PART I
Item 1. Business
General
Unimar Company (the Company) was organized as a general
partnership in 1984 under the Texas Uniform Partnership Act. The
partners are LASMO (Ustar), Inc. (Ultrastar), a Delaware
corporation and an indirect, wholly owned subsidiary of LASMO plc
(LASMO), a public limited company organized under the laws of
England, and Unistar, Inc. (Unistar), a Delaware corporation and a
direct subsidiary of Union Texas Petroleum Holdings, Inc. (UTPH),
a publicly-traded Delaware corporation.
The Company's sole business is its ownership of ENSTAR
Corporation (ENSTAR) which, through its wholly-owned subsidiaries,
Virginia International Company (INTERNATIONAL) and Virginia
Indonesia Company (VICO), has a 23.125 percent working interest in,
and is the operator of, a joint venture (the Joint Venture) for the
exploration, development and production of oil and natural gas
(gas) in East Kalimantan, Indonesia, under a production sharing
contract (Production Sharing Contract or PSC) with Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), the state
petroleum enterprise of the Republic of Indonesia. The majority of
the revenue derived from the Joint Venture results from the sale of
liquefied natural gas (LNG). Currently, the LNG is sold to utility
and industrial companies in Japan, Taiwan and South Korea. See
"The Joint Venture" below.
The principal executive offices of the Company are at 1221
McKinney, Suite 600, Houston, Texas 77010-2015 and its telephone
number is (713) 654-8550. A Management Board consisting of six
members, three appointed by each partner, exercises management,
budgeting and financial control of the Company. As of December 31,
1994, VICO, in its capacity as the Joint Venture operator, had
approximately 2,000 employees in the United States and Indonesia.
The Company presently does not have any other employees. All
aspects of the Company's business that are not associated with the
management of the Joint Venture, such as operations, legal,
accounting, tax and other management functions, are supplied by
employees of the partners in accordance with management agreements.
The Company can give no assurance as to the future trend of
its business and earnings, or as to future events and developments
that could affect the Company in particular or the oil industry in
general. These include such matters as environmental quality
control standards, new discoveries of hydrocarbons, and the demand
for petroleum products. Furthermore, the Company's business could
be materially affected by future events including price changes or
controls, payment delays, increased expenditures, legislation and
regulations affecting the Company's business, expropriation of
assets, renegotiation of contracts with foreign governments,
political instability, currency exchange and repatriation losses,
taxes, litigation, the competitive environment, and international
economic and political developments including actions of members of
the Organization of Petroleum Exporting Countries (OPEC). See Item
7 - Management Discussion and Analysis of Financial Condition and
Results of Operations.
Description of the Company's Indonesian Participating Units
(a) Market information. The Company's Indonesian
Participating Units (IPUs) are listed for trading on the American
Stock Exchange under the symbol "UMR." The following table shows
the reported high and low sales prices of the IPUs on a quarterly
basis:
INDONESIAN PARTICIPATING UNITS' PRICE RANGE
First Qtr. Second Qtr. Third Qtr. Fourth Qtr.
1994
High 9-1/2 10 10 10
Low 8-3/8 8-1/2 9-1/8 9
1993
High 9-1/8 10-1/4 9-3/4 9-1/2
Low 6-7/8 8-1/4 8-5/8 8-1/4
Source of prices: American Stock Exchange
(b) Holders. As of February 14, 1995, 10,778,590 IPUs were
outstanding and held by approximately 4,172 holders of record.
(c) Payments per Indonesian Participating Unit.
Period Payment Date Payment
First Quarter - 1993 June 1, 1993 0.46
Second Quarter - 1993 August 30, 1993 0.28
Third Quarter - 1993 November 29, 1993 0.45
Fourth Quarter - 1993 March 1, 1994 0.38
First Quarter - 1994 May 31, 1994 0.60
Second Quarter - 1994 August 29, 1994 0.29
Third Quarter - 1994 November 29, 1994 0.45
Fourth Quarter - 1994 March 1, 1995 0.49
Each IPU entitles the holder thereof to receive until
September 25, 1999, a payment (Participation Payment) for any
quarterly period equal to the product of (i) a fraction, the
numerator of which is 1 and the denominator of which is equal to
the number of IPUs outstanding on the last business day of such
quarterly period, multiplied by (ii) the amount by which cumulative
Net Cash Flow (as defined below) through the end of such quarterly
period exceeds the aggregate amount of all preceding Participation
Payments in respect of all IPUs. If Net Cash Flow is zero or
negative for any quarterly period, no Participation Payment for
that quarter will be made.
<PAGE>
The amount of Net Cash Flow for any quarterly period is equal
to the product of (i) a fraction, the numerator of which is equal
to the number of IPUs outstanding on the last business day of such
quarterly period, and the denominator of which is 14,077,747,
multiplied by (ii) 32 percent of (a) all cash actually received in
the United States by INTERNATIONAL and VICO (for purposes hereof,
the Special Subsidiaries) during such quarterly period from their
aggregate 23.125 percent interest in the Joint Venture (or actually
received by them outside the United States if they voluntarily
elect not to repatriate such cash) minus (b) an amount equal to the
sum of (A) the aggregate amount of all accruals or expenditures
made by the Special Subsidiaries during such quarterly period as a
result of their interest in the Joint Venture, (B) foreign or
domestic taxes paid by the Special Subsidiaries, (C) any award,
judgment or settlement and related legal fees incurred by the
Special Subsidiaries, (D) certain operating expenses incurred by
the Special Subsidiaries, and (E) the amortization of capitalized
advances made by the Special Subsidiaries for certain major capital
expenditures, together with interest thereon.
Participation Payments for any quarterly period will be paid
60 days in arrears to holders of record on the date 45 days after
the last day of the period. Participation Payments of less than
$0.01 per IPU for any quarterly period will be accumulated and paid
when Participation Payments in any succeeding quarter, together
with previously unpaid amounts, exceed $0.01 per IPU.
<PAGE>
BUSINESS
The Joint Venture
The Joint Venture participants are INTERNATIONAL (15.625%),
VICO (7.5%), LASMO Sanga Sanga Limited (an indirect subsidiary of
LASMO) (26.25%), Union Texas East Kalimantan Limited (an indirect
subsidiary of UTPH) (26.25%), and Universe Gas & Oil Company, Inc.
(a subsidiary of a consortium led by Japan Petroleum Exploration
Co., Ltd.) (4.375%). In addition, Opicoil Houston, Inc. (an
affiliate of the Chinese Petroleum Corporation) holds a 16.67
percent equity interest and a 20 percent voting interest, with the
remaining 3.33 percent non-voting equity interest held by assignees
of Opicoil Houston, Inc. VICO in its capacity as the Joint Venture
operator conducts exploration and development activities within the
PSC area. The cost of such activities is funded by the Joint
Venture participants. The vote of participants holding 66-2/3
percent of the total ownership is generally required for approval
of significant matters pertaining to the Joint Venture.
Terms of Production Sharing Contract
Under a PSC with Pertamina that was amended and extended in
1990 until August 7, 2018, the Joint Venture is authorized to
explore for, develop, and produce petroleum reserves in an
approximate 1.1 million acre area in East Kalimantan (East
Kalimantan Contract Area). In accordance with the requirements of
the PSC, during both 1991 and 1994, the Joint Venture selectively
relinquished approximately 10 percent of the PSC area. The Joint
Venture must relinquish a further 10 percent of the PSC area by
August 7, 1998; 10 percent by December 31, 2000; 15 percent by
December 31, 2002 and 15 percent by December 31, 2004. However,
the Joint Venture is not required to relinquish any of the PSC area
in which oil or gas is held for production. Additionally, pursuant
to the terms of the PSC, the Joint Venture, having produced 185
million barrels of oil, paid Pertamina a $5 million non-cost
recoverable bonus in March 1993.
Under the PSC, the Joint Venture participants are entitled to
recover cumulative operating and certain capital costs out of the
crude oil, condensate and gas produced each year, and to receive a
share of the remaining crude oil and condensate production and a
share of the remaining revenues from the sale of gas on an after-
Indonesian tax basis. The method of recovery of capital costs is
a system of depreciation and amortization that is similar to U.S.
tax accounting methods. The share of revenues from the sale of gas
after cost recovery through August 7, 1998 will remain at 35
percent to the Joint Venture after Indonesian income taxes and 65
percent to Pertamina. The split after August 7, 1998, will be 25
percent to the Joint Venture after Indonesian income taxes and 75
percent to Pertamina for gas sales under the 1973 and 1981 LNG
Sales Contracts, Korean carryover quantities and the seven 1986
liquefied petroleum gas (LPG) Sales Contracts (and any extensions
thereto) to the extent that the gas to fulfill these contracts is
committed from the Badak or Nilam fields; after August 7, 1998, all
other LNG sales contract revenues will be split 30 percent to the
Joint Venture after Indonesian income taxes and 70 percent to
Pertamina. Based on current and projected oil production, the
revenue split from oil sales after cost recovery through August 7,
2018 will remain at 15 percent to the Joint Venture after
Indonesian income taxes and 85 percent to Pertamina. These revenue
splits are based on Indonesian income tax rates of 56 percent
through August 7, 1998 and 48 percent thereafter.
In addition, the Joint Venture is required to sell out of its
share of production 8.5 percent (7.2 percent after August 7, 1998)
of the total oil and condensate production from the contract area
for Indonesian domestic consumption. The sales price for the
domestic market consumption is $0.20 per barrel with respect to
fields commencing production prior to February 23, 1989. For
fields commencing production after that date, domestic market
consumption is priced at 10 percent of the weighted average price
of crude oil sold from such fields. However, for the first sixty
consecutive months of production from new fields, domestic market
consumption is priced at the official Indonesian Crude Price (ICP).
The participants' remaining oil and condensate production is
generally sold in world markets.
The Joint Venture has no ownership interest in the oil and gas
reserves. The Joint Venture has long-term supply agreements with
Pertamina for the supply of gas and petroleum gas to be liquefied
at a liquefaction plant owned by Pertamina at Bontang Bay (the LNG
Plant) and sold to certain buyers pursuant to sales contracts. The
Joint Venture, other participating production sharing contractors
and Pertamina together market the LNG and the LPG produced at the
LNG Plant and LPG facilities and, as to the amounts allocable to
the PSC, the Joint Venture and Pertamina divide the net proceeds in
accordance with the percentages set out above.
Payment for LNG and LPG is made in U. S. dollars to a U. S.
bank as trustee for Pertamina, the Joint Venture, other
participating production sharing contractors and lenders that have
provided funds to build the LNG Plant and the LPG facilities. The
LNG Plant's processing costs, principal and interest payable on
borrowings from such lenders, transportation costs, and certain
other miscellaneous costs are deducted from the gross LNG and LPG
sales proceeds. The remaining amount represents the net proceeds
for gas delivered to the LNG Plant and is divided among Pertamina,
the Joint Venture, and the other production sharing contractors in
accordance with the terms of their respective agreements.
<PAGE>
Exploration and Development
From inception in 1972 up to and including December 31, 1994,
the following wells were drilled in the East Kalimantan Contract
Area:
Total Completed
Field Wells Productive Dry Suspended
Location Drilled Wells Holes Wells
Badak 186 176 7 3
Nilam 161 161 - -
Semberah 57 53 4 -
Mutiara 51 43 7 1
Pamaguan 32 26 6 -
Wailawi 6 6 - -
Other 46 6 31 9
Totals 539 471 55 13
Two significant fields, Badak and Nilam, have been discovered
in the East Kalimantan Contract Area. The Badak field is in the
northeast portion of the East Kalimantan Contract Area, and the
Nilam field is located immediately south of the Badak field. Total
Indonesie and Indonesia Petroleum, Ltd. (the Total Group), who are
not parties to the Joint Venture but have interests in the Nilam
and Badak fields, are parties to unitization agreements with the
Joint Venture in both fields. All gas and condensate from the
Badak and Nilam fields and all oil from the Nilam field, as well as
all allowable costs incurred in connection therewith, are deemed
attributable to the Joint Venture and the Total Group in the ratio
of their respective participating interests under the Badak and
Nilam unitization agreements. VICO acts as operator for the Joint
Venture and the Total Group in both fields. See "Business - The
Joint Venture." The Joint Venture is also producing from four
additional fields in the East Kalimantan Contract Area: Mutiara,
Semberah, Pamaguan and Wailawi.
The tables below summarize completed exploratory and
development drilling from 1992 through 1994 for the East Kalimantan
Contract Area.
EXPLORATORY DRILLING
Wells Dry
Year Drilled Discoveries Holes
1992 2 0 2
1993 3 0 3
1994 2 1 1
Totals 7 1 6
<PAGE>
DEVELOPMENT OR FIELD EXTENSION DRILLING
Completed
Wells For For For Dual Dry
Year Drilled Gas Oil Oil & Gas Holes
1992 31 24 5 2 -
1993 31 25 1 3 2
1994 20 10 1 8 1
Totals 82 59 7 13 3
Of 471 completed productive wells in the East Kalimantan
Contract Area, approximately 268 contain more than one completion
in the same bore hole.
Three wells were in progress as of December 31, 1994. This
includes wells that were drilled but not completed at the end of
1994. None of the suspended or "in-progress" wells are included in
the tables above.
The Company's share of the costs of the above wells ranged
from 18.53 percent to 23.125 percent.
<PAGE>
The following table sets forth total gas liquefied and sold as
LNG, the Company's net share of such production (calculated on a
million cubic feet equivalency basis as described in Note a below),
average sales prices (excluding transportation costs) and
production (lifting) costs of such production for the years 1992
through 1994.
Years ended December 31,
1994 1993 1992
Gas Production
for LNG (MMCF) (a) 735,116 637,847 621,600
Company's Net Share
(MMCF equivalency) (b) 90,046 80,873 77,264
Average Sales Price
per MCF (c) $2.45 $2.75 $2.92
Average Production (Lifting)
Cost per MCF $0.12 $0.13 $0.14
(a) Represents the volumes of LNG delivered and sold to purchasers
which is measured by its British Thermal Unit (BTU) content
and, for purposes of this table, has been converted to MMCF
equivalents based on a ratio of approximately 3.0 billion cubic
feet (BCF) of gas required at the plant to produce 2.9 trillion
BTUs of LNG. The Gas Production for LNG includes production
attributable to UNOCAL Indonesia Ltd., the Total Group and
Pertamina. The term "MMCF" refers to 1,000,000 cubic feet of
gas measured at 60 degrees Fahrenheit and 14.7 pounds per
square inch of pressure.
(b) The net share figures shown above have been calculated by
dividing the Company's total LNG revenues for each year by the
average price per MCF (in the form of LNG) received by
Pertamina for the sale of LNG during such year. The result
represents the MCF equivalent of the Company's LNG revenues.
(c) The sales price is based on the average sales price (excluding
transportation) per MMBTU of LNG received by Pertamina. The
term "MMBTU" refers to 1,000,000 British Thermal Units. The
sales price per MMBTU has been converted to a price per MCF
based on the conversion ratio referred to in note (a) above.
The term "MCF" refers to 1,000 cubic feet of gas measured at
60 degrees Fahrenheit and 14.7 pounds per square inch of
pressure.
The Company's production costs are small in relation to its
revenues because the Joint Venture's revenues under the LNG
contracts are net of costs associated with transporting and
converting the gas to LNG and shipping the LNG to the purchasers.
Costs incurred to operate and maintain wells and related equipment
and field facilities are considered to be production costs.
During 1994, the Company's share of the Joint Venture's
expenditures was approximately $52 million, including $2 million of
exploration expenditures and $32 million of development
expenditures. In 1995, the Company's share of the Joint Venture's
expenditures is expected to total $49 million, including $2 million
of exploration expenditures and $29 million of development
expenditures. The 1995 budgeted expenditures primarily reflect
continued development drilling required to maintain adequate gas
deliverability and to maximize cash flow.
Reserves
The Company files no reports which include estimates of oil or
gas reserves with any federal agency other than the Securities and
Exchange Commission.
The estimated proved reserves of gas and of oil and condensate
as of December 31, 1991, 1992, 1993 and 1994 attributable to the
Joint Venture's interest in the PSC in East Kalimantan were
prepared by petroleum engineers employed by LASMO, an affiliate of
Ultrastar. Gross proved field reserves are as follows:
Crude Oil and
Condensate Gas
Total Proved Reserves (000's barrels) (Dry MMCFs)
Dec. 31, 1991 135,712 7,615,739
Dec. 31, 1992 146,055 7,436,171
Dec. 31, 1993 203,068 7,187,995
Dec. 31, 1994 224,995 7,149,560*
* equivalent to approximately 6,914 trillion BTUs.
The Joint Venture, and thus the Company, has no ownership
interest in oil and gas reserves but rather has the right to
receive production and revenues from the sale of oil, condensate,
gas, LNG and LPG in accordance with the PSC and other agreements.
LNG Plant
Gas produced from the Joint Venture's interest in the PSC
reserves is liquefied at the LNG Plant, which is owned by Pertamina
and operated on a cost-reimbursement basis by a corporation in
which the Joint Venture owns a 20 percent interest. The LNG Plant
currently consists of six processing units (trains) having a
combined input capacity of approximately 2.5 billion cubic feet of
gas per operating day and a peak production capacity of
approximately 639,000 barrels or 101,500 cubic meters of LNG and
28,000 barrels of condensate per day. The five storage tanks at
the LNG Plant have a total capacity of 3.2 million barrels of LNG.
Gas is supplied to the plant through three pipelines (two 36 inch
and one 42 inch) which are connected to the central gas facilities
at the Badak field, 35 miles south of the LNG Plant. The six train
plant is the largest LNG processing facility in the world and has
the capacity to deliver 275 cargoes per year.
The LNG Plant has been developed in four phases. The original
facility, which consisted of two trains (Trains A and B) and a
dock, was constructed with financing arranged by Pertamina with the
Central Bank of the Republic of Indonesia, a consortium of Japanese
banks and a corporation owned substantially by the Japanese LNG
purchasers, and became fully operational in August 1977. Final
payment on the loans was made in the first quarter of 1990.
Expansion of the LNG Plant from two to four trains (Trains C
and D) was completed in 1983. Funding was arranged by Pertamina
with Japan Indonesia LNG Co., Ltd. (JILCO). Final payment on this
financing arrangement was made in the third quarter of 1993.
A fifth processing train (Train E) was completed in 1989 and
supplies LNG required for the Taiwan LNG Sales Contract with the
Chinese Petroleum Corporation (CPC), the state petroleum enterprise
of the Republic of China (Taiwan). Project financing was arranged
through a trustee borrowing with a consortium of Japanese banks and
is supported by revenues from such sales contract, as well as in
certain limited circumstances by portions of other revenue streams.
The financing contains two tranches, with tranche A totalling
$176.4 million at a fixed interest rate of 11.5 percent, and
tranche B totalling $117.6 million at a floating interest rate
initially of LIBOR plus 1 percent; at December 31, 1994 the
floating interest rate was 6.1875 percent. The financing is
repayable in graduated quarterly payments over ten years that began
in the fourth quarter of 1990.
The sixth processing train (Train F) was completed in November
1993 and supplies the LNG required for the LNG sales contract with
Osaka Gas, Tokyo Gas and Toho Gas for the sale of 2,020 trillion
BTUs over a twenty-year period which commenced in 1994. In August
1991, Pertamina and an international consortium of commercial banks
completed project financing of $750 million of which $699 million
was required to fund the construction of Train F and related
support facilities at an interest rate of LIBOR plus 1.25 percent;
at December 31, 1994 the floating interest rate was 6.5625 percent.
Financial support for the financing is limited to revenues from
such sales contract. The financing is repayable over ten years in
graduated quarterly payments which commenced in December 1994.
As a result of the production performance of Train E,
Pertamina has undertaken modifications to Trains A through D known
as "debottlenecking." Trains C and D were modified in 1992 during
regularly scheduled maintenance shutdowns. Likewise, Trains A and
B were modified in 1993 during regularly scheduled maintenance
shutdowns. Capacity tests on all four trains exceeded design rates
such that Trains A through D are now capable of LNG production
rates comparable to Train F, an increase of 14 percent, or 22
cargoes in total. The total cost of the Trains A through D
debottlenecking project amounted to $79 million. These costs were
funded through Package IV revenues. (See description of Package IV
beginning on page 14).
During 1994, Pertamina authorized construction of a seventh
LNG processing train (Train G), a third LNG/LPG dock, an additional
LPG storage tank and other support facilities at the LNG Plant.
These facilities are scheduled for completion in late 1997. The
total funding, including interest, for the project is expected to
be approximately $975 million. In January 1995, proposals were
requested from the Japanese and other commercial banks for non-
recourse financing to be repaid over ten years. Train G will
supply LNG for sales contracts agreed to during 1994 - the 1973
Sales Contract Extension, the Korea Medium Term Sales Contract and
the Taiwan Medium Term Sales Contract (see pages 14 and 15 for
contract descriptions).
In addition, preliminary studies are currently being conducted
by Pertamina, the Joint Venture and other production sharing
contractors regarding the planning, development, financing and
construction of an eighth train (Train H), which could come on
stream early in 2000, to primarily support long-term contracts
preliminarily agreed to in 1994 with CPC and Korea Gas Corporation.
LPG Facilities and Second Dock
The LPG processing facilities at the LNG Plant were
constructed concurrently with the fifth processing train. The LPG
facilities were completed in 1988, at a cost of approximately $158
million. Financing was made available to Pertamina through a
consortium of Japanese banks. A significant portion of the LPG
sales proceeds is dedicated to the financing, which is repayable
through 1999.
A second dock facility at the LNG Plant is used for both LNG
and LPG deliveries. The portion of the second dock costs
attributable to the LPG trade was financed through the same
consortium of Japanese banks that financed the LPG processing
facilities at the LNG Plant. Financing for the LNG portion of the
second dock was provided by a trustee borrowing from Japanese
banks.<PAGE>
The table below sets forth information regarding the status of
the major project financings incurred or arranged by Pertamina to
construct the LNG Plant:
Original
Principal/ Balance at Final Primary
Payment December 31, Payment Source of
Financing Amount 1994 Date Repayment
(000's) (000's)
Trains A&B
and 1st
Loading Dock $771,500 $ - - 1973 LNG Sales
Contract
Trains C & D 995,800 - - 1981 LNG Sales
Contract
Train E 294,000 189,630 2000 Taiwan LNG Sales
Contract
Train F and
Support
Facilities 699,000 688,285 2004 Train F LNG
Sales Contract
2nd Loading Dock
& Train E
Support
Facilities 135,000 16,200 1995 1973 LNG Sales
Contract (a)
LPG Facilities 157,700 74,165 1999 LPG Sales
Contract
(a) Debt service is allocated among all of the gas producers
according to the quantity of gas delivered.<PAGE>
Marketing and Distribution of
LNG
Certain information regarding deliveries of LNG from the LNG
Plant is set forth below:
BTUs Average
Number of LNG in Trillions Price Per
Tanker Liftings (Approximate) MMBTU
1992 211 606 $3.00
1993 216 621 $2.82
1994 247 716 $2.52
As a result of variations in LNG tanker capacity among the
various sales contracts, the measure of a net equivalent cargo has
been established. One net equivalent cargo equates to the quantity
of LNG delivered in a 1973 Sales Contract shipment or an average of
2,942 BBTUs.
The Joint Venture and other gas producers in Indonesia have
the opportunity to participate in each sales package. The Joint
Venture's equity interest in a sales package is based on its share
of gas reserves available for commitment to the package. The Joint
Venture's allocation in the LNG sales contracts has declined over
time since the initial 1973 Sales Contract, when the Joint Venture
was virtually the only supplier to the LNG Plant, to the present
when there are several other major production sharing contractors
supplying gas to the LNG Plant and sharing in the allocation of
volumes. The following table sets forth information regarding the
LNG Plant share of the LNG Sales Contracts grouped together by the
Joint Venture's participating percentages in the sales contracts
(each such group being referred to as a "package"):<PAGE>
<TABLE>
<CAPTION>
Remaining
LNG Sales 1994 Remaining Base LNG Price
Volumes Cargoes Cargoes Per MMBTU (a)
Package and Equity Interest TBTUs Gross/Net Gross/Net 12/31/94 2/24/95
(b) (b)
<S> <C> <C> <C> <C> <C>
Package I - 97.9%
1973 LNG Sales Contract
Term: 1977 - 1999 462 66/63 157/154 $2.58 $2.84
Package II - 66.4%
1981 LNG Sales Contract
Term: 1983 -2003 1,409 61/40 484/318 $2.54 $2.82
Package IIIA - 50%
Korean Carryover Sales
Contract
Term: 1986 - 2006 180 5/3 61/31 $2.58 $2.84
Package IIIB - 29.6%
Taiwan LNG Sales Contract
Term: 1990 - 2009 1,369 29/9 432/138 $2.52 $2.79
Toho LNG Sales Contract
Term: 1988 - 1997 17 2/- 6/2 $2.58 $2.84
Additional 1981 Sales
Contract cargoes
Term: 1990 - 2003 146 6/2 50/14 $2.54 $2.82
Package IV - 27.2%
Train F LNG Sales Contract
Term: 1994 - 2013 2,271 36/10 772/210 $2.40 $2.66
Korea II LNG Sales Contract
Term: 1994 - 2014 1,115 7/2 379/103 $2.42 $2.68
1973 LNG Sales Contract
Extension
Term: 1997 - 1999 459 - 156/42 - -
Medium City Gas Company
Sales Contract
Term: 1996 - 2015 185 - 438/17 - -
Other LNG Sales Contracts
Terms: Various ranging
from 1990 - 1999 32 35/9 11/4 $2.40 $2.66
Package V (c)
1973 Sales Contract
Extension
Term: 2000 - 2009 4,368 - 1,522/335 - -
Korea Medium Term Sales
Contract
Term: 1995 - 1999 315 - 108/24 - -
Taiwan Medium Term Sales
Contract
Term: 1998 - 1999 46 - 16/4 - -
Package VI (d)
1981 Sales Contract Extension
Term: 2003 - 2008 941 - 320/70 - -
Totals 13,315 247/138 4,912/1,466
(a) Excludes transportation costs.
(b) The gross amounts represent the LNG Plant's deliveries, the net amounts represent the Joint Venture's equity in such
deliveries.
(c) The Company expects the Joint Venture's final participation to be in a range from 20 percent to 24 percent, subject
to final agreement with Pertamina and the other East Kalimantan producers. In the interim the Company has used a
provisional rate of 22 percent.
(d) The IJV's percentage in Package VI sales is expected to be similar to that of Package V, between 20 percent and 24
percent, in the absence of any significant additional reserves in the IJV or other contractor areas.
</TABLE>
Commencing in 1994, LNG is primarily sold under five long-term
sales contracts between Pertamina and buyers in Japan, Taiwan and
Korea. These contracts are the 1973 LNG Sales Contract (Package
I), the 1981 LNG Sales Contract (Package II), the Taiwan LNG Sales
Contract (included in Package IIIB), the Train F LNG Sales Contract
and the Korea II LNG Sales Contract (both included in Package IV).
The gas processed by the LNG Plant is supplied from the Joint
Venture's contract area as well as other fields in which the Joint
Venture has no interest.
LNG sales contracts and amendments thereto are executed
between Pertamina and the buyers for the sale and delivery of a
fixed quantity of BTUs of LNG at a price that reflects an LNG
element derived from a basket of Indonesian crude oil prices that
is recalculated monthly. A transportation charge is added to the
LNG element under all contracts except for the 1981 LNG Sales
Contract, the Train F LNG Sales Contract and the Korea II LNG Sales
Contract, where the buyers bear the risk of loss and the
transportation costs. In those instances where the seller bears
the risk of loss during shipment, the cargoes are insured.
The LNG to be delivered under the sales contracts is supplied
from the LNG Plant and from a separate facility at Arun in Sumatra
(Arun Plant). The Joint Venture does not supply gas to the Arun
Plant or have any interest in revenues from the sale of its
product. The allocation of contract quantities between the LNG
Plant and the Arun Plant is determined by Pertamina. Presently,
all deliveries under the 1981 LNG Sales Contract (Package II), the
Taiwan LNG Sales Contract (included in Package IIIB) and the Train
F LNG Sales Contract (included in Package IV) are exclusively
supplied by the LNG Plant.
In January of 1994, deliveries began under a LNG sales
contract with Osaka Gas, Tokyo Gas, and Toho Gas (Train F LNG Sales
Contract) for the sale of at least 2,020 trillion BTUs over a
twenty-year period ending in 2013.
In July of 1994, deliveries began under a LNG sales contract
with Korea Gas Corporation (Korea II LNG Sales Contract) for the
sale of at least 2,044 trillion BTUs over a twenty-year period
ending in 2014. The LNG Plant will provide 50 percent and the Arun
Plant 50 percent of the LNG requirements for the contract.
In January of 1995, deliveries began under the Korea Medium
Term Sales Contract with Korea Gas Corporation for the sale of 315
trillion BTUs (108 cargoes) over a five-year period ending in 1999.
The Joint Venture has been allocated a 22 percent equity interest
in these deliveries pending final agreement among Pertamina and the
East Kalimantan producers.
During 1994, Pertamina reached agreement to extend the 1973
and 1981 LNG Sales Contracts. The 1973 Sales Contract Extension
involves the sale of 4,368 trillion BTUs (1,522 cargoes) over a
ten-year period commencing in 2000. The 1981 Sales Contract
Extension involves the sale of 941 trillion BTUs (320 cargoes) over
a five-year period commencing in 2003. Also executed was the
Taiwan Medium-Term Sales Contract for the sale of 46 trillion BTUs
(16 cargoes) between 1998 and 1999. The Joint Venture has been
allocated a provisional 22 percent equity interest in deliveries
under the 1973 LNG Sales Contract Extension and the Taiwan Medium-
Term Sales Contract (both included in Package V). The equity
sharing percentage for the 1981 Sales Contract Extension (included
in Package VI) is expected to be similar to that of Package V.
Other Gas Sales - The Joint Venture is obligated to supply
approximately 74 MMCF per day of gas to three local fertilizer
plants at a price of $1.00 per MMBTU subject to a pipeline tariff.
In addition, the Joint Venture is required to supply approximately
5 MMCF per day of gas to the Balikpapan refinery at a price of
$1.49 per MMBTU. In 1994, Pertamina executed a twenty-year
contract, commencing in November of 1997, for the sale of
approximately 70 MMCF per day of gas to be supplied by the Joint
Venture to a local methanol plant at a price not less than $1.25
per MMBTU for the first ten years.
Marketing and Distribution of LPG
Pertamina has individual sales contracts with seven Japanese
utility companies for the sale and delivery of 9,217,000 metric
tons of LPG through the year 1998, of which 3,877,000 metric tons
will be produced by the LPG facilities at the LNG Plant. In 1994,
23 cargoes, including spot sales, totaling 827,000 metric tons were
shipped to Japan. The first 385,000 metric tons of LPG sold under
the contract were sold at the weighted average price for all LPG
imported into Japan, except from Indonesia and Abu Dhabi, plus a
premium of $10.97 per ton. The next 305,000 metric tons of LPG
sold under the contract were sold at the aforementioned price plus
a premium of $18.31 per metric ton. The remaining LPG was sold on
the spot market at prevailing prices. The LPG is extracted from
the gas stream and stored at facilities at the LNG plant. The
Joint Venture was allocated a Package IIIB equity rate for the
revenues from the first 379,000 metric tons sold, a Package IV
equity rate for the revenues from the next 147,000 metric tons
sold, and a Package V equity rate (on a provisional basis) for the
revenues from the remaining 301,000 metric tons sold during 1994,
after deducting LPG-related operating costs and debt service.
Marketing of Oil and Condensate
Each party to the Joint Venture and Pertamina are entitled to
take their respective shares of oil and condensate in kind and to
market such shares separately. The Company, through affiliates of
Ultrastar and Unistar, markets its share of oil and condensate
f.o.b. Santan Terminal, in East Kalimantan, independently of
Pertamina and the other Joint Venture participants. The Santan
Terminal (operated by UNOCAL Indonesia Ltd.) is used for storing
and loading oil produced by the Joint Venture.
The Company's percentage share of the Joint Venture's oil and
condensate, except for that sold to Pertamina for Indonesian
domestic consumption, is sold at ICP. Prior to July 1, 1993, the
price for crude and condensate sales reflected world market
conditions at the time of sale. The sales price for the domestic
market consumption is $0.20 per barrel with respect to fields
commencing production prior to February 23, 1989. For fields
commencing production after that date, domestic market consumption
is priced at 10 percent of the weighted average price of crude oil
sold from such fields. However, for the first sixty consecutive
months of production from new fields, domestic market consumption
is priced at ICP.
Substantially all of the oil and condensate currently being
produced by the Joint Venture from the PSC contract area is being
produced from the Badak, Nilam, Mutiara and Semberah fields. The
Company's average sales prices and production (lifting) costs for
1992 through 1994 are:
Years ended December 31,
1994 1993 1992
Total Oil and
Condensate Sales
(barrels) (a) 22,635,461 20,905,232 18,633,441
Company's Net Share
(barrel equivalency) (a) 1,966,686 1,928,005 1,804,511
Average Sale Price - f.o.b.
Indonesia (per barrel) (b) $16.58 $18.31 $20.65
Average Production (Lifting)
Cost (per barrel) $0.72 $ 0.77 $ 0.80
(a) The total oil and condensate sales include production
attributable to other contractors' shares of unitized
operations in the Badak and Nilam fields. See "Exploration
and Development." The net share figures shown above have been
calculated by dividing the Company's total oil revenues for
each year by the average price per barrel received for sale of
oil during such year. The result represents the barrel
equivalent of the Company's oil revenues.
