MODEL PRODUCTION SHARING CONTRACT …

1 1 MODELPRODUCTION SHARING CONTRACTBETWEENTHE GOVERNMENT OF INDIAANDXYZ COMPANY(IES)WITH RESPECT TO CONTRACT AREAIDENTIFIED ASBLOCK : _____2 TABLE OF CONTENTSARTICLECONTENTSPAGE Interests123 License and Exploration Period13-144 Relinquishment155 Work Programme16-186 Management Committee19-227 Operatorship, Operating Agreement and Operating Committee238 General Rights and Obligations of the Parties24-259 Government Assistance2610 Discovery, Development and Production27-3011 Petroleum Exploration License and Mining Lease31-3212 Unit Development3313 Measurement of Petroleum3414 Protection of the Environment35-3815 Recovery of Cost Petroleum39-4016 PRODUCTION SHARING of Petroleum41-4217 Taxes, Royalties, Rentals, Duties, Supply, Sale, Disposal and Export of Crude Oil and Condensate4619 Valuation of Petroleum47-4820 Currency and Exchange Control Provisions4921 Natural Gas50-5422 Employment, Training and Transfer of Technology5523 Local Goods and Services5624 Insurance and Indemnification5725 Records, Reports.

2 Accounts and Audit58326 Information, Data, Confidentiality, Inspection and Security59-6127 Title to Petroleum, Data and Assets6228 Assignment of Participating Interest63-6529 Guarantees66-6730 Term and Termination of the Contract68-6931 Force Majeure7032 Applicable Law and Language of the Contract7133 Sole Expert, Conciliation and Arbitration72-7334 Change of Status of Companies7435 Entire Agreement, Amendments and Waiver and miscellaneous7536 Certificates7637 Notices77-78 APPENDICESCONTENTSPAGE ADescription of the CONTRACT Area79 Appendix BMap of the CONTRACT Area80 Appendix CAccounting Procedure to the Contract81-104 Appendix DCalculation of the Investment Multiple for PRODUCTION SHARING purposes105-106 Appendix E1 Form of Parent company Financial and Performance Guarantee107-108 Appendix E2 Form of Company Financial and Performance Guarantee109-110 Appendix FProcedure for acquisition of goods and services111-113 Appendix GPerforma of Bank Guarantee to be provided pursuant to Article 29114-115 Appendix HAn itemized break-up of the cost estimates given by the contractor in the bid116documents pursuant to Article PRODUCTION SHARING CONTRACTFOR OFFSHORE AREASThis CONTRACT made this _____ day of _____ President of India, acting through the _____.

3 Ministry of Petroleum and Natural Gas(hereinafter referred to as the Government ) of the FIRST PART;ANDXYZ Company, a Company incorporated under the laws of (hereinafter referred to as XYZ )having its registered office at _____ which expression shall include its successors andsuch assigns as are permitted under Article 28 hereof, of the SECOND PART;WITNESSETH:WHEREAS(1)By virtue of article 297 of the Constitution of India, Petroleum in its natural state in the territorial watersand the continental shelf of India is vested in the Union of India;(2)The Oilfields (Regulation and Development) Act, 1948 (53 of 1948) (hereinafter referred to as the Act )and the Petroleum and Natural Gas Rules, 1959, made thereunder (hereinafter referred to as the Rules )make provisions, inter alia, for the regulation of Petroleum Operations and grant of Licenses and Leasesfor exploration, development and PRODUCTION of Petroleum in India;(3)The Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976(80 of 1976) provides for the grant of a license by the Government to explore and exploit the resources ofthe continental shelf and exclusive economic zone and any Petroleum Operation under this CONTRACT shallbe carried out under a license granted by the Central Government.

4 (4)The above Acts and Rules provide for the grant of License and Lease in respect of any land or mineralunderlying the ocean, within the territorial waters, the continental shelf and exclusive economic zone ofIndia by the Central Government;(5)Rule 5 of the Rules provides for an agreement between the Government and the Licensee or Lesseecontaining additional terms and conditions with respect to the License or Lease;(6)The Government desires that the Petroleum resources which may exist in the territorial waters, thecontinental shelf, and the exclusive economic zone of India be discovered and exploited with the utmostexpedition in the overall interest of India and in accordance with modern oilfield and petroleum industrypractices;2(7)XYZ Company(ies) has / have committed that it has / they have, or will acquire and make available, thenecessary financial and technical resources and the technical and industrial competence and experiencenecessary for proper discharge and / or performance of all obligations required to be performed under thisContract in accordance with modern oilfield and petroleum industry practices and will provide guaranteesas required in Article 29 for the due performance of its obligations hereunder.

5 And(8)As a result of discussions between representatives of the Government and XYZ Company(ies) on theproposal of XYZ Company(ies), the Government has agreed to enter into this CONTRACT with XYZC ompany(ies) with respect to the CONTRACT Area identified as block and detailed in Appendix A andAppendix B, on the terms and conditions herein set , THEREFORE, in consideration of the premises and covenants and conditions herein contained,IT IS HERE BY AGREED between the Parties as follows:3 FOR ONLAND AREASThis CONTRACT made this _____ day of _____ President of India, acting through the _____, Ministry of Petroleum and Natural Gas (hereinafterreferred to as the Government ) of the FIRST PART;ANDXYZ Company, a Company incorporated under the laws of (hereinafter referred to as XYZ ) whichexpression shall include its successors and such assigns as are permitted under Article 28 hereof, of theSECOND PART;WITNESSETH:WHEREAS(1)The Oilfields (Regulation and Development) Act, 1948 (53 of 1948) (hereinafter referred to as the Act )and the Petroleum and Natural Gas Rules, 1959, made thereunder (hereinafter referred to as the Rules )make provision, inter alia, for the regulation of Petroleum Operations and grant of Licenses and Leasesfor exploration, development and PRODUCTION of Petroleum in India;(2)The Rules provide for the grant of Licenses and Leases in respect of land vested in a State Government bythat State Government with the prior approval of the Central Government.

