NO : 1 8 Natural Gas Purchase Agreement
NO : 1 8
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Seller:
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Shaanxi
Natural Gas Co., Ltd.
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Purchaser:
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Xi'an
Xilan Natural Gas Co.,
Ltd.
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1
Contract
No.: 18
Signed
at: Xi’an,
Shaanxi
Seller (Party
A): Shaanxi Natural Gas Co., Ltd.
Purchaser (Party
B): Xi’an Xilan Natural Gas Co., Ltd.
According
to the CONTRACT LAW OF THE PEOPLE’S REPUBLIC OF CHINA, the MUNICIPAL GAS
MANAGEMENT REGULATION, as well as the MUNICIPAL GAS SECURITY MANAGEMENT
REGULATION, to confirm the rights and obligations of both parties, after
negotiation, Party A and Party B reached the following agreement (‘the
Agreement’).
Article
1 Duration and
Supply
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1.
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Duration:
From 8 am on December 31, 2007 to 8 am on December 31,
2008.
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2.
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Supply:
According to the annual plan of the China Natural Petroleum Corporation
(‘CNPC’) Changqing Natural Gas Company and the distribution plan of the
Shaanxi Development and Reform Commission, the volume of gas in
this contract for the year 2008 will be 25.58 million cubic
meters.
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Unit: Million cubic
meters
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Jan.
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Feb.
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Mar.
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Apr.
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May
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Jun.
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Jul.
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Aug.
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Sep.
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Oct.
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Nov.
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Dec.
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1.94
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2.18
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2.53
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1.94
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1.64
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1.83
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1.76
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2.05
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1.99
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2.49
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2.52
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2.71
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3.
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In
order to ensure continuing operation, Party B shall provide the annual gas
usage plan for next year before July 20 2008 and the monthly gas usage
plan before the 20th of each month to Party A in
writing.
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4.
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Party
B shall provide timely and accurate market information regarding gas usage
and market development for the efficient and timely communication between
both parties.
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5.
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Party
B shall inform Party A of its new users one year in advance. Party B must
obtain approval under Notification No. [2005] 387 by Shaanxi Development
and Reform Commission for natural gas quota. Otherwise, Party A will not
consider the natural gas demand for Party B’s new industrial
users.
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6.
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Shaanxi
Natural Gas Supply Contingency Plan No. [2005] 387 shall govern in cases
of gas supply shortage or other emergency, and is attached as exhibit for
this Agreement.
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Article
2 Price
Setting
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1.
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Selling
price is set according to the relevant documents of Shaanxi Price
Bureau.
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According
to Shaanxi Natural Gas Price Adjustment 31 [2006], the price for natural gas
supplied by Party to Party B is RMB 1.26 per cubic meter at city gate stations,
which includes RMB 0.77 per cubic meter as base cost and RMB 0.49 per cubic
meter as long-distance pipeline transmission cost.
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2.
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During
the term of this contract, in cases of any price adjustments by regulatory
authorities, the new price shall substitute the price currently agreed by
both parties.
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2
Article
3 Supply
Handover
The
handover place is designated at Party A's Lintong transmission station, whereby
the natural gas ownership as well as corresponding risks shall be transferred
from Party A to Party B.
Article
4 Gas Quality
Natural
gas provided is purified and supplied by the Bureau of Changqing Gas
Purification Plant which satisfies the second level of
GB17820-1999 "Gas" Category Standard.
Article
5 Gas Pressure
The
pressure of sub-transmission station exit is less than 1.0 MPa.
Article
6 Gas Metering and Transition
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1.
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Volume
calculation:
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(1)
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Measurement
standards: the
amount of gas shall be measured by volume, and
in compliance with law of the People's Republic of China's oil and gas
industry standard SY/T6143-2004.
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(2)
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Measurement
condition: the standard temperature to measure the
volume of gas is 293.15K (20 degrees Celsius) with pressure 101.325 Pa (1
standard atmospheric pressure).
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2.
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Gas
handover
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(1)
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Shall
be in accordance with the calculation standards of Party A’s Lintong
distribution station, it will be monitored by Party B, and
Party A is responsible for the operation of the measuring
instruments.
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(2)
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Party
A shall provide receipt daily in five copies. After recording and signing
by both parties, these copies will be deemed as proof of
settlement.
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(3)
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At
8 o 'clock every morning, Party B will assign staff to record volume of
gas with Party A’s staff at the Lintong
station.
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3.
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Maintenance
of measuring instruments
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According
to the State regulations, both parties agreed to assess the measuring
instruments regularly by the Shaanxi Metrology Institute. Party A shall provide
the copy of tested results to Party B.
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4.
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Dispute
Resolution for Measuring
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(1)
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In
the process of gas supply, if
Party B has objection to Party A relating to the volume of metrological
instrument measuring, it shall inform Party A in written within three
days, and invite professionals in the Shaanxi Scientific Research
Institute to perform metrological measurement. Party B shall cooperate
with Party A. If
instrument measuring data are incorrect, Party A shall amend the record on
the day when dispute arises and be liable for the expenses otherwise Party
B will be liable for the assessment
expenses.
