above provision of this Section, the Taxation Laws of Ghana to the of Contractor, Affiliates extent that they are applicable shall be applied to the Employees or its Subcontractors. 48 ARTICLE 13 FOREIGN EXCHANGE TRANSACTIONS The provisions of this article 13 shall be subject to applicable legislation governing foreign exchange transactions in Ghana in force from time to time. 13.1 Contractor shall for the purpose of this Agreement be entitled to receive, remit with the approval of the Bank of Ghana, keep and utilize freely abroad all the foreign currency obtained from the sales of the Petroleum assigned to it by this Agreement or purchased hereunder, or from transfers, as well as its own capital, receipts from loans and in general all assets thereby acquired abroad. Upon making adequate arrangements with regard to its commitment to conduct Petroleum Operations, Contractor shall be free to dispose of its foreign currency or assets as it deems fit. 13.2 Contractor shall have the right to open and maintain in Ghana bank accounts in foreign currency and Ghanaian currency. No restriction shall be made on the import by Contractor in an authorized manner of funds assigned to the performance of the Petroleum Operations and Contractor shall be entitled to purchase Ghanaian currency through authorized means, without discrimination, at the prevailing rate of exchange; provided, however, that such prevailing rate applicable to Contractor hereunder for all transactions for converting Ghanaian currency into U.S. Dollars, and vice versa, shall be at a buying or selling, as the case may be, rate of exchange not less favourable to Contractor than that quoted by the State or its foreign exchange control authority to any person or entity on the dates of such conversion (excepting those special rates provided by the State to discretely defined groups for special, limited purposes). 13.3 Contractor shall be entitled to convert in an authorized manner into foreign currencies of its choice funds imported by Contractor for the Petroleum Operations and held in Ghana which exceeds its local requirements at the prevailing rate of exchange referred to in Article 13.2 and remit and retain such foreign currencies outside Ghana. 13.4 In the event of resale by Contractor or its Affiliate of Crude Oil purchased from the State or GNPC, the State or GNPC shall have the right to request payment for such sales of its share of production to Contractor or its Affiliate to be held in the foreign currency in which the resale transaction took place or in U.S. Dollars. 13.5 Contractor shall have the right to make direct payments outside of Ghana from its home offices in Nigeria, and elsewhere, to its Foreign National Employees, and to those of its Subcontractors and suppliers 'not resident in Ghana' (as that term is defined in Section 160 of the Internal Revenue Act 2000 (Act 592)) for wages, salaries, purchases of goods and performance of services, whether imported into Ghana or supplied or performed therein for Petroleum Operations carried out hereunder, in accordance with the provisions of this Agreement, in respect of services performed within the framework of this Agreement, and such payments shall be considered as part of the costs incurred in Petroleum Operations. In the event of any changes in the location of Operator's home or other offices, Operator shall so notify GNPC and the State. 49 I 13.6 All payments which this Agreement obligates Contractor to make to GNPC or the State, including income taxes, shall be made in United States Dollars, except as requested otherwise pursuant to Article 13.4 above. All payments shall be made by telex transfer in immediately available funds to a bank to be designated by GNPC or the State, and reasonably accessible to Contractor by way of its being able to receive payments made by Contractor and give a confirmation of receipt thereof, or in such other manner as may be mutually agreed. 13.7 All payments which this Agreement obligates GNPC or the State to make to Contractor shall be made in United States Dollars. All payments shall be made by electronic transfer ( or in such other manner as may be mutually agreed) in immediately available funds to a bank to be designated by Contractor, and reasonably accessible to GNPC or the State by way of its being able to receive payments made by GNPC or the State and give confirmation of receipt thereof 13.8 All payments due to the Contractor in respect of the conduct of petroleum operations in Ghana shall first be paid to the Contractor's bank account in Ghana. 50 ARTICLE 14 SPECIAL PROVISioNS FOR NATURAL GAS PARTI-GENERAL All natural gas produced by Contractor in association with GNPC under this Agreement shall be the property of the Corporation in accordance with the provisions of Section 16.2 of the Petroleum Law, subject to the terms of this Agreement. 14.1 Contractor shall have the right to use Natural Gas produced from any Development and Production Area for Petroleum Operations within the Contract Area such as reinjection for pressure maintenance and/or power generation at no cost. 14.2 Contractor shall not flare nor vent Natural Gas except: a) to the extent provided for in an approved Development Plan; b) during production testing operations; c) when required for operational safety and the safety of persons engaged in Petroleum Operations in accordance with international Petroleum industry practice; d) as otherwise authorized by the Minister. 14.3 Contractor shall have the right to extract and dispose of liquid hydrocarbons pursuant to the provisions of this Agreement relating to Crude Oil. Residual Natural Gas remaining after the extraction of liquid hydrocarbons is subject to the provisions of this Article 14. PART II -ASSOCIATED GAS 14.4 All gas produced in association with Crude Oil is the property ofGNPC. 14.5 Based on the principle of full utilisation of Associated Gas and without substantial impediment to Crude Oil production, the Development Plan of each Development and Production Area shall include a plan of utilization for the Associated Gas. 14.6 If Contractor considers that production, processing and utilisation of Associated Gas from any Development and Production Area is non-economic, GNPC or any State appointed agency, body or subcontractor shall have the option to offtake such Associated Gas not used as reinjection for pressure maintenance and/or power generation pursuant to Article 14.2 and or not utilized otherwise as per Article 14.5 at the outlet flange of the gas-oil separator on the crude oil production facility at its Sole Risk for its own use. GNPC and Contractor shall work together to develop the appropriate interface between Gas infrastructure owned by the State and/or GNPC and Contractor's Development Plan and to that end the Development Plan proposed by Contractor shall include: a) a statement of the facilities necessary for the delivery to GNPC of such Associated Gas; and 51 I b) a plan for the reinjection of Associated Gas into the reservoir if needed for pressure support and c) a plan for power-generation. d) a plan for any other use. 14.7 The decision ofGNPC as to whether or not to exercise the option provided for in Article 14.6 shall be made in a timely manner. In making such decision and in its subsequent conduct GNPC shall avoid the prevention of or delay to the orderly start up or continuation of the production of Crude Oil as envisaged in the approved Development Plan. 14.8 If GNPC or any State appointed agency, body or subcontractor elects to offtake Associated Gas under Article 14.6 above, GNPC shall be responsible for any additional facilities needed for the delivery of the Gas to GNPC, provided that: (a) if Contractor subsequently wishes to participate in GNPC's gas utilization programme, it shall reimburse GNPC for the costs of such facilities plus a premium of three hundred percent (300%); or (b) if Contractor subsequently develops a gas utilization programme and requires the use of GNPC's gas facilities, Contractor shall pay GNPC an agreed fee for such use. Provided there is excess capacity, GNPC shall allow access to such gas facilities on a non-discriminatory basis, at a reasonable market-based fee. In the absence of a market-based fee, the fee shall reflect levels that are calculated to yield a return on invested capital comparable to similar circumstances in the upstream gas industry. (c) If Contractor considers that it may be economic to produce Associated Gas for sale, the provision of Articles 14.13 and Part IV below shall apply as to such Associated Gas PART III - NON-ASSOCIATED GAS 14.9 Contractor shall have the right to commercialize a Discovery of Non-Associated Gas in the Contract Area in accordance with the provisions of this Agreement. Except as otherwise provided in this Agreement, the terms applicable to a Discovery as provided under Article 8 of this Agreement shall