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Petroleum Handling And Sale Agreement
By and Between
General Petroleum Company and Dara Petroleum Company
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Table of Contents
Preamble
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<S> <C>
Article (l): Definitions and scope
Article (2): Delivery and Receipt Arrangements, Quantities and Operational Emergencies.
Article (3): Delivery Standards, Quality and Measurement
Article (4): Effective Date and Term
Article (5): Tariff
Article (6): Liabilities
Article (7): Warranties
Article (8): Settlement of Disputes by Arbitration
Article (9): Applicable Law
Article(10): Assignment
Article (11): Payments
Article (12): Final Provisions, Headings and Force Majeure
Article (13): Notices
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Appendix A: Description of Facilities
Appendix B: Quantity of Unprocessed Crude Oil
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PETROLEUM HANDLING AND SALE AGREEMENT
This Agreement was made and entered as of 301 12/1999 by and between: The
General Petroleum Company herein referred to as "COMPANY", a company
organized and existing under the laws of the Government of the Arab Republic
of Egypt. Legally represented by Engineer / Hassan Rizk - Chairman of the
Board
And
Dara Petroleum Company, an operating company organized and existing under the
laws of the Arab Republic of Egypt, herein referred to as "Petro Dara"
Legally represented by Mr./Mamdouh Nagati - General Manager and Eng./ Essam
A. Moniem Chairman of the Board & MD
PREAMBLE
Whereas "Petro Dara" is in need of handling its crude oil produced from the
Hana oilfield, West Gharib Area to the "COMPANY" which owns and operates
facilities for processing, storing ,handling and exporting Crude Oil at Ras
Gharib and Ras Bakr in the Arab Republic of Egypt and whereas Petro Dara
desires to utilize the "COMPANY" Facilities for handling Crude Oil produced
and saved from the Hana Field subject to the conditions specified herein.
WHEREAS COMPANY agrees to allow Petro Dara to utilize the COMPANY Facilities
in accordance with the terms and conditions of this Agreement, and whereas
Petro Dara desire to sell all of its Crude Oil to the "COMPANY" and the
"COMPANY" as the purchaser of such Crude Oil, agrees to purchase all the Crude
Oil from Petro Dara.
NOW THEREFORE, in consideration of the premises and mutual understanding set
out herein, COMPANY and Petro Dara hereby agree as follows:
ARTICLE (1): DEFINITIONS AND SCOPE
In addition to terms defined parenthetically herein and unless the context
requires otherwise, capitalized terms shall have the definitions attributed
thereto in the Concession Agreement:
"Affiliated Company" means a company its share capital conferring a majority
of votes at stockholders' meetings of such company, of which is owned
directly or indirectly by a party hereto; which is the owner directly or
indirectly of share capital conferring a majority of votes at stockholders'
meetings of a party hereto; or whose share capital conferring a majority of
votes at stockholders' meetings of such company and the share capital
conferring of majority of votes at stockholders' meetings of a party hereto
are owned directly or indirectly by the same company.
"Barrel" means forty-two (42) United States gallons corrected to a
temperature of 60 of 14.65 PSIA
"Concession Agreement" means West Gharib Concession Agreement issued by Law
No. 15 of 1998 between Dublin International Petroleum Limited (Dublin), EGPC
and Government of Egypt.
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"Crude Oil" means crude oil produced from the Hana Field and delivered by
Petro Dara to the COMPANY at the Receiving Point either as Net Processed
Crude Oil or Unprocessed Crude Oil.
"Day" means a period beginning at zero six hundred hours (0600) and ending
twenty-four (24) hours later at zero six hundred hours (0600), local time at
the Gulf of Suez.
"Receiving Point" means that point or points at which the quantity of the
crude oil measured and delivered to the COMPANY at Ras Bakr No. 1 Station
(Bakr South) either via pipeline or by Oil trucks
"Facilities" means the Facilities as described in Appendix "A" of this
Agreement.
"COMPANY Facilities" means the Facilities owned and operated by COMPANY which
is necessary for the execution of this agreement.
"Hana Facilities" means the Facilities, operated by Petro Dara.
"Month" means a Gregorian Calendar Month.
"Net Processed Crude Oil" means that quantity of Processed Crude Oil
determined after the adjustments contemplated in Article 3.
