Article 28

Confidentiality

This article reserves the privacy of all documents and data shared between
parties whilst engaged in the contract. The data can range from samples,
interpretation data and other information regarding the Contract Area. The
information shared amongst parties is protected for up to five years post
contract termination.

It is important to have confidentiality agreement in a psc as it prevents the

parties involved from divulging sensitive information pertaining to the
contract. In the instance where one party is under performing or simply not
meeting its requirements and the other party wants to opt out it would
prevent the underperforming party from disclosing information pertaining to
the contract that may jeopardize the leaving partys operations.

Article 8

Guarantees

This article ensures that the contractor provides guarantees from a suitable
guarantor to the Minister upon approval of all exploration work programs.
These guarantees act as insurance for the Minister if the contractor does not
fulfill his obligations. These guarantees must be irrevocable and the sums
must be clearly stated for each phase. If the contractor does however
complete some phases of the contract he will only be required to pay the
Minister the amount for the outstanding guarantees.

This article is important because it guarantees that the government is

compensated if the contractor fails to perform. The fees associated with the
guarantee also influences the contractor to perform his duties in order to
avoid paying large sums to the Minister. If the guarantees are not included in
the contract it can cause the Minister to lose money as contractors would no
longer be obligated to finish the contact.

Article 4

This article provides the stipulated time periods the contractor must abide by
when completing the various phases of the contract. It clearly states the
number of contract years that will be allocated for the three phases of
exploration. This article highlights that contractor is only allowed to advance
to another phase in the contract if the obligations within the current phase
have been fulfilled. The article indicates how the contract should be
terminated provided that the contractor does not wish to proceed to another
phase.

Contract terms are important because it clearly defines the procedure the
contractor must follow in order to enter new phases or request extensions in
the contract from the Minister. If the contract terms were
\2016 REVISED DEEP WATER MODEL PRODUCTION SHARING CONTRACT
DRAFT DOCUMENT SUBJECT TO CONTRACT

2016 REVISED BID ROUND DEEP WATER

MODEL PRODUCTION SHARING CONTRACT
TABLE OF CONTENTS

ARTICLE 1
DEFINITION
..........................................................................................................................................
10

ARTICLE 2
SCOPE..............................................
21

ARTICLE 3
CONTRACT AREA......................................
23

ARTICLE 4
CONTRACT TERM......................................
24

ARTICLE 5
RELINQUISHMENTS....................................
27

ARTICLE 6
RETAINED EXPLORATION AREA..........................
30

ARTICLE 7
MINIMUM EXPLORATION WORK PROGRAMME.................
32
ARTICLE 8
GUARANTEES ......................................... 37

ARTICLE 9
COORDINATION COMMITTEE ............................. 40

ARTICLE 10
UNDERTAKING BY CONTRACTOR .......................... 42

ARTICLE 11
ANCILLARY RIGHTS OF CONTRACTOR ..................... 49

ARTICLE 12
ASSISTANCE BY MINISTER ............................. 50

ARTICLE 13
DISCOVERY, COMMERCIALIZATION PROCEDURE ............. 52

ARTICLE 14
EXPLORATION WORK PROGRAMME ......................... 60

ARTICLE 15
DEVELOPMENT AND PRODUCTION WORK PROGRAMMES AND
BUDGETS .............................................. 61

ARTICLE 16
NATURAL GAS ........................................ 64

ARTICLE 17
BOOKS OF ACCOUNT, FINANCIAL REPORTING, AUDIT, AND
COST VERIFICATION .................................... 69
ARTICLE 18
ALLOCATION OF PRODUCTION, RECOVERY OF COSTS AND
EXPENSES,PRODUCTION SHARING AND RIGHT OF EXPORT
....
....

ARTICLE 19
MEASUREMENT OF PETROLEUM...........................
84

ARTICLE 20
VALUATION ........................................

ARTICLE 21
FINANCIAL OBLIGATIONS..............................
89

ARTICLE 22
PAYMENT AND CURRENCY...............................
97

ARTICLE 23
MATERIALS AND EQUIPMENT IMPORT DUTIES..............
98

ARTICLE 24
OWNERSHIP OF ASSETS................................
99

ARTICLE 25
SUBCONTRACTORS, PERSONNEL AND TRAINING
.................................................
101

ARTICLE 26
STATE'S RIGHT OF REQUISITION
 .................................................
104

ARTICLE 27
UNITIZATION
.................................................
105

ARTICLE 28
CONFIDENTIALITY ................................... 106

ARTICLE 29
PIPELINES ......................................... 108

ARTICLE 30
INSURANCE ......................................... 109

ARTICLE 31
ASSIGNMENT AND TRANSFER ........................... 110

ARTICLE 32
APPLICABLE LAW .................................... 113

ARTICLE 33
CONSULTATION, EXPERT DETERMINATION AND ARBITRATION 114

ARTICLE 34
FORCE MAJEURE ..................................... 117

ARTICLE 35
NOTICES ........................................... 118

ARTICLE 36
TERMINATION ....................................... 119

ARTICLE 37
ABANDONMENT PROGRAMME, BUDGET AND ESCROW ACCOUNT .. 121

ARTICLE 38
 THE PETROLEUM ACT AND REGULATIONS ................. 125

ARTICLE 39
LOCAL CONTENT ..................................... 126

ARTICLE 40
MISCELLANEOUS ..................................... 129

ANNEX A

CONTRACT AREA

GEOGRAPHICAL DESCRIPTION OF BLOCK ... ... A-1

ANNEX B

REPORTS TO BE SUBMITTED BY CONTRACTOR ... ... ...

B-1

ANNEX C
ACCOUNTING PROCEDURE

ARTICLE 1
GENERAL PROVISIONS ... ... ... ... ... C-1

ARTICLE 2
COSTS AND EXPENDITURES ... ... ... ... ... C-5

ARTICLE 3
COST CENTRES ... ... ... ... ... ... C-12

ARTICLE 4
VALUATION OF MATERIALS... ... ... ... ... C-15

ARTICLE 5
RECEIPTS ... ... ... ... ... ... ... C-17

ARTICLE 6
NON-RECOVERABLE COSTS ... ... ... ... . C-18

ARTICLE 7
INVENTORIES AND INVENTORY STATEMENT ... . C-20

ARTICLE 8
PRODUCTION STATEMENT ... ... ... ... . C-22

ARTICLE 9
COST RECOVERY STATEMENT ... ... ... C-24

ARTICLE 10
STATEMENT OF EXPENDITURES ... ... ... ... C-25

ARTICLE 11
CONTROL STATEMENTS AND OTHER ACCOUNTS... ... C-26

ARTICLE 12
STATEMENT OF LOCAL CONTENT ... ... ... ... ...
...
C-27

ARTICLE 13
TAX COMPUTATION ... ... ... ... ... ... ... ...

C-31
 ANNEX D
MARKETING PROCEDURES FOR GAS

ANNEX E

TABLE FOR THE CALCULATION OF WORK UNITS