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PACKAGE V SUPPLY AGREEMENT
(1998-1999 LNG SALES TO CHINESE PETROLEUM CORPORATION)
between
PERTAMINA
and
VIRGINIA INDONESIA COMPANY
LASMO SANGA SANGA LIMITED
OPICOIL HOUSTON, INC.
UNION TEXAS EAST KALIMANTAN LIMITED
UNIVERSE GAS & OIL COMPANY, INC.
and
VIRGINIA INTERNATIONAL COMPANY
Dated: June 16, 1995
Effective: December 6, 1994
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PACKAGE V SUPPLY AGREEMENT
(1998-1999 LNG SALES TO CHINESE PETROLEUM CORPORATION)
THIS SUPPLY AGREEMENT, made and entered into in Jakarta on June 16,
1995, by and between PERUSAHAAN PERTAMBANGAN MINYAK ▇▇▇ GAS BUMI NEGARA
("PERTAMINA"), on the one hand, and VIRGINIA INDONESIA COMPANY ("VICO"), LASMO
SANGA SANGA LIMITED, OPICOIL HOUSTON, INC., UNION TEXAS EAST KALIMANTAN
LIMITED, UNIVERSE GAS & OIL COMPANY, INC., and VIRGINIA INTERNATIONAL COMPANY
(herein referred to collectively as "Contractors" and individually as
"Contractor"), on the other hand,
WITNESSETH:
A. WHEREAS, Contractors individually own or control all of the
interest of "Contractors" in that certain Amended and Restated Production
Sharing Contract, dated April 23, 1990, but effective as of August 8, 1968
(such contract as hereafter amended is herein referred to as the "Amended and
Restated Production Sharing Contract") and that certain Production Sharing
Contract dated April 23, 1990, but effective as of August 8, 1998 (such
contract as hereafter amended is herein referred to as the "Renewed Production
Sharing Contract"). The Amended and Restated Production Sharing Contract and
the Renewed Production Sharing Contract are herein referred to collectively as
the "Production Sharing Contracts" and the area covered thereby is herein
referred to as the "VICO Contract Area"; and
B. WHEREAS, pursuant to the Production Sharing Contracts, each of
PERTAMINA and Contractors is entitled to take and receive, sell and freely
export its respective share of the Natural Gas produced and saved from the VICO
Contract Area (the percentage share of such Natural Gas to which each of
PERTAMINA and Contractors is entitled, as determined under the Production
Sharing Contracts, is herein referred to as the "Production Sharing Percentage"
of such party); and
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C. WHEREAS, the reserves of Natural Gas in the VICO Contract Area
exceed the reserves of Natural Gas committed to be produced, supplied and
delivered by PERTAMINA and Contractors to meet a portion of PERTAMINA's
existing obligations under LNG sales contracts, LPG sales contracts, and
domestic gas sales contracts; and
D. WHEREAS, PERTAMINA, with assistance from Contractors, has
constructed and expanded and is further expanding the Natural Gas liquefaction
and related facilities located at Bontang Bay, on the east coast of Kalimantan,
Indonesia (herein referred to as the "Bontang Plant"); and
E. WHEREAS, funds for the expansion of the liquefaction plant will be
provided to PERTAMINA through financing of the cost of such expansion on terms,
mutually agreeable to PERTAMINA and Contractors, which provide for the
repayment of funds provided pursuant to such financing and the cost of such
funds (repayment of funds and the cost of such funds are hereinafter referred
to as "Financing Costs"); and
F. WHEREAS, PERTAMINA and Contractors are parties to the Amended and
Restated Bontang Processing Agreement dated as of February 9, 1988 (as from
time to time amended, the "Processing Agreement"), which provides for the
operation of the Bontang Plant and the payment of the costs of such operation
(such costs as determined in accordance with the Processing Agreement are
herein referred to as "Plant Operating Costs"); and
G. WHEREAS, PERTAMINA and Contractors have agreed to use the Bontang
Plant in part for the liquefaction of the VICO Contract Gas (as defined in
Section 2.2 hereof) and the Other Contract Gas (as defined in Section 2.3
hereof); and