"Net Unprocessed Crude Oil" means that quantity of Unprocessed Crude Oil
determined after the adjustments contemplated in Article 3.
"Pipeline Specifications" means minimum crude oil quality specifications for
the acceptance of Processed Crude Oil; as set out in this Agreement.
"Processed Crude Oil" means crude oil which has been processed at the Hana
Facilities for the removal of water, bottom sediments and salt in accordance
with Pipeline Specifications as set out herein, and delivered to the COMPANY
at the Receiving Point.
"EGPC" means Egyptian General Petroleum Corporation.
"Gharib Blend" means processed Crude Oil which has the following
specifications API 22(DEG.), Sulphur 3.5% by weight.
"Delivery Month" means the Gregorian Calendar Moth during which quantity of
either Processed or Unprocessed Crude Oil was delivered by Petro Dara to the
COMPANY.
Petro Dara, in consultation with COMPANY, shall be responsible for the
design, construction and commissioning of the pipeline at its own cost to be
constructed between the Hana Facilities and the Receiving Point at the
COMPANY Bakr No.1 Station" Petro Dara shall have full exclusive use and
enjoyment of the Pipeline for transportation of crude oil produced and saved
in accordance with the Concession agreement
Petro Dara shall have the right to use COMPANY roads to transport crude oil
by trucks to Bakr No.1 Station
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Petro Dara, at its sole election, may deliver Crude Oil either as Processed
Crude Oil or as Unprocessed Crude Oil to COMPANY at the Receiving Point and
receive payment and be subject to tariff charges accordingly as set out in
this Agreement.
ARTICLE (2) DELIVERY AND RECEIPT ARRANGEMENTS, QUANTITIES AND OPERATIONAL
EMERGENCIES
Subject to the terms and conditions of this Agreement, Petro Dara shall
deliver Crude Oil produced and saved from the Hana Field to COMPANY. COMPANY
shall accept all such quantities of delivered Crude Oil.
COMPANY shall accept all quantities of, Crude Oil delivered by Petro Dara at
the Receiving Point.
Notwithstanding the above, in case of 10, capacity limitations in COMPANY's
Facilities due to operational emergencies, COMPANY may reduce the quantity of
delivered Crude Oil pro rata with all other production from oil fields using
Bakr No.1 Station and shall, as soon as possible, remedy or remove the,
operational emergency and resume receipt of all Crude Oil.
In cases of operational emergencies, COMPANY shall give immediate notice 401
thereof to Petro Dara's designated Representatives. COMPANY will
subsequently confirm the nature of the operational emergency in writing.
COMPANY, in its capacity as the purchaser of Crude Oil, has agreed that EGPC
and Dublin's Crude Oil shall be sold, transferred and assigned to COMPANY at
the Receiving Point, subject to payment by COMPANY of the purchase price in
accordance with the provisions of Article 11.3 hereof.
Petro Dara shall have the right to audit the books and records of the COMPANY
with respect to volumes of Crude Oil sold by COMPANY and prices received for
said deliveries either for export or for selling locally.
ARTICLE (3) DELIVERY STANDARDS, QUALITY AND MEASUREMENT
Quality specifications of Crude Oil delivered by Petro Dara and accepted by
COMPANY at Receiving Point is stipulated as follows:
Minimum API 22(DEG.) at 60(DEG.) F
Maximum Sulfur Content 3% by weight
Maximum Viscosity 20 CP at 70(DEG.) F
Maximum W.C 10% By
In the event that the monthly average quality deviates from the
aforementioned specifications in any given month, then Petro Dara and COMPANY
will consult to establish a mutually acceptable basis for handling such Crude
Oil.
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The quantity of Unprocessed Crude Oil delivered and accepted at the Receiving
Point shall be adjusted in volume to 15(DEG.) C, in accordance with ASTM-IP
P.M.T (ASTM D-1250) or designation IP 200, table 54 (unabridged) or latest
revision thereof.
All measurements will be carried out in calibrated tanks in accordance with
the procedures adopted by industry standards for measurements carried out in
oilfields and which procedures are more fully described in Appendix B.
COMPANY's staff will make all calculations and copies thereof will be
furnished to Petro Dara. A representative of Petro Dara may witness and
check such calibrations and measurements. COMPANY will provide Petro Dara
with twenty-four (24) hours advance notice of said calibrations.