(b) Excludes domestic consumption sales. Also excluded are gains
or losses incurred on the sale of the Company's share of oil,
which resulted in marketing losses of $0.32 and $0.02 per
barrel in 1993 and 1992 respectively. Effective July 1, 1993,
the Company is no longer exposed to marketing fluctuations
incurred on the sale of its share of oil and condensate.
The Joint Venture's sales of oil and condensate averaged
approximately 49,700 barrels per day (BOPD) during 1994, compared
to approximately 48,600 BOPD during 1993.
Competition and Risks
Indonesian oil competes in the world market with oil produced
from other nations. Indonesia is a member of OPEC, and any OPEC-
imposed restrictions on oil or LNG exports in which Indonesia
participates could have a material adverse effect on the Company.
In addition to the LNG being sold from the Arun Plant, LNG
plants in the Middle East, Australia, Malaysia, or elsewhere may
provide competition for sales of any additional Joint Venture LNG
to Japanese and other markets, beyond the amount under current
contracts.
The Joint Venture's activities in Indonesia are subject to
risks common to foreign operations in the oil and gas industry,
including political and economic uncertainties, the risks of
cancellation or unilateral modification of contract rights,
operating restrictions, currency repatriation restrictions,
expropriation, export restrictions, increased taxes and other risks
arising out of foreign governmental sovereignty over areas in which
the Joint Venture's operations are conducted. The Company's
foreign operations and investment may also be subject to the laws
and policies of the U. S. affecting foreign trade, investment and
taxation that could affect the conduct and profitability of those
operations.
All of the Company's oil and gas activities are subject to the
risks normally incident to exploration for and production of oil
and gas, including blowouts, cratering and fires, each of which
could result in damage to life and property. Production from the
LNG Plant, which is the source of most of the Company's revenues,
is subject to the risks associated with maintaining and operating
a complex, technologically intensive processing plant, including
the risks of equipment failures, fire and explosion. To the extent
that the seller of the LNG produced by the LNG Plant bears the risk
of loss of cargoes, the seller is subject to the usual risks of
maritime transportation, including adverse incidents arising from
loading and unloading cargoes. In accordance with customary
industry practices, the Company carries insurance against some, but
not all, of these risks. Losses and liabilities arising from such
events would reduce revenues and increase costs of the Company to
the extent not covered by insurance.
Item 2. Properties
See Item 1. Business.
Item 3. Legal Proceedings
The Company has pending litigation arising in the ordinary
course of its business. However, none of the litigation is
expected to have a material adverse effect on the Company's
financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Shareholder
Matters
Refer to Item 12 for a description of the Registrant's Equity.
Refer to Item 1 for a description of the Indonesian Participating
Units.
Item 6. Selected Financial Data
The following financial data was derived from the audited
consolidated financial statements of the Company and should be read
in conjunction with the consolidated financial statements and
related notes included elsewhere herein.
1994 1993 1992 1991 1990
(millions of dollars)
Operating revenues $198 $201 $206 $208 $203
Earnings from
continuing operations 36 30 24 18 7
Net earnings 33 30 24 18 11
Total assets 422 449 472 500 519
Debt and security
subject to
mandatory redemption - 33 32 31 50
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Cash flow from operations amounted to $85.6 million in 1994,
compared to 1993 cash flow of $81.5 million. Capital expenditures
of $34.4 million were primarily spent on continued development
drilling in the Badak, Nilam, Mutiara and Semberah fields as was
the case in 1993. Net capital distributions in 1994 to the
partners from the Company were $18.1 million (1993, $41.1 million).
The decrease in distributions to the partners was primarily
attributable to the redemption of $36.4 million of debt as
discussed below.
On January 5, 1994, the Company redeemed its 8-1/4 percent
convertible subordinated guaranteed debentures, originally due in
1995, in the amount of $36.4 million at a loss of $3.1 million.
The redemption was funded through contributions from the partners
of the Company.
During 1994, the Company paid the Internal Revenue Service
$4.0 million to settle its 1984 windfall profit tax dispute. The
Company had fully reserved for this liability. The Company
continues to maintain a $3.8 million reserve and accrue interest
for the potential exposure in a royalty dispute.
The Company's ability to generate cash is primarily dependent
on the prices it receives for the sale of LNG, and to a lesser
extent, the sale of crude oil. In the event cash generated from
operations is not sufficient to meet capital investment and other
requirements, any shortfall will be funded through additional cash
contributions by the partners. The Company cannot predict with any
degree of certainty the prices it will receive in 1995 and future
years for its crude oil and LNG. The Company's financial
condition, operating results and liquidity will be materially
affected by any significant fluctuations in sales prices.
LNG sales are made under five principal long-term contracts
and several short- and medium-term contracts with Japanese, South
Korean and Taiwanese industrial and utility companies. The long-
term contracts contain take-or-pay provisions that generally
require that the purchasers either take the contracted quantities
or pay for such quantities if not taken; such provisions tend to
support the Company's ability to generate cash. During 1994, 138
net equivalent cargoes were shipped, of which 124 were under these
long-term contracts. In 1995, the Company anticipates shipping
approximately 134 net equivalent cargoes.
In the first quarter of 1994 the LNG plant began deliveries of
LNG under a twenty year sales contract with Osaka Gas, Tokyo Gas
and Toho Gas (Train F LNG Sales Contract) for the delivery of 2,020
trillion BTUs. In July 1994, the plant began deliveries to Korea
Gas Corporation (Korea II LNG Sales Contract) under the terms of
another twenty-year sales contract for 2,044 trillion BTUs, 50
percent of which will be supplied by the LNG plant.
During 1994, Pertamina entered into the Korea Medium Term
Sales Contract with Korea Gas Corporation for the delivery of 315
trillion BTUs or 108 LNG cargoes which deliveries commenced in
January 1995 and continue until 1999. The Joint Venture's revenue
sharing percentage is provisionally determined to be 22.0 percent
with a retroactive adjustment to be made upon finalizing the
revenue sharing percentage between all parties.
During 1994, Pertamina executed agreements to extend the 1973
and 1981 LNG Sales Contracts. The 1973 Sales Contract Extension
involves the sale of 4,368 trillion BTUs (1,522 cargoes) over a
ten-year period commencing in 2000. The 1981 Sales Contract
Extension involves the sale of 941 trillion BTUs (320 cargoes) over
a five-year period commencing in 2003. Also executed was the
Taiwan Medium-Term Sales Contract for the sale of 46 trillion BTUs
(16 cargoes) between 1998 and 1999. The Joint Venture has been
allocated a provisional 22 percent equity interest in deliveries
under the 1973 LNG Sales Contract Extension and the Taiwan Medium-
Term Sales Contract (both included in Package V). The equity
sharing percentage for the 1981 Sales Contract Extension (included
in Package VI) is expected to be similar to that of Package V.
Capital expenditures of the Joint Venture relate to the
exploration and development of the oil and gas fields. In 1995,
the Company's share of the Joint Venture expenditures is expected
to total $49 million, including $2 million of exploration
expenditures and $29 million of development expenditures. The 1995
budgeted expenditures primarily reflect continued development
drilling required to maintain gas deliverability and to maximize
cash flow.
The Company can give no assurance as to the future trend of
its business and earnings, or as to future events and developments
that could affect the Company in particular or the oil industry in
general. These include such matters as environmental quality
control standards, new discoveries of hydrocarbons and the demand
for petroleum products. Furthermore, the Company's business could
be profoundly affected by future events including price changes or
controls, payment delays, increased expenditures, legislation and
regulations affecting the Company's business, expropriation of
assets, renegotiation of contracts with foreign governments,
political instability, currency exchange and repatriation losses,
taxes, litigation, the competitive environment and international
economic and political developments including actions of members of
the Organization of Petroleum Exporting Countries (OPEC).
The Company's revenues are predominately based on the market
price of crude oil, which is denominated in U. S. dollars. Certain
operating costs, taxes and capital costs represent commitments
settled in foreign currency. Currency exchange rate fluctuations
on transactions in currencies other than U. S. dollars are
recognized as adjustments to the U. S. dollar cost of the
transaction.
The Company is unaware of any unrecorded environmental claims
as at December 31, 1994 which would have a material impact upon the
Company's financial condition or operations.
Results of Operations
1994 Compared to 1993
Net earnings for the year ended December 31, 1994 were $33.1
million as compared to $30.5 million for the year ended December
31, 1993. Included in the 1994 results was an extraordinary loss
of $3.1 million for the redemption of its 8 1/4 percent debentures.
The increased net earnings for the 1994 period benefitted from
decreased interest expense, depletion, and exploration cost
partially offset by lower oil and gas revenues. Cash flow from
operations for the year ended December 31, 1994 was $85.6 million
as compared to $81.5 million for the year ended December 31, 1993.
Revenues for the year ended December 31, 1994 were $197.9
million compared to $200.6 million in the corresponding 1993
period. The decrease in revenues was attributable to an 11 percent
and 9 percent decrease in the average price received for LNG and
crude oil, respectively, partially offset by a 9 percent increase
in LNG volumes. The Joint Venture's share of LNG volumes in 1994
increased 35 trillion BTUs to 404 trillion BTUs (138 net equivalent
cargoes) as compared to 369 trillion BTUs (127 net equivalent
cargoes) in the 1993 corresponding period. The increase in LNG
volumes was made possible by the completion of the plant expansion
in late 1993 allowing for the commencement of two twenty-year
contracts with certain Japanese and South Korean buyers. Crude oil
and condensate volumes net to the Company in 1994 and 1993 were 2.0
million barrels and 1.9 million barrels respectively.
The average price received for LNG in 1994 decreased to $2.52
per million BTUs as compared to $2.82 per million BTUs for the
corresponding 1993 period. The realized crude oil price fell
$1.53 per barrel to $16.46 per barrel in 1994 as compared to $17.99
per barrel in the same 1993 period. Additionally, the 1994 results
benefitted from a favorable non-taxable crude oil revenue final
settlement from 1993 reflecting a reallocation of certain capital
expenditures from gas to oil.
The table below summarizes the volumes and average prices for
the Company's sales for the years ended December 31, 1994 and 1993:
1994 1993
Volumes
LNG (TBTUs) 93.4 85.3
Crude (MMBLS) 2.0 1.9
Prices
LNG ($/MMBTU) 2.52 2.82
Realized Crude Oil ($/BBL) 16.46 17.99
Production costs for 1994 increased $0.9 million to $19.6
million as compared to the prior year. Depletion, depreciation and
amortization for 1994 was $50.6 million, a decrease of $2.2 million
from the prior year, reflecting higher proved reserves partially
offset by higher levels of production. During 1994, proved
reserve additions included approximately 2.7 million barrels of oil
and 96.3 billion cubic feet of gas.
Interest expense for 1994 decreased $4.5 million from the
prior year reflecting the repayment of the Company's 8 1/4%
debentures on January 5, 1994. An extraordinary loss of $3.1
million was recognized due to the redemption of the debentures.
Exploration costs decreased in 1994 as compared to the prior
period due to lower dry hole costs and lower seismic costs. During
1994, the Company drilled two exploration wells, making one
discovery as compared to 1993 when the Company wrote off three dry
holes.
General and administrative expenses for 1994 were $1.9 million
a slight increase over the prior year.
The effective tax rates for 1994 and 1993 were 70 percent and
74 percent respectively. These rates were the aggregate of
Indonesian source income taxed at a 56 percent rate, and certain
expenses attributable to Unimar activities which are not
deductible in the partnership. The decrease in the effective rate
was principally the result of decreased non-deductible interest
expense.
1993 Compared to 1992
Net earnings for the year 1993 were $30.5 million as compared
to $23.7 million in 1992. Cash flow from operations for 1993 was
$81.5 million (1992, $93.4 million).
Oil and gas production revenues for 1993 were $200.6 million,
or lower by $5.3 million when compared to 1992 revenues of $205.9
million. The increase in the Joint Venture's share of delivered
LNG sales volumes was not sufficient to offset a decline in the
average LNG sales price. The quantity of LNG delivered from the
LNG Plant was 621 trillion BTU's (216 cargoes) in 1993 as compared
to 606 trillion BTU's (211 cargoes) in 1992. The Joint Venture's
interest in the LNG delivered was 369 trillion BTU's (127 net
equivalent cargoes) in 1993 as compared to 363 trillion BTU's (124
net equivalent cargoes) in 1992. The average LNG sales price,
excluding transportation charges, declined to $2.82 per million
BTU's in 1993 as compared to $3.00 per million BTU's in 1992.
Crude oil sales volumes of 1.93 million barrels were higher by 7
percent in 1993 as compared to 1992's 1.8 million barrels, while
the average crude oil realized sales price of $17.99 per barrel was
lower than 1992 by $2.64 per barrel.
Production costs of $18.8 million were lower than 1992 costs
by about $6.8 million. This improvement in production costs was
caused by a provision included in 1992 related to the Company's
prior years' windfall profits tax liability. After a re-evaluation
of the ultimate exposure on this tax liability, the Company
reversed $3.5 million in 1993 as being no longer required. At the
same time, the Company provided an offsetting amount for the
potential exposure in a royalty dispute.
Depletion , depreciation and amortization of $52.7 million was
lower than 1992 by $4.6 million primarily as a result of a lower
depletion rate associated with the increase in proved reserves that
more than offset the higher level of LNG volumes delivered.
Exploration costs, including dry holes, of $4.9 million were
lower than 1992 by $4.2 million due to a lower level of seismic and
dry hole costs.
General and administrative expenses of $1.8 million were $1.0
million lower than the $2.8 million in 1992 due to the absence of
certain non-recurring charges. Both interest expense and interest
income were in line with the results for 1992. Other income in
1992 included a non-recurring benefit due to the favorable
disposition of a legal action.
The effective tax rates for 1993 and 1992 were 74 percent and
78 percent respectively. These rates were the aggregate of
Indonesian source income taxed at a 56 percent rate, and certain
expenses attributable to the Unimar activities which are not
deductible in the partnership.<PAGE>
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT AUDITORS
To The Partners of Unimar Company
We have audited the accompanying consolidated balance sheets of
Unimar Company and subsidiaries as of December 31, 1994 and 1993,
and the related consolidated statements of earnings, cash flows,
and partners' capital for each of the three years in the period
ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As more fully described in the notes to the consolidated financial
statements, the Company has material transactions with its partners
and affiliates.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Unimar Company and subsidiaries at December
31, 1994 and 1993, and the consolidated results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Houston, Texas
February 24, 1995
<PAGE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1994 and 1993
(Thousands of dollars)
<CAPTION>
1994 1993
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,421 $ 8,284
Accounts and notes receivable 5,882 11,604
Inventories 12,467 10,886
Other current assets 2,682 2,381
Total current assets 24,452 33,155
Property, plant and equipment, at cost:
Oil and gas properties (successful
efforts method) 1,023,546 991,901
Other 2,113 3,283
1,025,659 995,184
Less: accumulated depreciation and
depletion 631,499 580,807
Net property, plant and equipment 394,160 414,377
Other assets 3,567 1,252
$ 422,179 $ 448,784
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of long term debt $ - $ 33,292
Accounts payable 2,620 3,229
Advances from joint venture partners 1,629 3,589
Accrued liabilities 14,987 9,314
Income and other taxes 11,326 19,280
Total current liabilities 30,562 68,704
Deferred income taxes 162,966 167,206
Other liabilities 10,403 10,048
Commitments and Contingencies
Partners' capital 298,248 282,826
Less: demand notes receivable 80,000 80,000
218,248 202,826
$ 422,179 $ 448,784
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Statement of Earnings
Years ended December 31, 1994, 1993 and 1992
(Thousands of dollars)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Oil and gas production revenues $197,925 $200,588 $205,897
Production costs 19,623 18,751 25,600
Depletion, depreciation and
amortization 50,554 52,710 57,275
Exploration costs including dry holes 2,787 4,947 9,066
Operating profit 124,961 124,180 113,956
General and administrative expenses (1,923) (1,778) (2,819)
Interest expense (55) (4,542) (4,701)
Interest income 274 309 605
Other income (expense) (624) 18 1,236
Earnings before income taxes and 122,633 118,187 108,277
extraordinary item
Income tax expense (benefit)
Current 90,661 90,876 90,121
Deferred (4,240) (3,164) (5,520)
86,421 87,712 84,601
Earnings before extraordinary item 36,212 30,475 23,676
Extraordinary loss on redemption
of debt 3,108 - -
Net earnings $ 33,104 $ 30,475 $23,676
See accompanying Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Statement of Cash Flows
Years ended December 31, 1994, 1993 and 1992
(Thousands of dollars)
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Net earnings $ 33,104 $ 30,475 $ 23,676
Adjustments to reconcile to net cash
provided by operating activities:
Loss on extraordinary item 3,108 - -
Depletion, depreciation and
amortization 50,889 53,087 57,622
Deferred income taxes (4,240) (3,164) (5,520)
Exploratory dry hole costs 2,635 3,365 6,444
Interest accretion - 1,473 1,294
Loss on sale of assets 710 - -
(Increase) Decrease in operating
receivables 5,722 4,327 (6,153)
(Increase) Decrease in inventories (1,581) 4,257 4,372
Increase (Decrease) in operating payables
and accruals 5,482 (14,526) 10,880
Increase (Decrease) in other operating
assets and liabilities (10,215) 2,245 789
Net cash provided by operating
activities 85,614 81,539 93,404
Investment activities:
Capital expenditures (34,399) (40,142) (39,217)
Proceeds from sale of assets 382 - -
Net cash used in investing activities (34,017) (40,142) (39,217)
Financing activities:
Capital distributions, net (18,100) (41,100) (58,240)
Debt repaid (36,400) - -
Net cash used in financing activities (54,500) (41,100) (58,240)
Increase (Decrease) in advances from joint
venture partners (1,960) 1,526 165
Net increase (decrease) in cash and
cash equivalents (4,863) 1,823 (3,888)
Cash and cash equivalents at beginning
of year 8,284 6,461 10,349
Cash and cash equivalents at end
of year $ 3,421 $ 8,284 $ 6,461
IPU distributions paid $ 18,539 $ 17,569 $ 17,352
Interest paid $ 331 $ 3,072 $ 3,405
Income taxes paid $ 94,174 $ 88,787 $ 83,473
See accompanying Notes to Consolidated Financial Statements.
/TABLE
<PAGE>
<TABLE>
UNIMAR COMPANY AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
Years ended December 31, 1994, 1993 and 1992
(Thousands of dollars)
<CAPTION>
Ultrastar Unistar Total
<S> <C> <C> <C>
Balance, January 1, 1992 $158,550 $169,809 $328,359
Contributions 7,480 7,480 14,960
Cash distributions (36,600) (36,600) (73,200)
ENSTAR pension liability
adjustment (108) (108) (216)
Net earnings 11,838 11,838 23,676
Balance, December 31, 1992 141,160 152,419 293,579
Contributions 13,550 13,550 27,100
Cash distributions (34,100) (34,100) (68,200)
ENSTAR pension liability
adjustment (64) (64) (128)
Net earnings 15,238 15,238 30,476
Balance, December 31, 1993 135,784 147,043 282,827
Contributions 32,900 32,900 65,800
Cash distributions (41,950) (41,950) (83,900)
ENSTAR pension liability
adjustment 209 209 418
Net earnings 16,552 16,552 33,104
Balance, December 31, 1994 $143,495 $154,754 $298,249
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(in thousands of dollars unless otherwise indicated)
(1) THE COMPANY
Unimar Company (the Company) is a general partnership
organized under the Texas Uniform Partnership Act, whose
partners are Unistar, Inc., a Delaware corporation and a
direct subsidiary of Union Texas Petroleum Holdings, Inc.
(UTPH), a Delaware corporation, and LASMO (Ustar), Inc.
(Ultrastar), a Delaware corporation and an indirect wholly-
owned subsidiary of LASMO plc (LASMO), a public limited
company organized under the laws of England. Each partner
shares equally in the Company's net earnings, distributions
and capital contributions.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The Company's consolidated financial statements include
the accounts of the Company and its subsidiaries
including its proportionate share of the activities of an
Indonesian joint venture (the Joint Venture). All
significant intercompany accounts and transactions have
been eliminated.
(b) Inventories
Inventories primarily consist of materials and supplies
and are generally priced at the lower of cost (moving
average cost method) or net realizable value.
(c) Accounting for Oil and Gas Properties
Oil and gas exploration, development and production
activities are accounted for by the successful efforts
method of accounting. Under this method of accounting,
the cost of acquiring undeveloped oil and gas leasehold
acreage, including lease bonuses, brokers' fees and other
related costs are capitalized. Provisions for impairment
of undeveloped oil and gas leases are based on periodic
evaluation and exploratory experience. Costs to drill
and equip exploratory wells that find proved reserves are
capitalized while costs associated with unsuccessful
exploratory wells are expensed. Other exploratory
expenditures, including geological and geophysical costs
and annual lease rentals are expensed as incurred. Costs
incurred to drill and equip productive wells, including
development dry holes and related production facilities
are capitalized.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(c) Accounting for Oil and Gas Properties (continued)
Depreciation, depletion, and amortization of successful
oil and gas exploration wells and all development costs
are determined under the unit-of-production method based
on estimated recoverable proved developed reserves.
Leasehold costs of producing properties are depleted on
the unit-of-production method based on estimated proved
developed and undeveloped reserves.
The Company generally provides for depreciation of other
property, plant and equipment on a straight-line method
over the estimated useful life of the assets. The range
of rates used to calculate depreciation is 2-1/2 percent
to 11 percent on buildings and 3 percent to 33-1/3
percent for other property items.
Oil and gas assets are reviewed when they are fully
placed in service to insure that capitalized costs of the
asset do not exceed undiscounted future net pre-tax cash
flows and are reviewed annually.
(d) LNG Revenue Recognition
The Company recognizes its share of liquefied natural gas
(LNG) revenues net of Pertamina's plant operating costs,
transportation charges and project debt service. The
Company is not a party to any gas balancing arrangements.
(e) Income and Other Taxes
The Company is a partnership and; therefore, does not pay
income taxes. Since the Company's subsidiaries are
corporations, income taxes included in the accompanying
financial statements represent the domestic and foreign
taxes applicable to such entities.
The Company's subsidiary, ENSTAR Corporation (ENSTAR),
and its subsidiaries file a consolidated federal
corporate income tax return.
Certain income and expense items are recorded during
different periods for financial statement and income tax
purposes. Deferred income taxes are provided for these
differences.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(e) Income and Other Taxes (continued)
The Company follows the Statement of Financial Accounting
Standards No. 109 (Statement 109), "Accounting for Income
Taxes." Under Statement 109, the liability method is
used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based
on differences between financial reporting and tax bases
of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when
the differences are expected to reverse. An impairment
evaluation, with reserves recorded as necessary for any
tax benefit not expected to be realized, is required of
deferred tax assets. A current tax expense or benefit is
recognized for estimated taxes payable or refundable on
tax returns for the current year.
(f) Concentrations of Credit Risk
Financial instruments which may subject the Company to
concentrations of credit risk consist principally of
short-term investments and trade receivables. The
Company's excess cash is invested in time deposits with
major banks. These deposits are purchased at a maturity
of three months or less, and have minimal risk.
The Company's receivables consist primarily of the
revenues derived from the sale of LNG under long-term
contracts with utility and industrial companies in Japan,
Taiwan and Korea. The buyers of the LNG make payment in
United States dollars to a U.S. bank as trustee for the
Joint Venture and other parties. The trustee, after
deducting plant operating costs, transportation charges
and project debt service from the gross LNG sales
proceeds, distributes the net proceeds to the Joint
Venture participants and other parties. The Company's
trade receivables at December 31, 1994 result principally
from sales of LNG and oil and are considered current and
collectible, and collateral is not required to secure
such receivables.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(g) Fair Value of Financial Instruments
The Company has various types of financial instruments
consisting of cash and cash equivalents, accounts
receivable, accounts payable, and accrued liabilities.
The carrying amount approximates fair value because of
the short maturity of these instruments.
(h) Foreign Currency
The functional currency for translating the accounts of
foreign subsidiaries is the U. S. dollar. Transaction
gains and losses resulting from the effect of exchange
rate fluctuations on transactions in currencies other
than the functional currency are included in the
determination of net income.
(3) INDONESIAN OIL AND GAS PROPERTIES
The Company, through its subsidiaries, has a 23.125 percent
interest in, and is the operator of, the Joint Venture that
has certain oil and gas exploration and production rights in
Indonesia through a Production Sharing Contract (PSC) which
was amended and extended in 1990 until August 7, 2018 with
Pertamina, the state petroleum enterprise of the Republic of
Indonesia.
Virginia Indonesia Company (VICO), a subsidiary of the
Company, is the operator of the Joint Venture and is
responsible for conducting exploration and development
activities within the PSC area. The cost of such activities
is funded by the Joint Venture partners to VICO. In addition
to operating management responsibility, the operator acts as
a custodian of Joint Venture cash received from its partners
until disbursed in payment of operating and capital
expenditures. At December 31, 1994 and 1993, cash and cash
equivalents included $1,629 and $3,589, respectively, advanced
from the other Joint Venture partners.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(3) INDONESIAN OIL AND GAS PROPERTIES (continued)
In addition, other subsidiaries of UTPH and LASMO each own a
26.25 percent interest in the Joint Venture. The PSC permits
the Joint Venture to recover their costs of exploration,
development and production - including general and
administrative expenses - from oil and gas revenues as
follows: capital costs are based on recoverable double-
declining balance depreciation over various useful lives,
which average fourteen years; non-capital costs are recovered
in the year incurred. The Joint Venture, and thus the
Company, has no ownership interest in oil and gas reserves and
related assets, but rather receives revenues from the sale of
oil, condensate, LPG and LNG in accordance with the PSC. The
Joint Venture is required to sell out of its share of
production 8.5 percent (7.2 percent after August 7, 1998) of
the total oil and gas condensate production from the contract
area for Indonesian domestic consumption. Such amounts were
purchased for domestic use in 1994, 1993 and 1992. The sales
price for the domestic market consumption is $0.20 per barrel
with respect to fields commencing production prior to February
23, 1989. For fields commencing production after that date,
domestic market consumption is priced at 10 percent of the
weighted average price of crude oil sold from such fields.
However, for the first sixty consecutive months of production
from new fields, domestic market consumption is priced at the
official Indonesian crude price. The Semberah field which
commenced production in December 1991 is exempt from the
domestic obligation pricing until December 1996. In addition,
the share of revenues from the sale of gas after cost recovery
through August 7, 1998, will remain at 35 percent to the Joint
Venture after Indonesian income taxes and 65 percent to
Pertamina. The split after August 7, 1998, will be 25 percent
to the Joint Venture after Indonesian income taxes and 75
percent to Pertamina for gas sales under the 1973 and 1981 LNG
Sales Contracts, Korean carryover quantities and seven 1986
LPG Sales Contracts to the extent that the gas to fulfill
these contracts is supplied from the Badak or Nilam fields;
after August 7, 1998, all other LNG sales contract revenues
will be split 30 percent after Indonesian income taxes to the
Joint Venture and 70 percent to Pertamina. Based on current
and projected oil production, the revenue split from oil sales
after cost recovery through August 7, 2018, will remain at 15
percent to the Joint Venture after Indonesian income taxes and
85 percent to Pertamina. These revenue splits are based on
Indonesian income taxes of 56 percent through August 7, 1998,
and 48 percent thereafter.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(3) INDONESIAN OIL AND GAS PROPERTIES (continued)
Pertamina currently sells liquefied natural gas to Japanese,
Korean and Taiwanese utility and industrial customers
primarily under five long-term contracts that expire in 1999,
2003, 2009, 2013 and 2014, respectively. Contracted sales of
LNG to these customers approximated 72 percent, 68 percent,
and 69 percent of the Company's gross revenues in 1994, 1993
and 1992, respectively.
(4) CASH AND CASH EQUIVALENTS
At December 31, 1994 and 1993, cash and cash equivalents
includes short-term deposits and highly liquid debt
instruments, purchased at a maturity with three months or
less, of $3,421 and $8,284, respectively.
(5) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is as follows:
1994 1993
Oil and gas producing properties
Proved properties $1,023,546 $991,447
Uncompleted wells in progress - 454
1,023,546 991,901
Less: Accumulated depletion 630,414 579,860
393,132 412,041
Other, net of accumulated depreciation
of $1,085 in 1994 and $947 in 1993 1,028 2,336
$394,160 $414,377
(6) ACCRUED LIABILITIES
As at December 31, 1994 and 1993, accrued liabilities
consisted of:
1994 1993
Accrued IPU liability $ 5,792 $ 4,804
Indonesian operating accruals 8,179 2,358
Other 1,016 2,152
$14,987 $ 9,314
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(7) LEASES
VICO leases office space in Indonesia, Singapore and the
United States in connection with the operations of the Joint
Venture. Rental expense amounted to $4,553, $4,982 and $5,230
in 1994, 1993 and 1992 respectively. Minimum annual rental
commitments as at December 31, 1994 under non-cancelable
leases are as follows:
1995 $10,827
1996 3,376
1997 1,875
1998 1,371
1999 1,370
2000 and thereafter 1,485
Total minimum lease payments $20,304
Minimum payments have not been reduced by future minimum
sublease rentals of $1,717 due under non-cancelable leases.
Certain leases contain renewal options and escalation clauses
which require payments of additional rent to the extent of
related operating cost increases.
(8) INCOME AND OTHER TAXES
At December 31, 1994, the Company had investment tax credit
carryovers of $3,523 that expire in 1995 through 2001, net
foreign tax credit carryovers of $23,493 for regular tax
purposes and $130,358 for alternative minimum tax purposes
both of which expire in 1995 through 1999. The Company has a
minimum tax credit of $13,187 that carries forward
indefinitely. Deferred tax assets of $23,493 and $22,985 for
foreign tax credit carryforwards and $3,523 and $3,523 for
investment tax credit carryforwards at December 31, 1994 and
1993, respectively, have been offset by a valuation allowance.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(8) INCOME AND OTHER TAXES (continued)
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. Significant components of the
Company's deferred tax liabilities as of December 31, 1994 and
1993 are as follows:
1994 1993
Deferred tax liabilities:
Oil and gas proven property costs
capitalized for financial purposes
and deducted for foreign taxes $162,966 $167,206
For financial reporting purposes, income before income taxes
includes the following components:
1994 1993 1992
Pretax income:
U. S. $ (2,423) $ (7,026) $(12,089)
Foreign 125,056 125,213 120,366
$122,633 $118,187 $108,277
Significant components of the provision for income taxes
attributable to continuing operations are as follows:
1994 1993 1992
Current:
Federal $ 2,884 $ 2,446 $ 2,942
Foreign 87,777 88,430 87,179
$90,661 $90,876 $90,121
Deferred:
Federal $ - $ - $ -
Foreign (4,240) (3,164) (5,520)
$(4,240) $(3,164) $(5,520)
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(8) INCOME AND OTHER TAXES (continued)
The reconciliation of income tax attributable to continuing
operations computed at the U.S. federal statutory rates to
income tax expense is:
1994 1993 1992
Tax at U.S. Statutory Rate 35.0% 35.0% 34.0%
Foreign statutory tax rate
in excess of federal
statutory tax rate 21.0% 21.0% 22.0%
Expenses not deductible in
calculating Indonesian
taxes 11.0% 12.8% 13.1%
Unutilized domestic book
losses 0.7% 2.1% 3.8%
Domestic income taxed at
less than foreign statutory
rate 0.4% 1.2% 2.5%
U.S. taxes related to
foreign operations 2.4% 2.1% 2.7%
Total 70.5% 74.2% 78.1%
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(9) INDONESIAN PARTICIPATING UNITS (IPUs)
The IPUs were issued, with no assigned value, in connection
with the acquisition of ENSTAR in 1984 and represent a general
obligation of the Company to make quarterly participation
payments until September 1999, the amount of which will be
measured by a fixed percentage of Net Cash Flow (as defined
below) from the Joint Venture. While the amount of the
Participation Payments, which are treated as reductions from
revenues, will vary quarter to quarter depending upon the
amount of Net Cash Flow, payment of the amounts due to the IPU
holders is an obligation of the Company, not dependent upon
the discretion of the partners of the Company. The rights of
the IPU holders are those of a general creditor of the Company
and thus the IPU holders have no equity interest in the
Company in the nature of a general or limited partnership
interest or otherwise. The IPU holders derive no economic
benefit from the business activities of the Company other than
the Joint Venture.
Each IPU entitles the holder to receive, until September 25,
1999, a quarterly participation payment equal to 1/14,077,747
of 32 percent of net positive cash flow. Net Cash Flow,
attributable to IPU holders, is equal to the product of (i) a
fraction, the numerator of which is equal to the number of
IPUs outstanding on the last business day of such quarterly
period, and the denominator of which is 14,077,747, multiplied
by (ii) 32 percent of specified revenues net of specified
expenditures from the Joint Venture. The above calculation
was the result of negotiations among the parties to the 1984
merger of ENSTAR Corporation into the Company and represents
the amount of future income from the Joint Venture that the
Company has agreed to pay to the former stockholders of ENSTAR
in the form of payments on the IPUs. If Net Cash Flow is
zero or negative for any quarterly period, no Participation
Payments for that quarter will be made. The Company maintains
an irrevocable letter of credit for the benefit of the IPU
holders in an amount equal to 240 percent of the most recent
quarterly distribution. At December 31, 1994 and 1993, there
were 10,778,590 IPUs issued and outstanding. Based on the
closing price on the American Stock Exchange of the IPUs at
December 31, 1994 of $9.125 per unit, the outstanding IPUs had
a total market valuation of $98 million.