H. WHEREAS, PERTAMINA, in collaboration with Contractors and its
production sharing contractors in other contract areas in East Kalimantan
(herein referred to as the "Other Contract Areas"), has entered into a
Memorandum of Agreement dated December 6, 1994 ("MOA", and unless otherwise so
stated, any terms defined in the MOA shall have the same meanings when
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used herein) with Chinese Petroleum Corporation ("Buyer") pursuant to which
PERTAMINA is obligated to sell to Buyer certain quantities of LNG on an ex ship
basis; and
I. WHEREAS, the MOA provides that the Natural Gas to be processed into
LNG and sold by PERTAMINA under the MOA is to be produced from the areas in
East Kalimantan covered by production sharing contracts between PERTAMINA and
its suppliers, which consists of the VICO Contract Area and the Other Contract
Areas; and
J. WHEREAS, arrangements for the transportation of the ex ship
quantities pursuant to the MOA and for the payment of costs respecting such
transportation will be made on terms mutually agreeable to PERTAMINA and
Contractors (herein referred to as "Transportation Costs"); and
K. WHEREAS, PERTAMINA and each Contractor desire to supply and deliver
Natural Gas from the VICO Contract Area in support of the performance by
PERTAMINA of an agreed portion of its obligations under the MOA; and
L. WHEREAS, each Contractor desires to dispose of its Production
Sharing Percentage of the VICO Contract Gas (as herein defined) in accordance
with the terms of this Supply Agreement,
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
EFFECTIVE DATE AND DURATION
This Supply Agreement shall be effective as of December 6, 1994, and
shall terminate on the date when all rights and obligations of Contractors
hereunder have been satisfied.
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ARTICLE 2
SUPPLY COMMITMENT AND QUANTITY
2.1 Net Gas Requirement. The total quantity of net Natural Gas
required to be supplied and delivered out of proved recoverable reserves of
Natural Gas in East Kalimantan for liquefaction and sale as LNG under the MOA
is estimated to be 0.0482 trillion standard cubic feet ("t.s.c.f."). Such
quantity is herein referred to as the "MOA Net Gas Requirement". The MOA Net
Gas Requirement is based on the Fixed Quantities which Buyer has committed to
purchase pursuant to the terms of the MOA.
2.2 VICO Contract Gas. PERTAMINA and Contractors hereby commit and
agree to supply and deliver from proved economically recoverable reserves of
Natural Gas in specific fields within the VICO Contract Area sufficient Natural
Gas (and LNG resulting from the liquefaction thereof) to meet a portion of the
MOA Net Gas Requirement over the term of this Supply Agreement consisting of
0.0104 t.s.c.f., or 21.5956% thereof. Such quantities of net Natural Gas
committed to be supplied pursuant to this Supply Agreement are herein referred
to as the "VICO Contract Gas", and the above-stated percentage is herein
referred to as the "Producers' Percentage". The specific fields from which the
VICO Contract Gas will be committed are identified in the supplemental
memorandum entered into among PERTAMINA, Contractors and the production sharing
contractors in the Other Contract Areas pursuant to the Memorandum of
Understanding Re: Supply Agreements and Package V Sales dated October 5, 1994
(the "Package V Supplemental Memorandum"). The VICO participating fields and
the quantities in each field comprising the VICO Contract Gas are as follows:
Participating Fields Quantity of Gas (t.s.c.f.)
-------------------- --------------------------
Badak 0.0034
Lampake 0.0003
Mutiara 0.0014
▇▇▇▇▇ 0.0036
Pamaguan 0.0000
Semberah 0.0016
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The quantities committed from each field are subject to revision from time to
time, as the reserves from the fields may be updated and as additional data,
from deliverability studies and otherwise, become available.