The quality of Unprocessed Crude Oil will be determined in COMPANY's
chemical laboratories from samples withdrawn from Unprocessed Crude Oil at
the Receiving Point in accordance with standard procedures. The samples shall
be tested to determine the quality of Unprocessed Crude Oil delivered as well
as the quantities of water and sediments.
Representatives of Petro Dara shall have the right to witness these
procedures. The characteristics that will be determined and advised to Petro
Dara are:
API gravity degree at 60(DEG.) F
Sulphur content as a percent of Wt.
Viscosity CP at 70(DEG.) F
-Water content and sediments
The quantity of Net Unprocessed Crude Oil will be calculated by deducting the
following from the quantity of Unprocessed Crude Oil delivered by Petro Dara and
accepted by COMPANY at the Receiving Point:
3-1. Bottom sediments and water (BS&W) determined in accordance with Appendix
B of this agreement.
3-2a Temperature calibration and volume adjustment at 15(DEG.) C for, Petro
Dara crude, similar to what is applied to West Bakr, Assran, GPC Bakr and
North area Crude Oil at the Receiving Point.
3-2b The actual production loss due to the measurements at the dedicated tanks
in shipping terminal shall be accounted for at the end of every month
according to the measurements at the dedicated tanks and the loading quantity.
The losses will be distributed to the Ras Gharib crude oil partners according
to their delivered quantities proportionally to COMPANY and Petro Dara
representative will be allowed to check these measurements or run separate
measurements independently. In the case that more quantities of oil were
measured at the terminal tanks than what was measured at the dedicated tanks.
These incremental quantity shall be divided between the partners according to
their delivered quantities proportionally to the COMPANY.
3.3 The quality specification of Processed Crude Oil delivered by Petro Dara
and accepted by COMPANY at Receiving Point shall conform to the Pipeline
Specifications, stipulated as follows:
Maximum BS& W 0.25% (volume)
Maximum Salt Content 0.007% (weight)
The quantity of Processed Crude Oil delivered by Petro Dara and accepted by
COMPANY at the Receiving Point will be adjusted for volume in the same manner as
set out in Article 3.1 b.
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The quality of Processed Crude Oil delivered by Petro Dara and accepted by,
COMPANY at the Receiving Point will be determined in the same manner set out
in Article 3.1
ARTICLE (4) EFFECTIVE DATE AND TERM
4.1 This Agreement shall become effective ("Effective Date") on the date that
this Agreement is executed by all parties hereto (the date of receiving the
first quantity from Hana crude oil. This Agreement shall expire at the date
when Petro Dara's production rights under the Concession Agreement issued as
law No. 15 of 1998 have expired or GPC concession right in this area
expiration which ever is earlier.
4.2 Petro Dara or COMPANY, however, may terminate this Agreement upon giving
two (2) Months prior written notice to the other party. It is understood that
such termination notice shall not be, given during the first ninety (90) days
after the Effective Date.
ARTICLE (5) TARIFF
5-1 UNDROCESSED OIL
Subject to the provisions as set forth in this Article, Petro Dara shall pay to
the (COMPANY the following tariff per Barrel of Unprocessed Crude Oil delivered
to COMPANY at the Receiving 11 Point for all services rendered to Petro Dara
under the terms of this Agreement:
US $1.20 per Barrel for the first 3,000 Barrels per day.
US $1.10 per Barrel for the quantity above 3,000 up to 6,000 Barrels per day.
US $1.00 per Barrel for the quantity above 6,000 up to 10,000 Barrels per
day.
US$0.80 per Barrel for the quantity above 10,000 Barrels per day.
5.2 PROCESSED OIL:
Subject to the provisions as set forth in this article, Petro Dara shall pay
to the COMPANY the following tariff per Barrel of Net Processed Crude Oil
delivered to COMPANY at the Receiving Point for all services rendered to
Petro Dara under the terms of this Agreement:
US $ 0.49 per Barrel.
5.3 The Tariff will be revised every two years from the Effective Date
subject to the both parties agreeing. The minimum Tariff payment is based on
a minimum production of 500 B/D (1.2 x 500 = 600 U.S $1/Day) except for
Force Majeure or Crude Oil reduction by instructions from EGPC during the
first year of this Agreement Minimum Tariff shall increase to 1000 B/D in
subsequent years (1.2 x 1000 = 1200 US D $/day) except for Force Majeure
or Crude Oil reduction by instructions from EGPC .