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
Calculation of Net Cash Flow and
Participation Payments
1994 1993
Positive cash flow:
Gas receipts $188,211 $175,840
Oil and condensate receipts 33,411 34,741
Other non-revenue cash receipts from
Joint Venture 5,370 9,799
Total positive cash flow 226,992 220,380
Less negative cash flow:
Expenditures to Joint Venture 56,150 66,184
Indonesian income taxes 90,264 85,401
Total negative cash flow 146,414 151,585
Net positive cash flow from 23.125%
interest in Joint Venture $ 80,578 $ 68,795
Net cash flow for benefit of IPU holders $ 19,724 $ 16,922
Participation Payment per unit $ 1.83 $ 1.57
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(10) LONG-TERM DEBT
The 8-1/4% convertible subordinated guaranteed debentures, due
in December 1995, were repaid on January 5, 1994 in the
principal amount of $36,400. The debentures had a carrying
value at December 31, 1993 of $33,292 resulting in an
extraordinary loss on redemption of $3,108, which was
recognized in the first quarter of 1994.
(11) BENEFIT PLANS
VICO has a defined contribution retirement plan that covers
its eligible employees. Although VICO expects to provide an
annual contribution based on a percentage of each eligible
employee's salary, the actual contribution is determined at
the end of each year by its Board of Directors and may vary
depending upon circumstances. Defined contribution pension
expense is funded by the Joint Venture participants and the
Company's share of such expense for the years ended December
31, 1994, 1993 and 1992 was $211, $263 and $200, respectively.
VICO provides severance pay to its employees based upon salary
and length of service. Such severance pay is accrued over the
service life of the employees and is funded by the Joint
Venture. The Company has provided approximately $1.1 million,
$0.2 million and $1.4 million for the years ended December 31,
1994, 1993 and 1992 respectively for its share of future
severance payments.
The Company has a defined benefit pension plan established by
ENSTAR that covers ENSTAR's former employees who are
considered terminated and fully vested. ENSTAR's pension
funding policy is to contribute an amount meeting the
requirement of the Employees Retirement Income Security Act.
The estimated reconciliation of the funded status of ENSTAR's
pension plan as at December 31, 1994, 1993 and 1992
respectively was as follows:
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(11) BENEFIT PLANS (continued)
1994 1993 1992
Actuarial present value of:
Vested accumulated benefit
obligation $(16,155) $(17,763) $(16,913)
Projected vested benefit
obligation $(16,155) $(17,763) $(16,913)
Fair value of plan assets 13,902 14,902 14,353
Unfunded projected benefit
obligation (2,253) (2,861) (2,560)
Unrecognized net
loss 1,243 1,661 1,533
Unrecognized net transition
obligation 837 872 907
Adjustment required to
recognize minimum
liability (2,080) (2,533) (2,440)
Accrued pension cost
recognized in the
Consolidated Balance
Sheet $ (2,253) $ (2,861) $ (2,560)
The minimum liability that must be recognized is equal to the
excess of the accumulated benefit obligation over the fair
value of plan assets. A corresponding amount is recognized as
either an intangible asset or a reduction to Partners'
Capital. A reduction of Partners' Capital was required at
December 31, 1993 and 1992 since the intangible asset
recognized did not exceed the amount of unrecognized prior
service cost.
The pension expense for 1994, 1993 and 1992 was composed of
the following:
1994 1993 1992
Interest cost $ 1,317 $ 1,300 $ 1,303
Expected return on plan
assets (1,063) (1,107) (1,108)
Net amortization and deferral 35 35 35
$ 289 $ 228 $ 230
UNIMAR COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
(in thousands of dollars unless otherwise indicated)
(11) BENEFIT PLANS (continued)
The assumed rate of return used in determining the projected
benefit obligation was 8.5 percent, 7.5 percent and 8 percent
for 1994, 1993 and 1992, respectively. The assumed long-term
rate of return on plan assets was 8 percent for 1994, 1993 and
1992. Plan assets are invested in equity and fixed income
securities.
(12) CLAIMS AND LITIGATION
The Company has pending litigation arising in the ordinary
course of its business. However, none of the litigation is
expected to have a material adverse effect on the Company's
financial position or results of operations. The Company also
has a reserve of $3.8 million for potential exposure in a
royalty dispute. The Company believes it may have valid
defenses against such claims.
(13) RELATED PARTY TRANSACTIONS
All aspects of the Company's business that are not associated
with the operating management of the Joint Venture, such as
legal, accounting, tax and other management functions are
supplied by employees of the partners in accordance with
management agreements negotiated among the parties. For the
years 1994, 1993 and 1992, the charges approximated $400, $500
and $600, respectively.
The Company holds demand notes in the amount of $40,000 from
or guaranteed by affiliates of each partner. These funds will
be made available to the Company if additional working capital
is required.
In addition to acting as the operator of the Joint Venture,
VICO performs engineering, pipeline maintenance, and human
resource related services for the operator of the LNG Plant,
P.T. Badak Natural Gas Liquefaction Company (P.T. Badak).
During the years ended December 31, 1994 and 1993 VICO billed
P.T. Badak $21.8 and $33.5 million for services rendered.
Accounts receivable from P.T. Badak approximated $2.4 million
and $3.3 million at December 31, 1994 and 1993, respectively.
UNIMAR COMPANY AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION (Unaudited)
The following items are contained in this section:
(a) Indonesian oil and gas operations
(b) Interim financial data
(a) INDONESIAN OIL AND GAS OPERATIONS
The Company's estimated net share of Indonesian oil and gas
reserves is shown in Table 1. The estimated proved reserves
of gas and oil and condensate as of December 31, 1994, 1993
and 1992 attributable to the Joint Venture's interest in the
production sharing contract in East Kalimantan were prepared
by petroleum engineers employed by LASMO, an affiliate of
Ultrastar.
Net share estimates are the Company's present best estimates
of the share of proved Indonesian reserves attributable to
revenue the Company would receive, before Indonesian income
taxes, under the terms of the Production Sharing Contract, as
extended through August 7, 2018 based upon assumptions
regarding levels of Joint Venture expenditures over the life
of the project, oil and gas prices, firm contract sales
commitments and potential sales opportunities and upon
numerous other assumptions. The Company has no ownership
interest in the Indonesian reserves in place, but rather
shares in production and revenue from the sale of oil,
condensate, LPG and LNG in accordance with the Production
Sharing Contract. The reserve estimates are subject to
revision as prices fluctuate due to the cost recovery feature
for field and other operating costs under the Production
Sharing Contract and for changes in the Indonesian income tax
rate. Because of the number and range of these variables, no
representation can be made that the net share estimates set
forth below are accurate, and any changes in such variables
will impact such estimates and the cash flows the Company may
realize in the future.
Oil and gas reserves are considered proved if economic
producibility is supported by either actual production or
conclusive formation tests. Proved developed reserves are
reserves that can be expected to be recovered through existing
wells with existing equipment and operating methods. Proved
undeveloped reserves are reserves that are expected to be
recovered from new wells on undrilled acreage or from existing
INDONESIAN OIL AND GAS OPERATIONS (continued)
wells where a relatively significant expenditure is required
to permit production. These estimates do not include reserves
which may be found by extension of proved areas, reserves
which have been estimated considering known geological and
seismic data and previous experience with similar reservoirs,
or reserves recoverable by secondary or tertiary recovery
methods unless these methods are in operation and showing
successful results. These estimates include reserves that are
not currently under contract, but which management expects may
be marketed during the remaining period in which the Company
has the right to produce such reserves, but for which there is
no assurance of sales. Estimates of reserves require
extensive judgments of reservoir engineering data and are
generally less precise than other estimates used in connection
with financial reporting. Actual future revenues from proved
reserves estimates may vary significantly from estimated
future cash flows due to changes in prices of oil and gas, and
in the timing of actual production in future periods. Actual
production and development costs will vary from those
estimated due to inflation and other factors.
INDONESIAN OIL AND GAS OPERATIONS (continued)
TABLE 1
Quantities of Oil and Gas Reserves
(Oil in Thousands of BBLS; Gas in MMCF)
Oil Gas
Proved Developed and Undeveloped
Reserves:
As of December 31, 1991 11,150 1,011,381
Revisions to previous estimates 1,874 98,117
Production (1,736) (83,158)
As of December 31, 1992 11,288 1,026,340
Revisions to previous estimates 4,044 133,820
Production (1,778) (84,920)
As of December 31, 1993 13,554 1,075,240
Revisions to previous estimates 2,724 96,257
Production (1,891) (92,408)
As of December 31, 1994 14,387 1,079,089
Proved Developed Reserves:
As of December 31, 1991 8,792 656,546
As of December 31, 1992 7,632 733,354
As of December 31, 1993 10,281 727,536
As of December 31, 1994 11,731 877,140
INDONESIAN OIL AND GAS OPERATIONS (continued)
Table 2 shows costs incurred in oil and gas property acquisition,
exploration and development activities.
TABLE 2
Costs Incurred in Oil and Gas Property Acquisition,
Exploration and Development Activities
Years ended December 31, 1994, 1993 and 1992
(Thousands of dollars)
1994 1993 1992
Exploration costs $ 2,545 $ 5,223 $ 7,193
Development costs 31,878 36,328 34,407
Table 3 shows results of operations for oil and gas producing
activities.
TABLE 3
Results of Operations for Oil and Gas Producing Activities
Years ended December 31, 1994, 1993, and 1992
(Thousands of dollars)
1994 1993 1992
Revenues $197,925 $200,581 $205,847
Production costs 19,618 17,836 19,068
Exploration costs 2,787 4,947 9,066
Depreciation, depletion
and amortization 50,554 52,710 57,275
Income tax expense 86,357 87,640 81,386
Results of operations for
producing activities (1) $ 38,609 $ 37,448 $ 39,052
(1) Excludes corporate overhead and interest costs.
<PAGE>
INDONESIAN OIL AND GAS OPERATIONS (continued)
Table 4 shows a standardized measure of discounted future net
cash flows and changes therein relating to proved oil and gas
reserves using an annual discount of 10 percent and the Company's
net share estimates referred to in the preface to Table 1.
Generally, estimated future cash inflows have been computed by
applying year-end prices of oil and gas to estimated future
production of proved oil and gas reserves. Future development and
production costs have been computed by estimating the future
expenditures (based on year-end costs) to be incurred in developing
and producing the proved reserves, assuming continuation of
existing economic conditions. Future income tax expenses have been
calculated by using the year-end statutory tax rate for Indonesia
of 56 percent through August 7, 1998 and 48 percent thereafter.
Indonesian net cash flow estimates are the Company's present best
estimates of the share of future net revenues, after Indonesian
taxes and capital and operating contributions to the Joint Venture,
that the Company would receive if proved reserves are produced
under the terms of the Production Sharing Contract, as extended,
based upon assumptions regarding levels of Joint Venture
expenditures over the life of the project, firm contract sales
commitments and potential sales opportunities and upon numerous
other assumptions. Additionally, the net cash flow estimates
include amounts due IPU holders.
Because of the number and range of these variables, no
representation can be made that the net cash flow estimates set
forth below are accurate, and any change in such variables will
impact the cash flows the Company may realize in the future.
TABLE 4
Standardized Measure of Discounted Future Net Cash Flows and
Changes Therein Relating to Proved Oil and Gas Reserves
At December 31, 1994, 1993 and 1992
(Thousands of dollars)
1994 1993 1992
Future cash inflows $2,372,316 $2,085,222 $2,627,497
Future production and
development costs (593,791) (589,163) (573,047)
Future income tax expenses (874,477) (740,808) (1,037,570)
Future net cash flows 904,048 755,251 1,016,880
10% annual discount for
estimated timing of
cash flows (442,377) (375,500) (496,070)
Standardized measure of
discounted future net
cash flows $ 461,671 $ 379,751 $ 520,810
<PAGE>
INDONESIAN OIL AND GAS OPERATIONS (continued)
The following are the principal sources of changes in the
standardized measure of discounted future net cash flows for proved
reserves during 1994, 1993 and 1992.
1994 1993 1992
(Thousands of dollars)
Standardized measure of discounted
future net cash flows at
beginning of period $ 379,751 $ 520,810 $ 550,113
Sales and transfers of oil and gas
produced, net of
production costs (176,275) (177,720) (180,139)
Net changes in prices and
production costs 159,985 (367,050) (108,119)
Development costs incurred
during the period 31,878 36,328 34,407
Revisions of previous
quantity estimates 67,590 104,367 78,074
Accretion of discount 71,775 92,991 100,530
Net change in income taxes (73,033) 170,025 45,944
Standardized measure of discounted
future net cash flows at end
of period $ 461,671 $ 379,751 $ 520,810
Note: The standardized measure of discounted future net cash flows at
December 31, 1994, 1993 and 1992 included $59,571, $59,629 and
$90,683, respectively, in future net cash flows attributable to
IPU holders (See Footnote 9).
<PAGE>
<TABLE>
b) INTERIM FINANCIAL DATA (Unaudited)
The following table shows summary quarterly data for 1994, 1993 and 1992:
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Year Ended December 31, 1994
Revenues $ 55,151 $ 42,717 $ 51,941 $ 48,116
Operating profit $ 35,384 $ 26,018 $ 31,029 $ 32,530
Earnings before
Extraordinary
item $ 9,818 $ 8,509 $ 10,088 $ 7,797
Net earnings $ 6,710 $ 8,509 $ 10,088 $ 7,797
Year Ended December 31, 1993
Revenues $ 58,298 $ 38,834 $ 47,840 $ 55,616
Operating profit $ 37,952 $ 21,099 $ 28,331 $ 36,798
Net earnings $ 10,804 $ 3,618 $ 5,350 $ 10,703
Year Ended December 31, 1992
Revenues $ 52,814 $ 45,518 $ 56,642 $ 50,923
Operating profit $ 30,909 $ 25,059 $ 33,456 $ 24,532 (a)
Net earnings $ 7,842 $ 6,207 $ 7,766 $ 1,861
(a) Includes a $6,400 provision for prior year's windfall profit tax liability.
/TABLE
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The management, budgeting and financial control of the
Company's interest in the Indonesian Joint Venture operations are
exercised by a Management Board consisting of six members, three
appointed by each partner. The following persons currently serve
as members of the Company's Management Board:
GEORGE W. BERKO (age 48) was appointed to the Company's
Management Board in May 1992. Since May 1992, he has served as the
Partners' representative for Investor Relations, Treasurer and
Chief Financial and Accounting Officer of ENSTAR, ENSTAR Indonesia,
Inc., INTERNATIONAL, and certain of their subsidiaries, and has
been LASMO America Ltd.'s Vice President - Unimar Accounting. From
October 1990 until April 1992, he was Vice President, Controller of
Ultramar Oil and Gas Limited, and prior to that time, he was a
General Manager of American Ultramar Ltd. from December 1984.
IAN D. BROWN (age 45) was appointed to the Company's
Management Board in February 1993. He is also Director and
Chairman of ENSTAR and certain of its affiliates. In January 1994
he was appointed President and General Manager of LASMO Companies
in Indonesia. In January 1993, he was appointed Director,
Indonesian Joint Venture for LASMO plc and a member of the VICO
Board. Since May 1986, he served as Commercial Manager for LASMO
plc, and from February 1987, Managing Director, LASMO Trading
Limited, the marketing, trading and transportation affiliates of
the parent company.
ANDREW E. CROUCH (age 36) was appointed to the Company's
Management Board in May 1994. He is also director of ENSTAR and
certain of its affiliates. Since May 1994 he has been President
and Director of LASMO America Ltd., the holding company for LASMO
US subsidiaries. He previously served in a number of senior
management positions in LASMO's London, England head office.
LARRY D. KALMBACH (age 43) was appointed to the Company's
Management Board in February 1993. He is also a Director of ENSTAR
and certain of its affiliates. Since February 1995 he has been
Vice President and Chief Financial Officer of UTPH. Prior to that
he held several executive and management positions with UTPH
including Vice President - Finance from 1993 to 1995 and Vice
President and Controller from 1986 to 1993.
<PAGE>
WILLIAM M. KRIPS (age 55) was appointed to the Company's
Management Board in January 1987 and in May 1994 was appointed
Chairman of the Management Board. He is also a Director of ENSTAR
and certain of its affiliates. Since 1990, he has been Senior Vice
President-Exploration & Production of UTPH. Prior to that time, he
served as Senior Vice President - U. S. Exploration and Production,
Senior Vice President - Hydrocarbon Products Group and Vice
President - International Operations.
ARTHUR W. PEABODY, JR. (age 51) was appointed to the Company's
Management Board in February 1992. He is also a Director of
ENSTAR, ENSTAR Indonesia, Inc., International and VICO. Since May
1994, he has served as Senior Vice President of UTPH and has held
several executive positions with UTPH including Senior Vice
President - Exploration and Production, Senior Vice President and
General Manager - Hydrocarbon Products Group, Vice President -
Planning and Administration and Vice President - Acquisitions and
Planning.
As set forth above, control of the Company's operations is
exercised by the Management Board. The Company, a Texas general
partnership, does not have any Executive Officers.
Item 11. Executive Compensation.
The Company has no executive officers, and no members of the
Management Board are paid directly by the Company. All members of
the Management Board are full-time employees of UTPH or LASMO, or
their respective subsidiaries, and do not receive from the Company
any remuneration for their services to the Company. Moreover, the
Company has no employees who are compensated for their services to
the Company. VICO and its subsidiaries, have employees who are
responsible for the daily operating activities of the Joint Venture
and are compensated by the Joint Venture. See Item 13 below for
information concerning the Company's reimbursement to LASMO for
services rendered to the Company by one of LASMO's designees on the
Management Board.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The Company is a Texas general partnership and as such has no
voting securities apart from the general partnership interests
owned by the partners. The table below reflects the beneficial
ownership of 100 percent of the partnership interests in the
Company as of March 15, 1995:
<PAGE>
Name and Address of Amount Beneficially
Title of Class Beneficial Owner Owned
General Partnership LASMO plc 50%
Interest 100 Liverpool Street
London EC2M 2BB
England
Name and Address of Amount Beneficially
Title of Class Beneficial Owner Owned
General Partnership Union Texas Petroleum 50%
Interest Holdings, Inc.
1330 Post Oak Boulevard
Houston, Texas 77252
Item 13. Certain Relationships and Related Transactions.
The partners of the Company provide management expertise,
office space, and administrative, legal and professional services.
For such services, a management fee of approximately $434 and $508
was charged in 1994 and 1993, respectively, including $109 ($138 in
1993) paid in respect of Mr. Berko's services.
The Company holds demand notes in the amount of $40 million
from or generated by affiliates of each partner. These funds will
be made available to the Company if additional working capital is
required.
As operator of the Joint Venture, VICO conducts exploration
and development activities within the PSC area. The cost of such
activities is funded by the Joint Venture participants to VICO. In
addition, VICO performs engineering, pipeline maintenance and human
resource related services for the operator of the LNG Plant, P.T.
Badak Natural Gas Liquefaction Company (P.T. Badak). For the year
ended December 31, 1994 and 1993 VICO billed P.T. Badak $21.8
million and $33.5 million respectively for services rendered.
Accounts receivable from P.T. Badak approximated $2.4 million at
December 31, 1994 ($3.3 million at December 31, 1993).<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a)(1) Financial Statements listed below are included as
Part II, Item 8 hereof on the pages indicated:
Report of Independent Auditors 25
Consolidated Balance Sheet,
December 31, 1994 and 1993 26
Consolidated Statement of Earnings,
Years ended December 31, 1994,
1993 and 1992 27
Consolidated Statement of Cash Flows,
Years ended December 31, 1994,
1993 and 1992 28
Consolidated Statement of Changes in
Partners' Capital, Years ended
December 31, 1994, 1993 and 1992 29
Notes to Consolidated Financial
Statements 30-43
Supplemental Financial Information
(unaudited) 44-50
All schedules are omitted as they are not applicable.<PAGE>
(a)(3) The following documents are included as Exhibits to
this Report. Unless it has been indicated that a
document listed below is incorporated by reference
herein, copies of the document have been filed
herewith.
(2)-1- Merger Agreement, dated May 22, 1984, and Amendment
Agreements thereto, dated June 8, 1984 and June 12,
1984 (incorporated by reference to Annex A to the
Prospectus/Proxy Statement included in the Company's
Registration Statement on Form S-14 (No. 2-93037)).*
(2)-2- Agreement of Merger, dated as of August 28, 1984
(incorporated by reference to Annex B to the
Prospectus/Proxy Statement included in the Company's
Registration Statement on Form S-14 (No. 2-93037)).*
(2)-3- Divestiture Agreement, dated June 20, 1984 (filed as
Exhibit 2.3 to the Company's Registration Statement
on Form S-14 (No. 2-93037)).*
(3)-1- Amended and Restated Agreement of General
Partnership of Unimar Company dated September 11,
1990 between Unistar, Inc. and Ultrastar, Inc.
(filed as Exhibit (3)-4- to the Company's 1990 Form
10-K (No. 18791)).*
(4)-1- Form of Indenture between Unimar and Irving Trust
Company, as Trustee (filed as Exhibit 4 to the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(4)-2- First Supplemental Indenture, dated as of October
31, 1986, to the Indenture between Unimar and Irving
Trust Co., as Trustee (Exhibit (4)-1 above) (Filed
as Exhibit 10.114 to Union Texas Petroleum Holdings,
Inc.'s Registration Statement on Form S-1 (No. 33-
16267)).*
(10)-1- Joint Venture Agreement, dated August 8, 1968, among
Roy M. Huffington, Inc., Virginia International
Company, Austral Petroleum Gas Corporation, Golden
Eagle Indonesia, Limited, and Union Texas Far East
Corporation, as amended (filed as Exhibit 6.6 to
Registration Statement No. 2-58834 of Alaska
Interstate Company).*
(10)-2- Agreement dated as of October 1, 1979, among the
parties to the Joint Venture Agreement referred to
in Exhibit (10)-1- above (filed as Exhibit 5.2 to
Registration Statement No. 2-66661 of Alaska
Interstate Company).*
* Incorporated herein by reference.
(10)-3- Amendment to the Operating Agreement dated April 1,
1990, between Roy M. Huffington, Inc., a Delaware
corporation, Ultramar Indonesia Limited, a Bermuda
corporation, Virginia Indonesia Company, a Delaware
corporation, Virginia International Company, a
Delaware corporation, Union Texas East Kalimantan
Limited, a Bahamian corporation, and Universe Gas &
Oil Company, Inc., a Liberian corporation. (filed as
Exhibit (10)-3- to the Company's 1993 Form 10-K (No.
1-8791)).*
(10)-4- Amended and Restated Production Sharing Contract
dated April 23, 1990 (effective August 8, 1968 -
August 7, 1998) by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Roy M. Huffington, Inc., Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation. (filed as Exhibit (10)-4- to
the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-5- Production Sharing Contract dated April 23, 1990
(effective August 8, 1998 - August 7, 2018) between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(Pertamina) and Roy M. Huffington, Inc., Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company, Inc.
and Huffington Corporation. (filed as Exhibit (10)-
5- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-6- Nilam Unit Agreement, effective as of January 1,
1980, to establish the manner in which the Joint
Venture and Total will cooperate to develop the
unitized area of the Nilam Field. (filed as Exhibit
(10-58- to the Company's 1991 Form 10-K (No. 1-
8791)).*
(10)-7- Fourth Amended and Restated Implementation
Procedures for Crude Oil Liftings, effective as of
July 1, 1993, among Virginia Indonesia Company,
LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company.
* Incorporated herein by reference.
(10)-8- Amended and Restated 1973 LNG Sales Contract, dated
as of the 1st day of January 1990, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Kyushu Electric
Power Co., Inc., Nippon Steel Corporation, Osaka Gas
Co., Ltd. and Toho Gas Co., Ltd., as Buyers. (filed
as Exhibit (10)-8- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-9- Amendment to the 1973 LNG Sales Contract dated as of
the 3rd day of December, 1973, amended by Amendment
No. 1 dated as of the 31st day of August, 1976, and
amended and restated as of the 1st day of January,
1990 ("1973 LNG Sales Contract"), is entered into as
of the 1st day of June, 1992, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
a state enterprise of the Republic of Indonesia
(Seller), on the one hand, and Kyushu Electric Power
Co., Inc. (Kyushu Electric), Nippon Steel
Corporation (Nippon Steel), and Toho Gas Co., Ltd.
(Toho Gas), all corporations organized and existing
under the laws of Japan, on the other hand. (filed
as Exhibit (10)-9- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-10- Amended and Restated Supply Agreement (In Support of
the Amended and Restated 1973 LNG Sales Contract)
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 September 22, 1993, effective December
3, 1973. (filed as Exhibit (10)-10- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-11- Amended and Restated Badak LNG Sales Contract, dated
as of the 1st day of January, 1990, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Osaka Gas Co., Ltd.
and Toho Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-11- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-12- Supply Agreement, dated as of April 14, 1981 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(Pertamina) and the parties to the Joint Venture
Agreement, including the Company. (filed as Exhibit
(10)-12- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.
(10)-13- Seventh Supply Agreement for Excess Sales
(Additional Fixed Quantities under Badak LNG Sales
Contract as a Result of Contract Amendment and
Restatement) between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara and Virginia Indonesia Company,
Opicoil Houston, Inc., Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company, dated September 28, 1992, but effective as
of January 1, 1990. (filed as Exhibit (10)-13- to
the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-14- Bontang II Trustee and Paying Agent Agreement
Amended and Restated as of July 15, 1991 among
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Virginia International
Company, Union Texas East Kalimantan Limited,
Ultramar Indonesia Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and Continental Bank International. (filed as
Exhibit (10)-14- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-15- Producers Agreement No. 2 dated as of June 9, 1987
by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), Roy M. Huffington, Inc.,
Virginia International Company, Ultramar Indonesia
Limited, Virginia Indonesia Company, Union Texas
East Kalimantan Limited, Universe Tankships, Inc.,
Huffington Corporation in favor of The Industrial
Bank of Japan Trust Company as Agent (filed as
Exhibit (10)-30- to the Company's 1987 Form 10-K
(No. 1-8791)).*
(10)-16- Badak III LNG Sales Contract between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
as Seller and Chinese Petroleum Corporation as Buyer
signed on March 19, 1987.
(10)-17- Badak III LNG Sales Contract Supply Agreement, dated
October 19, 1987 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara (Pertamina) and the
parties to the Joint Venture Agreement. (filed as
Exhibit (10)-17- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-18- LNG Sales and Purchase Contract (Korea II) effective
May 7, 1991 between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara and Korea Gas Corporation.
(filed as Exhibit (10)-18- to the Company's 1993
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-19- Schedule A to the LNG Sales and Purchase Contract
(Korea II FOB) between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Korea Gas
Corporation. (filed as Exhibit (10)-19- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-20- Bontang III Producers Agreement, dated February 9,
1988, among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara (Pertamina) and the parties to the Joint
Venture Agreement. (filed as Exhibit (10)-20- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-21- Amendment No. 1 to Bontang III Producers Agreement
dated as of May 31, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and Train-E Finance Co., Ltd., as
Tranche A Lender, The Industrial Bank of Japan Trust
Company, as Agent and The Industrial Bank of Japan
Trust Company on behalf of the Tranche B Lenders.
(filed as Exhibit (10)-21- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-22- Amendment No. 2 to Producers Agreement No. 2 dated
as of May 31, 1988 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, Roy M. Huffington, Inc.,
Huffington Corporation, Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited and Universe Tankships, Inc. (filed as
Exhibit (10)-44- to the Company's 1988 Form 10-K
(No. 1-8791)).*
(10)-23- $316,000,000 Bontang III Loan Agreement dated
February 9, 1988 among Continental Bank
International as Trustee, Train-E Finance Co., Ltd.
as Tranche A Lender and The Industrial Bank of Japan
Trust Company as Agent. (filed as Exhibit (10)-23-
to the Company's 1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-24- Bontang III Trustee and Paying Agent Agreement,
dated February 9, 1988, among Pertamina, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, VICO, Ultrastar Indonesia
Limited, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Total Indonesia, Unocal
Indonesia, Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International (filed as Exhibit
10.42 to the Union Texas Petroleum Holdings, Inc.'s
1991 Form 10-K (Commission File No. 1-9019)).*
(10)-25- Amendment No. 1 to Bontang III Trustee and Paying
Agent Agreement, dated as of December 11, 1992,
among Pertamina, VICO, Virginia International
Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesia,
Unocal Indonesia Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International, as Bontang III
Trustee (Filed as Exhibit 10.83 to the Union Texas
Petroleum Holdings, Inc.'s 1992 Form 10-K
(Commission File No. 1-9019)).*
(10)-26- Amended and Restated Debt Service Allocation
Agreement dated February 9, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Roy M.
Huffington, Inc., Virginia International Company,
Ultramar Indonesia Limited, Virginia Indonesia
Company, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Huffington Corporation,
Total Indonesie, Unocal Indonesia, Ltd. and
Indonesia Petroleum, Ltd.
(10)-27- Letter agreement between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Chinese Petroleum
Corporation, dated December 1, 1989. (filed as
Exhibit (10)-27- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-28- Badak IV LNG Sales Contract dated October 23, 1990
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), as Seller and Osaka Gas Co.,
Ltd., Tokyo Gas Co., Ltd. and Toho Gas Co., Ltd., as
Buyers. (filed as Exhibit (10)-29- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-29- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Hiroshima Gas Co., Ltd. and
Nippon Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-30- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.
(10)-30- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Osaka Gas Co., Ltd., as Buyer.
(filed as Exhibit (10)-31- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-31- Supply Agreement for Natural Gas to Badak IV LNG
Sales Contract dated August 12, 1991 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Opicoil Houston, Inc.,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company, Inc.
and Virginia International Company. (filed as
Exhibit (10)-32- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-32- Second Supply Agreement for Package IV Excess Sales
(Osaka Gas Contract - Package IV Quantities) 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 September 22, 1993, effective January 1, 1991.
(filed as Exhibit (10)-33- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-33- Third Supply Agreement for Package IV Excess Sales
(Toho Gas Contract - Package IV Quantities) 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 September 28, effective January 1, 1991.
(filed as Exhibit (10)-34- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-34- Eleventh Supply Agreement for Package IV Excess
Sales (1973 Contract Build-Down Quantities) 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 September 22, 1993, effective January 1, 1990.
(filed as Exhibit (10)-35- to the Company's 1993
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-35- Bontang IV Producers Agreement dated August 26, 1991
by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, Virginia Indonesia Company, Opicoil Houston,
Inc., Virginia International Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc., Total
Indonesie, Unocal Indonesia, Ltd. and Indonesia
Petroleum, Ltd., in favor of The Chase Manhattan
Bank, N.A. as Agent for the Lenders. (filed as
Exhibit (10)-36- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-36- $750,000,000 Bontang IV Loan Agreement dated August
26, 1991 among Continental Bank International as
Trustee under the Bontang IV Trustee and Paying
Agent Agreement as Borrower, Chase Manhattan Asia
Limited and The Mitsubishi Bank, Limited as
Coordinators, the other banks and financial
institutions named herein as Arrangers, Co-
Arrangers, Lead Managers, Managers, Co-Managers and
Lenders, The Chase Manhattan Bank, N.A. and the
Mitsubishi Bank, Limited as Co-Agents and The Chase
Manhattan Bank, N.A. as Agent. (filed as Exhibit
(10)-37- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-37- Bontang IV Trustee and Paying Agent Agreement dated
August 26, 1991 among Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara, Virginia Indonesia Company,
Opicoil Houston, Inc., Virginia International
Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Universe Gas & Oil Company,
Inc., Total Indonesie, Unocal Indonesia, Ltd.,
Indonesia Petroleum, Ltd. and Continental Bank
International. (filed as Exhibit (10)-38- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-38- Amended and Restated Bontang Processing Agreement
dated February 9, 1988 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Roy M. Huffington,
Inc., Huffington Corporation, Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Tankships, Inc., Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and P.T. Badak Natural Gas Liquefaction Company
(filed as Exhibit (10)-39- to the Company's 1988
Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-39- Bontang Capital Projects Loan Agreement No. 2 dated
June 9, 1987, among Continental Bank International,
as Trustee under the Badak Trustee and Paying Agent
Agreement (Borrower), the banks named therein as
Lead Managers and Lenders and The Industrial Bank of
Japan Trust Company (Agent) (filed as Exhibit (10)-
31 to the Company's 1987 Form 10-K (No. 1-8791)).*
(10)-40- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and National Federation of Agricultural
Co-Operative Associations (Zen-Noh), as Buyer, dated
February 21, 1992. (filed as Exhibit (10)-42- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-41- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Japan Indonesia Oil Co., Ltd., as
Buyer, dated February 20, 1992. (filed as Exhibit
(10)-43- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-42- Arun and Bontang LPG Sales and Purchase Contract
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina) as Seller and Mitsubishi
Corporation, Cosmo Oil Co., Ltd., Nippon Petroleum
Gas Co., Ltd., Showa Shell Sekiyu K.K., Kyodo Oil
Co., Ltd., Idemitsu Kosan Co., Ltd. and Mitsui
Liquefied Gas Co., Ltd. as Buyers dated July 15,
1986.