apply to a Discovery of non-Associated Gas. 14.10 Where Contractor submits notice pursuant to Article 8.1 indicating that the Discovery does not at that time merit Appraisal but may merit Appraisal or additional evaluation at a later date during the Exploration Period or during the initial period under a new Agreement made pursuant to Article 14.17 below, then Contractor need not submit a proposed Appraisal Programme at that time but instead shall indicate what other studies or evaluations (in accordance with a definite time-table) may be warranted before an Appraisal Programme is undertaken. Where Contractor's Notice indicates that the Discovery will not merit appraisal at any time during the Exploration Period or during the initial period under a new Agreement made pursuant to Article 14.18, then 52 Contractor shall relinquish the rights to the Non-Associated Gas within that Discovery Area. 14.11 Not later than ninety (90) days from the date on which the Appraisal Programme relating to a Discovery is concluded, Contractor shall submit to the Minister a report containing the results of the Appraisal Programme (the "Appraisal Report"). The Appraisal Report may conclude that the Discovery merits commercial assessment. If the Appraisal Report concludes that the Discovery merits commercial assessment, Contractor shall submit to the Minister within sixty (60) days from the date of submission of the Appraisal Report, a programme incorporating a specific timetable for conducting such commercial assessment for approval by the Minister. If the Minister approves this programme, such commercial assessment shall be conducted within the Exploration Period and, if applicable, during the initial period under a new Agreement made pursuant to Article 14.17. Notwithstanding the above, the Minister may approve the conduct of other studies or evaluation, in accordance with a specific timetable, which may be warranted before a commercial assessment is undertaken, if Contractor notifies the Minister that commercial assessment of the Discovery is not warranted at that time but the Discovery may merit such assessment at a later date during the Exploration Period or during the initial period aforesaid. 14.12 The purpose of the commercial assessment shall be to study the uses to which production from the Discovery Area separately, can be devoted and whether involving exports or domestic utilization. As part of the assessment, the Parties shall also pursue discussions on the required contractual arrangements for disposition of the Natural Gas to GNPC. Contactor may undertake the Gas commercialization project at a level that will facilitate the achievement of the Contractor's rate of return, and shall use the State's gas infrastructure if available. 14.13 Contractor may consult with the Minister and GNPC and may make appropriate representations proposing changes in the fiscal and other provisions of this Agreement which may, in the opinion of Contractor, affect the above determinations made pursuant to Articles 14.10 and 8.6. The Minister and GNPC may, where feasible and in the best interests of the Parties, agree to make such changes or modifications in the existing arrangements. PART IV NATURAL GAS PROJECTS 14.14 If at any time during the commercial assessment Contractor informs the Minister in writing that the Discovery can be produced commercially, it shall within (one hundred and eighty) 180 days submit to the Minister and to GNPC its proposals for an agreement relating to the development of the Discovery on the principles set forth in I this Part IV of Article 14. The State and GNPC undertake on receipt of such notice to negotiate in good faith with Contractor with a view to reaching agreement on terms for such production. Any such agreement will be based on terms and fiscal requirements which shall be no less favourable to Contractor than those provided for in Articles 10 and 11 and which take full account of, among other things, the legitimate interest of the State as the resource owner, the value of the gas in the market bearing in mind the use which can be made of such Natural Gas. For the avoidance of doubt, the pricing 53 discussions in this Article 14.14 shall not apply to any Natural Gas which may be used for ~ export project. 14.15 If at any time during the commercial assessment Contractor has identified a market for the reserves of Non-Associated Gas or any part thereof that can be saved without prejudice to an export project, the Parties shall proceed in good faith to negotiate the appropriate contractual arrangements for the disposition of the Natural Gas. In the event of a market for such Gas, Contractor shall receive for delivery its share of the Natural Gas at a price to be agreed in good faith between GNPC and Contractor, taking into account among other things, the cost of finding and developing the Natural Gas, a reasonable return on exploration and development investment and the uses which will be made of the Natural Gas. 14.16 In the event of a Discovery of Natural Gas in the Contract Area which is to be developed and commercially produced, the provisions of this Agreement in respect to interests, rights and obligations of the Parties regarding Crude Oil shall apply to Natural Gas, with the necessary changes in points of detail, except with respect to specific provisions in this Agreement concerning Natural Gas and different or additional provisions concerning Natural Gas which may be agreed by the Parties in the future. a) The system for the allocation of Natural Gas among the Parties shall follow the same general format as Article 10.1 provides for Crude Oil, with the exception that the royalty to be delivered to the State on Natural Gas shall be at the rate of five (5%) percent for domestic gas projects and seven and a half percent (7.5%) for Natural Gas to be exported. b) The Parties recognize that projects for the Development and Production of Natural Gas are generally long-term in nature for both the project developers and the customers who purchase the Natural Gas. Substantial investments and dedication of facilities require long-term commitments on both sides. This Agreement, being for a specific term of years, may not cover the length of time for which customers in given cases will require commitments on the part of the Parties to this Agreement to deliver their respective shares of the output. Accordingly the Parties agree to consider undertaking such commitments where reasonably required for the efficient and viable development of a Natural Gas project. It is recognized that, unless otherwise agreed by the Parties hereto, Contractor will have no right or interest in the project or the Natural Gas produced and delivered after the term of this Agreement has expired. I c) In the event that Contractor or an Affiliate by mutual agreement with GNPC and the State constructs facilities to receive Natural Gas from the Development and Production Area for further processing or for use as a feedstock or fuel in order to convert such a Natural Gas into one or more commercially marketable products, the Contractor shall be entitled to pay GNPC or the State for such gas the price, if any, paid by the State or GNPC under this Article 14.16. d) The Parties will consider collaboration in obtaining any common external financing available for Natural Gas production possibilities, including project financing; 54 however, each Party shall remain free to finance externally its share of such facilities to the extent it prefers to do so. 14.17 a) Where Contractor has during the continuance of the Exploration Period made a Discovery of Non-Associated Gas but has not before the end of the Exploration Period declared that Discovery to be commercial, the State and GNPC will, if Contractor so requests, enter into a new Petroleum Agreement with Contractor in respect of the Discovery Area to which that Discovery relates; b) The State and GNPC shall not be under any obligation to enter into an Agreement pursuant to Article 14.17(a) above unless before the end of the Exploration Period Contractor has carried out an Appraisal Programme in respect of that Discovery pursuant to Article 14.11 and submitted to the Minister a report thereon pursuant to Article 14.11, or has commenced an Appraisal Programme and has notified the Minister of reasonable arrangements to undertake and complete such an Appraisal Programme during the period provided for in (c) (i) below: c) A Petroleum Agreement entered into pursuant to Article 14.17 (a): i) shall, unless the Discovery in respect of which the Agreement has been made is declared by Contractor to be a Commercial Discovery, continue in force for an initial period not exceeding three (3) years; ii) shall in the event that the Discovery is declared by Contractor to be a Commercial Discovery a) continue in force for an aggregate period not exceeding 25 (twenty- five) years; b) include, or be deemed to include, all the provisions which, mutatis mutandis, would have applied to a Commercial Discovery of Non- Associated Gas pursuant to Article 14.14 if Contractor had declared such Discovery to be a Commercial Discovery under this Agreement; iii) shall contain in respect of the initial period or of any renewal period details of the evaluations or studies (in accordance with a specific timetable) which Contractor proposes to undertake in order to determine or keep under review the commerciality of the Discovery I iv) shall confer on GNPC pre-emptive rights in respect of the Gas contained in the reservoir to which the Discovery relates substantially in the form of the provisions hereinafter set out in Article 14.16 (e) below. d) Where Contractor has not, before the end of the initial period, declared the Discovery to be commercial and the Minister has in his discretion determined that further evaluation or studies may be required before the Discovery can be declared commercial, the right of Contractor to retain the Discovery Area shall continue for a further period not exceeding in the aggregate three (3) years. The right of Contractor to retain the Discovery Area aforesaid shall be secured by the 55 renewal of the Agreement referred to in Article 14.17 (a) or where necessary by a new Agreement entered into by the Parties for that purpose. e) i) Where Contractor has not declared the Discovery to be a Commercial Discovery, if GNPC has identified a market for the Gas contained in the reservoir to which the Discovery relates, or any part thereof, it may at any time during the initial period or the aggregate period referred to in 14.17 (d) above serve on Contractor a notice giving particulars of the quantities of Gas required to serve that market and the price offered; and on the basis of the procedure detailed in Article 9, exercise the right referred to in Article 14.17 (c) (iv) above. ii) Within three (3) months from the receipt of a notice as aforesaid Contractor may declare the Discovery to be commercial and in accordance with the Agreement and the Petroleum Law prepare and submit to the Minister a Development Plan for the production of the Gas in association with GNPC. iii) If. Contractor has not, within the period of three (3) months aforesaid, declared the Discovery to be commercial, GNPC may at its sole risk and expense develop the Discovery and in that event the Contractor shall cease to have any rights in respect of the Gas in the reservoir required for that purpose. 14.18 For the purpose of calculating the State's 7.5% for export gas and 5.0% for domestic gas royalty share on Natural Gas; if the State elects to take its royalty on Natural Gas in cash, the value of such Natural Gas shall be the actual realized price received by the Contractor, less transportation, compression and marketing costs which shall be in accordance with the principles indicated in Article 11 .. , 56 ARTICLE 15 DOMESTIC SUPPLY REQUIREMENTS (CRUDE OIL) 15.1 Crude Oil for consumption in Ghana (in this Article called the "Domestic Supply Requirement") shall be supplied, to the extent possible, by the State and GNPC from their respective entitlements under this Agreement and under any other contract for the production of Crude Oil in Ghana. 15.2 Consumption shall for the purposes of this Article include crude oil processed in Ghana and the equivalent of crude oil derived products imported into Ghana. 15.3 In the event that Crude Oil available to the State and GNPC, pursuant to this agreement and pursuant to other contracts for the production of Crude Oil in Ghana is insufficient to fulfill the Domestic Supply Requirements, the Contractor shall be obliged together with any third parties which produce Crude Oil in Ghana within 2 months' notice from the State, to supply a volume of Crude Oil to be used for such Domestic Supply Requirements, calculated on the basis of the ratio of Contractor's entitlement to Crude Oil under Article 10.1 (d) to the sum of the similar entitlements of all such third parties and provided that Contractor's obligation to supply Crude Oil for purposes of meeting the Domestic Supply Requirement shall not exceed the total of Contractor's said entitlement under this Agreement and any other agreement for similar purposes to this agreement. 15.4 The State shall purchase any Crude Oil supplied by Contractor pursuant to this Article at the Market Price determined under Article 11.7 for the Month of delivery, and the State shall pay such prices in accordance with Article 13.7 within thirty (30) days after receipt of invoice, failing which Contractor's obligations in respect of the Domestic Supply Requirement under this Article 15 shall be suspended until payment is made good, at which time deliveries shall be resumed subject to any alternative commitments that may have been reasonably entered into by Contractor to dispose of the Domestic Supply Requirement Crude Oil during the period of default in payment. Contractor shall recover any amount due and unpaid by State, plus interest at the Specified Rate, from GNPC's I proceeds of sale as provided in Article 1 0.1 (d). 15.5 The calculation of the domestic supply requirement shall be done on a Calendar Year basis, broken down by Month. The calculation shall begin with the determination of the quantities of Crude Oil required for Consumption in Ghana in each relevant Month (the "Monthly Domestic Consumption") during the applicable Calendar Year. 57 ------------ ....•. ARTICLE 16 INFORMA TION AND REPORTS: CONFIDENTIALITY 16.1 Contractor shall keep GNPC regularly and fully informed of operations being carried out by Contractor under this Agreement and provide GNPC with all information, data, (film, paper and digital forms), samples, interpretations and reports, (including progress and completion reports) including but not limited to the following: a) processed seismic data and interpretations thereof; b) well data, including butnot limited to electric logs and other wireline surveys, and mud logging reports and logs, oil or hydrocarbon samples, samples of cuttings and cores and analyses made therefrom; c) any reports prepared from drilling data or geological or geophysical data, including maps or illustrations derived therefrom; d) well testing and well completion reports; e) reports dealing with location surveys, seabed conditions and seafloor hazards and any other reports dealing with well, platform or pipeline locations; f) reservoir investigations and estimates regarding reserves, field limits and economic evaluations relating to future operations; g) daily, weekly, monthly and other regular reports on Petroleum Operations; h) comprehensive final reports upon the completion of each specific project or operation; i) contingency programmes and reports on safety and accidents; j) procurement plans, subcontracts and contracts for the provision of services to Contractor. k) for such subcontracts and contracts for the provision of services to Contractor i. bid documents and their evaluation reports ii. a statement showing the values, executing companies, award and completion dates Data shall be provided on film, paper and in digital format as available in an acceptable format to GNPc. In respect of the reports, including text and graphics, paper and digital copies shall be submitted. 16.2 Contractor shall have the right to retain for its own use in connection with the conduct of Petroleum Operations under this Agreement copies of data, well logs, maps, magnetic 58 tapes, other geological and geophysical information, portions of core samples and copies of r~orts, studies and analyses, referred to in Article 16.1. 16.3 Not later than ninety (90) days following the end of each Calendar Year, Contractor shall submit to GNPC a report covering Petroleum Operations performed in the Contract Area during such Calendar Year. Such report shall include, but not be limited to: a) a statement of the number of Exploration Wells, Appraisal Wells and Development Wells drilled, the depth of each such well, and a map on which drilling locations are indicated; b) a statement of any Petroleum encountered during Petroleum Operations, as well as a statement of any fresh water layers encountered and of any other minerals discovered; c) a statement of the quantity of Petroleum produced and of all other minerals produced therewith from the same reservoir or deposit; d) a summary of the nature and extent of all exploration activities in the Contract Area; e) a general summary of all Petroleum Operations in the Contract Area; and f) a statement of the number of employees engaged in Petroleum Operations in Ghana, identified as Ghanaian or non-Ghanaian. Contractor will inform the latter that details as to nationality are required by GNPC and that Contractor is available to assist them to supply that information. 