At the end of each Delivery Month COMPANY shall submit to Petro Dara, Tariff
invoice and Petro Dara shall pay during 30 days from receiving the invoice.
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The services given by COMPANY against such invoice shall include receiving
Hana crude oil in the Receiving Tanks, Crude oil analysis processing,
pumping, and storing of Petro Dara's Net Unprocessed Crude Oil and Net
Processed Crude Oil in the COMPANY Facilities, disposal of waste products and
loading such Crude Oil from COMPANY Facilities for export from Ras Gharib
terminal.
Well Sample to be analyzed at Petro Dara's cost.
5-4 In the event that Petro Dara's deliveries of Crude Oil have to be reduced
due to Force Majeure or operational difficulties and/or emergencies, then in
respect of the period in which deliveries of Crude Oil are so reduced:
Petro Dara shall pay only the tariff per Barrel applicable under Articles 5.1
and 5.2 on actual deliveries.
5-5 Force Majeure shall not include production fluctuation of the wells or
mechanical failure of Petro Dara's equipment unless such mechanical failure
is due to Force Majeure.
5-6 It is acknowledged that the COMPANY operates a fuel gas pipeline in the
vicinity of the Hana Field.
COMPANY agrees that Petro Dara has the right to connect to this line and
shall have access to fuel gas for processing Hana Field crude oil production
and Petro Dara shall pay for the used gas at the formal prevailing price.
5-7 It is acknowledged that COMPANY operates a water supply line in the
vicinity of the Hana Field.
COMPANY agrees that Petro Dara has the right to connect to this line and
shall have access to water for use at the Hana Facilities, Petro Dara shall
pay for the used water price at the formal prevailing price.
ARTICLE (6) LIABILITIES
6-l Upon delivery of Petro Dara's Crude oil into COMPANY's custody at the
Receiving Point, COMPANY shall exercise due care in handling such Crude Oil
in accordance with the terms and conditions of this Agreement. Petro Dara
shall have the right independently to inspect the COMPANY Facilities.
6-2 Petro Dara shall not be liable for any death or injury of COMPANY's
employees nor for any damage to or loss of COMPANY's property except to the
extent such injury, loss or damage is caused by gross negligence or willful
misconduct of Petro Dara's own employees, their contractors or contractors'
employees.
6-3 COMPANY shall not be liable for death or injury of Petro Dara's
employees nor for any damage to or loss of EGPC and Petro Dara's properties
and any loss of EGPC and Petro Dara's Crude Oil prior to the Receiving
Point, except to the extent such damage, loss or injury is caused by gross
negligence or willful misconduct of COMPANY, its employees, contractors or
contractors' employees.
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6-4 Not withstanding Article 3.2 b, after the delivery at the Receiving
Point, Petro Dara shall bear no liability or responsibility for any damage or
spillage or loss of Crude Oil in the COMPANY Facilities and any such damage
or spillage or loss shall not release COMPANY from its obligation to pay
Petro Dara for its share of Crude Oil delivered hereunder except for the
Force Majeure.
ARTICLE (7) WARRANTIES
Petro Dara hereby warrants that it is or will be entitled to a share of Crude
Oil delivered at the Receiving Point according to the Concession Agreement,
and further warrants that its share is free from all liens, claims, taxes,
assessments and encumbrances of any kind and nature and agrees to indemnify
COMPANY against all suits, judgements, actions, debts, accounts, damages,
costs, losses and expenses arising from or out of any r adverse legal claims
of any and all persons to or against any such Crude Oil. Petro Dara shall,
within a reasonable time after receiving notice of the assertion of any such
lien or adverse claim, notify COMPANY of such fact and shall permit COMPANY
to participate in the defense against lien or adverse claim if COMPANY wishes
to do so.
ARTICLE (8) SETTLEMENT OF DISPUTES BY ARBITRATION
Any dispute, controversy or claim arising out of or relating to this
Agreement, or breach, termination or invalidity there of between parties
shall be settled by Arbitration in accordance with Arbitration Rules of the
Regional Center for commercial Arbitration -Cairo ("the Center") in effect on
the date of this Agreement. The award of the Arbitrators shall be final,
binding on the parties and subject to no appeal.