(10)-43- Amendments to Arun and Bontang LPG Sales and
Purchase Contract, dated October 5, 1994, between
Pertamina, as Seller, and Mitsubishi Corporation,
Cosmo Oil Co., Ltd., Nippon Petroleum Gas Co., Ltd.,
Showa Shell Sekiyu K.K., Japan Energy Corporation,
Idemitsu Kosan Co., Ltd., and Mitsui Oil & Gas Co.,
Ltd., as Buyers. (filed as Exhibit 10.88 to the
Union Texas Petroleum Holdings, Inc.'s 1994 Form 10-
K (Commission File No. 1-9019)).*
(10)-44- Bontang LPG Supply Agreement, dated November 17,
1987, between Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara (Pertamina) and the parties to the Joint
Venture Agreement. (filed as Exhibit (10)-45- to the
Company's 1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-45- Advance Payment Agreement between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Arun Bontang Project Finance Co., Ltd., dated
February 16, 1987 (filed as Exhibit (4)-15- to the
Company's 1986 Form 10-K (No. 1-8791)).*
(10)-46- Agreement and Plan of Reorganization of ENSTAR
Corporation, dated December 22, 1989, by and among
Unimar Company, Ultrastar, Inc., Unistar, Inc.,
ENSTAR Corporation, Newstar Inc., Union Texas
Development Corporation, Union Texas Petroleum
Corporation and Ultramar America Limited. (filed as
Exhibit (10)-47- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-47- Amendment to Agreement and Plan of Reorganization of
ENSTAR Corporation, dated May 1, 1990, by and among
Unimar Company, Ultrastar, Inc., Unistar, Inc.,
ENSTAR Corporation, Ultramar Production Company,
Union Texas Development Corporation, Union Texas
Petroleum Corporation and Ultramar America Limited.
(filed as Exhibit (10)-48- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-48- Addendum to Badak IV LNG Sales Contract Supply
Agreement (effective October 23, 1990), dated
January 31, 1994, by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") 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.
(10)-49- Memorandum of Agreement for Purchase and Sale of LNG
During 1995 - 1999 between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara ("Pertamina") ("Seller")
and Korea Gas Corporation ("KGC") ("Buyer") for the
sale and purchase of certain quantities of LNG.
(21)-1- List of Subsidiaries of the Company.
(23)-1- Consent of Ernst & Young LLP.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the
last quarter of the fiscal year ended December 31,
1994.
* Incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNIMAR COMPANY
March 22, 1995 By /S/ WILLIAM M. KRIPS
William M. Krips
Chairman of the
Management Board
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated as of March
22, 1995.
By /S/ GEORGE W. BERKO By /S/ LARRY D. KALMBACH
George W. Berko Larry D. Kalmbach
Management Board Management Board
(LASMO Representative) (UTPH Representative)
By /S/ IAN D. BROWN By /S/ WILLIAM M. KRIPS
Ian D. Brown William M. Krips
Management Board Chairman of the
(LASMO Representative) Management Board
(UTPH Representative)
By /S/ ANDREW E. CROUCH By /S/ ARTHUR W. PEABODY, JR.
Andrew E. Crouch Arthur W. Peabody, Jr.
Management Board Management Board
(LASMO Representative) (UTPH Representative)
<PAGE>
INDEX TO EXHIBITS
Sequential
Numbered
Exhibit Number Page
The following documents are included as Exhibits to this Report.
Unless it has been indicated that a document listed below is
incorporated by reference herein, copies of the document have been
filed herewith.
(2)-1- Merger Agreement, dated May 22, 1984, and Amendment
Agreements thereto, dated June 8, 1984 and June 12,
1984 (incorporated by reference to Annex A to the
Prospectus/Proxy Statement included in the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(2)-2- Agreement of Merger, dated as of August 28, 1984
(incorporated by reference to Annex B to the
Prospectus/Proxy Statement included in the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(2)-3- Divestiture Agreement, dated June 20, 1984 (filed
as Exhibit 2.3 to the Company's Registration
Statement on Form S-14 (No. 2-93037)).*
(3)-1- Amended and Restated Agreement of General
Partnership of Unimar Company dated September 11,
1990 between Unistar, Inc. and Ultrastar, Inc.
(filed as Exhibit (3)-4- to the Company's 1990 Form
10-K (No. 18791)).*
(4)-1- Form of Indenture between Unimar and Irving Trust
Company, as Trustee (filed as Exhibit 4 to the
Company's Registration Statement on Form S-14 (No.
2-93037)).*
(4)-2- First Supplemental Indenture, dated as of October
31, 1986, to the Indenture between Unimar and
Irving Trust Co., as Trustee (Exhibit (4)-1 above)
(Filed as Exhibit 10.114 to Union Texas Petroleum
Holdings, Inc.'s Registration Statement on Form S-1
(No. 33-16267)).*
(10)-1- Joint Venture Agreement, dated August 8, 1968,
among Roy M. Huffington, Inc., Virginia
International Company, Austral Petroleum Gas
Corporation, Golden Eagle Indonesia, Limited, and
Union Texas Far East Corporation, as amended (filed
as Exhibit 6.6 to Registration Statement No. 2-
58834 of Alaska Interstate Company).*
* Incorporated herein by reference.
(10)-2- Agreement dated as of October 1, 1979, among the
parties to the Joint Venture Agreement referred to
in Exhibit (10)-1- above (filed as Exhibit 5.2 to
Registration Statement No. 2-66661 of Alaska
Interstate Company).*
(10)-3- Amendment to the Operating Agreement dated April 1,
1990, between Roy M. Huffington, Inc., a Delaware
corporation, Ultramar Indonesia Limited, a Bermuda
corporation, Virginia Indonesia Company, a Delaware
corporation, Virginia International Company, a
Delaware corporation, Union Texas East Kalimantan
Limited, a Bahamian corporation, and Universe Gas &
Oil Company, Inc., a Liberian corporation. (filed
as Exhibit (10)-3- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-4- Amended and Restated Production Sharing Contract
dated April 23, 1990 (effective August 8, 1968 -
August 7, 1998) by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Roy M. Huffington, Inc., Virginia International
Company, Virginia Indonesia Company, Ultramar
Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation. (filed as Exhibit (10)-4-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-5- Production Sharing Contract dated April 23, 1990
(effective August 8, 1998 - August 7, 2018) between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(Pertamina) and Roy M. Huffington, Inc., Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc. and Huffington Corporation. (filed as Exhibit
(10)-5- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-6- Nilam Unit Agreement, effective as of January 1,
1980, to establish the manner in which the Joint
Venture and Total will cooperate to develop the
unitized area of the Nilam Field. (filed as Exhibit
(10-58- to the Company's 1991 Form 10-K (No. 1-
8791)).*
(10)-7- Fourth Amended and Restated Implementation
Procedures for Crude Oil Liftings, effective as of
July 1, 1993, among Virginia Indonesia Company,
LASMO Sanga Sanga Limited, Opicoil Houston, Inc.,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company.
* Incorporated herein by reference.
(10)-8- Amended and Restated 1973 LNG Sales Contract, dated
as of the 1st day of January 1990, by and between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Kyushu Electric
Power Co., Inc., Nippon Steel Corporation, Osaka
Gas Co., Ltd. and Toho Gas Co., Ltd., as Buyers.
(filed as Exhibit (10)-8- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-9- Amendment to the 1973 LNG Sales Contract dated as
of the 3rd day of December, 1973, amended by
Amendment No. 1 dated as of the 31st day of August,
1976, and amended and restated as of the 1st day of
January, 1990 ("1973 LNG Sales Contract"), is
entered into as of the 1st day of June, 1992, by
and between Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, a state enterprise of the Republic of
Indonesia (Seller), on the one hand, and Kyushu
Electric Power Co., Inc. (Kyushu Electric), Nippon
Steel Corporation (Nippon Steel), and Toho Gas Co.,
Ltd. (Toho Gas), all corporations organized and
existing under the laws of Japan, on the other
hand. (filed as Exhibit (10)-9- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-10- Amended and Restated Supply Agreement (In Support
of the Amended and Restated 1973 LNG Sales
Contract) 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 September 22, 1993,
effective December 3, 1973. (filed as Exhibit (10)-
10- to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-11- Amended and Restated Badak LNG Sales Contract,
dated as of the 1st day of January, 1990, by and
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller, and Chubu Electric Power Co.,
Inc., The Kansai Electric Power Co., Inc., Osaka
Gas Co., Ltd. and Toho Gas Co., Ltd., as Buyers.
(filed as Exhibit (10)-11- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-12- Supply Agreement, dated as of April 14, 1981
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina) and the parties to the Joint
Venture Agreement, including the Company. (filed as
Exhibit (10)-12- to the Company's 1993 Form 10-K
(No. 1-8791)).*
* Incorporated herein by reference.
(10)-13- Seventh Supply Agreement for Excess Sales
(Additional Fixed Quantities under Badak LNG Sales
Contract as a Result of Contract Amendment and
Restatement) between Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara and Virginia Indonesia Company,
Opicoil Houston, Inc., Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc. and Virginia International
Company, dated September 28, 1992, but effective as
of January 1, 1990. (filed as Exhibit (10)-13- to
the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-14- Bontang II Trustee and Paying Agent Agreement
Amended and Restated as of July 15, 1991 among
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Virginia International
Company, Union Texas East Kalimantan Limited,
Ultramar Indonesia Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd.
and Continental Bank International. (filed as
Exhibit (10)-14- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-15- Producers Agreement No. 2 dated as of June 9, 1987
by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), Roy M. Huffington, Inc.,
Virginia International Company, Ultramar Indonesia
Limited, Virginia Indonesia Company, Union Texas
East Kalimantan Limited, Universe Tankships, Inc.,
Huffington Corporation in favor of The Industrial
Bank of Japan Trust Company as Agent (filed as
Exhibit (10)-30- to the Company's 1987 Form 10-K
(No. 1-8791)).*
(10)-16- Badak III LNG Sales Contract between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
as Seller and Chinese Petroleum Corporation as
Buyer signed on March 19, 1987.
(10)-17- Badak III LNG Sales Contract Supply Agreement,
dated October 19, 1987 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and the parties to the Joint Venture Agreement.
(filed as Exhibit (10)-17- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-18- LNG Sales and Purchase Contract (Korea II)
effective May 7, 1991 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Korea
Gas Corporation. (filed as Exhibit (10)-18- to the
Company's 1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-19- Schedule A to the LNG Sales and Purchase Contract
(Korea II FOB) between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Korea Gas
Corporation. (filed as Exhibit (10)-19- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-20- Bontang III Producers Agreement, dated February 9,
1988, among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara (Pertamina) and the parties to the
Joint Venture Agreement. (filed as Exhibit (10)-20-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-21- Amendment No. 1 to Bontang III Producers Agreement
dated as of May 31, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and Train-E Finance Co., Ltd., as
Tranche A Lender, The Industrial Bank of Japan
Trust Company, as Agent and The Industrial Bank of
Japan Trust Company on behalf of the Tranche B
Lenders. (filed as Exhibit (10)-21- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-22- Amendment No. 2 to Producers Agreement No. 2 dated
as of May 31, 1988 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, Roy M. Huffington,
Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited and Universe Tankships, Inc.
(filed as Exhibit (10)-44- to the Company's 1988
Form 10-K (No. 1-8791)).*
(10)-23- $316,000,000 Bontang III Loan Agreement dated
February 9, 1988 among Continental Bank
International as Trustee, Train-E Finance Co., Ltd.
as Tranche A Lender and The Industrial Bank of
Japan Trust Company as Agent. (filed as Exhibit
(10)-23- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.
(10)-24- Bontang III Trustee and Paying Agent Agreement,
dated February 9, 1988, among Pertamina, Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, VICO, Ultrastar Indonesia
Limited, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Total Indonesia, Unocal
Indonesia, Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International (filed as Exhibit
10.42 to the Union Texas Petroleum Holdings, Inc.'s
1991 Form 10-K (Commission File No. 1-9019)).*
(10)-25- Amendment No. 1 to Bontang III Trustee and Paying
Agent Agreement, dated as of December 11, 1992,
among Pertamina, VICO, Virginia International
Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Opicoil Houston, Inc.,
Universe Gas & Oil Company, Inc., Total Indonesia,
Unocal Indonesia Ltd., Indonesia Petroleum, Ltd.
and Continental Bank International, as Bontang III
Trustee (Filed as Exhibit 10.83 to the Union Texas
Petroleum Holdings, Inc.'s 1992 Form 10-K
(Commission File No. 1-9019)).*
(10)-26- Amended and Restated Debt Service Allocation
Agreement dated February 9, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Roy M.
Huffington, Inc., Virginia International Company,
Ultramar Indonesia Limited, Virginia Indonesia
Company, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., Huffington Corporation,
Total Indonesie, Unocal Indonesia, Ltd. and
Indonesia Petroleum, Ltd.
(10)-27- Letter agreement between Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara and Chinese Petroleum
Corporation, dated December 1, 1989. (filed as
Exhibit (10)-27- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-28- Badak IV LNG Sales Contract dated October 23, 1990
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina), as Seller and Osaka Gas Co.,
Ltd., Tokyo Gas Co., Ltd. and Toho Gas Co., Ltd.,
as Buyers. (filed as Exhibit (10)-29- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-29- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Hiroshima Gas Co., Ltd. and
Nippon Gas Co., Ltd., as Buyers. (filed as Exhibit
(10)-30- to the Company's 1993 Form 10-K (No. 1-
8791)).*
* Incorporated herein by reference.
(10)-30- LNG Sales Contract dated as of October 13, 1992
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, as Seller and Osaka Gas Co., Ltd., as
Buyer. (filed as Exhibit (10)-31- to the Company's
1993 Form 10-K (No. 1-8791)).*
(10)-31- Supply Agreement for Natural Gas to Badak IV LNG
Sales Contract dated August 12, 1991 between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
Virginia Indonesia Company, Opicoil Houston, Inc.,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc. and Virginia International Company. (filed as
Exhibit (10)-32- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-32- Second Supply Agreement for Package IV Excess Sales
(Osaka Gas Contract - Package IV Quantities)
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 September 22, 1993, effective January
1, 1991. (filed as Exhibit (10)-33- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-33- Third Supply Agreement for Package IV Excess Sales
(Toho Gas Contract - Package IV Quantities) 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 September 28, effective January 1, 1991.
(filed as Exhibit (10)-34- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-34- Eleventh Supply Agreement for Package IV Excess
Sales (1973 Contract Build-Down Quantities) 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 September 22, 1993, effective January 1,
1990. (filed as Exhibit (10)-35- to the Company's
1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-35- Bontang IV Producers Agreement dated August 26,
1991 by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, Virginia Indonesia Company, Opicoil
Houston, Inc., Virginia International Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company,
Inc., Total Indonesie, Unocal Indonesia, Ltd. and
Indonesia Petroleum, Ltd., in favor of The Chase
Manhattan Bank, N.A. as Agent for the Lenders.
(filed as Exhibit (10)-36- to the Company's 1993
Form 10-K (No. 1-8791)).*
(10)-36- $750,000,000 Bontang IV Loan Agreement dated August
26, 1991 among Continental Bank International as
Trustee under the Bontang IV Trustee and Paying
Agent Agreement as Borrower, Chase Manhattan Asia
Limited and The Mitsubishi Bank, Limited as
Coordinators, the other banks and financial
institutions named herein as Arrangers, Co-
Arrangers, Lead Managers, Managers, Co-Managers and
Lenders, The Chase Manhattan Bank, N.A. and the
Mitsubishi Bank, Limited as Co-Agents and The Chase
Manhattan Bank, N.A. as Agent. (filed as Exhibit
(10)-37- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-37- Bontang IV Trustee and Paying Agent Agreement dated
August 26, 1991 among Perusahaan Pertambangan
Minyak Dan Gas Bumi Negara, Virginia Indonesia
Company, Opicoil Houston, Inc., Virginia
International Company, Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas &
Oil Company, Inc., Total Indonesie, Unocal
Indonesia, Ltd., Indonesia Petroleum, Ltd. and
Continental Bank International. (filed as Exhibit
(10)-38- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-38- Amended and Restated Bontang Processing Agreement
dated February 9, 1988 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara and Roy M.
Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company,
Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Tankships, Inc., Total
Indonesie, Unocal Indonesia, Ltd., Indonesia
Petroleum, Ltd. and P.T. Badak Natural Gas
Liquefaction Company (filed as Exhibit (10)-39- to
the Company's 1988 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-39- Bontang Capital Projects Loan Agreement No. 2 dated
June 9, 1987, among Continental Bank International,
as Trustee under the Badak Trustee and Paying Agent
Agreement (Borrower), the banks named therein as
Lead Managers and Lenders and The Industrial Bank
of Japan Trust Company (Agent) (filed as Exhibit
(10)-31 to the Company's 1987 Form 10-K (No. 1-
8791)).*
(10)-40- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and National Federation of Agricultural
Co-Operative Associations (Zen-Noh), as Buyer,
dated February 21, 1992. (filed as Exhibit (10)-42-
to the Company's 1993 Form 10-K (No. 1-8791)).*
(10)-41- Bontang LPG Sales and Purchase Contract between
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
as Seller, and Japan Indonesia Oil Co., Ltd., as
Buyer, dated February 20, 1992. (filed as Exhibit
(10)-43- to the Company's 1993 Form 10-K (No. 1-
8791)).*
(10)-42- Arun and Bontang LPG Sales and Purchase Contract
between Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara (Pertamina) as Seller and Mitsubishi
Corporation, Cosmo Oil Co., Ltd., Nippon Petroleum
Gas Co., Ltd., Showa Shell Sekiyu K.K., Kyodo Oil
Co., Ltd., Idemitsu Kosan Co., Ltd. and Mitsui
Liquefied Gas Co., Ltd. as Buyers dated July 15,
1986.
(10)-43- Amendments to Arun and Bontang LPG Sales and
Purchase Contract, dated October 5, 1994, between
Pertamina, as Seller, and Mitsubishi Corporation,
Cosmo Oil Co., Ltd., Nippon Petroleum Gas Co.,
Ltd., Showa Shell Sekiyu K.K., Japan Energy
Corporation, Idemitsu Kosan Co., Ltd., and Mitsui
Oil & Gas Co., Ltd., as Buyers. (filed as Exhibit
10.88 to the Union Texas Petroleum Holdings, Inc.'s
1994 Form 10-K (Commission File No. 1-9019)).*
(10)-44- Bontang LPG Supply Agreement, dated November 17,
1987, between Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara (Pertamina) and the parties to the
Joint Venture Agreement. (filed as Exhibit (10)-45-
to the Company's 1993 Form 10-K (No. 1-8791)).*
* Incorporated herein by reference.
(10)-45- Advance Payment Agreement between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara (Pertamina)
and Arun Bontang Project Finance Co., Ltd., dated
February 16, 1987 (filed as Exhibit (4)-15- to the
Company's 1986 Form 10-K (No. 1-8791)).*
(10)-46- Agreement and Plan of Reorganization of ENSTAR
Corporation, dated December 22, 1989, by and among
Unimar Company, Ultrastar, Inc., Unistar, Inc.,
ENSTAR Corporation, Newstar Inc., Union Texas
Development Corporation, Union Texas Petroleum
Corporation and Ultramar America Limited. (filed as
Exhibit (10)-47- to the Company's 1993 Form 10-K
(No. 1-8791)).*
(10)-47- Amendment to Agreement and Plan of Reorganization
of ENSTAR Corporation, dated May 1, 1990, by and
among Unimar Company, Ultrastar, Inc., Unistar,
Inc., ENSTAR Corporation, Ultramar Production
Company, Union Texas Development Corporation, Union
Texas Petroleum Corporation and Ultramar America
Limited. (filed as Exhibit (10)-48- to the
Company's 1993 Form 10-K (No. 1-8791)).*
(10)-48- Addendum to Badak IV LNG Sales Contract Supply
Agreement (effective October 23, 1990), dated
January 31, 1994, by and between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") 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.
(10)-49- Memorandum of Agreement for Purchase and Sale of
LNG During 1995 - 1999 between Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara
("Pertamina") ("Seller") and Korea Gas Corporation
("KGC") ("Buyer") for the sale and purchase of
certain quantities of LNG.
(21)-1- List of Subsidiaries of the Company.
(23)-1- Consent of Ernst & Young LLP.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the
last quarter of the fiscal year ended December 31,
1994.
* Incorporated herein by reference.
BADAK III LNG SALES CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
CHINESE PETROLEUM CORPORATION
AS BUYER
<PAGE>
BADAK III LNG SALES CONTRACT
THIS CONTRACT, dated as of the 19th day of March, 1987, is
made by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI
NEGARA, a State Enterprise of the Republic of Indonesia, on the one
hand, and CHINESE PETROLEUM CORPORATION, a corporation organized
under the laws of the Republic of China, on the other hand.
In consideration of the mutual agreements contained herein,
Buyer and Seller hereby agree as follows:
ARTICLE 1 - DEFINITIONS
The terms or expressions set forth below shall have the
following meanings when used in this Contract, and, where the
context so requires or permits, words importing the plural meaning
shall include the singular meaning and vice versa:
Actual Cubic Foot
A volume equal to the volume of a cube the edge of which is
one (1) foot.
Additional LNG
As defined in Section 7.6(a).
Additional LNG Quantity Deficiency
As defined in Section 7.3(a).
Advance Make-Good
As defined in Section 7.3(d)(iii)(A).
Affiliate
As used with respect to a party hereto or one of Seller's
Suppliers, a company or other entity which controls, is controlled
by or is under common control with such party or Seller's Supplier.
Aggregate Quantity Deficiency
As defined in Section 7.3(a).
Allowed Laytime
As defined in Section 4.4(b).
Annual Program
A program or revision thereof issued by Seller pursuant to
Section 12.3, setting forth a schedule of deliveries of cargoes of
LNG for sale under this Contract for a Fixed Quantity Period.
Annual Quantity Deficiency
As defined in Section 7.3(a).
Badak Facility
The liquefaction plant facility located at Bontang, East
Kalimantan, Indonesia, including four (4) liquefaction trains
heretofore constructed, one (1) additional train to be constructed,
storage, loading and related facilities and the Natural Gas
transmission pipelines from the gas fields to the said liquefaction
plant, together with all future expansions and additions to the
said liquefaction plant and its related facilities.
Badak III Trade
The sale, delivery and purchase of LNG pursuant to this
Contract.
British Thermal Unit (BTU)
The amount of heat required to raise the temperature of one
(1) avoirdupois pound of pure water from fifty-nine (59) degrees
Fahrenheit to sixty (60) degrees Fahrenheit at an absolute pressure
of 14.696 pounds per square inch.
Build-up Allowances
As defined in Section 7.2(b).
Build-up Period
The period commencing with January 1, 1990 and ending on
December 31, 1991 unless, because of an event of force majeure as
defined in Article 15, Start-up does not occur until after January
1, 1990, in which event the period shall commence on Start-up and
end on the later of:
(i) March 31, 1992 or twenty-four (24) months from
the end of the month in which Start-up occurs,
whichever is earlier, or
(ii) Twelve (12) months from the end of the month in
which Start-up occurs.
Business Day in the R.0.C.
Every day other than Saturdays, Sundays and national holidays
in the R.0.C. (including compensatory days).
Buyer
Chinese Petroleum Corporation, a corporation organized under
the laws of the R.0.C., or the successor in interest of such
corporation, or the permitted assignee of such corporation or such
successor in interest.
Certificate
As defined in Section 3.2(a).
Commercial Interest Rate
As defined in Section 10.3(c).
Committed Recovery Quantity
A Quantity of LNG containing 3,053 billion BTU's which shall
constitute an increase in the Fixed Quantity for each Fixed
Quantity Period during a Force Majeure Recovery Period.
Contract
This Badak III LNG Sales Contract, including Schedule A
hereto, as it may from time to time be amended, modified, varied or
supplemented in accordance with the terms hereof.
Contract Sales Price
As defined in Section 8.2(a).
Coordinated Maintenance Schedule
As defined in Section 12.2.
Cubic Meter
A volume equal to the volume of a cube the edge of which is
one (1) meter.
Dedicated Vessel
A new-built LNG tanker with a cargo tank volume of
approximately 135,000 cubic meters, with a discharge capacity of a
full cargo in twelve (12) hours and having a design consistent with
the requirements of Sections 5.1 and 5.4., which will be used for
purposes of transporting LNG under this Contract.
Deliver Point
The point at the Unloading Port at which the flange coupling
of the LNG discharging manifold onboard an LNG Tanker joins the
flange coupling of Buyer's unloading line.
Estimated Time of Arrival (ETA)
As defined in Section 4.2(a)(i).
Excess Laytime
As defined in Section 4.4(c).
Fixed Quantity
As defined in Section 7.2(a).
Fixed Quantity Period
Each calendar year commencing with 1990 and extending for a
period of twenty (20) years through 2009.
Force Majeure Deficiency
As defined in Section 7.4.
Force Majeure Recovery Period
As used in Section 7.4.
Gas Supply Area
The production sharing contract areas in East Kalimantan,
Indonesia of Seller's Suppliers as at the date hereof.
GPA
Gas Processors Association
Gross Heating Value
The quantity of heat, expressed in British Thermal Units,
produced by the complete combustion in air of one (1) cubic foot of
anhydrous Natural Gas, at a temperature of sixty (60) degrees
Fahrenheit and an absolute pressure of 14.696 pounds per square
inch, with the air at the same temperature and pressure as the
Natural Gas, after cooling the products of the combustion to the
initial temperature of the Natural Gas and air, and after
condensation of the water formed by combustion.
Implementation Procedure
As defined in Article 24.
Initial Contract Sales Price
As defined in Section 8.1.
Joint Coordinating Committee
As defined in Article 18.
Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its boiling point
and at a pressure of approximately one (1) atmosphere.
LNG Tanker
The Dedicated Vessel or any Substitute LNG Tanker.
Loading Port
The port located at the Badak Facility.
Make-Good
As used in Article 7 to mean, fulfillment by Buyer of its
obligation to restore Plateau Allowances under any of subsections
(A) (B) or (C) of Section 7.3(d)(iii) or Section 7.7 as may be
applicable.
Make-Up
As used in Sections 7.4, 7.5 and 7.7.
MMBTU
One million BTU's.
Natural Gas
Any hydrocarbon or mixture of hydrocarbons, consisting
essentially of methane, other hydrocarbons, and noncombustible
gases in a gaseous state, which is extracted from the subsurface of
the earth in its natural state, separately or together with liquid
hydrocarbons.
Natural Gas Facilities
The facilities for the production, recovery, treatment and
compression of Natural Gas in the Gas Supply Area and for the
transmission thereof to the Badak Facility.
Ninety-Day Schedule
As defined in Section 12.4.
Notice of Readiness
As defined in Section 4.4(a).
Plateau Allowance
As defined in Section 7.3(d).
Plateau Allowance Restoration Period
As defined in Section 7.3(d)(i).
Plateau Period
The period commencing on the day following the termination of
the Build-up Period and extending through the last Fixed Quantity
Period.
Port Charges
All charges of whatsoever nature (including rates, tolls and
dues of every description) in respect of an LNG Tanker entering,
using or leaving a port, including charges made in respect of
marking and lighting the port and charges in respect of work
performed, services rendered or facilities provided.
Proved Remaining Recoverable Reserves
The amount of recoverable reserves of Natural Gas which have
been proved to a high degree of certainty by reason of actual
completion, successful testing or in certain cases by adequate core
analyses and which are defined already by reasonable geological
interpretation of structures and known continuity of oil or gas-
saturated material.
Quarterly Quantity Deficiency
As defined in Section 7.3(b).
Quarterly Quantity Requirement
As defined in Section 7.3(b).
Receiving Facility
As defined in Section 5.1.
R.0.C.
The Republic of China.
Round-up Quantity Deficiency
As defined in Section 7.3(a).
Round-up Request
As defined in Section 7.3(a)(iii).
Seller
Perusahaan Pertambangan Minyak dan Gas Bumi Negara
(Pertamina), a State Enterprise of the Republic of Indonesia, or
the successor in interest of such enterprise, or the permitted
assignee of such enterprise or such successor in interest.
Seller's Gas Supply Obligation
From time to time and at any time throughout the term of this
Contract the amount of Natural Gas prudently required (including
without limitation such amount as may be required in connection
with the production, transmission, liquefaction, transfer to an LNG
carrier, shipping and delivery including LNG required as boil-off)
to satisfy all the obligations of Seller at any such time to supply
LNG or Natural Gas from the Gas Supply Area, plus the amount of
Natural Gas from the Gas Supply Area, prudently required to supply
any additional commitment or commitments which Seller anticipates
making.
Seller's Suppliers
Virginia Indonesia Company, Virginia International Company,
Roy M. Huffington, Inc., Huffington Corporation, Ultramar Indonesia
Limited, Union Texas East Kalimantan Limited and Universe
Tankships, Inc. (collectively, the "Huffco Group"), Total
Indonesie, Indonesia Petroleum, Ltd. and Unocal Indonesia, Ltd.,
and any successors or assignees of the aforesaid suppliers and any
other companies or entities having obligations at any time or times
during the term of this Contract for the supply to the Seller of
Natural Gas for sale as LNG hereunder.
Seller's Transporters
The owners (including owners' operators) of the Dedicated
Vessel and each Substitute LNG Tanker.
Standard Cubic Foot (scf)
The quantity of Natural Gas, free of water vapor, occupying a
volume of one (1) Actual Cubic Foot at a temperature of sixty (60)
degrees Fahrenheit and at an absolute pressure of 4.696 pounds per
square inch.
Start-up
The first date on which Buyer is able to receive and Seller is
able to deliver LNG at the Receiving Facility on a continuing basis
so as to be in a position to perform their respective obligations
to purchase and receive and to sell and deliver LNG under this
Contract.
Substitute LNG Tanker
Any LNG tanker having a design consistent with the
requirements of Sections 5.1 and 5.4 used or scheduled to be used
by Seller for transporting LNG under this Contract, either in place
of or in addition to the Dedicated Vessel.
Taxes
As defined in Section 14.1.
Unloading Port
The port at Hsin-Ta, near Kaohsiung, Taiwan, R.0.C., where the
Receiving Facility is located.
Used Laytime
As defined in Section 4.4(a).
<PAGE>
ARTICLE 2 - SALE AND PURCHASE
Seller agrees to sell and to deliver at the liver Point, and
Buyer agrees to purchase, receive and pay for, and to pay for if
not taken, LNG in the quantities, at the price and in accordance
with the other terms and conditions set forth in this Contract.
<PAGE>
ARTICLE 3 - SOURCES OF SUPPLY
3.1 Sources of Supply
The Natural Gas to be processed into LNG and sold and
delivered hereunder is to be produced from the Gas Supply Area.
Seller has and will maintain throughout the term of this Contract
the right and ability to perform its obligations under this
Contract to sell and deliver all quantities of LNG to be sold and
delivered hereunder. Notwithstanding any reference to Seller's
Suppliers in this Contract, Seller is fully responsible for
performance of all the obligations of Seller hereunder and no
contractual default of any of Seller's Suppliers shall excuse
Seller from its full responsibility hereunder.
3.2 Reserves of Natural Gas
(a)Seller has furnished Buyer with a statement or statements,
each entitled a "Certificate", of an independent petroleum
engineering consultant firm of recognized standing in the petroleum
industry expressing that firm's estimate of Proved Remaining
Recoverable Reserves of Natural Gas in the Gas Supply Area. Seller
represents that such estimated quantity is in excess of Seller's
Gas Supply Obligation as of the date of this Contract. Hereafter
and throughout the term and any extension of this Contract, before
committing additional Natural Gas from the Gas Supply Area to sale
or other utilization, Seller shall secure from an independent
petroleum engineering consultant firm of recognized standing in the
petroleum industry qualified by reputation and experience in
estimating reserves f oil and natural gas in subsurface
reservoirs,the written statement (the "Certificate") of such firm
expressing its estimate of Proved Remaining Recoverable Reserves of
Natural Gas in the Gas Supply Area in an amount at least equal to
Seller's Gas Supply Obligation. Seller shall furnish to Buyer a
copy of each Certificate of such independent petroleum engineering
consultant firm on which Seller relies in making any such
commitment for supply of Natural Gas from the Gas Supply Area.
Seller shall also furnish all supporting documentation provided by
such independent petroleum engineering consultant firm in
connection with the issuance of such Certificate.
(b) If during the term of this Contract Seller obtains
information which indicates unforeseen adverse changes in the
Proved Remaining Recoverable Reserves of Natural Gas in the Gas
Supply Area, Seller shall promptly inform Buyer of such situation
and shall further inform Buyer of any measures which Seller may be
required to take in fulfillment of its obligations under this
Contract.
<PAGE>
ARTICLE 4 - TRANSPORTATION AND UNLOADING
4.1 Transportation
(a) At no cost to Buyer except as otherwise provided
herein, Seller shall be responsible for the transportation from the
Badak Facility to the Receiving Facility of the LNG to be sold and
delivered hereunder, using, subject to Section 4.1(b), either the
Dedicated Vessel or Substitute LNG Tankers.
(b) Seller may use any spare capacity of the
Dedicated Vessel for purposes other than transporting LNG under
this Contract and (in addition to using Substitute LNG Tankers when
the Dedicated Vessel is not available) may schedule the use of a
Substitute LNG Tanker to make deliveries hereunder to the extent
necessary to make the best use of such spare capacity.
(c) Seller shall cause the LNG Tankers to comply
with the regulations of, and to obtain all marine permits required
by, the R.0.C. and other relevant authorities respecting the
operation of LNG Tankers. Buyer shall provide Seller with advice
on a timely basis as to the requirements of R.0.C. regulations and
shall use its best efforts to assist compliance therewith. Buyer
shall reimburse to Seller any and all costs, including costs of
modification required to be made to LNG Tankers, which are incurred
by Seller as a result of the requirements of any governmental
authority in the R.0.C. which differ from standard international
maritime safety or other requirements, such as those established by
the International Maritime Organization, the U.S. Coast Guard, the
Japanese Maritime Agency or internationally recognized vessel
classification societies. Seller agrees to limit such
modifications to the extent strictly needed to comply with R.0.C.
requirements and/or its obligations hereunder and will consult with
Buyer before carrying out such modifications. Seller further
agrees to refund any money paid to it under this Section 4.1(c) if
the aforesaid international maritime requirements are subsequently
changed so that they require the same modifications as were
required by R.0.C. authorities.