2.3 Other Contract Gas. To meet the balance of the MOA Net Gas
Requirement, constituting 0.0378 t.s.c.f., or 78.4044% thereof, sufficient
Natural Gas (and LNG resulting from the liquefaction thereof) will be committed
for supply and delivery by PERTAMINA and its production sharing contractors
from proved economically recoverable reserves of Natural Gas in the Other
Contract Areas by separate supply agreements, similar hereto and compatible
herewith, executed and delivered concurrently herewith (such amounts are herein
collectively referred to as the "Other Contract Gas"). The specific fields from
which the Other Contract Gas will be committed are also identified in the
Package V Supplemental Memorandum.
2.4 ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ Certification. The amounts of net Natural
Gas constituting the VICO Contract Gas and the Other Contract Gas are part of
the estimates of proved recoverable reserves of Natural Gas as certified by the
independent consultant firm of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇▇ in written statements
based on data available on May 31, 1994.
The quantities for the VICO Contract Gas and the Other Contract Gas
set forth in Sections 2.2 and 2.3 hereof and the Producers' Percentage were
established by PERTAMINA at a meeting on May 29, 1995 of the East Kalimantan
Gas Reserves Management Committee.
ARTICLE 3
COORDINATION OF GAS SUPPLY
The VICO Contract Gas and the Other Contract Gas may be produced from
participating fields at times and production rates which may change from time
to time during the term hereof so as to secure the optimal ultimate recovery of
Natural Gas. The supply of Natural Gas from the ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇ and the Other Contract Areas will be coordinated by PERTAMINA so
as to conserve and permit full utilization of such Natural Gas. The sources of
supply, producing rates, quality of gas, metering and related matters shall be
matters for study by the East Kalimantan Gas Reserves Management Committee,
consisting of representatives from PERTAMINA, VICO, TOTAL Indonesie and Unocal
Indonesia Company.
ARTICLE 4
ADMINISTRATION, INSURANCE AND CONSULTATION
4.1 MOA. PERTAMINA shall be responsible for the due and prompt
administration of the MOA for the benefit of PERTAMINA and Contractors. All
matters which affect the MOA or the sale, transportation and delivery of LNG
thereunder will be administered by a representative to be appointed by
PERTAMINA and the representative appointed by Contractors under Article 9
hereof. It is understood, however, that it will be necessary from time to time
for PERTAMINA, as seller under the MOA, to take certain administrative and
operational actions without prior consultation where immediate action is
required. Contractors will be promptly advised of any such action.
4.2 Insurance. PERTAMINA shall ensure that the interests of it and
each Contractor in respect of each cargo of LNG transported by PERTAMINA from
the Bontang Plant to Buyer shall be adequately insured pursuant to arrangements
mutually agreed to by PERTAMINA and each Contractor. PERTAMINA and each
Contractor shall be entitled to receive its Production Sharing Percentage of
the Producers' Percentage of any proceeds paid under a marine insurance policy
covering a cargo of LNG being transported from the Bontang Plant. Such proceeds
shall be remitted by the insurer directly to the bank designated as Trustee
pursuant to Article 6 hereof.
4.3 Consultation. PERTAMINA and Contractors agree to consult with each
other freely on all matters relating to the MOA. PERTAMINA and Contractors
shall confer and agree as to any amendment to the MOA or to any permitted
action or election thereunder which constitutes
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a material adjustment in the quantities of LNG to be sold and delivered
thereunder or a change in the terms thereof. At the request of any party
hereto, a memorandum evidencing any such agreement shall be prepared as soon as
feasible and signed by each party hereto.
ARTICLE 5
TITLE, DELIVERY AND INVOICING
5.1 Title. PERTAMINA will cause the LNG resulting from the
liquefaction of the VICO Contract Gas and the Other Contract Gas to be
delivered to Buyer at the "Delivery Point" as that term is defined in the MOA.
Title to each Contractor's share of the LNG resulting from the liquefaction of
the VICO Contract Gas shall pass to PERTAMINA at the same time as the passage
of title from PERTAMINA to Buyer pursuant to the MOA.