The Arbitration tribunal shall be composed of three arbitrators.
Each party shall appoint one arbitrator. If, within thirty days after receipt
of the Claimant's notification of the appointment of an arbitrator, the
respondent has not notified the Claimant in writing of the name of the
arbitrator, he appoints, the Claimant may request "The Center" to appoint the
second arbitrator.
The two arbitrators thus appointed shall choose the third arbitrator who will
act as the Presiding Arbitrator of the tribunal. If within thirty days after
the appointment of the Presiding Arbitrator, then either party may request
the Secretary General of Permanent Court of Arbitration at the Hague to
appoint the Presiding Arbitrator in the same way as a Sole Arbitrator would
be appointed under article 6.3 of the UNCITRAL.
Arbitration Rules. The Presiding Arbitrator shall be a person of a
nationality other than A.R.E. or... and of a country which has a diplomatic
relations with both A.R.E and Canada
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The arbitration proceedings including the making of the award shall take
place in Cairo.
The provisions of this agreement relating to arbitration shall continue in
force not withstanding the termination of this agreement. The award rendered
may be entered in any court having jurisdiction and application may be made
in such court for a judicial acceptance of the award or an order of
enforcement, as the case may be.
ARTICLE (9) APPLICABLE LAW
9-1 The laws of the Arab Republic of Egypt will be applied in interpreting
this agreement and in resolving any dispute arising hereunder.
The formal language for this contract is Arabic.
ARTICLE (10) ASSIGNMENT
Any party shall have the right to assign its rights and obligations under
this Agreement whether in part or in whole to its Affiliated Companies
provided that a written notice will be given to the other party
ARTICLE (11) PAYMENTS
11-1 All tariff payments under this Agreement shall be paid in U.S. Dollars
within thirty (30) days after receipt of billing on the account indicated on
the bill.
11-2 In the event Petro Dara has reasonable objections to any item or items
of the tariff bill, it may withhold fifty (50) percent of the disputed part
of the bill until a settlement is reached.
11-3 COMPANY shall pay the price of the net Crude Oil which delivered from
Petro Dara within (30) days after receiving the invoice from Petro Dara
according to the EGPC instructions to the COMPANY.
11-4 The price shall be paid in U.S $ Dollars to Petro Dara bank account. In
the event of payments delay for any reason either for Tariff payment or Crude
Oil price the delayed party shall pay delay penalty equals to LIBOR rate plus
2%.
ARTICLE (12) FINAL PROVISIONS, HEADINGS AND FORCE MAJEURE
The Article headings of this Agreement: are for convenience only and are not
to be taken into consideration in interpreting the terms and conditions
hereof.
No party shall be deemed to be in default of its contractual obligations to
the extent that performance thereof is prevented by Force Majeure.
Force Majeure are contingencies caused by none of the parties which are
unforeseeable at the time of signature, uncontrollable by the parties and
which render the performance of the contractual obligations impossible as,
for instance, Acts of God, Acts of War, blockage, revolution and strike.
ARTICLE (13) NOTICES
All notices, including invoices and other communications, required or
permitted to be given under this Agreement, shall be in writing in the
English and Arabic languages and shall be sufficiently given if delivered,
sent by hand or registered mail or by prepaid telegraph, telex, cable or
radiogram to COMPANY at the following address;
GENERAL PETROLEUM COMPANY
8, Dr, Mustafa Abou Zahra -Nasr City- Cairo, A.R.E.
Attention- Chairman of the Board
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DARA PETROLEUM COMPANY
5 Ramsis Street Heliopolis -Cairo A.R.E
Attention: Chairman of the Board & General Manager
Notices, including invoices and other communications shall be deemed to have
been given when received, whether delivered, by hand mailed, by registered
mail or couriers.
A party may change its address for the purposes set forth in Article 13.1 by
giving seven (7) days prior written notice to the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
GENRAL PETROLEUM COMPANY
By:
Name: Eng./ Hassan Rizk
Chairman of the Board
DARA PETROLEUM COMPANY
By:
Name: Geol./ Mamdouh Nagati
General Manager and M.D
Name: Eng Essam A.Moniem
Chairman of the Board and MD
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