4.2 Notices of LNG Tanker Movements and Characteristics
of LNG Cargoes
a) With respect to each cargo of LNG to be delivered
hereunder, Seller shall give or shall cause the master of the LNG
Tanker delivering the same to give to Buyer at the Receiving
Facility the following notices:
(i) a first notice, which shall be sent upon
the departure of the LNG Tanker from the
Loading Port and which shall set forth the
time and date that loading was completed,
the volume, expressed in Cubic Meters, of
LNG loaded on board the LNG Tanker and the
estimated time of arrival of the LNG Tanker
at the sea buoy of the Unloading Port
("Estimated Time of Arrival" or "ETA");
(ii) a second notice, which shall be sent forty-
eight (48) hours prior to the ETA;
(iii) a third notice, which shall be sent twenty-
four (24) hours prior to the ETA;
(iv) a final notice, which shall be sent five
(5) hours prior to the ETA.
The notices referred to in clauses (i) and (ii) above shall be sent
by telex or, if necessary, by radio. The notices referred to in
clauses (iii) and (iv) above shall, if possible, be sent by both
telex and radio.
(b) Within thirty-six (36) hours after departure of an
LNG Tanker from the Loading Port Seller shall notify Buyer, for
Buyer's information only, of the following characteristics of the
LNG comprising its cargo as determined at the time of loading:
(i) the Gross Heating Value per Standard Cubic Foot;
(ii) the molecular percentage of hydrocarbon
components and nitrogen; and
(iii) average temperature.
4.3 Obligations at Unloading Port
(a) Buyer shall provide a safe berth at the
Receiving Facility complying with the standards set forth in
Section 5.1. Buyer shall operate the Receiving Facility so as to
permit discharge of LNG cargoes as quickly as reasonably possible
and shall cooperate with Seller or Seller's Transporters, their
agents and the masters of LNG Tankers to ensure the timely and
efficient delivery of LNG hereunder. During discharge of each
cargo of LNG, Buyer shall return to the LNG Tanker Natural Gas in
such quantities as are necessary for the safe unloading of the LNG
Tanker at such rates, pressures and temperatures as may be required
by the LNG Tanker's design and commonly accepted operating practice
for such LNG Tanker. The LNG to be sold and delivered hereunder
shall be unloaded through manifold strainers of sixty (60) mesh (or
such other mesh as shall be agreed from time to time by the
parties).
(b) Buyer shall cause to be made available at the
Unloading Port such tugs, fireboats, pilots and other services as
are necessary for the purposes of safety and efficiency and are
required by R.0.C. authorities.
(c) Seller shall pay, or shall cause Seller's
Transporter to pay, all Port Charges in respect of LNG Tankers at
the Unloading Port promptly when due, provided that Buyer shall
reimburse to Seller the amount (if any) by which such Port Charges
exceed the average of those generally payable for vessels of the
same type and size in LNG unloading ports in Japan.
4.4 Demurrage at Unloading Port
(a) Upon the arrival of an LNG Tanker at the
Unloading Port (or off the Unloading Port if such LNG Tanker is
prohibited from approaching or entering the Unloading Port by
applicable safety regulations) the master of the LNG Tanker or its
agent shall give notice to Buyer, or Buyer's agent, by telegraph,
radio or telephone that such LNG Tanker is ready to discharge LNG,
berth or no berth ("Notice of Readiness"). A Notice of Readiness
may be tendered on any day of the week or any hour of the day.
Laytime used in unloading an LNG Tanker ("Used Laytime") shall
begin to count upon the earlier of (i) four (4) hours from Notice
of Readiness, except where such Notice of Readiness is given when
the LNG Tanker is prevented from berthing because of night berthing
restrictions, in which case it shall begin to count from four (4)
hours after the sunrise following such Notice of Readiness, or
(ii) the LNG Tanker's being "all fast" in berth. Used Laytime
shall continue to run until discharge and return lines have been
disconnected and the LNG Tanker is cleared for departure.
(b) Allowed Laytime at the Unloading Port shall be
twenty-four (24) consecutive hours extended by any period of delay
which is caused by:
(i) reasons attributable to Seller, the LNG
Tanker or its master, crew, owner or
operator, including but not limited to
delays in departure due to quarantine, port
regulation or documentary clearance to the
extent so attributable;
(ii) prevention or delay in the LNG Tanker's
attaining its full design discharge rate
because of the condition of the cargo;
(iii) force majeure as defined in Article 15;
(iv) prevention of berthing or interruption of
discharge because of bad weather;
(v) occupancy of the berth by another vessel if the
LNG Tanker arrives more than one (1) day after the
delivery date scheduled in the most recent Ninety-Day
Schedule without the consent of Buyer; provided that 1
such period of extension shall be equal to the lesser of
(A) twenty-four (24) hours, or (B) the time elapsed
between Notice of Readiness and the departure from the
berth of such other vessel; or
(vi) arrival of the LNG Tanker before the delivery date
scheduled in the most recent Ninety-Day Schedule without
the consent of the Buyer; provided that such period of
extension shall be equal to the time elapsed (if any)
between commencement of Used Laytime and the earlier of
(A) 00:00 hours on the scheduled delivery date, or (B)
completion of berthing.
(c) In the event Used Laytime exceeds Allowed Laytime
(such excess being herein referred to as "Excess Laytime"), Buyer
shall pay to Seller, or for Seller's account if so directed by
Seller, demurrage at a rate per day (reduced pro rata for each
partial day) determined in accordance with the following formula:
Demurrage rate = FQ x PT
365
Where:
FQ = Fixed Quantity for the Fixed Quantity Period in
which the demurrage occurs
PT = the adjusted Transportation Related Component as
calculated pursuant to Section 8.2(c) as of the
date demurrage is incurred;
provided, however, that no demurrage shall be payable under this
Section 4.4 in respect of any calendar quarter in which the
aggregate of Excess Laytime for all deliveries to the Receiving
Facility hereunder during such quarter is less than eighteen (18)
hours. Seller shall invoice Buyer for demurrage amounts due under
this Section 4.4 at the end of each calendar quarter, and Buyer
shall pay such invoices in accordance with the terms of Article 10.
4.5 Effect of Unloading Port Delays
(a) Notwithstanding the terms of Section 11.1, to the
extent that the Gross Heating Value of LNG to be delivered
hereunder is higher than the limits set forth in Section 11.1 by
reason of boil-off occurring during a delay in the unloading of an
LNG Tanker of more than forty-eight (48) hours after Notice of
Readiness has been given, such LNG shall be deemed to have met the
quality specifications of this Contract regarding Gross Heating
Value.
(b) For each hour beyond thirty (30) hours from
Notice, of Readiness that the commencement of unloading of an LNG
Tanker is delayed, other than as a result of an event described in
Section 4.4(b)(i), (ii), (iii), (v) or (vi), Buyer shall pay Seller
an amount on account of excess boil-off calculated by multiplying
the Contract Sales Price by the number of MMBTU's contained in the
hourly LNG boil-off rate of such LNG Tanker. Such hourly LNG boil-
off rate shall be expressed in cubic meters and shall be determined
by recent normal operating experience or, in the absence thereof,
shall be the design boil-off rate of such LNG Tanker. For the
purpose of determining BTU content, the boil-off quantity will be
deemed composed of a mixture of methane and nitrogen to be
determined according to a mutually agreed procedure. Seller shall
invoice Buyer for amounts due under this Section 4.5(b), and Buyer
shall pay such invoiced amount as a cargo invoice in accordance
with Article 10.
<PAGE>
ARTICLE 5 - ON-SHORE FACILITIES OF BUYER AND SELLER
5.1 Buyer's Facilities
Buyer, at no cost or expense to Seller, shall construct
or cause to be constructed at Hsin-Tanear Kaohsiung, Taiwan,
R.0.C., such receiving facilities to be used by Buyer as are
necessary for the Badak III Trade and the timely performance by
Buyer of its obligations under this Contract (the "Receiving
Facility"). Such facilities shall include, without limitation, the
following:
(a) berthing facilities capable of receiving LNG
Tankers having an overall length not exceeding approximately two
hundred and ninety (290) meters, a beam not exceeding approximately
forty-six (46) meters and a draft not exceeding approximately
eleven (11) meters, which LNG Tankers can always safely reach,
fully laden, and safely depart, and at which LNG Tankers can lie
safely berthed and discharge safely afloat at all times (except
during circumstances of force majeure as defined in Article 15);
(b) unloading facilities capable of receiving LNG at
a rate which will permit the discharging of cargo from a fully
loaded LNG Tanker within twelve (12) hours of pumping time at the
full pumping rate specified by the LNG Tanker design;
(c) a vapor return line system of sufficient capacity
to transfer to an LNG Tanker quantities of Natural Gas necessary
for the safe unloading of LNG at such rates, pressures and
temperatures as may be required by the LNG Tanker design and
commonly accepted operating practice for such LNG Tanker;
(d) facilities allowing access to LNG Tankers from
onshore adequate for the handling and delivery to LNG Tankers of
ship's stores, provisions and spare parts:
(e) LNG storage tanks of adequate capacity to receive
and store a full cargo of LNG upon each scheduled arrival of an LNG
Tanker; and
(f) appropriate systems for necessary radio
communications with LNG Tankers.
5.2 Seller's Facilities
Seller, at no cost or expense to Buyer, (a) has
arranged for the use of existing Natural Gas Facilities in the Gas
Supply Area,the Badak Facility and the Loading Port, and (b) shall
construct cause to be constructed such additional Natural Gas
Facilities and such additions to the Badak Facility and the loading
Port, including without limitation one (1) additional liquefaction
train and additions to the loading facilities, as are necessary for
the Badak III Trade and the timely performance by Seller of its
obligations under this Contract.
5.3 Fuel, Liquid Nitrogen and Fresh Water
Buyer, at no cost to Seller, shall provide at the
Receiving Facility adequate systems to supply in a safe and
efficient manner the requirements of LNG Tankers for bunker fuel
oil and diesel oil and shall further arrange for the supply of the
requirements of LNG Tankers for liquid nitrogen and fresh water.
Subject to reasonable advance notice (not in any event to be less
than three (3) days) prior to arrival of an LNG Tanker, Buyer shall
at all times during the term of this Contract cause adequate
supplies of such products to meet the requirements of the LNG
Tankers to be available for sale at the Receiving Facility on the
terms and conditions generally prevailing for long-term contracts
for such items in ports in Taiwan, R.0.C. Except with respect to
requirements upon the completion of drydocking and in the case of
operational emergency, Seller will at all times throughout the term
of this Contract cause the bunker fuel and diesel requirements of
the Dedicated Vessel (and of any Substitute LNG Tanker during the
time it is in service in the Badak III Trade) to be purchased only
from Buyer or its nominee as its sole source of supply, provided
Buyer or such nominee makes available required quantities of such
products on such terms and conditions.
5.4 Compatibility of the Receiving Facility and
LNG Tankers
It is recognized that the Receiving Facility and the LNG
Tankers must be mutually compatible in order to accommodate and
allow for the safe unloading and that the LNG Tankers must be
compatible with existing at the Loading Port. To ensure such
mutual facility compatibility the parties shall exchange data in a
timely manner to meet their respective construction schedules.
<PAGE>
ARTICLE 6 - COMMENCEMENT AND DURATION OF CONTRACT
This Contract shall come into force and effect as
of and from the date hereof and shall continue in effect thereafter
until the expiration of the parties' respective obligations to sell
and purchase LNG as provided in Article 7 or the earlier
termination of this Contract pursuant to Section 15.4. If Seller
and Buyer so agree prior to December 31, 2005, the term of this
Contract may be extended on such terms and conditions as may be
mutually agreed.
<PAGE>
ARTICLE 7 - QUANTITIES
7.1 Deliveries for Testing and Cool-Down of
Receiving Facility
(a) Seller shall, during the ninety (90) day period
immediately preceding Start-up, make available for sale and
delivery to Buyer, and Buyer shall purchase and receive, up to four
(4) full cargoes of LNG for the purpose of commissioning the
Receiving Facility. Buyer shall give Seller notice of its
requirements for commissioning cargoes at least ninety (90) days
prior to the anticipated delivery date for the first of such
cargoes. Such commissioning cargoes shall be delivered on a
schedule mutually agreeable to Buyer and Seller. Buyer may reduce
the number of such commissioning cargoes with as much advance
notice to Seller as possible. Buyer may request a revision in the
agreed delivery schedule or an increase in the number of
commissioning cargoes previously requested, subject to acceptance
by Seller. No delivery schedule for commissioning cargoes shall
require the employment of more than one (1) LNG Tanker.
(b) All quantities of LNG sold and delivered under
this Section 7.1 shall be paid for at the Contract Sales Price
applicable at the time of delivery, and such quantities shall not
be applied to, or otherwise affect, any Fixed Quantity.
(c) If Buyer does not exercise the right provided for
in this Section 7.1, Buyer shall give Seller not less than ninety
(90) days' notice of the desired date of first delivery of Fixed
Quantities hereunder.
7.2 Fixed Quantities
(a) In respect of each Fixed Quantity Period Seller
shall sell and deliver to Buyer, and Buyer shall purchase, receive
and pay for, or pay for if not taken, at the Contract Sales Price,
LNG having a heating value of 79,380 billion BTU's, subject to
adjustment as provided in Sections 7.2(b), 7.2(c), 7.2(d) and
7.3(a)(ii). Such quantity in respect of each Fixed Quantity
Period, after giving effect to each such adjustment, is herein
called a "Fixed Quantity".
(b) Buyer shall have the right to reduce the Fixed
Quantities applicable to the Fixed Quantity Period or Periods
included in the Build-up Period by the exercise of allowances.
("Build-up Allowances") as follows:
(i) During the first twelve (12) months of the Build-
up Period by Build-up Allowances aggregating not more
than 18,318 billion BTU's; and
(ii) During the remainder of the Build-up Period, if
any, by Build-up Allowances equal to the quantity of LNG
calculated by dividing the number of months in such
remainder by two (2), rounding the quotient obtained to
the next highest whole number and multiplying the result
by 3,053 billion BTU's, not to exceed, however, 9,159
billion BTU's in the aggregate.
Such right of reduction may be exercised by Buyer in its notice of
required LNG pursuant to Section 12.1 or by notice to Seller
cancelling the delivery of one (1) or more cargoes of LNG scheduled
in the Annual Program for delivery during the Build-up Period.
Buyer shall provide Seller with as much advance notice as
practicable of any such cancellation of delivery of a scheduled LNG
cargo, and in any event if the deliveries of more than two (2)
scheduled cargoes are to be cancelled in any period of sixty (60)
consecutive days, notice of any such additional cancellation in
excess of such two (2) cargoes within such sixty (60) day period
shall be given not less than ninety (90) days prior to the
scheduled delivery date thereof; further, Buyer may not cancel the
delivery of a cargo after the loading thereof has commenced. If
Buyer exercises Build-up Allowances, then the Fixed Quantity for
each Fixed Quantity Period or part thereof within the Plateau
Period shall be increased, with effect from commencement of the
Plateau Period, by a quantity of LNG calculated by multiplying by
two (2) the total amount of the reduction in Fixed Quantities
resulting from the exercise of Build-up Allowances, dividing the
product obtained by the number of calendar months in the Plateau
Period and multiplying the quotient obtained by the number of
calendar months in such Fixed Quantity Period which are included in
the Plateau Period.
(c) The Fixed Quantity for each Fixed Quantity Period
during a Force Majeure Recovery Period shall be increased by the
Committed Recovery Quantity.
(d) Buyer shall have the option, which may be
exercised by written notice given to Seller by not later than six
(6) months prior to the end of the Build-up Period, to increase the
Fixed Quantity for each Fixed Quantity Period of the balance of the
term of this Contract, commencing with either of the two (2)
succeeding Fixed Quantity Periods, as Buyer may elect in its notice
of exercise of such option, by an amount equal to the difference
between 6,106 billion BTU's and any increase to each such Fixed
Quantity pursuant to Section 7.2(b).
7.3 Buyer's Obligation to Take or Pay
(a) If during any Fixed Quantity Period Buyer shall
fail to take (i) the full Fixed Quantity applicable thereto, (ii)
all quantities of Additional LNG which Seller has become obligated
to sell and Buyer has become obligated to purchase during such
Fixed Quantity Period pursuant to Section 7.6, or (iii) any
quantity of LNG which is the subject of a Round-up Request which
Seller is able to accept as provided in Section 7.3(a)(iii), Buyer
shall pay Seller, at the Contract Sales Price in effect as of the
last day of such Fixed Quantity Period, for the quantities of LNG
required to have been purchased but which were not taken by Buyer
during such Fixed Quantity Period (any such deficiency respecting
a Fixed Quantity being called an "Annual Quantity Deficiency", any
such deficiency respecting Additional LNG being called an
"Additional LNG Quantity Deficiency", any such deficiency
respecting LNG which is the subject of a Round-up Request accepted
by Seller being called a "Round-up Quantity Deficiency" and the
aggregate of an Annual Quantity Deficiency, Additional LNG Quantity
Deficiency and Round-up Quantity Deficiency being called an
"Aggregate Quantity Deficiency"), subject however to the provisions
of Section 7.3(c), 7.3(d) and 7.3(e) and to the following:
(i) The amount of LNG constituting an Aggregate
Quantity Deficiency for a Fixed Quantity Period shall
first be reduced by the amount of all Quarterly Quantity
Deficiencies for which Buyer has made a payment pursuant
to Section 7.3(b) during such Fixed Quantity Period, less
any portion of such Quarterly Quantity Deficiencies
applied as a credit, or against which a credit was
applied, on account of LNG taken by Buyer in excess of
the Quarterly Quantity Requirement for any calendar
quarter of such Fixed Quantity Period as provided in
Section 7.3(b).
(ii) If, after taking into account all adjustments
provided for in this Section 7.3, an Aggregate Quantity
Deficiency amounts to less than one (1) full LNG Tanker
cargo, or if such Aggregate Quantity Deficiency exceeds
one (1) full LNG Tanker cargo solely by reason of a
variance in the BTU content of the actual cargoes
delivered from the BTU content per cargo estimated in
connection with the preparation of the Annual Program or
the applicable Fixed Quantity Period, then in either
event it will be deemed that no Aggregate Quantity
Deficiency exists for such Fixed Quantity Period, and
the amount the shortfall in delivery shall be carried
forward and added to Buyer's Fixed Quantity for the next
succeeding Fixed Quantity Period.
(iii) If at the time an Annual Program is developed
pursuant to Section 12.3 it is estimated that Buyer will
have an Annual Quantity Deficiency or an Additional LNG
Quantity Deficiency in the Fixed Quantity Period being
programmed in an amount that is less than one (1) full
LNG Tanker cargo, Buyer shall have the right to request
an increase in the quantities which Buyer wishes to take
in such Fixed Quantity Period in an amount sufficient to
fill out such cargo (such right being herein referred
to as a "Round-up Request"); and if at the time of such
request Seller has sufficient uncommitted capacity in
the Badak Facility and sufficient shipping capacity for
the purpose of delivering such cargo, Seller shall within
a period of fourteen (14) days confirm that such Round-up
Request will be accepted. If Buyer does not make a
Round-up Request, or if Seller is unable by reason of
insufficient plant or shipping capacity to accept a
Round-up Request made by Buyer, the non-delivery of the
partial cargo of Fixed Quantity or Additional LNG, as the
case may be, shall not for any purpose constitute a
failure of Seller to make LNG available for sale under
the terms of this Contract. However, if Seller accepts
a Round-up Request, Seller shall be obligated to sell a
deliver, and Buyer shall be obligated to purchase,
receive and pay for, or pay for if not taken, the LNG
which is the subject of the Round-up Request; provided,
that no LNG which is the subject of a Round-up Request
shall be delivered in a Fixed Quantity Period until after
the delivery of all of the Fixed Quantity and Additional
LNG which the parties have become obligated to sell and
purchase respectively in such Fixed Quantity Period. (b)
If during any one (1) of the first three (3) calendar
quarters of any Fixed Quantity Period Buyer shall fail to
take each cargo of LNG scheduled for delivery in such
calendar quarter in the Annual Program prepared pursuant
to Section 12.3 (the "Quarterly Quantity Requirement"),
Buyer shall pay to Seller the Contract Sales Price in
effect as of the last day of such quarter for that
quantity of LNG which equals the estimated BTU content of
the cargo or cargoes not taken (any such quantity being
called a "Quarterly Quantity Deficiency"). Buyer's
obligations under this Section 7.3(b) are subject to the
provisions of Sections 7.3(c), 7.3(d) and 7.3(e) and to
the following:
(i) If Buyer makes a payment during a Fixed Quantity
Period on account of a Quarterly Quantity Deficiency,
Buyer shall be entitled to credit the amount of such
payment against the payment due respecting an equivalent
quantity of LNG taken in excess of the Quarterly Quantity
Requirement in any subsequent calendar quarter of the
same Fixed Quantity Period; and (ii) To the extent Buyer
purchases and receives LNG in excess of the Quarterly
Quantity Requirement for a calendar quarter, the amount
of such excess purchase shall be applied to reduce any
Quarterly Quantity Deficiency occurring in any of the
succeeding calendar quarters of the same Fixed Quantity
Period. For the purposes of paragraphs (i) and (ii)
above the Quarterly Quantity Requirement for the fourth
quarter shall be determined in the same way as for the
other three (3) quarters by reference to the estimated
BTU content of the number of cargoes scheduled for
delivery in the Annual Program for the fourth quarter.
(c) Buyer's obligation hereunder to pay for LNG not
taken in a Fixed Quantity Period or calendar quarter, shall be
reduced by amount which would otherwise have been payable i with
respect to the quantity of LNG which Buyer was unable to purchase
because of Seller's failure for any reason, including force
majeure, to make such quantity available for sale in accordance
with the terms of this Contract.
(d) Buyer shall have the right in each Fixed Quantity
Period, commencing with the first Fixed Quantity Period, or portion
thereof, included in the Plateau Period, to reduce its take-or-pay
obligation under this Section 7.3 by the exercise of an allowance
("Plateau Allowance") of not more than 6,106 billion BTU's for each
such Fixed Quantity Period (the permitted Plateau Allowance for
such first Fixed Quantity Period shall be determined by
multiplying 6,106 billion BTU's by a fraction, the numerator of
which shall be the number of months in such first Fixed Quantity
Period included in the Plateau Period and the denominator of which
shall be twelve (12); provided that Buyer shall have an obligation
to "Make-Good" each such Plateau Allowance in the manner
hereinafter provided, and provided further that Buyer may not
exercise a Plateau Allowance which, when added to Plateau
Allowances previously exercised and not Made-Good (or deemed
Made-Good in accordance with subparagraph (iii)(B) below) in the
Plateau Allowance Restoration Period applicable thereto, would
result in outstanding Plateau Allowances not Made-Good in such
Plateau Allowance Restoration Period being in excess of 12,212
billion BTU's. A Plateau Allowance may be exercised by Buyer in
its notice of required LNG pursuant to Section 12.1 or by notice to
Seller cancelling the delivery of one or more cargoes of LNG
scheduled for delivery in the Annual Program for the Fixed Quantity
Period. Buyer shall give Seller as much advance notice as may be
practicable of any such cancellation of delivery of a scheduled LNG
cargo, and in no event may the delivery of a cargo be cancelled
once the loading thereof has commenced. Each such Plateau
Allowance shall be Made-Good in accordance with the following
conditions:
(i) All Plateau Allowances outstanding at any given
time must, subject to (ii) next below, be Made-Good by
the end of the third Fixed Quantity Period following
the first Fixed Quantity Period in which any Plateau
Allowance remains not Made-Good after application of the
provisions of subparagraph (iii)(A) below (such period
being herein called a Plateau Allowance Restoration
Period").
(ii) If at the expiration of a Plateau Allowance
Restoration Period Buyer has not Made-Good all
outstanding Plateau Allowances required to be Made-Good
therein, then to the extent provided in (A) and (B) below
such Plateau Allowance Restoration Period will be subject
to extension:
(A) If such failure to Make-Good is caused by
failure on the part of Seller to make available
Additional LNG which Seller was obligated to sell and
Buyer was obligated to purchase pursuant to Section 7.6
or by a failure on the part of Buyer to take such
Additional LNG, in either case caused by an event of
force majeure as defined in Article 15, such Plateau
Allowance Restoration Period will be extended with
respect to the portion of such Plateau Allowances not
Made-Good because of such a failure until such Plateau
Allowances are Made-Good; provided, that if Buyer does
not request in accordance with the provisions of Section
7.6 at least 6,106 billion BTU's of Additional LNG with
respect to any Fixed Quantity Period following that in
which occurs a failure.of Seller to make available or of
Buyer to take Additional LNG because of an event of force
majeure as defined in Article 15, the amount of such
shortfall in request shall on the last day of such Fixed
Quantity Period be deducted from the portion of Plateau
Allowances subject to extension.
(B) If (x) Buyer does not exercise the option provided
for in Section 7.2(d), and (y) there shall occur during
such Plateau Allowance Restoration Period a Fixed
Quantity Period which also is included in a Force Majeure
Recovery Period and (z) in such Fixed Quantity Period
Seller is unable to confirm its capacity to deliver at
least 3,053 billion BTU's of Additional LNG which Buyer
has requested pursuant to its rights under Sections
7.6(a)(ii) and 7.6(b), then such Plateau Allowance
Restoration Period shall be extended with respect to the
lesser of the portion of the Plateau Allowances not
Made-Good or 3,053 billion BTU's for each such Fixed
Quantity Period in which Seller s unable to confirm the
availability of such requested Additional LNG. Such
extension shall remain in effect until such Plateau
Allowances are Made-Good; provided that if during such
Force Majeure Recovery Period and such extension
resulting from the operation of this subparagraph Buyer
does not request in accordance with the provisions of
Section 7.6 at !east 6,106 billion BTU's of Additional
LNG with respect to any Fixed Quantity Period following
that in which Seller during such Force Majeure Recovery
Period was First unable to confirm the availability of
such Additional LNG, the amount of such shortfall in
request shall on the last day of such Fixed Quantity
Period be deducted from the portion of the Plateau
Allowances subject to extension.
During an extension of a Plateau Allowance Restoration Period
pursuant to (A) or (B) above new Plateau Allowances may be
exercised and a new Plateau Allowance Restoration Period commenced;
subject, however, to the condition that Buyer may not by the
exercise of Plateau Allowances during such an extension relieve
itself of the obligation to Make-Good all Plateau Allowances
required to be Made-Good during the extended Plateau Allowance
Restoration Period.
(ii) Plateau Allowances shall be Made-Good in the
following manner:
(A) If at the time a Plateau Allowance is exercised
Additional LNG has been taken in one or more prior (but
not the same) Fixed Quantity Periods pursuant to Section
7.6 and not previously applied to Make-Up or Make-Good,
then the same shall be applied to Make-Good such Plateau
Allowance on the last day of the Fixed Quantity Period in
which such Plateau Allowance is exercised ("Advance Make-
Good"). Not more than 12,212 billion BTU's of LNG may be
accumulated from time to time for purposes of Advance
Make-Good, and should Buyer at any time when 12,212
billion BTU's have been so accumulated take further
Additional LNG, such further quantity shall not be
available for Advance Make-Good purposes.
(B) Additional LNG shall, subject to Section 7.6(c),
be applied to satisfaction of Buyer's Make-Good
obligation to the extent received and paid for, or paid
for but not taken, during the Plateau Allowance
Restoration Period or any extension thereof; provided
that Additional LNG which pursuant to Section 7.6 Seller
has become obligated to sell and Buyer has become
obligated to purchase during a Plateau Allowance
Restoration Period or any extension thereof and which
Seller fails to make available to Buyer, for reasons
other than force majeure as defined in Article 15, shall
for purposes of Make-Good only be deemed to have been
received and paid for by Buyer.
C) If by the last day of the Plateau Allowance
Restoration Period or any extension thereof Buyer has not Made-Good
all outstanding Plateau Allowances pursuant to Section
7.3(d)(iii)(A) or (B), or if during the extension of a Plateau
Allowance Restoration Period such extension shall terminate because
of a failure on the part of Buyer to request in a Fixed Quantity
Period sufficient Additional LNG pursuant to Section 7.3(d)(ii)(A)
or (B), Buyer shall pay for the portion not Made-Good or with
respect to which an extension of the Plateau Allowance Restoration
Period has terminated at the Contract Sales Price in effect on the
last day of the Allowance Restoration Period or the Fixed Quantity
Period in which an extension terminates, as may be applicable.
(e) In calculating the quantity of LNG delivered by
Seller and purchased by Buyer in respect of each calendar quarter
or Fixed Quantity Period, whether Fixed Quantity, Additional LNG or
LNG which is the subject of a Round-up Request and irrespective of
the purpose for which taken, including Make-Up and Make-Good, an
estimate of quantities to be delivered and purchased within the
first fourteen (14) days of the next following calendar quarter or
Fixed Quantity Period, respectively shall be included, provided
such quantities were scheduled in the Annual Program for delivery
in the calendar quarter or Fixed Quantity Period with respect to
which the calculation is being made. Any discrepancy between any
such estimate and actual deliveries shall be accounted for as an
adjustment to the Fixed Quantity in the next succeeding Fixed
Quantity Period.
7. Make-Up of Force Majeure Deficiencies
If in any Fixed Quantity Period all or any portion of the
Fixed Quantity to be sold and purchased hereunder is not delivered
by Seller or taken by Buyer because of an event of force majeure as
defined in Article 15 (any such quantity not delivered or taken
because of an event of force majeure being called a "Force Majeure
Deficiency"), such Force Majeure Deficiency shall be Made-Up during
the Force Majeure Recovery Period applicable thereto or to the
extent applicable pursuant to Section 7.7. The Force Majeure
Recovery Period respecting Force Majeure Deficiency shall commence
with the later to occur of the Fixed Quantity Period beginning
January , 1995 or the first Fixed Quantity Period beginning six
(6) months or more following the restoration of normal operations
after the most recent event of force majeure which resulted in a
Force Majeure Deficiency, and shall terminate at the earlier to
occur of the time when all the outstanding Force Majeure Deficiency
has been Made-Up or at the end of the last Fixed Quantity Period.
A Force Majeure Deficiency shall be Made-Up as follows:
(a) In each Fixed Quantity Period during a Force
Majeure Recovery Period the Committed Recovery Quantity shall be
applied to Make-Up the aggregate of the Force Majeure Deficiencies
then outstanding; provided that the Fixed Quantity in any Fixed
Quantity Period shall not be increased by more than one Committed
Recovery Quantity.
(b) In addition Seller and Buyer shall as soon as
practicable during such Force Majeure Recovery Period use their
respective best efforts to deliver and take Additional LNG pursuant
to Section 7.6 to Make-Up such Force Majeure Deficiency.
7.5 Take-or-Pay Make-Up
During any Fixed Quantity Period in the Plateau Period
Buyer may request Additional LNG pursuant to Section 7.6 as Make-Up
for any quantity which has been paid for but not taken by Buyer
pursuant to Section 7.3(a), 7.3(b) or 7.3(d)(iii)(C); provided,
that if in any such Fixed Quantity Period there shall occur an
Aggregate Quantity Deficiency (caused by Buyer's failure to take
LNG for reasons other than force majeure as defined in Article 15)
comprised in whole or in part of Additional LNG which would have
been applied pursuant to Section 7.6(c) to Make-Up of a prior
Aggregate Quantity Deficiency, then, at Buyer's option (i) Buyer
may make the payment required pursuant to Section 7.3(a) with
respect to the portion of such Aggregate Quantity Deficiency
comprised of such Additional LNG, in which event Buyer shall
continue to have Make-Up rights respecting both the prior Aggregate
Quantity Deficiency and that quantity for which the said payment is
being made, or (ii) such LNG shall be deemed to have been delivered
by Seller and taken by Buyer, and Buyer shall have no further Make-
Up rights with respect thereto. Each invoice for LNG utilized for
Make-Up pursuant to this Section 7.5 shall be reduced by the amount
previously paid by Buyer on account of the quantity being Made-Up.
Quantities shall be Made-Up, and prior payments applicable thereto
applied, in the same chronological order in which such quantities
accrued.
7.6 Additional LNG
Buyer shall have the optional right to purchase
Additional LNG under the terms of this Contract during each Fixed
Quantity Period in the Plateau Period in accordance with the terms
of this Section 7.6. As used herein Additional LNG shall mean the
following:
(i) LNG containing up to 6,106 billion BTU's in excess
of the applicable Fixed Quantity or, if Buyer exercises the option
provided in Section 7.2(d), up to Quantities are increased pursuant
to the exercise of such option in Section 7.2(d), provided, that
during a Force Majeure Recovery Period Additional LNG available
pursuant to this subparagraph (i) shall be decreased by the
Committed Recovery Quantity;
(ii) a further, additional quantity of LNG, subject to
the confirmation by Seller at the time of request that Seller has
sufficient uncommitted capacity in the Badak Facility and
sufficient shipping capacity for the purpose of delivering such
LNG, containing (A) if the option provided for in Section 7.2(d) is
not exercised, up to 6,106 billion BTU's or, during a Force Majeure
Recovery Period, up to 9,159 billion BTU'S, or (B) if such option
is exercised, and only during a Force Majeure Recovery Period, up
to 6,106 billion BTU's.