16.4 All data, information and reports including interpretation and analysis supplied by Contractor pursuant to this Agreement shall be treated as confidential and shall not be disclosed by Contractor to any other person without the express written consent of the other Parties. However subject to Article 16.6, GNPC shall have the right to disclose data, information and reports including interpretation and analysis in respect of Petroleum Operations to any other person. 16.5 The provisions of Article 16.4 shall not prevent disclosure by Contractor: J i) to its Affiliates, advisers or consultants; ii) subject to Article 16.6, to a Bona Fide Potential Assignee of all or part of Contractor's Interest hereunder provided with respect to a bonafide potential assignee of Contractor GNPC is given prior notice of such potential assignee; iii) subject to Article 16.6, to banks or other lending institutions for the purpose of seeking external financing of costs of the Petroleum Operations; iv) to non-Affiliates who shall provide services for the Petroleum Operations, including Subcontractors, vendors and other service contractors, where this 59 ---------- . is essential for their provision of such services, and provided GNPC is notified about such disclosure; v) to governmental agencies for obtaining necessary rulings, permits, licenses and approvals, or as may be required by applicable law or financial stock exchange, accounting or reporting practices, and provided GNPC is given prior notice of such disclosure; or Or by any Party 1. to the extent necessary in any Arbitration Proceedings or proceedings before a Sole Expert or in proceedings before any court; 11. with respect to data etc., which already through, no fault of the disclosing Party is in the public domain. 16.6 Any disclosure of information or provision of data to any third party by Contractor under Article 16.5(i), 16.5(ii), 16.5(iii) and 16.5(iv) shall require such persons to observe the confidentiality of such data by either executing a confidentiality agreement substantially in the form attached hereto as Annex [4] or incorporating the relevant confidentiality provisions in their service agreements. Disclosure under Articles 16.5(i), 16.5(ii), 16.5(iii) and (iv) shall not be made unless before such disclosure the disclosing Party has obtained a written undertaking from the recipient party to keep the information strictly confidential and to use the information for the sole purpose described in Articles 16.5(i), 16.5(ii), 16.5(iii) and 16.5(iv) whichever applies with respect to the disclosing Party. 16.7 Public statements and press releases regarding the Petroleum Operations undertaken under this Agreement shall be issued jointly by the Contractor and GNPC, and the Parties shall agree on the timing and wording of such statements and releases to the public. Where, however, a Party is required to make a public announcement or statement under the applicable laws, rules or regulations of any government, legal proceedings or a stock exchange having jurisdiction over such Party or any of its Affiliates, that Party shall inform the other Party of such requirement and submit the text of the proposed announcement or statement for comment and/or approval. Should a Party fail to respond for more than five (5) days (or such shorter period as may be reasonable in the event of an emergency or disaster) to request for the approval of a public statement or announcement for such purposes, such failure shall be deemed approval of the request. 16.8 Subject in all cases to the terms of any technical services agreements, all intellectual property rights to any and all inventions, discoveries or improvements made or conceived in connection with Petroleum Operations either through a Contractor Party's employees, contractors (including the Contractor Parties), sub-contractors, secondees or otherwise, shall be jointly owned by GNPC and Contractor. 16.9 Notwithstanding any provision to the contrary in this Agreement, if a Contractor Party or an Affiliate of a Contractor Party has confidential information, proprietary intellectual property or technology actually used in Petroleum Operations then, subject to GNPC (or 60 its successors or permitted assignees) entering into a usual and customary non-disclosure and licensing agreement (which such agreement shall be on terms that are commercially reasonable under the circumstances), such Contractor Party or its Affiliate shall provide GNPC (or its successors or permitted assignees) with rights to use such confidential information, proprietary intellectual property or technology in other operations of GNPC (or its successors or permitted assignees) outside of the Contract Area. The terms and conditions of the foregoing rights will be provided for in separate agreements to be agreed between GNPC (or its successors or permitted assignees) and such Contractor Party or its relevant Affiliate. Further, GNPC (or its successors or permitted assignees) and such Contractor Party or its relevant Affiliate will enter into a usual and customary confidentiality agreement relating to confidential information disclosed to GNPC (or its successors or permitted assignees) pursuant to any such licensing agreements, which confidentiality agreement shall restrict, inter alia, GNPC (or its successors or permitted assignees) from making disclosure of such information to such Contractor Party's oil and gas industry competitors. , 61 I ARTICLE 17 INSPECTION, SAFETY AND ENVIRONMENTAL PROTECTION 17.1 GNPC shall have the right of access to all sites and offices of Contractor and the right to inspect all buildings and installations used by Contractor relating to Petroleum Operations. Such inspections and audits shall take place in consultation with Contractor and at such times and in such manner as not unduly to interfere with the normal operations of Contractor. 17.2 Contractor shall take all necessary steps, in accordance with International Good Oil Field practice, to perform activities pursuant to the Agreement in a safe manner and shall comply with all requirements of Governing Law, including labour, health safety and environmental laws and regulations issued by the Environmental Protection Agency of Ghana and other relevant State agencies 17.3 Contractor shall provide an effective and safe system for disposal of water and waste oil, oil base mud and cuttings in accordance with applicable laws and International Good Oil Field Practice, and shall provide for the safe completion or abandonment of all boreholes and wells. 17.4 Contractor shall exercise its rights and carry out its responsibilities under this Contract in accordance with International Good Oilfield Practice, and shall take steps in such manner as to: a) result in minimum ecological damage or destruction; b) control the flow and prevent the escape or the avoidable waste of Petroleum discovered in or produced from the Contract Area; c) prevent damage to Petroleum-bearing strata; d) prevent the entrance of water through boreholes and wells to Petroleum-bearing strata, except for the purpose of secondary recovery; e) prevent damage to onshore lands and to trees, crops, buildings or other structures; and f) avoid any actions which would endanger the health or safety of persons. 17.5 In the event of a release, of Petroleum or other materials on the seabed, in the sea, on land or in fresh water, or if Contractor's operations result in any other form of pollution 1 or otherwise cause harm to fresh water, marine, plant or animal life, Contractor shall, in accordance with International Good Oil Field Practice promptly take all necessary measures, to control the pollution, to clean up Petroleum or other released material, or to repair, to the maximum extent feasible, damage resulting from any such circumstances. If such release or pollution results directly from negligence, gross negligence or willful misconduct of the Contractor, its Affiliate or Sub- Contractor and shall not be included as Petroleum Cost under this Agreement. 62 17.6 Contractor shall notify GNPC immediately in the event of any emergency or major accident or major release of materials into the environment (and promptly in the event of any other accident or release of materials into the environment) and shall take such action as may be prescribed by the Operator's emergency procedures and by accepted international Petroleum industry practices. 