5.2 Delivery and Invoicing. At the time of delivery of each cargo of
LNG to Buyer at the relevant "Delivery Point", PERTAMINA will furnish
Contractors with appropriate documentation to evidence the quantity and quality
of LNG delivered, together with copies of the invoices to Buyer in respect of
the sale of LNG in question. PERTAMINA will also furnish Contractors with a
copy of each invoice or billing delivered to Buyer on account of interest or
other payment obligation of Buyer pursuant to the MOA concurrently with its
being furnished to Buyer. Calculation of the Contract Sales Price as provided
for in the MOA, the amount of sales invoices and other ▇▇▇▇▇▇▇▇ to Buyer, and
any adjustments, shall be reviewed and approved by PERTAMINA and Contractors
prior to presentation to Buyer.
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ARTICLE 6
ENTITLEMENT AND PAYMENT
6.1 Contractor Entitlement. The amounts to be paid to each Contractor
for its share of the LNG resulting from the liquefaction of Natural Gas to be
supplied under this Supply Agreement shall be its Production Sharing Percentage
of the Producers' Percentage of the sum of:
(a) all amounts to be paid by Buyer to PERTAMINA for LNG sold and
delivered under the MOA;
(b) all other amounts which Buyer shall become obligated to pay
pursuant to the MOA with regard to deliveries of LNG thereunder including, but
not limited to any interest accruing on overdue invoice payments;
(c) amounts payable by insurers in respect of LNG resulting from the
liquefaction of the VICO Contract Gas and the Other Contract Gas; and
(d) interest earned on any of the amounts referred to in this Section
6.1.
6.2 PERTAMINA Assignment of Contractor Percentage Share. In order to
arrange for the receipt by each Contractor of the payments to which such
Contractor is entitled under Section 6.1 hereof, PERTAMINA hereby assigns to
each Contractor that Contractor's Production Sharing Percentage of the
Producers' Percentage of all amounts referred to in Section 6.1 hereof.
6.3 Method of Payment. Throughout the term of this Supply Agreement,
all those payments referred to in Section 6.1 hereof shall be paid in U.S.
Dollars, directly to BankAmerica International in New York City (or such other
leading bank in the United States as shall be selected by PERTAMINA and
approved by Contractors) pursuant to a Trustee and Paying Agent Agreement, the
parties to which shall be PERTAMINA, Contractors, the production sharing
contractors in the Other Contract Areas and the Trustee thereunder. Amounts so
received by the Trustee shall be used for payment of (i) Financing Costs; (ii)
an agreed portion of Plant Operating Costs; (iii)
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Transportation Costs; and (iv) other costs approved by PERTAMINA and
Contractors. Amounts received by the Trustee, to the extent that they are not
used for payment of the costs referred to in the preceding sentence, shall,
insofar as they are applicable to the VICO Contract Gas, be disbursed to
PERTAMINA and each Contractor in accordance with its Production Sharing
Percentage at a bank or banks of its choice.
6.4 Contractors' Right to Payment. The right of Contractors to the
payments provided for in this Article 6 shall extend throughout the term of
this Supply Agreement and shall not be affected by the production rates or
sources of Natural Gas supplied from the VICO Contract Gas or the Other
Contract Gas from time to time during the term hereof.
ARTICLE 7
DELIVERABILITY
7.1 Oversupply of VICO Contract Gas. If the quantities of net Natural
Gas produced from the participating fields within the VICO Contract Area and
delivered pursuant to this Supply Agreement exceed in the aggregate the
quantity of the VICO Contract Gas, the Producers' Percentage (and the
percentage of the revenues to be paid to PERTAMINA and Contractors hereunder)
will not be increased, and Contractors, together with PERTAMINA, will be
credited with and have the right to receive revenue from future marketing
opportunities in respect of a quantity of net Natural Gas from reserves in the
Other Contract Areas equal to such excess quantities.
7.2 Shortfall of VICO Contract Gas. If the quantities of net Natural
Gas produced from the participating fields within the VICO Contract Area and
delivered pursuant to this Supply Agreement are in the aggregate less than the
quantity of the VICO Contract Gas, the Producers' Percentage (and the
percentage of the revenues to be paid to PERTAMINA and Contractors hereunder)
will not be reduced, and the production sharing contractors in the Other
Contract Areas and any new contract area, together with PERTAMINA, will be
credited with and have the right to receive revenue from future marketing
opportunities in respect of a quantity of net Natural Gas from
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reserves in the VICO Contract Area equal to excess quantities delivered from
sources within the Gas Supply Area.