(b) If Buyer shall request Additional LNG for a Fixed
Quantity Period (i) by not later than the preceding July 1 and, to
the extent subparagraph (a)(ii) above has application, Seller shall
confirm the sufficiency of uncommitted capacity in the Badak
Facility and shipping capacity respecting such LNG, or (ii) prior
to January 15 of the relevant Fixed Quantity Period for Make-Up or
Make-Good purposes arising from circumstances occurring after the
preceding July 1 and Seller confirms the sufficiency of uncommitted
capacity in the Badak Facility and shipping capacity respecting
such LNG, then in each case Seller shall have the obligation to
sell and deliver, and Buyer shall have the obligation to purchase,
receive and pay for, or pay for if not taken, such Additional LNG.
No LNG delivered in a Fixed Quantity Period shall be treated as
Additional LNG until all of the Fixed Quantity with respect thereto
has been taken and paid for.
(c) Additional LNG shall be utilized for the following
purposes and in the following order of priority:
(i) Make-Up pursuant to Section 7.5;
(ii) Make-Good in respect of Plateau Allowances taken
in a prior Fixed Quantity Period pursuant to Section 7.3(d);
(iii) Make-Up during a Force Majeure Recovery Period in
respect of Force Majeure Deficiencies pursuant to Section 7.4;
(iv) Advance Make-Good pursuant to Section 7.3.(d); and
(v) additional sales of LNG.
(d) All Additional LNG shall be paid for at the
Contract Sales Price in effect as of the date of delivery thereof
and, if not taken once the obligations of Seller and Buyer become
fixed as provided in Section 7.6(b), shall be paid for at the
Contract Sales Price in effect as of the last day of the Fixed
Quantity Period in which delivery was scheduled.
7.7 Make-Up and Make-Good after the Last Fixed
Quantity Period
If at the expiration of the last Fixed Quantity
Period there" remains any (i) quantities paid for but not taken
pursuant to Section 7.3 but not Made-Up, (ii) Plateau Allowance not
Made-Good or (iii) Force Majeure Deficiency not Made-Up, then
during the succeeding calendar Year Seller and Buyer shall take and
pay for, at the Contract Sales Price in effect at the time of
delivery, or Buyer shall pay for if not taken at the Contract Sales
Price in effect on the last day of such calendar year, such
remaining quantities of LNG up to a maximum of the Fixed Quantity
for the last Fixed Quantity Period of this Contract; provided, that
such quantities shall be scheduled for delivery at the same rate as
the Fixed Quantity was scheduled for delivery during the last Fixed
Quantity Period and to the extent appropriate the provisions of
Article 12 shall apply. Such quantities shall be applied first to
Make-Up of quantities paid for but not taken, and next to Make-Good
of Plateau Allowances and finally to Make-Up of Force Majeure
Deficiencies. Each invoice for LNG utilized for Make-Up shall be
reduced by the amount previously paid by Buyer on account of the
quantity being Made-Up.
7.8 Allocation of Deliveries between Buyer and
Other Purchasers
(a) should an event or circumstance of force majeure
as defined in Article 15 occur either before or after Start-up
affecting Seller's ability to produce or load LNG from the Badak
Facility, an allocation of such quantities as are then capable of
being produced and loaded will be made between Buyer and other
purchasers of LNG from the Badak Facility. At such times the total
quantities capable of being produced and loaded from the Badak
Facility shall be allocated among the purchasers therefrom
(including Buyer) pro rata in the ratio of their respective
quantities which are eligible for allocation as provided below. The
quantities eligible for such allocation shall be the Fixed
Quantities hereunder during the period of such force majeure, as to
Buyer, and those fixed or contract quantities of LNG which are
committed for sale from the Badak Facility during the period of
such force majeure in satisfaction of Seller's contracts with other
purchasers which provide for deliveries of LNG over a term of at
least fifteen (15) years, as to other purchasers.
(b) If such an event of force majeure does not
preclude full production and loading of all Fixed Quantities under
the allocation formula described in Section 7.8(a) but is of such
an extent as to prevent Seller from producing and loading all LNG
required for Make-Up and/or Make-Good purposes by Buyer and other
purchasers under LNG sales contracts providing for deliveries over
a term of at least fifteen (15) years, quantities of such LNG as
are available for such purposes shall be allocated between Buyer
and such other purchasers in proportion to the respective
quantities required for Make-Up and/or Make-Good purposes.
ARTICLE 8 - CONTRACT SALES PRICE
8.1 Initial Contract Sales Price
The Initial Contract Sales Price applicable as of
January 1, 1986 to the quantities of LNG to be sold and delivered
at the Delivery Point, and to any quantities of LNG required to be
taken but which are not taken and are required to be paid for by
Buyer under this Contract, expressed in U.S. Dollars per million
British Thermal Units (U.S.$/MMBTU), shall be U.S.$4.76 (the
"Initial Contract Sales Price"), of which U.S.$4.284 is a component
adjustable with Indonesian crude prices (the "LNG Related
Component") and the balance of U.S.$0.476 is a component
"Transportation Related Component").
8.2 Contract Sales Price and Adjustments Thereto
(a) Each of the components of the Initial Contract
Sales Price shall be subject to adjustment from time to time
according to the following provisions of this Section 8.2. The sum
of the two components as adjusted and in effect at any time shall
be the contract sales price ("Contract Sales Price") which is in
effect hereunder at such time to be calculated in accordance with
the following formula:
PC = PL + PT
in which :-
PC = the Contract Sales Price (expressed in U.S.$/MM
the adjusted LNG Related Component as
calculated pursuant to Section 8.2(b) (expressed
in U.S.$/MMBTU)
PL = the adjusted Transportation Related Component as
calculated pursuant to Section 8.2(c) (expressed
in U.S.$/MMBTU).
PT = the adjusted Transportation Related Component as
calculated pursuant to Section 8.2(c) (expressed
in U.S.$/MMBTU).
The Contract Sales Price to be applied to the
BTU's comprising each cargo of LNG shall be that Contract Sales
Price in effect as of the date of completion of unloading of such
cargo.
(b) An adjustment to the LNG Related Component shall
be made as of each effective date on which either (i) the realized
export prices of more than one (1) of the field classifications of
Indonesian crude oils (including condensate but excluding premiums
and prices for spot sales) then being sold and exported shall have
changed from the respective prices therefor included in the last
preceding adjustment made pursuant to this Section 8.2(b), or (ii)
two (2) or more additions or deletions, or an addition and a
deletion, in such field classifications of crude oils then being
sold and exported shall have become effective as compared with such
field classifications of crude oils being exported from Indonesia
as of the date of the last preceding adjustment made pursuant to
this Section 8.2(b). The export prices and classification data
required to make the above determination shall be as verified by
the Ministry of Mines and Energy of the Republic of Indonesia. In
every case such adjustment shall be made in accordance with the
following formula:
AX
PL = PA AY
PA = U.S.$4.284, the LNG Related Component included in
the Initial Contract Sales Price (expressed
in U.S.$/MMBTU)
AX = the arithmetic average of the realized export
prices in U.S. Dollars per barrel f.o.b.
Indonesia, of all field classifications of
Indonesian crude oils (including condensate) then
being sold and exported, except premiums and
except such prices for spot sales
AY = U.S.$27.4595, being the arithmetic average on
January 1, 1986 of the realized export prices in
U.S. Dollars per barrel, f.o.b. Indonesia, of
allfield classifications of Indonesian crude oils
(including condensate) then being sold and
exported, except premiums and except such prices
for spot sales.
(c) The Transportation Related Component shall be
adjusted on, and with effect from, January 1 of each year during
the term of this Contract in accordance with the following formula:
PT = PB (1. 025)n
in which :
PB = U.S.$0.476 the Transportation Related Component
included in the Initial Contract Sales Price
expressed in U.S.$/MMBTU)
n = 1 on January l, 1987, and one higher whole number
on each subsequent January 1.<PAGE>
ARTICLE 9 - TRANSFER OF TITLE
The LNG to be sold by Seller and purchased by Buyer
hereunder shall be delivered to Buyer into the Receiving Facility
at the Unloading Port. Delivery of LNG shall be deemed completed,
and title to and risk of loss of such LNG shall pass from Seller to
Buyer, when the LNG is at the Delivery Point.
<PAGE>
ARTICLE 10 - INVOICES AND PAYMENT
10.1 Cargo Invoices and Documents
Promptly after completion of unloading of an LNG Tanker,
Seller or its representative shall furnish to Buyer a certificate
of volume unloaded, together with such other documents concerning
the cargo as may be reasonably requested by Buyer for the purpose
of R.0.C. customs clearance. Buyer shall, as soon as possible but
in no event later than forty-eight (48) i hours after completion of
unloading, complete a laboratory analysis to determine the quality
of the LNG unloaded in accordance with the provisions of Section
13.7 and shall promptly furnish to Seller or its representative a
certificate with respect thereto. Seller shall then perform the
calculation of the number of BTU's unloaded and delivered in
accordance with the provisions of Section 13.9 and shall furnish to
Buyer the details of the calculation. Promptly upon completion of
such calculation, Seller or its representative shall furnish to
Buyer by telex or telegram an invoice, stated in U.S. Dollars, the
amount of the Contract Sales Price for the number of BTU's
delivered. At the same time Seller shall send to Buyer a signed
copy of the invoice together with relevant documents setting forth
the basis for the calculation thereof.
10.2 Other Invoices
Except as provided in Section 10.1, in the event that any
amount is due from one party to the other hereunder, including,
without limitation, amounts payable pursuant to Article 7 on
account of LNG required to be purchased but not taken by Buyer,
then the party to which such amount is due shall furnish or cause
to be furnished an invoice therefor and relevant documents showing
the basis for the calculation thereof. All such invoices shall be
stated in U.S. Dollars. If the documentation supporting such an
invoice is based upon one or more currencies, other than U.S.
Dollars, such currencies shall be converted to U.S. Dollars using
the currency exchange rate for interbank transfers in the United
States for payments abroad, expressed as the number of units of
U.S. Dollars required to purchase, exclusive of commissions and
charges, one unit of the relevant currency as quoted by Citibank,
N.A., New York City or such other bank as may be mutually
agreeable, in the New York market at 12:00 noon on the first
banking day in New York preceding the date on which the cost or
expense in such other currency was incurred.
10.3 Invoice Due Dates
(a) Each invoice for LNG delivered to Buyer referred
to in Section 10.1 shall become due and payable by Buyer on the
eighth (8th) Business Day in the R.0.C. after the date on which the
invoice (which may be in telex or telegraphic form) has been
received by Buyer in Taiwan, R.0.C. Each invoice issued pursuant
to Section 10.2 shall become due and payable on the twenty-fifth
(25th) Business Day in the R.0.C. after the date of receipt of such
invoice by the party to which directed.
(b) For the purposes of this Section 10.3 a telex invoice
shall be deemed received by the party to which directed on the day
such party's telex machine accepts transmission thereof by a
confirmed answerback, or, in the event such party's telex machine
is inoperative, on the day that a copy of the telex form of invoice
is received by such party.
(c) In the event the full amount of any invoice is not
paid when due any unpaid amount thereof shall bear interest from
the due date until paid at an interest rate (the "Commercial
Interest Rate"), compounded annually, two (2) percentage points
greater than the publicly announced prime rate of Citibank, N.A.,
New York City, or such other bank as may be mutually agreeable.
Such interest rate shall be adjusted, up or down as the case may
be, to reflect any changes in the aforesaid prime rate as of the
dates of such changes in the prime rate.
10.4 Payment
(a) Buyer shall pay, or cause to be paid, in U.S.
Dollars, in immediately available funds, all amounts which become
due and payable by Buyer pursuant to any invoice issued hereunder,
to an account with a bank in the United States to be designated by
Seller. Seller shall pay or cause to be paid, in U.S. Dollars, in
immediately available funds, all amounts which become due and
payable by Seller pursuant to any invoice issued to it hereunder to
a bank account in the R.0.C. designated by Buyer. The paying
party's deposit in immediately available funds of the full amount
of each invoice with the appropriate bank account shall constitute
full discharge and satisfaction of the obligations under this
Contract for which such amounts were remitted. Each payment of any
amount owing hereunder shall be in the full amount due without
reduction or offset for any reason, including, without limitation,
taxes, exchange charges or bank transfer charges.
(b) A transfer of funds to the bank in the United States
referred to in Section 10.4(a) effected by Buyer from the R.0.C.
before the close of business in the R.0.C. on or before the due
date of any invoice issued pursuant to Section 10.1 or 10.2 shall
be deemed timely payment notwithstanding that such United States
bank cannot credit such transfer as immediately available funds for
a period of up to thirteen (13) hours by reason of the time
difference between the R.0.C. and the United States, or for one (1)
or more days which are not banking days in the United States.
10.5 Seller's Right of Suspension upon Buyer's Failure to
Make Payment
If payment of any invoice for quantities of LNG is
delivered hereunder or for LNG not taken and for which Buyer is
obligated to pay pursuant to this Contract is not made within sixty
(60) days after the due date thereof, Seller shall be entitled,
upon giving thirty (30) days' written notice to Buyer, to suspend
subsequent deliveries to Buyer until the amount of such invoice
together with interest thereon, has been paid and Buyer shall not
be entitled to any Make-Up rights in respect of such suspended
deliveries.
10.6 Disputed Invoices
In the event of disagreement concerning any invoice
hereunder, the party to which such invoice was issued shall make
provisional payment of the total amount thereof and shall
immediately notify the issuing party of the reasons for such
disagreement, except that in the case of an obvious error in the
invoice or supporting documents the party to which such invoice was
issued shall pay the correct amount disregarding such error. An
invoice may be contested by a party only if, within a period of one
hundred and eighty (180) days after its receipt thereof, such party
serves notice on the other questioning its correctness. If no such
notice is served, such invoice shall be deemed correct and accepted
by both parties. Promptly after resolution of any dispute as to an
invoice, the amount of any overpayment shall be paid by Seller or
Buyer to the other, as the case may require, plus interest at the
Commercial Interest Rate from the date the overpayment was received
to the date of refund.
10.7 Form of Invoices
The form and content of invoices to be issued under this
Contract and the supporting documents shall be prescribed in the
Implementation Procedure. In addition the issuing party shall
provide such further information as the receiving party may
reasonably request from time to time to assure the receiving party
of the correctness of any amount invoiced.
<PAGE>
ARTICLE 11 - QUALITY
11.1 Gross Heating Value
LNG delivered by Seller to Buyer hereunder shall have,
in a gaseous state, a Gross Heating Value of not less than 1,100
BTU's per Standard Cubic Foot and not more than 1,160 BTU's per
Standard Cubic Foot, determined as provided in Part II of Schedule
A.
11.2 Components
LNG delivered by Seller to Buyer hereunder shall, in a
gaseous state, contain not less than 85 molecular percentage (85
mol%) of methane (CH4) and, for the components and substances
listed below, such LNG shall not contain more than the following:
(i) Nitrogen (N2), 1.0 mol%;
(ii) Butanes (C4) and heavier, 2.00 mol%;
(iii) Pentanes (C5) and heavier, 0.10 mol%;
(iv) Hydrogen Sulfide (H2S), 0.25 grains per 100
Standard Cubic Feet (0.25 grains/100 scf); and
(v) Total sulfur content, 1.3 grains per 100
Standard Cubic Feet (1.3 grains/100 scf).
Although LNG which Seller delivers to Buyer hereunder is permitted
to contain the sulfur concentrations shown in items (iv) and (v)
above, under normal operating conditions at the Badak Facility
Seller would expect such concentrations to be materially less.
Should any question regarding quality of the LNG arise,
Seller and Buyer shall consult and cooperate concerning such
question.<PAGE>
ARTICLE 12 - PROGRAMMING AND SHIPPING MOVEMENTS
12.1 Buyer's Request
On or before June 15 preceding each Fixed Quantity
Period Seller shall notify Buyer of the current estimate of the BTU
content of each cargo to be delivered in such Fixed Quantity Period
based to the extent practicable on recent operating experience.
Not later than six (6) calendar months prior to the beginning of
each Fixed Quantity Period Buyer shall give notice in writing of
the quantity of LNG, expressed in BTU's, it wishes to deliver
hereunder during such Fixed Quantity Period. Each such request
shall include the Fixed Quantity for such Fixed Quantity Period and
any Additional LNG requested by Buyer pursuant to Section 7.6.
Within fourteen (14) days of any request for Additional LNG, but
not earlier than July 15 preceding the Fixed Quantity Period to
which the request relates, Seller shall confirm whether or not it
has sufficient production capacity at the Badak Facility and
shipping capacity available to deliver such of the Additional LNG
as is subject to production capacity and shipping availability
during such Fixed Quantity Period.
12.2 Maintenance and Inspection Coordination
Not later than ninety (90) days prior to the beginning
of each Fixed Quantity period Seller and Buyer shall consult and
agree on a program designed to coordinate the scheduled drydocking
of the LNG Tanker and the anticipated maintenance/inspection
downtime of the Badak Facility and the Receiving Facility during
that Fixed Quantity Period, if and to the extent such downtime is
expected to affect deliveries of LNG hereunder. Such program (the
"Coordinated Maintenance Schedule") will be devised so as to
minimize the collective impact of such drydocking and downtime
periods on the timely delivery of LNG hereunder.
12.3 Annual Programs
Based on the quantity of LNG the parties have agreed
shall be delivered during a Fixed Quantity Period pursuant to
Section 12.1, and taking into account the Coordinated Maintenance
Schedule for such Fixed Quantity Period, Seller and Buyer shall
consult together with regard to the Annual Program for such Fixed
Quantity Period no later than one (1) calendar month prior to the
commencement of such Fixed Quantity Period. Each Annual Program
shall include provisional delivery dates at the Receiving Facility
for the quantities of LNG to be sold hereunder to be loaded in full
cargo lots at the Badak Facility. If necessary, the Annual Program
shall take into account any request for Additional LNG made
subsequent to July 1 of the preceding year pursuant to Section
7.6(b) which has been confirmed by Seller as being available. Each
Annual Program shall provide for deliveries at rates and intervals
which are reasonably constant throughout the period to which it
relates. Any Annual Program and/or Ninety-Day Schedule may be
amended by mutual agreement to make provision for circumstances
occurring subsequent to the preparation thereof including, to the
extent practicable, an acceleration of the rate of deliveries
necessitated by unscheduled downtime, failure of transportation or
event of force majeure as defined in Article 15. The Annual
Programs and Ninety-Day Schedules (and any revisions thereto) are
intended to assist the parties in planning their respective
operations during the periods involved and shall not reduce the
entitlement and obligation during any Fixed Quantity Period of
Seller to sell, deliver and be paid for or to be paid for if not
taken, or of Buyer to purchase and receive, or to pay for if not
taken, the quantities of LNG required under Article 7 to be sold,
delivered and paid for during such period.
12.4 Ninety-Day Schedules
Not later than the fifteenth (15th) day of each calendar
month Seller shall deliver to Buyer a three-month forward plan of
deliveries (the "Ninety-Day Schedule") which follows the applicable
Annual Program (or the most current agreed revision thereof or, if
the Annual Program has not been issued, the most recent draft
thereof) as nearly as reasonably possible, and sets forth projected
delivery dates for each of the next three (3) calendar months.
Each Ninety-Day Schedule shall reflect all adjustments, if any,
necessitated by deviation from prior Ninety-Day Schedules so as to
maintain as far as reasonably possible the delivery schedule in the
Annual Program (or the most recent agreed revision thereof or, if
the Annual Program has not been issued, the most recent draft
thereof). Both parties shall cooperate to facilitate smooth
performance of the Ninety-Day Schedule. After consultation with
Buyer Seller shall revise the Ninety-Day Schedule when appropriate
to meet the respective operational requirements of each party with
the overall objective of fulfilling the Annual Program as far as
reasonably possible.
ARTICLE 13 - MEASUREMENTS AND TESTS
13.1 Parties to Supply Devices
(a) Seller shall supply, operate and maintain, or cause
to be supplied, operated and maintained, suitable gauging devices
for the LNG tanks of the LNG Tankers, pressure and temperature
measuring devices and any other measurement or testing devices
which are incorporated in the structure of an LNG Tanker or
customarily maintained on shipboard.
(b) Buyer shall supply, operate and maintain, or cause
to be supplied, operated and maintained, devices required for
collecting samples and for determining quality and composition of
delivered LNG and any other measurement or testing devices which
are incorporated in land structures or customarily maintained at
LNG receiving facilities.
13.2 Selection of Devices
All devices provided for in this Article 13 which are
not currently in use in the sale and delivery of LNG from the Badak
Facility shall be chosen by mutual agreement of the parties and
shall be such as are, at the time of selection, the most accurate
and reliable in their practical application; provided, that the use
of such devices as are on board a Substitute LNG Tanker shall be
permitted. The required degree of accuracy of such devices
selected shall be mutually agreed upon and verified by Buyer and
Seller in advance of their use, and such degree of accuracy shall
be verified by an independent surveyor mutually agreed upon by
Buyer and Seller. In any event all devices (including those on
board a Substitute LNG Tanker) shall comply with maximum
permissible tolerances provided for in Part III of Schedule A.
13.3 Units of Measurement and Calibration
The parties shall cooperate closely in the design,
selection and acquisition of devices to be used for measurements
and tests under this Article 13 in order that, to the maximum
extent possible, all measurements and tests may be conducted either
in United States units of measurement or in metric units of
measurement. In the event that it becomes necessary to make
measurements and tests using a new system of units of measurement,
the parties shall establish mutually agreeable conversion tables.
13.4 Tank Gauge Tables of LNG Tankers
Seller shall provide Buyer, or cause Buyer to be
provided, with a certified copy of tank gauge tables for each tank
of LNG Tankers verified by a competent impartial authority or
authorities mutually agreed upon by the parties. Such tables shall
include correction tables for list, trim, tank construction and any
other items requiring such tables for accuracy of gauging. Seller
and Buyer shall each have the right to have representatives present
at the time each LNG tank on an LNG Tanker is volumetrically
calibrated. If the LNG tanks of an LNG Tanker suffer distortion of
such nature as to cause a prudent expert reasonably to question the
validity of the said tank gauge tables (or any subsequent
calibration provided for herein), Buyer or Seller may require
recalibration of such LNG tanks during any period when the LNG
Tanker is out of service for inspection and/or repairs. Upon
recalibration of the LNG tanks of LNG Tankers, the same procedure
used to provide the original tank gauge tables will be used to
provide revised tank gauge tables and correction tables based upon
the recalibration data. The calibration and recalibration of tanks
provided for in this Section 13.4 shall constitute the only tank
calibration required for purposes of this Contract.
13.5 Gauging and Measuring LNG Volumes Unloaded
Volumes of LNG delivered pursuant to this Contract shall
be determined by gauging the LNG in the tanks of LNG Tankers
immediately before and immediately after unloading. Gauging the
liquid in the tanks of an LNG Tanker and measuring of liquid
temperature, vapor temperature, vapor pressure in each LNG tank,
trim and list of an LNG Tanker and atmospheric pressure shall be
simultaneously performed, or caused to be simultaneously performed,
by Seller immediately before and immediately after unloading as set
out in Section 13.8. The first gauging and measurements shall be
made immediately before the commencement of unloading. The second
gauging and measurements shall take place immediately after
completion of unloading. Copies of gauging and measurement records
shall be furnished to Buyer. Gauging and measurements shall be
effected in accordance with operating procedures to be mutually
agreed between Seller and Buyer and within the tolerances listed in
Part III of Schedule A.
(a) Gauging the Liquid Level of LNG
The level of the LNG in each LNG tank of an LNG Tanker
shall be gauged by means of the gauging device installed in the LNG
Tanker for that purpose. The level of the LNG in each tank shall
be logged or printed.
(b) Determination of Temperature
The temperature of the LNG and of the vapor space in each
cargo tank shall be measured by means of a sufficient number of
properly located temperature measuring devices to permit the
determination of average temperatures. Temperatures shall be
logged or printed.
(c) Determination of Pressure
The pressure of the vapor in each LNG tank shall be
determined by means of pressure measuring devices installed in each
LNG tank of LNG Tankers. The atmospheric pressure shall be
determined by readings from the standard barometer installed in LNG
Tankers.
(d) Determination of Density
Density of the LNG shall be computed by Seller from
sample analysis as described in Sections 13.6 and 13.7 or, if
mutually agreed, measured. Initially, the density of the LNG shall
be computed by the method described in Part I of Schedule A.
Should any improved data, method of calculation or direct
measurement device become available which is acceptable to both
Buyer and Seller, such improved data, method or device shall then
be used. If density is determined by measurements, the results
shall be logged or printed.
13.6 Samples for Quality Analysis
Representative samples of the LNG delivered shall be
obtained, or caused to be obtained, in triplicate by Buyer during
the time of unloading and delivery to Buyer. The three (3) samples
shall be taken from an appropriate point on Buyer's receiving line
as close as possible to the unloading flanges and collected in the
gaseous state using the continuous gasification/
collection method agreed by Buyer and Seller. In addition Buyer
shall obtain spot samples during unloading. The samples obtained
shall be distributed as follows:
First sample - for analysis by Buyer.
Second sample - for use of Seller.
Third sample - for retention by Buyer for an agreed
period, not to exceed twenty-five (25)
days, during which period any dispute as
to the accuracy of any analysis shall be
raised, in which case the sample shall
be further retained until Buyer and
Seller agree to retain it no longer.
If it is not possible for any reason to obtain composite samples by
the continuous gasification/collection method, the composition of
the LNG delivered shall be the arithmetic average of the results
obtained by analysis of the spot samples. If it is not possible to
obtain such spot samples, an analysis of the LNG loaded at the
Loading Port, after adjustment for boil-off measured in respect of
the delivery voyage, shall be used to determine the composition of
the cargo delivered. For this purpose Seller shall utilize devices
comparable to those utilized at the Receiving Terminal and shall
employ methods of taking and analyzing the samples at the Loading
Port comparable in accuracy to those employed at the Receiving
Terminal.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be
analyzed, or be caused to be analyzed, by Buyer to determine the
molar fraction of the hydrocarbon and other components in the
sample by gas chromatography in accordance with "G.P.A. Standard
2261, Method of Analysis for Natural Gas and Similar Gaseous
Mixtures by Gas Chromatography", published by GPA current as of
January 1, 1977, or as otherwise mutually agreed upon. If revised
standards for analysis are subsequently adopted by GPA or other
recognized competent impartial authority, upon mutual agreement of
Buyer and Seller they shall be substituted for the standard then in
use, but such substitution shall not take place retroactively. If
a chromatograph is used, duplicate runs shall be made on each
sample to determine that the repeatability of results is within
mutually agreed limits. The calculated results of the acceptable
runs shall be averaged. A calibration of the chromatograph or
other analytical instrument used shall be performed by Buyer
immediately prior to the analysis of the sample of LNG delivered.
Buyer shall give advance notice to Seller of the time Buyer intends
to conduct a calibration thereof, and Seller shall have the right
to have a representative present at each such calibration;
provided, however, Buyer will not be obligated to defer or
reschedule any calibration in order to permit the representative of
Seller to be present.
(a) Use of Spot Analysis
The average of the spot sample analyses, as specified in
Section 13.6, shall serve the purpose of fall-back reference in
case of failure to obtain a representative composite sample. The
frequency of sampling shall be agreed between Buyer and Seller.
Analysis of spot samples may be carried out on a back-up
chromatograph mutually agreed upon by Buyer and Seller.
(b) Hydrogen Sulfide
The ASTM D 2725-70 Standard Method of Test for Hydrogen
Sulfide in Natural Gas (Methylene Blue Method) shall be used to
determine the hydrogen sulfide content of Seller's sample unless
Seller and Buyer mutually agree on any other method.
(c) Total Sulfur
The ASTM D 3246-76 Standard Method of Test for Sulfur in
Petroleum Gas by Oxidative Microcoulometry shall be used to
determine the total sulfur content in Seller's sample unless Seller
and Buyer mutually agree on any other method. If the total sulfur
content is less than 0.25 grains per 100 Standard Cubic Feet, it
shall not be necessary to analyze the sample for hydrogen sulfide.
13.8 Operating Procedures
Prior to conducting operations for measurement, gauging
and analysis as provided in Sections 13.5, 13.6 and 13.7, the
party responsible for such operations shall notify the
appropriate representatives of the other party, allowing such
representatives reasonable opportunity to be present for all
operations and computations; however, the absence of the other
party's representative after notification and opportunity to attend
shall not prevent any operation or computation from being
performed. At the request of either party any measurement, gauging
or analysis provided for in Sections 13.5, 13.6 and 13.7 shall be
witnessed and verified by an independent surveyor mutually agreed
upon by Buyer and Seller. The results of such surveyor's
verifications shall be made available promptly to each party. All
records of measurement and the computation results shall be
preserved and available to both parties for a period of not less
than three (3) years after such measurement and computation.
13.9 BTU Quantities Delivered
The quantity of BTU's delivered from LNG Tankers shall
be calculated by Seller following the procedures described in this
Section 13.9 and shall be verified by an independent surveyor
mutually agreed upon by Seller and Buyer.
(a) Determination of Gross Heating Value
The Gross Heating Value of samples of LNG shall be
determined by computation, in accordance with the method described
in Part I of Schedule A on the basis of the molecular composition
determined pursuant to Section 13.7 and of the molecular weights
and heating values described in "GPA Publication 2145" published by
GPA, current at the time of computation. If revised constants or
improved methods for determination of heating value are
subsequently adopted by GPA or other recognized competent impartial
authority, they shall, upon mutual agreement of Seller and Buyer,
be substituted therefor, but not retroactively. The Gross Heating
Value of the representative sample shall be conclusive for the
purpose of determining quantities of BTU's delivered.
(b) Determination of Volume of LNG Unloaded
The LNG volume in the tanks of an LNG Tanker before and
after unloading shall be determined by gauging as provided in
Section 13.5 on the basis of the tank gauge tables and correction
tables provided for in Section 13.4. The volume of LNG unloaded
shall be determined by deducting the total volume of LNG in all
tanks determined immediately after unloading is completed from the
total volume in all tanks determined immediately before unloading
is commenced. If failures of gauging and measuring devices of an
LNG Tanker should make it impossible to determine the LNG volume,
the volume of LNG delivered shall be determined by gauging the
liquid level in Buyer's on-shore LNG storage tanks immediately
before and after unloading such LNG Tanker, and such volume shall
be increased by adding an estimated LNG volume agreed upon by the
parties for boil-off due to unloading of LNG from such LNG Tanker
to on-shore LNG tanks and related pipelines. Buyer shall provide
Seller, or cause Seller to be provided with, a certified copy of
tank gauge tables for each on-shore LNG tank which is to be used
for this purpose, such tables to be verified by a competent
impartial authority.
(c) Determination of BTU Quantities Delivered
The quantities of BTU's delivered from LNG Tankers shall
be computed by Seller by means of the following formula:
Q = (V x D x P) - Qr
in which:
Q represents the quantity of the LNG delivered in
BTU's.
V represents the volume of the LNG unloaded, stated
in Cubic Meters, determined as provided in Section
13.9 (b).
D represents the density of the LNG unloaded, stated
in kilograms per Cubic Meter, determined as
provided in Section 13.5 (d).
P represents the Gross Heating Value of the LNG
unloaded, stated in BTU's per kilogram, determined
as provided in Section 13.9(a).
Qr represents the quantity in BTU's of the vapor
which displaced the volume of LNG unloaded from
the LNG tanks in the LNG Tankers.
Physical constants, calculation procedures and examples of BTU
determination are provided in Part I of Schedule A.
13.10 Verification of Accuracy and Correction for Error
Accuracy of devices used shall be tested and verified in
accordance with a schedule as recommended by the manufacturer
unless superseded by a mutually agreed schedule, and at any time if
requested by either party, including the request by a party to
verify accuracy of its own devices. Each party shall have the
right to inspect at any time the measurement devices installed by
the other party, provided that the other party be notified in
advance. Testing shall be performed only when both parties are
represented, or have received adequate advance notice thereof,
using methods recommended by the manufacturer or any other method
agreed to by Seller and Buyer. At the request of either party, any
test shall be witnessed and verified by an independent surveyor
mutually agreed upon by Buyer and Seller. Permissible tolerances
shall be as defined in Part III of Schedule A. Inaccuracy of a
device exceeding the permissible tolerances shall require
correction of previous recordings, and computations made on the
basis of those recordings, to zero error with respect to any period
which is definitely known or agreed upon by the parties, as well as
adjustment of the device. In the event that the period of error is
not known, cannot be agreed upon or cannot be determined from
available data, corrections shall be made for each delivery made
during the last half of the period since the date of the most
recent calibration of the inaccurate device. However, the
provisions of this Section 13.10 shall not be applied to require
the modification of any invoice that has become final pursuant to
Article 10.
13.11 Disputes
In the event of any dispute concerning the subject
matter of this Article 13, including, but not limited to, disputes
over selections of the type or accuracy of measuring devices, their
calibration, the result of measurement, sampling, analysis,
computation or method of calculation or conversion table, such
dispute shall be submitted to a competent impartial authority
mutually agreed upon by the parties. Expenses incurred in
connection with the services of such authority shall be shared
equally by the parties. If such authority cannot be agreed upon
within thirty (30) days of request by either party, such dispute
shall be decided by arbitration pursuant to Article 16. All
decisions of an authority acting under this Section 13.11 shall be
binding on the parties.
13.12 Costs and Expenses of Tests and Verifications
All costs and expenses for testing and verifying
Seller's measurement devices as provided for in this Article 13
shall be borne by Seller, and all costs and expenses for testing
and verifying Buyer's measurement devices shall be borne by Buyer.