17.7 If Contractor does not act promptly so as to control, clean up or repair any pollution or damage, GNPC may, after giving Contractor reasonable notice in the circumstances, take any actions which are necessary, in accordance with applicable laws and International Good Oil Field Practice in the same or similar circumstances and the documented reasonable costs and expenses of such actions shall be borne by Contractor and shall, subject to Article 17.5 be included as Petroleum Costs. I , 63 ARTICLE 18 ACCOUNTING AND AUDITING 18.1 Contractor shall maintain, at its offices in Ghana, books of account and supporting records in the manner required by applicable law and accepted accounting principles generally used in the international petroleum industry and shall file reports, tax returns and any other documents and any other financial returns which are required by applicable law. 18.2 In addition to the books and reports required by Article 18.1 Contractor shall maintain, at its office in Ghana, a set of accounts and records relating to Petroleum Operations under this Agreement. Such accounts shall be kept in accordance with the requirements of the applicable law and accepted accounting principles generally used in the international Petroleum industry. 18.3 The accounts required by Articles 18.1 and 18.2 shall be kept in United States Dollars or such other currency as GNPC and Contractor may agree. 18.4 Contractor will provide GNPC with quarterly financial statements and summaries of the Petroleum Costs incurred under this Agreement. 18.5 GNPC shall review all financial statements submitted by the Contractor as required by this Agreement, and shall signify its provisional approval or disapproval of such statements in writing within ninety (90) days of receipt failing which the financial statements as submitted by Contractor shall be deemed approved by GNPC; in the event that GNPC indicates disapproval of any such statement, the Parties shall meet within fifteen (15) days of Contractor's receipt of the notice of disapproval to review the matter. 18.6 Notwithstanding any provisional approval pursuant to Article 18.5 GNPC shall have the right and upon giving reasonable notice in writing to Contractor to audit the books and accounts of Contractor relating to Petroleum Operations within two (2) years from the submission by Contractor of any report of financial statement. GNPC shall not, in carrying out such audit, interfere unreasonably with the conduct of Petroleum Operations. Any such audit shall be undertaken by an independent auditing firm and shall be completed within nine (9) months after commencement. Contractor shall provide all necessary facilities for auditors appointed hereunder by GNPC including working space and timely access to all relevant personnel, records, files and other materials. If and GNPC desires verification of charges from an Affiliate, Contractor shall obtain for GNPC or its representatives an audit certificate to this purpose from the statutory auditors of the Affiliate concerned. Copies of audit reports shall be provided to the Contractor and GNPC. Any unresolved audit claim resulting from such audit, upon which Contractor and GNPC are unable to agree shall be submitted to the JMC for decision which must be unanimous. In the event that a unanimous decision is not reached in respect of any audit claim, then such unresolved audit claim shall be submitted for resolution in accordance with Article 24. Subject to any adjustments resulting from such audits, Contractor's accounts and financial statements shall be considered to be correct on expiry of a period of two (2) years from the date of their submission unless before the expiry of such two year period GNPC has notified Contractor of any exceptions to such accounts and statements. 64 • ------------ ......• 18.7 Nothing in this Article shall be read or construed as placing a limit on GNPC's access to Contractor's books and accounts in respect of matters arising under Article 23.4 and 23.5. 18.8 In the event of any changes in location of Operator's home office, Operator shall so notify GNPC and the State. 18.9 Petroleum Costs incurred with respect to the Contract Area shall have no bearing on allowable or non-allowable costs under any other contract area or Contractor's eligibility or otherwise for deductions in computing Contractor's net income from Petroleum Operations for income tax purposes in any other contract area. Similarly, Petroleum Costs incurred in any other contract area shall have no bearing on allowable or non- allowable costs in respect of the Contract Area or Contractor's eligibility or otherwise for deductions in computing Contractor's net income from Petroleum Operations for income tax purposes in respect of the Contract Area. 65 ARTICLE 19 TITLE TO AND CONTROL OF GOODS AND EQUIPMENT 19.1 GNPC shall be the sole and unconditional owner of: a) Petroleum produced and recovered as a result of Petroleum Operations, except for such Petroleum as is distributed to the State and to Contractor pursuant to Article 10 or 14 hereof; b) all physical assets other than those to which Article 19.3 or 19.4 apply, which are purchased, installed, constructed or used by Contractor in Petroleum Operations as from the time that: i) the full cost thereof has been recovered in accordance with the provisions of the Accounting Guide; or ii) this Agreement is terminated and Contractor has not disposed of such assets prior to such termination, whichever occurs first. 19.2 Contractor shall have the use of the assets referred to in Article 19.1(b) for purposes of its operations under this Agreement without payment provided that Contractor shall remain liable for maintenance, insurance and other costs associated with such use. Where Contractor has failed to keep any such asset in good working condition (normal wear and tear excepted), GNPC shall have the right to recover the cost of repair or replacement of such assets from Contractor. Contractor shall indemnify GNPC against all losses, damages, claims or legal action resulting from Contractor's use of such assets, if and in as far as such losses, damages, claims or legal actions were directly caused by Contractor's f gross negligence or willful misconduct. 19.3 Equipment or any other assets rented or leased by Contractor which is imported into Ghana for use in Petroleum Operations and subsequently re-exported therefrom, which is of the type customarily leased for such use in accordance with International Good Oil Field Practice or which is otherwise not owned by Contractor shall not be transferred to GNPc. No equipment or assets owned or leased by a Subcontractor shall by reason of the provisions of this Article 19 be deemed to be transferred to GNPC. 19.4 All assets acquired by Contractor which are not affected by the provisions of Article 19 .1 (b) above may, where required for further Petroleum Operations, be retained by GNPC for such operations provided that GNPC shall thereby be liable to pay a reasonable and mutually agreed fee for such use, and shall bear the cost of repair or replacement upon failure to keep such assets in good working condition (normal wear and tear excepted), and further provided that Contractor does not require such assets for its Petroleum Operations. 19.5 Upon the termination of Petroleum Operations in any Area, Contractor shall give GNPC the option to acquire any movable and immovable assets used for such Petroleum Operations and not affected by the provisions of Article 19.1 (b) at a reasonable and 66 I mutually agreed price, always provided that Contractor does not require such assets for Contractor's Petroleum Operations in the Contract Area. 19.6 All assets which are not affected by Article 19.1 (b) nor subject to Article 19.4 or 19.5 above, and all subcontractor equipment, may be freely exported by Contractor or its Subcontractor, respectively, at its discretion. 1 67 ARTICLE 20 PURCHASING AND PROCUREMENT 20.1 Subject to all applicable laws to which it is subject the Contractor, its subcontractors or other entities which cooperate with them shall: a) acquire materials, equipment, machinery and consumer goods produced or provided in Ghana by an Indigenous Ghanaian company in Ghana which are of the same or approximately the same quality as foreign materials, equipment, machinery and consumer goods and which are available for sale and delivery in due time at prices which are no more than ten percent higher than the imported items including transportation and insurance costs and custom charges due; b) Contract local Ghanaian service provided by Indigenous Ghanaian company to the extent to which the services they provide are similar to those available on the international market and their prices when subject to the same tax charges are no more than ten percent higher than the prices charged by foreign contractors for similar services, 20.2 For the purposes of Article 20.1, price comparisons shall be made on a c.i.f. Accra delivered basis. I 68 ARTICLE 21 EMPLOYMENT AND TRAINING 21.1 In order to establish programmes to train Ghanaian personnel for work in Petroleum Operations and for the transfer of management and technical skills required for the efficient conduct of Petroleum Operations, Contractor shall make the following payments to GNPC: a) Training: US $ 500, 000 per Contract year b) Technology support (one-time payment) • Initial Exploration Period: US $500, 000 • Commercial Discovery: US $1,500,000 21.2 All payments pursuant to Articles 21. 