ARTICLE 8
ARBITRATION AND GOVERNING LAW
8.1 Arbitration. All disputes arising in connection with this Supply
Agreement shall be finally settled by arbitration conducted in the English
language in Paris, France, by three arbitrators under the Rules of Arbitration
of the International Chamber of Commerce. Judgment upon the award rendered may
be entered in any court having jurisdiction, or application may be made to such
court for a juridical acceptance of the award and an order of enforcement, as
the case may be.
8.2 Governing Law. This Supply Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York, United States
of America.
ARTICLE 9
CONTRACTORS' REPRESENTATIVE
VICO is designated representative by Contractors for performance on
behalf of Contractors of their obligation under Section 4.1 hereof and for the
giving of notices, responses or other communications to and from Contractors
under this Supply Agreement. Such representative may be changed by written
notice to such effect from Contractors to PERTAMINA.
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ARTICLE 10
NOTICES
Any notices to the parties shall be in writing and sent by mail,
cable, telex or facsimile to the following addresses:
To PERTAMINA:
PERUSAHAAN PERTAMBANGAN MINYAK ▇▇▇ GAS BUMI NEGARA
(PERTAMINA)
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Attention: Head of BPPKA
Cable: PERTAMINA, Jakarta, Indonesia
Telex: PERTAMINA, 44134 Jakarta
Facsimile: 3846932
To Contractors:
VIRGINIA INDONESIA COMPANY (VICO)
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
Jl. H.R. Rasuna Said ▇▇▇. ▇▇▇-▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
Attention: President - VICO Indonesia
Cable: VICO
Telex: 62458 or 62468
Facsimile: 523-6100
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cc: VIRGINIA INDONESIA COMPANY
One Houston Center
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇.▇.▇.
Attention: Chairman
Telex: 166-100
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
A party may change its address by written notice to the other parties.
ARTICLE 11
MISCELLANEOUS
11.1 Amendment. This Supply Agreement shall not be amended or modified
except by written agreement signed by the parties hereto.
11.2 Successors and Assigns. This Supply Agreement shall inure to the
benefit of, and be binding upon, PERTAMINA and each Contractor, their
respective successors and assigns, provided that this Supply Agreement shall be
assignable by a Contractor only if such Contractor concurrently assigns to the
same assignee an equal interest in the Production Sharing Contracts.
11.3 Exclusivity. The parties to this Supply Agreement shall be the
only persons or entities entitled to enforce the obligations hereunder of the
other parties hereto, and no persons or entities not parties to this Supply
Agreement shall have the right to enforce any of the obligations hereunder of
any of the parties hereto.
11.4 Headings and Subheadings. The Article headings and subheadings
used herein are for convenience of reference only.
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IN WITNESS WHEREOF, PERTAMINA and Contractors have caused their duly
authorized representatives to execute this Supply Agreement as of the day and
year first written above.
PERUSAHAAN PERTAMBANGAN MINYAK CONTRACTORS:
▇▇▇ GAS BUMI NEGARA (PERTAMINA)
VIRGINIA INDONESIA COMPANY
BY /s/ [ILLEGIBLE] BY /s/ [ILLEGIBLE]
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LASMO SANGA SANGA LIMITED
BY /s/ [ILLEGIBLE]
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OPICOIL HOUSTON, INC.
BY /s/ [ILLEGIBLE]
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UNION TEXAS EAST KALIMANTAN
LIMITED
BY /s/ ▇.▇. ▇▇▇▇▇▇
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Vice President
UNIVERSE GAS & OIL COMPANY, INC.
BY /s/ [ILLEGIBLE]
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VIRGINIA INTERNATIONAL COMPANY
BY /s/ [ILLEGIBLE]
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