Seller and Buyer shall bear equally the fees and charges of
independent surveyors for measurements and calculations in
Sections 13.8 and 13.9 and in Section 13.10 when provided for such
independent surveyors are required and selected by the parties.
<PAGE>
ARTICLE 14 - DUTIES, TAXES AND CHARGES
14.1 Indemnity by Buyer; Effect of Withholding
Buyer agrees to indemnify and hold harmless Seller from
any taxes, duties, royalties, assessments, charges (excluding Port
Charges, provided such charges are not in the nature of Taxes on
the income or profits of an LNG Tanker or its owner/operator or any
of (a) through (d) set forth below) or imposts, including any
additions or penalties due to late payment of any thereof
(collectively, "Taxes") levied or imposed by the Government of the
R.0.C. or any subdivision thereof, or any other governmental
authority in the R.0.C., on (a) the transportation, sale, value
added or import of LNG, (b) any revenues, income or profits
resulting therefrom (including revenues, income or profits
resulting from payments under this Section 14.1), (c) the LNG
itself or any documents, invoices or receipts provided in
connection therewith, and (d) LNG Tankers. If Buyer is obligated
in its remittance to Seller respecting any invoice to deduct or
withhold an amount for or with respect to Taxes, it shall
simultaneously pay to Seller such additional amount in U.S.
Dollars in immediately available funds as shall be necessary to
cause the total amount paid to Seller respecting such invoice
(including any such additional amount) to equal the amount which
would have been receivable by Seller in the absence of Buyer's
obligation to make such a deduction or withholding.
14.2 Seller's Cooperation with Buyer
Seller agrees, at all times during the term of this
Contract or any extension thereof, and to the extent reasonable and
practicable, to cooperate in minimizing Buyer's liability
(including any liability for additions or penalties due to the late
payment of Taxes) under Section 14.1; and insofar as Buyer's
liability relates to Taxes levied on revenues, income or profits
resulting from the sale or import of LNG, Seller agrees to conduct
all business and other activities with or in the R.0.C. so as not
to be deemed to be (w) a resident company, (x) engaged in a trade
or business directly, (y) maintaining a permanent establishment or
(z) doing business through a "business agent (as defined in the
Profit Seeking Enterprise Income Tax of the R.0.C.) in the R.0.C.
Further, if following the date of this Contract there shall occur
any change in the laws affecting taxation of the R.0.C. or any
subdivision thereof which, solely by reason thereof, would result
in Taxes being levied on Seller with respect to revenues, income or
profits resulting from the sale or import of LNG, Seller shall,
upon notice from Buyer, consult with Buyer and take such action as
may be reasonable and practicable to limit the amount of such
Taxes. Nothing in this Section 14.2 shall require Seller to take
or forego taking any action which would impair Seller's performance
of its obligations or enjoyment of its benefits under this
Contract.
<PAGE>
ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor Buyer shall be liable for any delay
or failure in performance hereunder if and to the extent such delay
or failure in performance is caused by any of the following:
(a) As to onshore facilities:
(i) fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado,
earthquake, landslide, soil erosion,
subsidence, washout, epidemic or other Act
of God;
(ii) war, riot, civil war, blockade,
insurrection, acts of public enemies or
civil disturbances;
(iii) strike, lockout or other industrial
disturbances;
(iv) with respect to Seller's onshore
facilities, including Natural Gas
reservoirs, production facilities in the
field, facilities for transportation of
Natural Gas from the field, facilities for
the treatment or liquefaction of Natural
Gas and facilities for the storage or
loading of LNG;
(A) accidental damage; or
(B) other damage or failure beyond the
reasonable control of Seller except
those failures occurring during the
process of testing and commissioning
new facilities which would normally be
anticipated to occur;
(v) with respect to Buyer's onshore facilities,
including facilities for unloading,
receiving or storage of LNG, facilities for
gas compression or regasification and the
facilities for transporting Natural Gas to
Buyer's Natural Gas distribution systems;
(A) accidental damage; or
(B) other damage or failure beyond the
reasonable control of Buyer except
those failures occurring during the
process of testing and commissioning
new facilities which would normally be
anticipated to occur;
(vi) full depletion of the Proved Remaining
Recoverable Reserves of Natural Gas in the
Gas Supply Area which are covered by the
most recent Certificate and which can
economically be produced unless such
depletion (other than depletion resulting
from accident or production of reserves of
Natural Gas from the Gas Supply Area for
sale as contemplated in Article 3) results
from an event or events within the
reasonable control of Seller;
(vii) delay in completion and testing of the
onshore facilities described in
subparagraphs (iv) and (v) above so as to
prevent the same from becoming operational
on a continuing basis, which delay is
caused by any of the events described in
subparagraphs (i) through (v) above or
(viii) below or by delay in receiving major
items of equipment or materials from the
manufacturer or vendor thereof, provided
that the party claiming such delay as an
event of force majeure shall have taken
all steps reasonably available to obtain
timely delivery of such items, including
the placing of purchase orders within such
time as was prudent under the circumstances
existing at the time; or
(viii) acts of government that directly affect the
ability of a party to perform any
obligation hereunder other than the
obligation to remit payments as provided in
Section 10.4 on account of LNG delivered
and taken or not taken but required to be
paid for under this Contract.
(b) As to LNG Tankers:
(i) delay in completion and testing of the
Dedicated Vessel so as to prevent the same
from becoming operational on a continuing
basis, provided that Seller shall have
taken all steps which could reasonably have
been expected and which are necessary to
fulfill its responsibility to provide
transportation under this Contract;
(ii) (A) loss of, or accidental damage to, an
LNG Tanker, or (B) other damage to or
failure of an LNG Tanker beyond the
reasonable control of Seller, provided that
Seller shall have taken all steps which
could reasonably have been expected and
which are necessary to fulfill its
responsibility to provide transportation
under this Contract;
(iii) fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado,
epidemic or other Act of God;
(iv) war, riot, civil war, blockade,
insurrection, acts of public enemies or
civil disturbances;
(v) strike, lockout or other industrial
disturbance occurring aboard an LNG Tanker
or at a port or other facility at which
such LNG Tanker calls;
(vi) acts of government; or
(vii) the unavailability because of force majeure
as described in subparagraphs (ii) through
(vi) above of any of the vessels contracted
to Seller on a long-term basis, other than
the Dedicated Vessel, together with
Seller's inability to obtain alternative
shipping despite its best efforts.
15.2 Notice; Resumption of Normal Performance
(a) Immediately upon the occurrence of an event of force
majeure that gives Seller or Buyer warning that the event may delay
or prevent the performance by Seller or Buyer of any of its
obligations hereunder, the party affected shall give notice thereof
to the other party describing such event and stating the
obligations the performance of which are, or are expected to be,
delayed or prevented, and (either in the original or in
supplemental notices) stating:
(i) the estimated period during which
performance may be suspended or reduced,
including, to the extent known or
ascertainable, the estimated extent of such
reduction in performance; and
(ii) the particulars of the program to be
implemented to ensure full resumption of
normal performance hereunder.
(b) In order to ensure resumption of normal performance
of this Contract within the shortest practicable time, the party
affected by an event of force majeure shall take all measures to
this end which are reasonable in the circumstances (which shall
include the provision by Seller of alternative shipping in the case
of force majeure affecting an LNG Tanker), taking into account the
consequences resulting from such event of force majeure. Prior to
resumption of normal performance the parties shall continue to
perform their respective obligations under this Contract to the
extent not prevented by such event of force majeure.
15.3 Settlement of Industrial Disturbances
Settlement of strikes, lockouts or other industrial
disturbances shall be entirely within the discretion of the party
experiencing such situations, and nothing herein shall require such
party to settle industrial disputes by yielding to demands made on
it when it considers such action inadvisable.
15.4 Termination for Force Majeure
In the event a party to this Contract suffers an event
of force majeure as defined in this Article 15 and as a result
thereof all deliveries of LNG hereunder are suspended for a period
of forty-two (42) consecutive calendar months, the other party
shall have the right to terminate this Contract by written notice
given within one hundred and eighty (180) days following the
expiration of such forty-two (42) month period, provided that in
the case of full depletion of recoverable reserves as provided in
Section 15.1(a)(vi) Buyer may terminate this Contract by written
notice within thirty (30) days of Seller's declaring force majeure
in such circumstances, unless prior to that date Seller shall have
reasonably demonstrated its willingness and ability to resume
deliveries hereunder within the said succeeding forty-two (42)
month period.
<PAGE>
ARTICLE 16 - ARBITRATION
All disputes arising between Seller and Buyer relating to
this Contract or the interpretation or performance hereof shall be
finally settled by arbitration conducted in the English language in
accordance with the Rules of Arbitration of the International
Chamber of Commerce in effect at the time by three (3) arbitrators
appointed in accordance with such Rules. Arbitration shall be held
in New York, New York, United States of America, unless another
location is selected by mutual agreement of the parties. The award
rendered by the arbitrators shall be final and binding upon the
parties, and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction over any party
concerned.
<PAGE>
ARTICLE 17 - APPLICABLE LAW
This Contract shall be governed by and interpreted in
accordance with the laws of the State of New York, United States of
America.
<PAGE>
ARTICLE 18 - JOINT COORDINATING COMMITTEE
Each of the parties shall promptly appoint
representatives to a joint technical and operating committee
("Joint Coordinating Committee"), which shall hold its first
meeting within sixty (60) days after the execution of this Contract
and thereafter at such intervals as shall be decided upon by the
Joint Coordinating Committee. The Joint Coordinating Committee and
such other technical representatives as may be designated shall
consult together to coordinate plans (a) relating to additions to
or modifications of the Badak Facility to accommodate deliveries
hereunder, (b) relating to LNG Tankers and (c) relating to the
construction of the Receiving Facility, so as to assure that such
facilities and LNG Tankers are compatible for all purposes and that
progress is being made in accordance with the project timetable
agreed to between the parties. Notwithstanding the foregoing, each
of Buyer and Seller shall regularly keep the other informed of its
progress with the timely performance of its respective obligations
hereunder and in particular shall immediately inform the other of
any significant delay envisaged in its respective performance.
<PAGE>
ARTICLE 19 - AUTHORIZATIONS AND APPROVALS
Each of Buyer and Seller represents and warrants that it
has obtained all governmental approvals and authorizations required
to execute and deliver this Contract, to be bound by the terms
hereof, to export and import, respectively, the LNG to be sold and
purchased hereunder and to construct the facilities required
pursuant to Article 5; and each further warrants and represents
that it has obtained, or will obtain in a timely manner, all
further approvals and authorizations which may be required for it
to perform its obligations hereunder.
<PAGE>
ARTICLE 20 - CONFIDENTIALITY
Information or documents furnished by one party to the
other party hereunder in connection with the performance of this
Contract and which the disclosing party identifies as confidential
may not be used or communicated to third parties without the
agreement of Seller, in the case of information and documents
furnished by Seller, and of Buyer, in the case of information and
documents furnished by Buyer. This restriction shall not apply to
information or documents to the extent that such information or
documents:
(i) without fault of the receiving party have become
available to the public;
(ii) are communicated to any of Seller's Suppliers or
any Affiliate of one of the parties or of Seller's
Suppliers with the obligation of the recipient to
maintain confidentiality;
(iii) are communicated to legal counsel, accountants,
other professional consultants or advisers, underwriters
or lenders of one of the parties, or other persons that
are participating in the implementation of the Badak III
Trade, with the obligation of the recipient to maintain
confidentiality;
(iv) are communicated to contractors for or operators
of the Badak Facility, the Loading Port, LNG Tankers or
the Receiving Facility, provided that such communication
is necessary for the performance by a party of its
obligations under this Contract and provided that said
contractors and operators shall be subject to an
obligation to maintain confidentiality; or
(v) are communicated to the government or governmental
authorities of the Republic of Indonesia, the R.0.C. or
the United States of America claiming authority to
require such disclosure, in accordance with that
authority.
<PAGE>
ARTICLE 21 - NOTICES
All notices and other communications for purposes of this
Contract shall be in writing in English, which shall include
transmission by telex or cable, except that notices given from
ships at sea may be by radio in English. Notices and
communications shall be directed as follows:
(a) To Seller at the following mail address:
PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA (PERTAMINA)
Attention: Bureau of Gas Marketing
Sub-Directorate of
Foreign Marketing
Medan Merdeka Timur 1A,
Jakarta Pusat, Indonesia.
and at the following cable and telex addresses:
Cable:
PERTAMINA
JAKARTA, INDONESIA VIA RCA
Attention: Bureau of Gas Marketing
Sub-Directorate of
Foreign Marketing
Telex:
PERTAMINA
44134 or 44152
JAKARTA, INDONESIA
(b) To Buyer at the following mail address:
CHINESE PETROLEUM CORPORATION
Attention: Director of Supply Department
83 Chung Hwa Road
TAIPEI, TAIWAN, REPUBLIC OF CHINA
and at the following cable and telex addresses:
Cable:
CHINESE PETROLEUM CORPORATION
Chinol Taipei
TAIPEI, TAIWAN, REPUBLIC OF CHINA
Telex:
CHINESE PETROLEUM CORPORATION
11215 Chinol
TAIPEI, TAIWAN, REPUBLIC OF CHINA
The parties may designate additional addresses for
particular communications as required from time to time, and may
any address, by notice given thirty (30) days in advance change of
such addition or change. Immediately upon receiving communications
by telex, cable or radio, a party shall acknowledge receipt by the
same means and may request a repeat transmittal of the entire
communication or confirmation of particular matters. If the sender
receives no acknowledgment of receipt within twenty-four (24) hours
or receives a request for repeat transmittal or confirmation, said
party shall repeat the transmittal or answer the particular
request. Unless otherwise expressly provided herein all notices
hereunder shall become effective upon receipt. Prior to the date
the initial delivery of LNG is to be made under this Contract the
parties shall establish radio channels, frequencies and procedures
for all communications between LNG Tankers, the Receiving Facility
and the authorities for the Unloading Port.
<PAGE>
ARTICLE 22 - ASSIGNMENT
Neither this Contract nor any rights or obligations
hereunder may be assigned by Buyer without the prior written
consent of Seller, or by Seller without the prior written consent
of Buyer.
<PAGE>
ARTICLE 23 - AMENDMENTS; NON-WAIVER
This Contract may not be amended, modified, varied or
supplemented except by an instrument in writing signed by the
president Director or other duly authorized representative for
Seller and by the Chairman or other duly authorized representative
for Buyer. Performance of any condition or obligation to be
performed hereunder shall not be deemed to have been waived or
postponed except by an instrument in writing signed by an
authorized signatory, as specified in the preceding sentence, of
the party who is claimed to have granted such waiver or
postponement. No omission, delay or forebearance on the part of
either party in requiring the due and punctual fulfillment by the
other party of any of its obligations under this Contract shall be
deemed to constitute a waiver of the right to require the
fulfillment of such obligation or the due and punctual fulfillment
of any other obligation, whether similar or otherwise, or a waiver
of any remedy it may have hereunder.
<PAGE>
ARTICLE 24 - IMPLEMENTATION
Seller and Buyer shall cooperate fully with each other in
implementing this Contract and performing their respective
obligations hereunder, including the drawing up of an
Implementation Procedure at such time and containing such details
as may be appropriate to facilitate the full and timely
implementation and performance of this Contract. In the event of
any conflict or inconsistency between the contents of the
Implementation Procedure and this Contract, then the provisions of
this Contract shall prevail.
<PAGE>
ARTICLE 25 - ENTIRE AGREEMENT
This Contract and any documents executed
contemporaneously herewith constitute the entire agreement between
the parties relating to the subject matter hereof and supersede and
replace any provisions on the same subject contained in any other
agreement between the parties prior to the execution of this
Contract, whether written or oral.
<PAGE>
ARTICLE 26 - LANGUAGE OF THE CONTRACT
This Contract shall be made and executed only in the
English language.
<PAGE>
ARTICLE 27 - HEADINGS
The headings and captions in this Contract are inserted
solely for the sake of convenience. and shall not affect the
interpretation or construction of this Contract.
<PAGE>
ARTICLE 28 - COUNTERPARTS
This Contract is executed in two (2) identical
counterparts, each of which shall have the force and dignity of an
original, and all of which shall constitute but one and the same
Contract.
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER:
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
BY: ______/s/_____________________
PRESIDENT DIRECTOR
BUYER:
CHINESE PETROLEUM
CORPORATION
BY ______/s/_______________________
CHAIRMAN OF THE
BOARD OF DIRECTORS
AMENDED AND RESTATED
DEBT SERVICE ALLOCATION AGREEMENT
THIS AGREEMENT made as of the 9th day of February, 1988,
among PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina") and ROY M. HUFFINGTON, INC. ("Huffco"), VIRGINIA
INTERNATIONAL COMPANY, ULTRAMAR INDONESIA LIMITED, VIRGINIA
INDONESIA COMPANY, UNION TEXAS EAST KALIMANTAN LIMITED, UNIVERSE
TANKSHIPS, INC., HUFFINGTON CORPORATION, TOTAL INDONESIE ("Total"),
UNOCAL INDONESIA, LTD. ("Unocal"), and INDONESIA PETROLEUM, LTD.
(herein collectively "Contractors" and individually "Contractor"),
W I T N E S S E T H :
WHEREAS, Pertamina and the Contractors are currently
parties to an agreement designated as Debt Service Allocation
Agreement No. 2, dated as of June 9, 1987 (the "Source Document");
and
WHEREAS, Pertamina and the Contractors are authorizing
the Bontang III Trustee to enter into a Financing Agreement and may
from time to time hereafter authorize one or more of the Trustees
to enter into other Financing Agreements, in each case to provide
for the borrowing of additional funds to pay certain costs of
Financed Capital Projects; and
WHEREAS, Pertamina and the Contractors wish to amend and
restate the Source Document in order to set forth the arrangements
which will hereafter govern the allocation among Pertamina and the
Contractors of the reduction in aggregate distributions under all
of the Trust Agreements resulting from Debt Service under the
Financing Agreements and certain other loan agreements;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the
meanings set forth below:
"Accountants" shall mean that firm of independent public
accountants appointed by the Producers pursuant to the provisions
of the Trust Agreements.
"Additional Debt Service" shall mean Debt Service with
respect to any Financing Agreement entered into hereafter which is
designated as Additional Debt Service under this Agreement by a
Debt Service Designation Memorandum.
"Aggregate Dollar Share" shall have the meaning specified
in Section 2.2.
"Allocation Trust Agreements" shall mean the Bontang II
Trust Agreement, the Bontang III Trust Agreement, the Bontang
Excess Sales Trust Agreement and the Bontang LPG Trust Agreement.
"Allocation Trustees" shall mean all of the trustees
under the Allocation Trust Agreements, collectively, and
"Allocation Trustee" shall mean one of such Allocation Trustees as
the context may require.
"Applicable Percentage" shall initially mean 22.57% in
the case of Common Facilities Debt Service and 77.43% in the case
of Relocation Debt Service, provided, however, that such
percentages are based upon estimated construction costs of the
facilities to be financed (U.S. $6.259 million for construction of
the new administration building, fire station and area I
maintenance facilities and U.S. $21.476 million for relocation of
facilities required for construction of liquefaction train "E")
and, upon the completion of construction thereof, the Producers
shall enter into an agreement supplemental to this Agreement
adjusting such percentages to the extent required to reflect the
actual costs of construction and shall give notice of any such
adjustment to the Allocation Trustees, and provided, further, that
any such adjustment shall not be retroactive but shall only apply
to calculations made hereunder after notice thereof is received by
the Allocation Trustees.
"Badak Jilco Debt Service" shall mean all Debt Service
with respect to the Badak Jilco Loan Agreement.
"Badak Jilco Loan Agreement" shall have the meaning
specified in the Bontang I trust Agreement.
"Badak III LNG Sales Contract" shall mean the agreement
so entitled dated as of March 19, 1987, as hereafter amended,
between Pertamina and Chinese Petroleum Corporation.
"Badak Special Accounts" shall have the meaning
specified in the Bontang I Trust Agreement.
"Badak Special Financing Debt Service" shall mean all
Debt Service with respect to the Badak Special Financing Agreement.
"Badak Special Financing Agreement" shall have the
meaning specified in the Bontang I Trust Agreement.
"Base Load Quantities" shall have the meaning specified
in the Bontang I Trust Agreement.
"Bontang I Trust Agreement" shall mean the Badak Trustee
and Paying Agent Agreement as amended and restated effective as of
the date of this Agreement, as hereafter amended, among the
Producers and Continental Bank International.
"Bontang I Trustee" shall mean the trustee under the
Bontang I Trust Agreement. "Bontang II Trust Agreement"
shall mean the Badak Expansion Trustee and Paying Agent Agreement
dated as of July 15, 1981, as amended to the date hereof and as
hereafter amended, among the Producers and Continental Bank
International.
"Bontang II Trustee" shall mean the trustee under the
Bontang II Trust Agreement.
"Bontang III Trust Agreement" shall mean the Bontang III
Trustee and Paying Agent Agreement dated as of the date hereof, as
hereafter amended, among the Producers and Continental Bank
International.
"Bontang III Trustee" shall mean the trustee under the
Bontang III Trust Agreement.
"Bontang Excess Sales Trust Agreement" shall mean the
Bontang Excess Sales Trustee and Paying Agent Agreement, as amended
and restated effective as of the date hereof, as hereafter amended,
among the Producers and Continental Bank International.
"Bontang Excess Sales Trustee" shall mean the trustee
under the Bontang Excess Sales Trust Agreement.
"Bontang LPG Trust Agreement" shall mean, when such
agreement becomes effective, the Bontang LPG Trustee and Paying
Agent Agreement to be entered into hereafter by the Producers and
Continental Bank International with respect to the proceeds of LPG
produced at the Bontang Plant, as such agreement may be thereafter
amended.
"Bontang LPG Trustee" shall mean, when the Bontang LPG
Trust Agreement becomes effective, the trustee thereunder.
"Bontang Plant" shall have the meaning specified in the
Processing Agreement.
"Borrowed Amounts" shall have the meaning specified in
Financing Agreement No. 3.
"Borrowing Trustee" shall mean any Trustee which is a
party to any of the Financing Agreements and "Borrowing Trustees"
shall mean all of such Borrowing Trustees, collectively.
"Calculation Percentage" shall have the meaning specified
in the Processing Agreement.
"Common Facilities Debt Service" shall mean all Debt
Service with respect to borrowings pursuant to Financing Agreement
No. 1 and the Applicable Percentage of Debt Service with respect to
borrowings pursuant to Tranche B.
"Contingent Support" shall mean amounts so designated
pursuant to any Trust Agreement which are paid to the Bontang III
Trustee for deposit in any of the Debt Service Accounts established
pursuant to the Bontang III Trust Agreement.
"Contingent Support Trustees" shall mean, collectively,
the Bontang Excess Sales Trustee and all other Trustees which may
hereafter enter into a Trust Agreement which provides for the
payment of Contingent Support, and "Contingent Support Trustee"
shall mean one of such Trustees as the context may require.
"Contractor" and "Contractors" are each defined in the
title paragraph of this Agreement.
"Debt Service" shall mean (i) amounts paid by any
Borrowing Trustee with respect to principal, interest and other
fees and expenses incurred by such Trustee under a Financing
Agreement, as the same are paid into a Debt Service Account (ii)
Contingent Support paid by any Contingent Support Trustee, as the
same is paid to the Bontang III Trustee and (iii) amounts paid by
the Bontang I Trustee with respect to principal, interest and other
fees and expenses under (a) the Badak Jilco Loan Agreement, as the
same are paid over to the Escrow Account and (b) the Badak Special
Financing Agreement, as the same are set aside in the Badak Special
Accounts. The term Debt Service shall not include, however (x)
such amounts at such times as actually paid from a Debt Service
Account to lenders or (y) amounts paid from Borrowed Amounts or
Contingent Support by the Bontang III Trustee into a Debt Service
Account established pursuant to the Bontang III Trust Agreement.
Except as hereinafter provided, any amounts paid by a Producer
pursuant to Sections 3.2, 3.3(a) or Part 4 of Producers Agreements
No. 1, 2 and 3, or the corresponding sections of any other
Producers Agreement, shall be deemed to be Debt Service paid by the
Borrowing Trustee which is a party to the Financing Agreement with
respect to which such payment was made. Any amount paid by a
Producer pursuant to any of the Producers Agreements which is paid
as a result of an event involving such Producer, or for which such
Producer is responsible, which (i) is not directly related to the
Bontang Plant, the supply of Natural Gas thereto, the production of
LNG or LPG thereat or the transportation or sale of LNG or LPG
therefrom and (ii) causes any amount payable to a Trustee under any
of the LNG Sales Contracts or any related agreement not to be paid
to such Trustee as contemplated by such LNG Sales Contract or
related agreement shall not be deemed to be Debt Service.
"Debt Service Accounts" shall mean (i) all accounts,
including any sub-accounts thereof, which a Borrowing Trustee opens
and into which it transfers LNG revenues or other funds in
anticipation of payments of principal, interest and other fees and
expenses pursuant to any of the Financing Agreements, (ii) the
Reserve Account, and (iii) the Escrow Account and (iv) the Badak
Special Accounts, and "Debt Service Account" shall mean one of such
Debt Service Accounts as the context may require.
"Debt Service Designation Memorandum" shall mean any
instrument so entitled hereafter entered into by the Producers in
order to designate any Debt Service as "Additional Debt Service"
hereunder and to specify the manner in which such Debt Service is
to be allocated under this Agreement.
"Escrow Account" shall have the meaning specified in the
Bontang I Trust Agreement.
"Estimated Debt Service Percentages" for each Producer
for any calendar year shall mean the percentages most recently
certified by the Accountants with respect to such Producer and such
year pursuant to Section 2.3(a).
"Excluded Quantities" shall mean that portion of the
BTU's loaded pursuant to the 1973 LNG Sales Contract which relates
to the quantities provided for in the supply Agreement dated
December 3, 1973 between Pertamina and the Huffco Group, as
originally executed.
"Financed Capital Projects" shall have the meaning
specified in the Processing Agreement.
"Financing Agreement No. 1" shall mean Bontang Capital
Projects Loan Agreement No. 1 dated as of September 10, 1986, as
amended to the date hereof and as hereafter amended, entered into
by the Bontang I Trustee and providing for the borrowing of up to
U.S. $43,700,000.
"Financing Agreement No. 2" shall mean Bontang Capital
Projects Loan Agreement No. 2 dated as of June 9, 1987, as amended
to the date hereof and as hereafter amended, entered into by the
Bontang I Trustee and providing for the borrowing of up to U.S.
$148,800,000, divided into Tranche A and Tranche B.
"Financing Agreement No. 3" shall mean the Bontang III
Loan Agreement dated as of the date hereof, as hereafter amended,
entered into by the Bontang III Trustee and providing for the
borrowing of up to U.S. $316,000,000.
"Financing Agreements" shall mean Financing Agreement No.
1, Financing Agreement No. 2, Financing Agreement No. 3 and all
loan, credit or other similar agreements which a Trustee may enter
into hereafter with respect to which Additional Debt Service is
payable.
"Huffco" is defined in the title paragraph of this
Agreement.
"Huffco Group" shall mean Huffco, Virginia International
Company, Ultramar Indonesia Limited, Virginia Indonesia Company,
Union Texas East Kalimantan Limited, Universe Tankships, Inc., and
Huffington Corporation and their predecessors or successors in
interest.
"LNG" shall have the meaning specified in the Processing
Agreement.
"1973 LNG Sales Contract" shall mean the LNG Sales
Contract dated as of December 3, 1973, as heretofore and hereafter
amended, between Pertamina and various Japanese buyers of LNG.
"LNG Sales Contracts" shall have the meaning specified in
the Processing Agreement.
"LPG" shall have the meaning specified in the Processing
Agreement.
"Natural Gas" shall have the meaning specified in the
Processing Agreement.
"Pertamina" is defined in the title paragraph of this
Agreement.
"Plant Operator" shall have the meaning specified in the
Processing Agreement.
"Processing Agreement" shall mean the Bontang LNG
Processing Agreement originally dated as of July 1, 1983, as
amended and restated effective as of the date hereof, as hereafter
amended, among the Producers and the Plant Operator.
"Producer" shall mean each of Pertamina and the
Contractors, and "Producers" shall mean, collectively, all of
Pertamina and the Contractors.
"Producers Agreement No. 1" shall mean the agreement
entitled "Producers Agreement" dated as of September 10, 1986, as
amended to the date hereof and as hereafter amended, among
Pertamina and the Huffco Group and the lenders under Financing
Agreement No. 1.
"Producers Agreement No. 2" shall mean the agreement so
entitled dated as of June 9, 1987, as amended to the date hereof
and as hereafter amended, among Pertamina and the Huffco Group and
the lenders under Financing Agreement No. 2.
"Producers Agreement No. 3" shall mean the Bontang III
Producers Agreement dated as of the date hereof, as hereafter
amended, among the Producers and the lenders under Financing
Agreement No. 3.
"Producers Agreements" shall mean Producers Agreement
No. 1, Producers Agreement No. 2, Producers Agreement No. 3 and all
similar agreements so entitled which any of the Producers may
hereafter enter into with lenders under a Financing Agreement, as
the same may be amended hereafter.
"Producers' Percentage" shall have the meaning specified
in the Processing Agreement, except that solely for purposes of
allocating the Debt Service related reductions in distributions in
accordance with this Agreement the "Producers' Percentage", as to
each of Pertamina and the Huffco Group and Pertamina and the Total
Group, and as to the 1973 LNG Sales Contract and as to each other
LNG Sales Contract in respect of which (i) the revenues thereunder
are subject to sharing in accordance with the Badak Gas Unit East
Kalimantan Joint Operating Agreement executed on June 25, 1977 (but
effective as of January 1, 1976) and (ii) no supply agreement or
related memorandum otherwise establishes an alternate method for
the sharing of such revenues, shall be deemed to be 97.9% for
Pertamina and the Huffco Group and 2.1% for Pertamina and the Total
Group.
"Provisional Debt Service" shall mean, with respect to
any Debt Service, payments by any Allocation Trustee to reimburse
Producers which have borne more than their respective Estimated
Debt Service Percentages of such Debt Service, together with
interest on the Reimbursement Amount from and including the date of
such Debt Service payment to, but not including, the date of such
reimbursement, at the rate equal to the weighted average of the
interest rates in effect under Financing Agreement No. 3 on the
date of such reimbursement.
"Reimbursement Amount" shall mean the amount of any
Provisional Debt Service payment other than the portion thereof
attributable to interest on said reimbursement amount.
"Relocation Debt Service" shall mean the Applicable
Percentage of Debt Service with respect to borrowings pursuant to
Tranche B.
"Reserve Account" shall have the meaning specified in the
Bontang III Trust Agreement.
"Sales Contract's Percentage" shall have the meaning
specified in the Processing Agreement.
"Sharing Percentages", as to any Trust Agreement, shall
have the meaning specified in such Trust Agreement.
"Second Dock Debt Service" shall mean Debt Service with
respect to borrowings pursuant to Tranche A.
"Supply Agreement" shall have the meaning specified in
the Processing Agreement.
"Total" is defined in the title paragraph of this
Agreement.
"Total Group" shall mean Total and Indonesia Petroleum,
Ltd. and their successors in interest.
"Train E Debt Service" shall mean all Debt Service with
respect to Financing Agreement No. 3.
"Tranche A" shall mean the tranche so designated in
Financing Agreement No. 2, in the maximum principal amount of U.S.
$121,800,000.
"Tranche B" shall mean the tranche so designated in
Financing Agreement No. 2, in the maximum principal amount of U.S.
$27,000,000.
"Trust Agreements" shall mean, collectively, the
Bontang I Trust Agreement, the Bontang II Trust Agreement, the
Bontang III Trust Agreement, the Bontang Excess Sales Trust
Agreement and the Bontang LPG Trust Agreement and all other similar
agreements hereafter entered into by Pertamina and Continental Bank
International, and "Trust Agreement" shall mean one of such Trust
Agreements as the context may require.
"Trustees" shall mean the trustees under the Trust
Agreements, and "Trustee" shall mean one of such Trustees as the
context may require.
"Unocal" is defined in the title paragraph of this
Agreement.
"Unocal Group" shall mean Unocal and Indonesia Petroleum,
Ltd. and their successors in interest.
ARTICLE 2
ALLOCATION OF DEBT SERVICE
2.1 Distributions with respect to Sharing Percentages
under the Allocation Trust Agreements shall be adjusted in a manner
which will cause the reduction in aggregate distributions under all
of the Trust Agreements resulting from Debt Service paid during
each calendar year to be allocated among the Producers in
accordance with this Article 2.
2.2 The share of each Producer in the reduction in
aggregate distributions with respect to Sharing Percentages
attributable in each calendar year to:
- Common Facilities Debt Service shall be equal to its
Calculation Percentage(s) of its Producers' Percentage(s) of
each Sales Contract's Percentage of such Debt Service paid by
the Bontang I Trustee during such calendar year;
- Second Dock Debt Service shall be equal to its
Calculation Percentage(s) of its Producers' Percentage(s) of
each Sales Contract's Percentage (in this instance such Sales
Contract's Percentages being calculated as if the Excluded
Quantities had not been loaded and as if no LPG had been
loaded) of such Debt Service paid by the Bontang I Trustee
during such calendar year;
- Relocation Debt Service shall be equal to its
Calculation Percentage(s) of its Producers' Percentage as to
the Badak III LNG Sales Contract of such Debt Service paid by
the Bontang I Trustee during such calendar year;
- Train E Debt Service shall be equal to its Calculation
Percentage(s) of its Producers' Percentage as to the Badak III
LNG Sales Contract of such Debt Service paid by the Bontang
III Trustee and the Contingent Support Trustees during such
calendar year;
- Badak Jilco Debt Service and Badak Special Financing
Debt Service shall be equal to its Calculation Percentage(s)
of its Producers' Percentage(s), if any, as to the Base Load
Quantities under the 1973 LNG Sales Contract of such Debt
Service paid by the Bontang I Trustee during such calendar
year; and
- Additional Debt Service shall be as provided in the
Debt Service Designation Memorandum with respect thereto.