1 (a) and (b) above shall be paid by Contractor by wire transfer to a designated GNPC account within thirty (30) days of receiving an invoice from the GNPC. The invoice shall state the amount due and purpose for such payment. All payments under Articles 21.I(a) and (b) above shall be considered Petroleum Costs. 21.3 Where qualified Ghanaian personnel are available for employment in the conduct of Petroleum Operations, Contractor shall ensure that in the engagement of personnel it shall as far as reasonably possible provide opportunities for the employment of such personnel. For this purpose, Contractor shall submit to GNPC an employment plan with number of persons and the required professions and technical capabilities prior to and during the conduct of Petroleum Operations. GNPC shall be given the opportunity to provide the qualified personnel according to the said plan. 21.4 Contractor shall, if so requested by GNPC, provide opportunities for a mutually agreed number of personnel nominated by GNPC to be seconded for on-the-job training or attachment in all phases of its Petroleum Operations under a mutually agreed secondment contract. Such secondment contract shall include continuing education and short industry courses mutually identified as beneficial to the secondee. Cost and other expenses connected with such assignment of GNPC personnel shall be borne by the Contractor and shall be considered as Petroleum Costs. 21.5 Contractor shall regularly provide to GNPC information and data relating to worldwide Petroleum science and technology, Petroleum economics and engineering available to Contractor, and shall assist GNPC personnel in every way to acquire knowledge and skills in all aspects of the Petroleum industry. 21.6 It is agreed that there will be no disclosure or transfer of any documents, data, know- how, technology or other information owned or supplied by Contractor, its Affiliates, or non-Affiliates, to third parties without Contractor's prior written consent, and then only upon agreement by the recipients to retain such information in strict confidence. 69 ARTICLE 22 FORCE MAJEURE 22.1 The failure of a Party to fulfill any term or condition of this Agreement, except for the payment of monies, shall be excused if and to the extent that such failure arises from Force Majeure, provided that, if the event is reasonably foreseeable such party shall have prior thereto taken all appropriate precautions and all reasonable alternative measures with the objective of carrying out the terms and conditions of this Agreement. A Party affected by an event of Force Majeure shall promptly give the other Parties notice of such event and also of the restoration of normal conditions. 22.2 A Party unable by an event of Force Majeure to perform any obligation hereunder shall take all reasonable measures to remove its inability to fulfill the terms and conditions of this Agreement with a minimum of delay, and the Parties shall take all reasonable measures to minimize the consequences of any event of Force Majeure. 22.3 Any period set herein for the completion by a Party of any act required or permitted to be done under the terms of this Agreement, shall be extended for a period of time equal to that during which such Party was unable to perform such actions as a result of Force Majeure, together with such time as may be required for the resumption of Petroleum Operations. 70 I ARTICLE 23 TERM AND TERMINATION 23.1 Subject to this Article 23 the term of this Agreement shall be twenty-five (25) years commencing from the Effective Date. 23.2 Unless this Agreement has been earlier terminated, all rights and obligations of the Parties shall cease and this Agreement shall terminate at the end of the term provided for in Article 23.1, above. 23.3 Subject to Article 22, Termination of this Agreement shall result upon the occurrence of any of the following: a) the relinquishment or surrender of the entire Contract Area; b) the termination of the Exploration Period including extensions pursuant to Article 3 without notification by Contractor of commerciality pursuant to Article 8 in respect of a Discovery of Petroleum in the Contract Area, provided however Termination shall not occur while Contractor has the right to evaluate a Discovery for appraisal or commerciality and/or propose a Development Plan pursuant to Articles 8 or 14, or once a Development Plan has been approved, nor when the provisions of Articles 8.14 through 8.22 are applicable; c) if, following a notice that a Discovery is a Commercial Discovery the Exploration Period terminates under Article 3 without a Development Plan being approved, provided however that Termination shall not occur when the provisions of Articles 8.14 through 8.22 are applicable; or d) the failure of Contractor through any cause other than Force Majeure, to commence preparations with respect to Development Operations pursuant to Article 8.12. 23.4 Subject to Article 22 and pursuant to procedures described in Article 23.5 below GNPC and/or the State may terminate this Agreement upon the uncorrected occurrence of any of the events (or failures to act listed) below: a) the submission by Contractor to GNPC of a written statement which Contractor knows or should have known to be false, in a material particular; or the release by Contractor to any print or electronic media or to a stock exchange of a written statement regarding the Petroleum Operations in Ghana in breach of Article 16.7 and in a form which Contractor knows or should have known to be false in a material particular provided that in the event of intent on the part of Contractor to cause serious damage to GNPC or the State, a period for remedy of such false statement shall not be given; b) the assignment or purported assignment by Contractor of this Agreement contrary to the provisions of Article 25 hereof; 71 c) the insolvency or bankruptcy of Contractor, the entry by Contractor into any agreements or composition with its creditors, taking advantage of any law for the benefit of debtors or Contractor's entry into liquidation, or receivership, whether compulsory or voluntary, Provided that if Contractor is more than one Party, then the insolvency or bankruptcy of one Contractor Party shall not lead to a termination of the Agreement if the other Contractor Party will assume the rights and obligations of the defaulting Contractor Party under this Petroleum Agreement. In such a case, GNPC shall have the right to acquire a proportionate share of the interest of the defaulting Contractor Party in respect of GNPC's Initial and Additional Interest. d) the intentional extraction by Contractor of any material of potential economic value other than as authorized under this Agreement, or any applicable law. Where, however, in the course of Petroleum Operations conducted in accordance with accepted International Good Oil Field practice, Contractor unavoidably extracts any mineral, Contractor shall immediately notify the Minister responsible for natural resources and surrender such mineral to the State. e) failure by Contractor i) to fulfill its minimum work obligations pursuant to Article 4.3; save where the Minister has waived the default; ii) to carry out an approved Appraisal Programme undertaken by Contractor pursuant to Article 8, unless Contractor notifies GNPC and the Minister that the Appraisal Programme should be amended and submits said amendment to the JMC for its review; or iii) to carry out the terms of an approved Development Plan. f) failure by Contractor to comply with any of its obligations pursuant to Article 7.1 hereof or any other material obligation under this Agreement; g) failure by Contractor to make any payment of any sum due to GNPC or the State pursuant to this Agreement within thirty (30) days after receiving notice that such payment is due; or h) failure by Contractor to comply with any decisions reached as a result of any arbitration proceedings conducted pursuant to Article 24 hereof. 23.5 If GNPC and/or the State believe an event or failure to act as described in Article 23.4 above has occurred, a written notice shall be given to Contractor describing the event or failure. Contractor shall have thirty (30) days from receipt of said notice to commence and pursue remedy of the event or failure cited in the notice. If after said thirty (30) days Contractor has failed to commence appropriate remedial action, GNPC and/or the State may then issue a written Notice of Termination to Contractor which shall become effective thirty (30) days from receipt of said Notice by Contractor unless Contractor has referred the matter to arbitration. In the event that Contractor disputes whether an event specified in Article 23.3 or Article 23.4 has occurred or been remedied, Contractor may, any time up to 72 • the effective date of any Notice of Termination refer the dispute to arbitration pursuant to Article 24 hereof. If so referred, GNPC and/or the State may not terminate this Agreement in respect of such event except in accordance with the terms of any resulting arbitration award as provided for in Article 24. 