6 (3)Rule 5 of the Rules provides for an agreement between the Central Government and the Licensee orLessee containing additional terms and conditions with respect to the License or Lease;(4)The Government desires that the Petroleum resources which may exist in India be discovered and exploitedwith the utmost expedition in the overall interest of India in accordance with modern oilfield and petroleumindustry practices;(5)XYZ Company(ies) has / have committed that it has / they have, or will acquire and make available, thenecessary financial and technical resources and the technical and industrial competence and experiencenecessary for proper discharge and/or performance of all obligations required to be performed under thisContract in accordance with modern oilfield and petroleum industry practices and will provide guaranteesas required in Article 29 for the due performance of its obligations hereunder.

7 And(6)As a result of discussions between representatives of the Government and XYZ Company (ies) on theproposal of XYZ Company(ies), the Government has agreed to enter into this CONTRACT with XYZC ompany(ies), with respect to the CONTRACT Area identified as block_____ and detailed in Appendix Aand Appendix B, on the terms and conditions herein set , THEREFORE, in consideration of the premises and covenants and conditions herein contained, ITIS HERE BY AGREED between the Parties as follows:4 ARTICLE - 1 DEFINITIONSIn this CONTRACT , unless the context requires otherwise, the following terms shall have the meaning ascribedto them Accounting Procedure means the principles and procedures of accounting set out in Appendix Act means Oilfields (Regulation and Development) Act, 1948 as amended from time to Affiliate means a company or a body;(a)which directly or indirectly controls or is controlled by a Company which is a Party to thisContract; or(b)which directly or indirectly controls or is controlled by a company which directly or indirectlycontrols or is controlled by a Company which is a Party to this the purpose of this definition it is understood that control means:(i)ownership by one company of more than fifty percent (50%) of the voting securities of the othercompany.

8 Or(ii)the power to direct, administer and dictate policies of the other company even where the votingsecurities held by such company exercising such effective control in that other company is less thanfifty percent (50%) and the term controlled shall have a corresponding Appendix means an Appendix attached to this CONTRACT and made a part Appraisal Programme means a programme, carried out following a Discovery in the CONTRACT Area forthe purpose of appraising Discovery and delineating the Petroleum Reservoirs to which the Discoveryrelates in terms of thickness and lateral extent and determining the characteristics thereof and the quantityof recoverable Petroleum Appraisal Well means a Well drilled pursuant to an Appraisal Approved Work Programme and Approved Budget means a Work Programme or a Budget that hasbeen approved by the Management Committee pursuant to the provisions of this Arms Length Sales means sales made freely in the open market, in freely convertible currencies.

9 Betweenwilling and unrelated sellers and buyers and in which such buyers and sellers have no contractual or otherrelationship, directly or indirectly, or any common or joint interest as is reasonably likely to influence5selling prices and shall, inter alia, exclude sales (whether direct or indirect, through brokers or otherwise)involving Affiliates, sales between Companies which are Parties to this CONTRACT , sales between governmentsand government-owned entities, counter trades, restricted or distress sales, sales involving barterarrangements and generally any transactions motivated in whole or in part by considerations other thannormal commercial Article means an article of this CONTRACT and the term Articles means more than one Associated Natural Gas or ANG means Natural Gas produced in association with Crude Oil either asfree gas or in solution, if such Crude Oil can by itself be commercially Barrel means a quantity or unit equal to litres (forty two (42) United States gallons) liquidmeasure, at a temperature of sixty (60) degrees Fahrenheit ( degrees Celsius) and under one atmospherepressure ( psia).

10 Basement means any igneous or metamorphic rock, or rocks or any stratum of such nature, in and belowwhich the geological structure or physical characteristics of the rock sequence do not have the propertiesnecessary for the accumulation of Petroleum in commercial quantities and which reflects the maximumdepth at which any such accumulation can be reasonably expected in accordance with the knowledgegenerally accepted in the international petroleum Budget means a budget formulated in relation to a Work Business Day means any of the Calendar Days, which is not a Calendar Day means any of the seven (7) days of a Calendar Month means any of the twelve (12) months of the Calendar Calendar Quarter or Quarter means a period of three (3) consecutive Calendar Months commencingon the first day of January, April, July and October of each Calendar Calendar Year means a period of twelve (12) consecutive Months according to the Gregorian calendar,commencing with the first (1st) day of January and ending with the thirty-first (31st) day of Commercial Discovery means a Discovery of Petroleum reserves which has been declared as aCommercial Discovery in accordance with the provisions of Article 10 and/or Article Commercial PRODUCTION means PRODUCTION of Crude Oil or Condensate or Natural Gas or any combinationof these from the CONTRACT Area (excluding PRODUCTION for testing purposes)