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(2)
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For
disputes between the parties, settlement will be in accordance with Party
A's calculation standards. The amended figures after negotiation will be
used in the settlement calculation, where overpaid/underpaid amount will
be settled.
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3
Article
7 Prepayment
In
accordance with the "Payment made before supply" principle, and in order to
guarantee the overall performance of the contract, within one week of the date
of this Agreement, Party B shall prepay RMB 1.76 million to Party
A.
Article
8 Payment Settlement
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1.
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Settlement
time
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On the
30th
of each month, and
within three days (If it falls on a holiday, the payment day will be moved
forward).
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2.
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The
settlement: According
to the People's Republic of China’s present interim measures for the
administration of gas supply: ‘For the settlement of supply
settlement, the measurement by the seller shall prevail’. Each day, the
"Invoice for the supply and purchase of gas" as signed by the designated
staff of each party will be the proof of settlement for the supply of
natural gas.
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3.
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Payment
option
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Party
B shall adopt bank transfer and check
transfer methods etc. Party
B shall send or fax a copy of the receipt to Party A after payment is
made.
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Article
9 Gas Load
Party A
is only responsible within the scope of this Agreement. Party A is not
responsible for the gas load in situation such as co-operating with Party B to
alter the volume of gas supply in accordance with the condition of pipeline
safety and production capacity.
Article
10 Party A’s Responsibility of Breach of Contract
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1.
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Under
normal circumstances, Party A shall be in strict compliance with the plan
for continuous gas supply. Party A cannot automatically suspend the
supply.
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2.
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For
repair and maintenance of the gas pipelines, it will require a temporary
suspension of the gas supply. Party A shall inform Party B 24 hours in
advance; for sudden failure leading to immediate suspension of supply,
Party A shall inform Party B immediately. After suspension of supply,
Party A shall fix and provide gas supply as soon as
possible.
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3.
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Party
A shall provide written notice to Party B five days in advance when gas
supply is suspended for overhaul
maintenance.
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4.
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If
Party B reasonably requests to suspend gas supply, Party A shall
immediately contact the upstream units for volume adjustment and prepare
for the termination of the gas supply, and
accordingly inform Party B.
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Article
11 Party B's Responsibility of Breach of Contract
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1.
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If
Party B is unable to perform the contract in the following circumstances,
it will be deemed as a breach of the contract and Party B will be liable to compensate the losses caused to the
other
party:
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4
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(1)
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Under
normal circumstances, Party B shall be in strict compliance with the
target for continuous gas usage.
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(2)
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When
Party B intends to terminate gas usage, Party B shall inform Party A 24
hours in advance so that Party A can perform all the necessary preparation
works for the suspension of gas supply. Party B can only shut down the
valves after receiving replied from Party A. For sudden failure causing
suspension of gas supply, Party B shall inform Party A immediately. Party
B shall fix and ensure gas usage as soon as
possible.
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(3)
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Party
B shall provide written notice to Party A five days in advance when gas
supply is suspended for overhaul
maintenance.
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(4)
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If
Party A reasonably requests to suspend supply, Party B shall cooperate
with and reply Party B immediately.
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2.
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If
Party B fails to settle the payments on time, besides paying money
according to the daily amount, from the second day of the deferred
payment, Party B shall pay 0.3% of accounts payable per day as the
penalty. If Party B delays the payment for more than 5 days, Party A may
reduce the quantity of daily gas supply, and may not guarantee minimum
supplies, all of the consequential losses shall be borne by Party
B.
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Article
12 Dispute Resolution
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1.
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For
disputes arising between the parties, both parties shall make their best
effort to negotiate. If the dispute cannot be resolved, either party can
pursue the first resolution set forth as
follow:
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(1)
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Apply
to the Xi'an arbitration
commission;
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(2)
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Proceed
with legal proceedings at the People's Court at Party A's
locality.
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2.
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During
the mediation period, both parties are strictly bound by this
Agreement.
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Article
13 Other terms
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1.
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Unless
terminated under contract law, either
party shall not unilaterally modify or terminate this Agreement. Either
party, requesting to change or terminate this Agreement in accordance with
the law, shall promptly notify the other party in writing and to reach a
written agreement between the
parties.
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2.
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If
this Agreement could not be performed due to force majeure, both parties,
in accordance with relevant laws and regulations, shall negotiate and
settle the matter promptly.
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3.
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As
for any outstanding issues, the two parties can make further negotiation
and enter into a supplemental agreement. The supplemental agreement has
the same legal effect as this
Agreement.
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Article
14 Supplementary Provisions
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1.
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This
Agreement will be valid from 8:00 am on December 31, 2007 until 8:00 am on
December 31, 2008.
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2.
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This
Agreement is executed in four copies, two original and two copies, all of
which have equal legal effectiveness. Each
of Party A and Party B holds one original copy
respectively.
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5
Party
A：Shaanxi Natural Gas Co.,
Ltd
Company
Seal
Party B：Xi’an Xilan Natural Gas Co.,
Lt
Company
Seal
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