23.6 Upon Termination of this Agreement, all rights of Contractor hereunder shall cease, except for such rights as may at such time have accrued, and without prejudice to any obligation or liability imposed or incurred under this Agreement prior to Termination and to such rights and obligations as the Parties may have under applicable law. 23.7 Upon Termination of this Agreement or in the event of an assignment of all the rights of Contractor, all wells and associated facilities shall be left in a state of good repair in accordance with applicable laws and International Good Oil Field Practice. 73 ARTICLE 24 CONSULTATION, ARBITRATION AND INDEPENDENT EXPERT 24.1 Except in the cases specified in Article 26.3 any dispute arising between the State and GNPC or either of them on one hand and Contractor on the other hand in relation to or in connection with or arising out of any terms and conditions of this Agreement shall be resolved by consultation and negotiation among senior personnel authorized by each. 24.2 In the event that no agreement is reached within thirty (30) days after the date when either Party notifies the other that a dispute or difference exists within the meaning of this Article or such longer period specifically agreed to by the Parties or provided elsewhere in this Agreement, any Party shall have the right subject to Article 24.8 to have such dispute or difference finally settled through international arbitration under the auspices of the International Chamber of Commerce (the "ICe') and adopting the Rules of Arbitration of the International Chamber of Commerce (the "ICC Rules"), which ICC Rules are deemed incorporated by reference into this Article 24, save as otherwise provided herein. The failure or refusal to submit to arbitration in accordance with this Article and/or the seeking of any Pre-Award Attachment by any Party shall be deemed a breach of this Agreement by such Party. In the event of a breach of this Article, each non-breaching Party shall, without prejudice to any other remedies, be entitled to recover from each breaching Party all costs and expenses, including reasonable attorneys' fees, that such non-breaching Party was thereby required to incur 24.3 The tribunal shall consist of three (3) arbitrators. Each Party to the dispute shall appoint one (1) arbitrator and those so appointed shall designate a chairman arbitrator. If a Party's arbitrator and/or the chairman arbitrator is/are not appointed within the periods provided in the rules referred to in Article 24.1 and 24.2 above, such Party's arbitrator and/or the chairman arbitrator shall at the request of any Party to the dispute be appointed by the ICC International Court of Arbitration in accordance with the ICC Rules. 24.4 No arbitrator or sole expert shall be a citizen of the home country of any Party hereto, and shall not have any economic interest or relationship with any such Party. 24.5 The seat of the arbitration proceedings shall be in London or at such other location as the Parties may agree in writing. The proceedings shall be conducted in the English language. 24.6 If the opinions of the arbitrators are divided on issues put before the tribunal, the decision of the majority of the arbitrators shall be determinative. The award of the tribunal shall be final and binding upon the Parties and enforceable by the Parties in whose favour the award is made. Each of the State and GNPC hereby irrevocably agree that to the extent that such party, has any right of immunity from any legal proceedings or enforcement of awards in connection with or arising from terms and conditions of this Agreement, including immunity from service of process, immunity from jurisdiction or judgement or any arbitration tribunal, immunity from execution of judgment or tribunal award, such party hereby expressly and irrevocably waives any such immunity and agrees not to 74 I assert or invoke any such rights or claim in any such proceedings provided, however, that the provisions hereof shall not constitute a waiver by any Party of any right that it now or hereafter has to claim sovereign immunity for itself or any of its assets in respect of any effort to confirm, enforce, or execute any Pre-Award Attachment. 24.7 The right to arbitrate disputes arising out of this Agreement shall survive the termination of this Agreement. 24.8 In lieu of resorting to arbitration, the Parties to a dispute arising under this Agreement, including the Accounting Guide, which such Parties by mutual written agreement consider appropriate, may be referred for determination by a sole expert to be appointed by agreement of the Parties who is a recognised specialist with respect to the subject of the dispute (a "Sole Expert"). In such case, the Parties shall agree on the terms of reference for such proceeding, the schedule of presentation of evidence and testimony of witnesses, and other procedural matters. The decision of the Sole Expert shall be final and binding upon the Parties. The sole expert shall have ninety (90) days after his appointment to decide the case, subject to any extensions mutually agreed to by the Parties to the dispute. Upon failure of the sole expert to decide the matter within such time, any Party shall have the right to have such dispute or difference settled through arbitration under the foregoing provisions of this Article 24. 24.9 Except as set forth in Article 24.1 above, each Party to a dispute shall pay its own counsel and other costs; however, costs of the arbitration tribunal shall be allocated in accordance with the decision of the tribunal. The costs and fees of the sole expert shall be borne equally by the Parties to the dispute. 24.10 Neither the State and/or GNPC, on the one hand, and Contractor, on the other hand, shall be held liable to the other for any consequential, special, indirect or punitive damages (including loss of profit or loss of production) arising directly or indirectly out of or in relation or in connection to this Agreement, regardless of cause or fault. 75 ARTICLE 25 ASSIGNMENT 25.1 This Agreement shall not be assigned by Contractor directly or indirectly in whole or in part, without the prior written consent of GNPC, and the Minister except that this Agreement may be assigned to a wholly owned Affiliate of Contractor upon notice to the Minister and GNPC. GNPC and/or the Minister may impose such reasonable conditions upon the giving of consent under this Article as may be deemed by GNPC or the Minister appropriate in the circumstances. 25.2 Any assignment of this Agreement shall bind the assignee as a Party to this Agreement to all the terms and conditions hereof unless otherwise agreed and as a condition to any assignment Contractor shall provide an unconditional undertaking by the assignee to assume all obligations assigned by Contractor under this Agreement. 25.3 Where in consequence of an assignment hereunder Contractor is more than one person: a) any operating or other agreement made between the persons who constitute contractor and relating to the Petroleum Operations hereunder shall be disclosed to GNPC and the Minister and shall not be inconsistent with the provisions of this Agreement; b) an operating agreement shall be established by the JMC to regulate the conduct of Petroleum Operations thereafter, including cash-calls and the limits of authority; c) no change in the scope of the operations may take place without the prior approval in writing of GNPC which approval shall not be unreasonably delayed or withheld; and d) the duties and obligations of Contractor hereunder shall be joint and several except those relating to the payment of income tax pursuant to Article 12 which shall be the several obligation of each such person. 25.4 GNPC's acquisition of additional participating Interest under Article 2 or a Sole Risk Interest pursuant to Article 9 shall not be deemed to be an assignment within the meaning of this Article 25. 76 I ARTICLE 26 MISCELLANEOUS 26.1 This Agreement and the relationship between the State and GNPC on one hand and Contractor on the other shall be governed by and construed in accordance with the laws of the Republic of Ghana in effect and as amended from time to time. 26.2 The State, its departments and agencies, shall support this Agreement and the due exercise and performance of rights and obligations of the Parties hereunder. 26.3 Where a Party considers that a significant change in the circumstances prevailing at the time the Agreement was entered into, has occurred affecting the economic balance of the Agreement, the Party affected hereby shall notify the other Parties in writing of the laimed change with a statement of how the claimed change has affected the relations c between the Parties. 26.4 The other Parties shall indicate in writing their reaction to such representation within a period of three (3) months of receipt of such notification and if such significant changes are established by the Parties to have occurred, the Parties shall meet to engage in negotiations and shall effect such changes in, or rectification of, these provisions as they may agree are necessary. 26.5 No waiver by any Party of any of its rights hereunder shall be construed or implied, but shall be binding on such Party only if made specifically, expressly and in writing. 26.6 Except for payment obligations arising under the Petroleum Income Tax Law, any Party failing to pay any amounts payable by it under this Agreement (including the provisions of Annex 2) on the respective dates on which such amounts are payable by such Party hereunder shall be obligated to pay interest on such unpaid amounts to the Party to which such amounts are payable. The rate of such interest with respect to each day of delay during the period of such nonpayment shall be the Default Rate shall be the rate at which the Financial Times, or if the Financial Times is not so published the Wall Street Journal certifies to be the London Interbank offered rate (LIBOR) in the London Interbank Eurodollar market on thirty (30) day deposits, in effect on the last business day of the respective preceding Month, plus two percent (2%). Such interest shall accrue from the respective dates such amounts are payable until the amounts are duly paid. The Party to whom any such amount is payable may give notice of nonpayment to the Party in default and if such amount is not paid within fifteen (15) days after such notice, the Party to which the amount is owed may, in addition to the interest referred to above, seek remedies available pursuant to Article 24. 26.7 a) The rights and obligations under this Agreement of the State and GNPC on the one hand and Contractor on the other shall be separate and proportional and not joint. This Agreement shall not be construed as creating a partnership or joint venture, nor an association or trust (under any law other than the Petroleum Law), or as authorizing any Party to act as agent, servant or employee for any other Party for any purpose whatsoever except as provided in Article 10.4. 77 b) The duties and obligations of each Party constituting Contractor hereunder shall be joint and several and it is recognized that each such Party shall own and be responsible for its undivided Interest in" the rights and obligations of Contractor hereunder; provided, however, that the following payments shall be the separate obligation of and shall be made by each Party which constitutes the Contractor: i) Payments under the Petroleum Income Tax Law; ii) Payments of royalty taken in cash under the provisions of Article 1 0.2 (a); and iii) AOE share under the provisions of Article 10.2 (b). 26.8 This Agreement shall not take effect unless and until it has been ratified by the Parliament of Ghana. (the "Effective Date"). 26.9 In construing this Agreement: a) no consideration shall be given to the captions of the Articles, Sections, or Subsections which are inserted for convenience in locating the provisions of this Agreement and not as an aid in its construction; b) the word "includes" and its derivatives means "includes, but is not limited to" and corresponding derivative expressions; c) a defined term has its defined meaning throughout this Agreement and each annex, and attachment to this Agreement, regardless of whether it appears before or after the place where it is defined; d) the plural shall be deemed to include the singular, and vice versa; e) each gender shall be deemed to include the other genders; f) Each annex and attachment to this Agreement is a part of this Agreement, but if there is any conflict or inconsistency between the main body of this Agreement and any annex or attachment, the provisions of the main body of this Agreement shall prevail; and g) each reference to an Article, Section or Subsection refers to an Article, Section or Subsection of this Agreement unless expressly otherwise provided. 26.10 This Agreement comprises the full and complete agreement of the Parties hereto with respect to the subject matter hereof and supersedes and cancels all prior communications, understandings and agreements between the Parties hereto, whether written or oral, expressed. 26.11 Each contractor Party warrants that neither it nor any of its Affiliates or any of its or their officers, directors or employers has made, offered, or authorized and will not make, offer, or authorize with respect to the matters which are the subject of this Agreement, any payment, gift, promise or other advantage, whether directly or through any other person or entity, to or for the use or benefit of any public official (i.e., any person 78 I holding a legislative, administrative or judicial office, including any person employed by or acting on behalf of a public agency, a public enterprise or a public international organization) or any political party or political party official or candidate for office, where such payment, gift, promise or advantage would violate to the extent applicable to such Party (i) the applicable laws of Ghana; (ii) the laws of the country of incorporation of such Party or such Party's ultimate parent company and of the principal place of business of such ultimate parent company; (iii) the principles described in the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on December 17, 1997, which entered into force on February 15, 1999, and the Convention's Commentaries; (iv) the United States of America Foreign Corrupt Practices Act 1977; and (v) the United Kingdom Bribery Act 2010. Each Party shall defend, indemnify and hold the other Parties harmless from and against any and all claims, damages, losses, penalties, costs and expenses arising from or related to, any breach by such first Party of such warranty. Such indemnity obligation shall survive termination or expiration of this Agreement. Each Party shall in good time (i) respond in reasonable detail to any notice from any other Party reasonably connected with the above-stated warranty; and (ii) furnish applicable documentary support for such response upon request from such other Party. 26.12 Contractor shall at all times comply, and shall ensure that its agents, subcontractors and Affiliates while in Ghana carrying out activities contemplated by this Agreement and related documents comply, with the laws of the Republic of Ghana in effect from time to time during the term of this Agreement to the extent that the Contractor has notice of or, with the exercise of reasonable inquiry, would have knowledge of, such laws. Nothing in this Agreement or any related document shall require the Contractor or any of its agents, subcontractors or Affiliates to violate the laws of the Republic of Ghana in effect from time to time. To the extent any conflict exists between the terms of this Agreement and the laws of the Republic of Ghana, the Contractor shall not be found to be in breach of this Agreement to the extent the Contractor complies with the terms of this Agreement; provided, however, that where this Agreement specifically refers to the law of the Republic of Ghana, a breach of such law shall constitute a breach of this Agreement. 79 ARTICLE 27 NOTICE 27. Any Notice, Application, Requests, Agreements, Consent, Approval, Instruction, Delegation, Waiver or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been properly given when delivered in person to an authorised representative of the Party to whom such notice is directed or when actually received by such Party through registered mail, telex or telegram at the following address or at such other address as the Party shall specify in writing fifteen (15) days in advance: FOR THE STATE: MINISTER FOR ENERGY AND PETROLEUM MINISTRY OF ENERGY AND PETROLEUM PRIVATE MAIL BAG MINISTRY POST OFFICE ACCRA, GHANA Telephone: 233 (0)302667151- 3 Telex: 2436 ENERGY GH Telefax: 233 (0)302 668262 FOR GHANA NA TIONAL PETROLEUM CORPORA TION: THE CHIEF EXECUTIVE GHANA NATIONAL PETROLEUM CORPORATION PETROLEUM HOUSE HARBOUR ROAD PRIVATE MAIL BAG TEMA GHANA Telephone: 233-(0)303-204726 Telefax: 233-(0)303-202854 FOR CONTRACTOR BRITTANIA-U GHANA LIMITED CHIEF EXECUTIVE OFFICER NO. 12 AIRPORT BYPASS, Po. BOXC2444, CANTOMENT, ACCRA Telephone: +233244171619 Telefax: +234234 1- 462 7745 80 I HILLS OIL AND PETROLEUM MARKETING COMPANY LIMITED CHIEF EXECUTIVE OFFICER 181 ADJELE ROAD MARTE TSURU, EAST AIRPORT ACCRA - GHANA 81 IN WITNESS WHEREOF the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first,written above. FOR THE STATE Witnessed: By: J