The portion of aggregate Debt Service which each Producer
is required to bear during any period is herein called its
"Aggregate Dollar Share" for such period.
2.3(a) On or before the 20th day of December in each
calendar year (initially for 1988, on the date of the execution and
delivery of this Agreement) the Accountants shall calculate and
deliver by telex to the Allocation Trustees and each Producer a
certificate setting forth the Estimated Debt Service Percentages
for each Producer of each of (i) the estimated Common Facilities
Debt Service, (ii) the estimated Second Dock Debt Service, (iii)
the estimated Relocation Debt Service, (iv) the estimated Train E
Debt Service, (v) the estimated Badak Jilco Debt Service and Badak
Special Financing Debt Service and (vi) any estimated Additional
Debt Service, to be paid during the following calendar year (for
1988 in the case of the first such calculation). Within 5 business
days after the 10th day of March, June and September in each
calendar year the Accountants shall re-calculate and deliver by
telex to the Allocation Trustees and each producer revised
Estimated Debt Service Percentages for the current calendar year.
The Estimated Debt Service Percentage for each Producer of:
- the estimated Common Facilities Debt Service shall be
its Calculation Percentage(s) of its Producers' Percentage(s)
of the latest estimate of each Sales Contract's Percentage for
the calendar year in question as prepared by the Plant
Operator pursuant to Article 11 of the Processing Agreement;
- the estimated Second Dock Debt Service shall be its
Calculation Percentage(s) of its Producers' Percentage(s) of
the latest estimate of each Sales Contract's Percentage (in
this instance such Sales Contract's Percentages being
calculated as if the Excluded Quantities had not been loaded
and as if no LPG had been loaded) for the calendar year in
question as prepared by the Plant Operator pursuant to Article
11 of the Processing Agreement;
- the estimated Relocation Debt Service shall be its
Calculation Percentage(s) of its Producers' Percentage(s) as
to the Badak III LNG Sales Contract;
- the estimated Train E Debt Service shall be its
Calculation Percentage(s) of its Producers' Percentage(s) as
to the Badak III LNG Sales Contract;
- the estimated Badak Jilco Debt Service and Badak
Special Financing Debt Service shall be equal to its
Calculation Percentage(s) of its Producers' Percentage(s), if
any, as to the Base Load Quantities under the 1973 LNG Sales
Contract; and
- the estimated Additional Debt Service shall be as
provided in the Debt Service Designation Memorandum with
respect thereto.
(b) (i) Within the first 5 business days of April, July
and October in each calendar year, the Accountants shall calculate
the Aggregate Dollar Share for each Producer of the Debt Service
paid during the current calendar year through the end of the
immediately preceding calendar quarter. These end-of-quarter,
year-to-date calculations shall be based upon the latest estimate
of the Sales Contract's Percentages (where applicable) for the
calendar year in question as prepared by the Plant Operator
pursuant to Article 11 of the Processing Agreement.
(ii) Within 10 business days after the end of each
calendar year, the Accountants shall calculate the Aggregate Dollar
Share for each Producer of the Debt Service paid during such
calendar year. This year-end calculation shall be based upon the
actual Sales Contract's Percentages (where applicable) for such
calendar year.
(c) When making each of the calculations under clause
(b) of this Section 2.3, the Accountants shall also calculate the
portion of the Debt Service paid during the period in question
which has actually been borne by each Producer. For this purpose:
(i) the amount actually borne by each Producer in
respect of Debt Service paid during the calendar quarter ended
immediately prior to the making of such calculation shall be
equal to (the sum of A, B and C) minus D, where:
- A equals the aggregate amount by which Sharing
Percentage distributions to such Producer by the
Borrowing Trustees, the Contingent Support Trustees and
the Bontang I Trustee were reduced during such quarter by
reason of Debt Service paid by such Trustees,
- B equals the aggregate amount of any Debt
Service paid by such Producer during such quarter
pursuant to Producers Agreements,
- C equals the Reimbursement Amount of the
aggregate amount of any Provisional Debt Service funded
by such Producer during such quarter through a reduction
in Sharing Percentage distributions to such Producer
pursuant to the Allocation Trust Agreements, and
- D equals the Reimbursement Amount of the
aggregate amount of any Provisional Debt Service payments
received by such Producer during such quarter pursuant to
the Allocation Trust Agreements; and
(ii) the amount actually borne by each Producer of Debt
Service paid during the current calendar year through the end
of the calendar quarter immediately preceding that referred to
in sub-clause (i) above shall equal the amount borne by each
Producer as of the end of such preceding calendar quarter as
previously determined in accordance with this clause (c).
Each of the above calculations shall be adjusted by the amount of
any increases or decreases pursuant to clauses (d) or (e) of this
Section 2.3 in the Sharing Percentage distributions made to such
Producer pursuant to the Allocation Trust Agreements during the
period in question. (d) In the event that a comparison
of the calculations made at the end of a calendar quarter or at the
end of a calendar year, as the case may be; pursuant to clauses (b)
and (c) of this Section 2.3 indicates that any Producer has borne
more than its Aggregate Dollar Share of Debt Service during the
period in question, the Accountants shall deliver by telex to each
Producer a certificate to this effect and instruct the Allocation
Trustees to pay to the Producers which have borne more than their
Aggregate Dollar Shares for the period in question, pro rata in
proportion to the excess amount borne by each such Producer, all
amounts otherwise distributable with respect to Sharing Percentages
under the Allocation Trust Agreements to the Producers which have
borne less than their Aggregate Dollar Shares for the period in
question until each Producer which has borne more than its
Aggregate Dollar Share shall have received the amount stated in the
certificate as the excess amount borne by such Producer.
(e) The Accountants shall also calculate, and reflect in
each certificate delivered pursuant to clause (d) of this
Section 2.3, the amount of any adjustments which may be required to
give retroactive effect to any changes in Producers' Percentages
effected from time to time by, or pursuant to, Article 2 of the
Supply Agreements with respect to the Badak III LNG Sales Contract,
so as to cause Debt Service to be allocated hereunder in the same
manner as it would have been allocated had such changes become
effective on June 9, 1987. Any adjustment amount due to a Producer
pursuant to this clause (e) shall not bear interest.
2.4 In connection with the adjustments under Section 2.3
hereof to be made at the end of each calendar year, interest earned
on the funds in any disbursement trust agreement entered into in
connection with a Financing Agreement in respect of the calendar
year involved (and not disbursed pursuant to payment instructions)
shall be apportioned by the Accountants among the Producers in the
same proportions as the Producers bore the Debt Service with
respect to such Financing Agreement for such calendar year. After
having made the foregoing calculations, the Accountants shall
instruct each Trustee which has the authority to instruct a
disbursement trustee (with a copy of such instructions to be sent
by telex or facsimile to each Producer) to instruct the appropriate
disbursement trustee(s) to distribute from the disbursement trusts
to such Trustee an amount equal to such net interest for the
preceding calendar year and such Trustee shall distribute from the
amount so received to each of the Producers the portion of such net
interest amount allocated to it.
2.5 In order to give effect to the provisions of this
Article 2:
(a) The Producers shall cause the Plant Operator to
furnish to the Accountants the statements of the Sales Contract's
Percentages provided for in Section 11.01 of the Processing
Agreement, except that such statements for a completed calendar
year shall be furnished as soon as practicable after the end of
such calendar year.
(b) The Producers shall, to the extent necessary, cause
amendments to be made to the Trust Agreements which require the
Trustees (i) to act in accordance with instructions and other
directives given to the Trustees from time to time by the
Accountants in accordance with the terms of this Agreement, (ii) to
provide to the Accountants such information as to Debt Service,
Provisional Debt Service and other matters as is necessary to
enable the Accountants to perform their functions hereunder in a
timely manner, and (iii) to cause the Allocation Trustees to make
Provisional Debt Service payments which will, to the nearest extent
practicable, assure that each Producer bears the share of Debt
Service contemplated by this Agreement.
(c) In the event any Trustee shall make a payment of
Debt Service in excess of the amount actually required to be paid
but shall correct such overpayment prior to the inclusion of the
overpaid amount in any determination hereunder of Debt Service
borne by the Producers, such overpaid amount shall be disregarded
for purposes of all such determinations.
(d) In the event any Producer makes a payment pursuant
to a Producers Agreement which such Producer claims should be
deemed Debt Service, such Producer shall promptly provide to the
Accountants (with a copy to each other Producer and the Borrowing
Trustee which is a party to the Financing Agreement with respect to
which such payment was made) such information as is necessary to
demonstrate that such payment constitutes Debt Service as defined
herein and to establish the type of Debt Service so paid.
2.6 The provisions of this Article 2 are intended solely
for the benefit of the Producers and for the making of adjustments
among themselves and are not intended and shall not be interpreted
to require any payment by any Producer to the Trustees or to any
lender under the Financing Agreements, the Badak Special Financing
Agreement, the Badak Jilco Loan Agreement or any other loan or
credit agreement.
2.7 Producers Agreements may provide for certain
payments to be made thereunder in accordance with pre-tax
percentage interests of the Producers. Any use of such pre-tax
percentages is based upon the assumption that any payment made on
the basis thereof constituting Debt Service will constitute a
currently deductible expense for purposes of income taxes imposed
by The Republic of Indonesia. In the event any Producer makes a
payment pursuant to any such Producers Agreement which is deemed to
be Debt Service hereunder, the Producers will use their best
efforts to assure that such payment is so deductible by any
Producer which bears the cost thereof pursuant to the terms hereof.
In the event such payment should ultimately be determined not to be
so deductible by any Producer, the amounts payable to the Producers
under the Trust Agreements will be adjusted so as to achieve the
same economic result as if such deduction had been allowed. Any
adjustment made pursuant to the foregoing provisions shall be
without prejudice to rights of any Producer pursuant to any other
agreements among any Producers.
2.8 Interest or any other income arising out of
investment of funds in a Debt Service Account established with
respect to any Financing Agreement, the Badak Special Financing
Agreement or the Badak Jilco Loan Agreement shall be credited to
such account and retained therein until being applied to Debt
Service or distributed in accordance with this Section 2.8. A
separate sub-account of the Debt Service Account under the Bontang
I Trust Agreement shall be established for Debt Service with
respect to borrowings pursuant to Financing Agreement No. 1,
Tranche A and Tranche B, respectively. Interest or any other
income arising out of the investment of funds in each such sub-
account shall be allocated to the sub-account for which such
investment was made. Upon receipt of (a) notice from Pertamina of
the payment in full of the final installment of principal of,
accrued interest on and all other amounts due with respect to, the
loan and all tranches thereof made pursuant to any Financing
Agreement, the Badak Special Financing or the Badak Jilco Loan
Agreement and (b) notice from the relevant Trustee of the amount
then held in the relevant Debt Service Accounts, the Accountants
shall apportion the amount then held in such Debt Service Accounts
among the Producers in accordance with their respective Estimated
Debt Service Percentages of each type of Debt Service for which
such amount is held, as most recently determined pursuant to
Section 2.3(a). After having made the foregoing calculations, the
Accountants shall instruct such Trustee (with a copy of such
instructions to be sent by telex or facsimile to each Producer) to
distribute to each of the Producers the portion of such amount
allocated to it.
2.9 Solely for purposes of allocating the Debt Service
related reduction in aggregate distributions under the Trust
Agreements, the portion of each Debt Service payment made by the
Bontang I Trustee which is attributable to Common Facilities Debt
Service, Second Dock Debt Service and/or Relocation Debt Service
shall be determined as provided in this Section 2.9. All
references in this Section 2.9 to "clauses" are to the specified
clauses of Section 14.2 of the Bontang I Trust Agreement and all
references to accounts are to those established pursuant to the
Bontang I Trust Agreement.
(i) Any such payment to the Debt Service Account made in
compliance with the fifth sentence of clause (c) shall be deemed
attributable to the Debt Service payments required by all notices
pursuant to clause (b) then in effect, and shall be allocated among
those of the above types of Debt Service with respect to which such
payments are then required, on a pro rata basis in proportion to
the amount of Debt Service so required for each such type.
(ii) Any such payment to the Debt Service Account made in
compliance with the sixth sentence of clause (c) shall be deemed
attributable to the Debt Service payments required by all notices
from Pertamina pursuant to such sentence then in effect, and shall
be allocated among those of the above types of Debt Service with
respect to which such payments are then required, on a pro rata
basis in proportion to the amount of Debt Service so required for
each such type.
(iii) Any such payment made in compliance with clause
(e) shall be deemed attributable to the Debt Service required by
all notices pursuant to such clause then in effect, and shall be
allocated among those of the above types of Debt Service with
respect to which such payments are then required, on a pro rata
basis in proportion to the amount of Debt Service so required for
each such type.
(iv) Any such payment to the Debt Service Account made in
compliance with the second sentence of clause (f) for deposit in
the Acceleration Account established thereby, or the fifth sentence
of clause (f) for payment to the Affected Lenders specified
therein, shall be deemed attributable to the Debt Service then
required for all such deposits or payments to Affected Lenders, and
shall be allocated among those of the above types of Debt Service
with respect to which such deposits or payments are then required,
on a pro rata basis in proportion to the aggregate amount of such
deposits and payments required for each such type.
(v) Any such payment to the Debt Service Account made in
compliance with clause (g) shall be deemed attributable to the Debt
Service required by all notices pursuant to such clause then in
effect, and shall be allocated among those of the above types of
Debt Service with respect to which such payments are then required,
on a pro rata basis in proportion to the outstanding principal
amount of Trustee Indebtedness (as defined in the Bontang I Trust
Agreement) owed with respect to each such type.
(vi) Any amount paid by a Producer pursuant to a
Producers Agreement which constitutes Debt Service hereunder shall
be deemed attributable to and allocated to the type(s) of Debt
Service paid by such Producer.
ARTICLE 3
MISCELLANEOUS
3.1 Effective as of the date first above written, the
Source Document shall be amended and restated in its entirety as
provided herein, and, as so amended and restated, this Agreement
shall remain in effect until all loans to the Borrowing Trustees
pursuant to Financing Agreements and all loans pursuant to the
Badak Special Financing Agreement and the Badak Jilco Loan
Agreement have been repaid in full and all adjusting payments
required by this Agreement have been finally determined and
settled.
3.2 ALL DISPUTES ARISING IN CONNECTION WITH THIS
AGREEMENT OR THE INTERPRETATION OR PERFORMANCE HEREOF, 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 JUDICIAL ACCEPTANCE OF
THE AWARD AND AN ORDER OF ENFORCEMENT, AS THE CASE MAY BE. ANY
AWARD MADE UNDER THIS SECTION 3.2 SHALL BE BINDING UPON ALL PARTIES
CONCERNED.
3.3 All notices, approvals, instructions and other
communications for purposes of this Agreement shall be in writing,
which shall include transmission by cable, telex or facsimile
transmission. All communications given by cable, telex or
facsimile transmission shall be directed as follows:
A. To Pertamina at the following mail, cable,
telex and telecopier addresses:
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (Pertamina)
Jalan Medan Merdeka Timur 1-A
Jakarta
INDONESIA
Attention: LNG Coordinator
Cable: Pertamina
Jakarta
Attention: LNG Coordinator
Telex: 44134, 44152, 44441 or 44302
(Answerback: PTMJKT IA)
Telecopier No: 62-21343882
B. To the Contractors comprising the Huffco Group
at the following mail, telex and telecopier
addresses:
HUFFCO INDONESIA
P. O. Box 2828
Jakarta
INDONESIA
Attention: Vice President - Finance
Telex: 44421
(Answerback: HUFFCO IA)
Telecopier No: 62-213800037
c.c. Roy M. Huffington, Inc.
P. O. Box 4455
Houston, Texas 77210
U.S.A.
Attention: Vice President - Finance
Telex: 762810
(Answerback: HUFFCO HOU)
Telecopier No: 1-713-651-0104
C. To the Contractors comprising the Total Group at
the following mail, cable, telex and telecopier
addresses:
TOTAL INDONESIE
Tromolpos 10
Jakarta 10002
INDONESIA
Cable: Totalindo Jakarta
Telex: 44108
(Answerback: TOTAL JKT)
Telecopier: 62-21 520 0834
D. To the Contractors comprising the Unocal Group
at the following mail, telex and telecopier
addresses:
UNOCAL INDONESIA, LTD.
Ratu Plaza Office Tower, 7th Floor
Jalan Jenderal Sudirman
Jakarta
INDONESIA
Telex: 47335
(Answerback: UNOCAL IA)
Telecopier No: 62-21 711 954
Each of Vico, Total and Unocal is hereby designated the
representative of the Contractors comprising its respective group
for the giving and receipt of notices, approvals, instructions and
other communications under this Agreement. A new or successor
representative may be designated by notice to such effect signed by
all the Contractors comprising a group given to the other parties
to this Agreement ten days in advance of any such change. Until
receipt of any such notice, the other parties to this Agreement may
rely on any notice, approval, instruction or other communication
from or to the representative of a group as binding upon each of
the Contractors in such group, provided, however, that nothing in
this Agreement is intended to grant to the representative of a
group (or any successor representative designated pursuant to this
Section 3.3) any power or authority as among the Contractors in
such group themselves.
The representatives of each group may designate
additional addresses for particular communications as required from
time to time, and may change any address, by notice given ten days
in advance of such additions or changes. Immediately upon
receiving communications by cable, telex or facsimile transmission,
a party may request a repeat transmittal of the entire
communication or confirmation of particular matters.
3.4 This Agreement may not be amended, modified, varied
or supplemented except by a written agreement signed by the parties
hereto.
3.5 THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES
OF AMERICA.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its duly authorized representative
as of the date first above written.
PERUSAHAAN PERTAMBANGAN UNION TEXAS EAST KALIMANTAN
MINYAK DAN GAS BUMI LIMITED
NEGARA (PERTAMINA)
By: __________/S/_____________ By: ___________/S/_______________
ROY M. HUFFINGTON, INC. UNIVERSE TANKSHIPS, INC.
By: _________/S/______________ By: ___________/S/_______________
VIRGINIA INTERNATIONAL COMPANY HUFFINGTON CORPORATION
By: _________/S/______________ By: ___________/S/_______________
ULTRAMAR INDONESIA LIMITED TOTAL INDONESIE
By: ________/S/_______________ By: ___________/S/_______________
VIRGINIA INDONESIA COMPANY UNOCAL INDONESIA, LTD.
By: ________/S/_______________ By: ___________/S/_______________
INDONESIA PETROLEUM, LTD.
By: ___________/S/__________
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
COSMO OIL CO., LTD.
AS BUYER
DATED
15 JULY 1986<PAGE>
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
MITSUBISHI CORPORATION
AS BUYER
DATED
15 JULY 1986<PAGE>
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
NIPPON PETROLEUM GAS CO., LTD.
AS BUYER
DATED
15 JULY 1986
<PAGE>
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
SHOWA SHELL SEKIYU K.K.
AS BUYER
DATED
15 JULY 1986
<PAGE>
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
KYODO OIL CO., LTD.
AS BUYER
DATED
15 JULY 1986
<PAGE>
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
IDEMITSU KOSAN CO., LTD.
AS BUYER
DATED
15 JULY 1986
<PAGE>
ARUN AND BONTANG
LPG
SALES AND PURCHASE CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
AS SELLER
AND
MITSUI LIQUEFIED GAS CO., LTD.
AS BUYER
DATED
15 JULY 1986
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and COSMO OIL CO., LTD., a corporation organized
under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and MITSUBISHI CORPORATION, a corporation organized
under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and NIPPON PETROLEUM GAS CO., LTD., a corporation
organized under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and SHOWA SHELL SEKIYU K.K., a corporation organized
under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and KYODO OIL CO., LTD., a corporation organized
under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and IDEMITSU KOSAN CO., LTD., a corporation organized
under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
LPG SALES AND PURCHASE CONTRACT
THIS CONTRACT, dated as of the 15th day of July, 1986, is made
by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
("Pertamina"), a State Enterprise of the Republic of Indonesia, on
the one hand, and MITSUI LIQUEFIED GAS CO., LTD., a corporation
organized under the laws of Japan, on the other hand.
In consideration of the mutual agreements contained herein,
the parties hereto hereby agree as follows:
<PAGE>
ARTICLE 1 -- DEFINITIONS
The terms or expressions below shall have the following
meanings in this Contract:
1.1 Accepted Date Range(s)
Nominated Date Range(s) acceptable to Seller or date
range(s) established by Seller pursuant to Article 11.4.
1.2 Accepted Quantities
Nominated quantities acceptable to seller or quantities
established by seller in accordance with Article 11.4.
1.3 Affiliate
In relation to a corporation or other entity, a
corporation or other entity which is controlled by, which
controls, or which is controlled by a corporation or
other entity which also controls, that corporation or
other entity.
1.4 Allotted Laytime
As defined in Article 13.3.
1.5 Annual Demurrage Rate
As defined in Article 13.4
1.6 Annual Program
As defined in Article 11.1.
1.7 Arun Facilities
The Arun LNG Facilities and the Arun LPG Facilities.
1.8 Arun Gas Supply Area
The contract area of the Mobil Production Sharing
Contract and such other nearby contract areas in North
Sumatra, Indonesia, as Seller may designate from time to
time.
1.9 Arun Loading Port
The port at the Arun Facilities.
1.10 Arun LNG Facilities
The LNG liquefaction plant facilities located in Blang
Lancang, Lhok Seumawe, Aceh, Indonesia, including
liquefaction trains and LNG storage, loading and related
facilities and the Natural Gas transmission pipelines to
the liquefaction plant.
1.11 Arun LPG Facilities
The facilities in the contract area of the Mobil
Production Sharing Contract for separation of LPG from
Natural Gas and related equipment and facilities;
facilities located in, at or near the Arun LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal; and the LPG transmission pipelines from
the contract area of the Mobil Production Sharing
Contract to the Arun LPG Facilities at the Arun LNG
Facilities.
1.12 Bontang Facilities
The Bontang LNG Facilities and the Bontang LPG
Facilities.
1.13 Bontang Loading Port
The port at the Bontang Facilities.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
COSMO OIL CO., LTD., a corporation organized under the
laws of Japan, or the successor(s) in interest of such
corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
MITSUBISHI CORPORATION, a corporation organized under the
laws of Japan, or the successor(s) in interest of such
corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
NIPPON PETROLEUM GAS CO., LTD., a corporation organized
under the laws of Japan, or the successor(s) in interest
of such corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
SHOWA SHELL SEKIYU K.K., a corporation organized under
the laws of Japan, or the successor(s) in interest of
such corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
KYODO OIL CO., LTD., a corporation organized under the
laws of Japan, or the successor(s) in interest of such
corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
IDEMITSU KOSAN CO., LTD., a corporation organized under
the laws of Japan, or the successor(s) in interest of
such corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.14 Bontang LNG Facilities
The LNG liquefaction plant facilities located in Bontang,
East Kalimantan, Indonesia, including liquefaction trains
and LNG storage, loading and related facilities and the
Natural Gas transmission pipelines to the liquefaction
plant.
1.15 Bontang LPG Facilities
The facilities in, at or near the Bontang LNG Facilities
for separation of LPG from Natural Gas and for
liquefaction and fractionation of LPG, as well as all
related equipment and facilities; Propane and Butane
storage, loading and related facilities including the
Loading Terminal.
1.16 Business Day
Every day other than a Saturday or Sunday or other day on
which commercial banks are authorized to close in the
city in which the bank designated by Seller or Buyer, as
the case may be, pursuant to Article 10.4 is located.
1.17 Butane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.18 Buyers
MITSUI LIQUEFIED GAS CO., LTD., a corporation organized
under the laws of Japan, or the successor(s) in interest
of such corporation, or the permitted assignee(s) of such
corporation or such successor(s) in interest.
1.19 Calculation Date
As defined in Article 6.1.
1.20 Calculation Quantities
As defined in Article 6.2.
1.21 Conditions of Use
The conditions in effect at the Loading Port at any time
as applied by the operator of each Loading Terminal
(including requirements for undertakings as to
liabilities of an LPG Tanker, its owner, operator or
charterer and a Buyer) under which an LPG Tanker is
permitted to enter and use the Loading Ports.
1.22 Contract
This LPG Sales and Purchase Contract, including the
Exhibits hereto, as it may from time to time be amended,
modified, varied or supplemented in accordance with the
terms of Article 22.
1.23 Contract Sales Prices
As defined in Article 6.1.
1.24 Cubic Meter
A volume equal to the volume of a cube whose edge is one
meter.
1.25 Delivery Point
The point at the Loading Port at which the flange
coupling of Seller's loading line joins the flange
coupling of the loading manifold onboard a Buyer's LPG
Tanker.
1.26 East Kalimantan Gas Supply Area
The contract areas of the Huffco, Total and Unocal
Production Sharing Contracts and such other nearby
contract areas in East Kalimantan, Indonesia as Seller
may designate from time to time.
1.27 First Loading
As defined in Article 5.4.
1.28 First Loading Notice
As defined in Article 5.4.
1.29 Fixed Quantities and Fixed Quantity
As defined in Article 5.1.
1.30 Fixed Quantity Period
As defined in Article 5.1.
1.31 Force Majeure
As defined in Article 15.1.
1.32 Gas Supply Areas
The Arun Gas Supply Area and the East Kalimantan Gas
Supply Area.
1.33 Huffco Group
Roy M. Huffington, Inc. ("Huffco"), Huffington
Corporation, Virginia International Company, Virginia
Indonesia Company, Ultramar Indonesia Limited, Union
Texas East Kalimantan Limited, and Universe Tankships,
Inc., and their successors in interest.
1.34 Independent Surveyor
As defined in Article 9.1.
1.35 Lifting Obligation
As defined in Article 5.5.
1.36 LNG
Natural Gas in a liquid state at or below its boiling
point and at a pressure of approximately one atmosphere.
1.37 Loading Ports
The Arun Loading Port and the Bontang Loading Port.
1.38 Loading Terminal
The facilities for delivery of LPG into vessels at each
of the Loading Ports.
1.39 LPG
Propane or Butane, or as the context requires, both
Propane and Butane. A "grade of LPG" refers to either
Propane or Butane.
1.40 LPG Tanker
An ocean-going vessel which is used by a Buyer for
transportation of LPG delivered under this Contract.
1.41 Metric Ton
A unit of weight equal to 1,000 kilograms.
1.42 Mobil
Mobil Oil Indonesia Inc. and its successors in interest.
1.43 Natural Gas
Any hydrocarbon or mixture of hydrocarbons, consisting
essentially of methane, other hydrocarbons, and
non-combustible gases in a gaseous state, which is
extracted from the subsurface of the earth in its natural
state, separately or together with liquid hydrocarbons.
1.45 Nominated Date Range
As defined in Article 11.4.
1.46 Nominated Quantities
As defined in Article 11.4.
1.47 Notice of Readiness
As defined in Article 13.2.
1.48 Production Sharing Contract(s)
As to Pertamina and the Huffco Group, the agreement dated
August 8, 1968, between P.N. Pertambangan Minyak
Nasional, the predecessor of Pertamina as the Oil and Gas
State Enterprise of the Republic of Indonesia, on the one
hand, and Huffco and Virginia International Company
(predecessors in interest to the Huffco Group), on the
other, as heretofore and hereafter amended (the "Huffco
Production Sharing Contract");
As to Pertamina and Mobil, the agreement dated December
12, 1978, between Pertamina, on the one hand, and Mobil,
on the other, as heretofore and hereafter amended (the
"Mobil Production Sharing Contract");
As to Pertamina, Total Indonesie ("Total") and Indonesia
Petroleum, Ltd., the agreement dated October 6, 1966,
between P.N. Pertambangan Minyak Nasional, on the one
hand, and Japan Petroleum Exploration Company, Ltd.
(predecessor in interest to the Total Group), on the
other, as heretofore and hereafter amended (the "Total
Production Sharing Contract"); and
As to Pertamina and Unocal Indonesia Incorporated
("Unocal"), the agreement dated October 25, 1968 between
P.N. Pertambangan Minyak Nasional, on the one hand, and
Unocal, on the other, as heretofore and hereafter amended
(the "Unocal Production Sharing Contract").
1.49 Program Year
As defined in Article 11.1.
1.50 Propane
A mixture predominately of hydrocarbons, having the
specifications set out in Exhibit D.
1.51 Quarter
A period of three (3) calendar months commencing on
January 1, April 1, July 1 or October 1.
1.52 Quarterly Schedule
As defined in Article 11.2.
1.53 Receiving Facilities
Any terminal(s) available to Buyer in Japan for discharge
of LPG, whether or not existing as of the date of this
Contract.
1.54 Seller
Perusahaan Pertambangan Minyak dan Gas Bumi Negara
("Pertamina"), a State Enterprise of the Republic of
Indonesia, or the successor in interest of such
enterprise, or the permitted assignee of such entity or
such successor in interest.
1.55 Shipment Month
As defined in Article 11.4.
1.56 Shipment quarter
As defined in Article 11.2.
1.57 Suppliers
Mobil and Pertamina, as suppliers of their respective
shares of Natural Gas produced under the Mobil Production
Sharing Contract from areas within the Arun Gas Supply
Area, and the Huffco Group, Total Group, Unocal Group and
Pertamina, as suppliers of their respective shares of
Natural Gas produced under the Huffco, Total and Unocal
Production Sharing Contracts from areas within the East
Kalimantan Gas Supply Area, for the production of LPG to
be sold and delivered hereunder.
1.58 Supply Agreements
As defined in Article 3.2.
1.59 TBN
As defined in Article 11.4.
1.60 Terminal Procedures
All procedures established or customarily practiced by
the operator of each Loading Terminal with respect to
notifications, nominations, berthing, lifting, loading,
safety procedures for ship and shore, documentation,
departure, measurement and the like (including without
limitation Conditions of Use).
1.61 Total Group
Total and Indonesia Petroleum, Ltd., and their successors
in interest.
1.62 Unlifted Quantities
As defined in Article 5.5.
1.63 Unocal Group
Unocal and Indonesia Petroleum, Ltd. and their successors
in interest.
1.64 Used Laytime
As defined in Article 13.3.
<PAGE>
ARTIC LE 2
SALE AND PURCHASE
Seller agrees to sell and deliver at the Delivery Point, and
Buyer agrees to purchase, receive and pay for, LPG, in the
quantities and at the prices and in accordance with the other
terms and conditions set forth in this Contract.
<PAGE>
ARTICLE 3
SOURCES OF SUPPLY
3.1 Relationship to LNG Processing
The LPG to be sold hereunder will be produced from
Natural Gas in conjunction with the production and processing
of Natural Gas into LNG at the Arun and Bontang LNG
Facilities.
3.2 Sources of Natural Gas
(a) The Natural Gas from which LPG to be sold hereunder
is to be extracted is to be produced from the Gas Supply
Areas. Nothing herein shall be construed, however, as
conferring upon any Buyer any interest or right in the Arun or
East Kalimantan Gas Supply Area or in Natural Gas or any
hydrocarbon deposit or producing area. No warranty express or
implied is given, nor is there to be construed any
representation, as to the quantity of Natural Gas in, or its
recoverability from, the Gas Supply Areas. If during the term
of this Contract Suppliers obtain information from their
activities which indicate unforeseen changes in the proved
remaining recoverable reserves of Natural Gas in the Gas
Supply Areas such that Seller's ability to perform Seller's
obligation hereunder may be materially and adversely affected,
Seller shall promptly inform Buyers of such situation.
(b) Seller represents that Seller will maintain throughout
the term hereof the right to sell all quantities of LPG to be sold
hereunder. In this connection, Seller represents that it has
executed or will execute from time to time, as required in order to
maintain the right to sell all of the quantities of LPG to be sold
hereunder, agreements between itself and other Suppliers under
which agreements ("Supply Agreements") Suppliers shall supply
Natural Gas from the Gas Supply Areas for processing into LPG at
the Arun and Bontang LPG Facilities and shall make available, for
sale by Seller hereunder, their respective interests in the
quantities of LPG to be sold hereunder.
(c) It is understood that, by virtue of the Supply
Agreements, Mobil, the Huffco Group, the Total Group and the Unocal
Group, as parties to such Supply Agreements, shall be third-party
beneficiaries of this Contract. The foregoing sentence shall not
be construed as discharging Seller of its obligation to supply LPG
to Buyer in accordance with the terms of this Contract.
<PAGE>
ARTICLE 4
COMMENCE MENT AND DURATION OF CONTRACT
4.1 This Contract shall come into full force and effect as of
and from the date hereof, and shall continue in full force and
effect thereafter until December 31, 1998; unless terminated
sooner pursuant to the terms of this Contract; provided,
however, that such provisions of this Contract as are required
to give effect to the rights and obligations of the parties
which arise prior to such date shall continue in full force
and effect until the expiration of the parties' respective
obligations to sell and purchase LPG hereunder and obligations
associated therewith.
4.2 If Seller and Buyer so agree at least one(1) year prior
to the date this Contract would otherwise expire, the term of
this Contract may be extended for an additional term of five
(5) years on such terms and conditions as may be mutually
agreed.
<PAGE>
ARTICLE 5
QUANTITI ES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 325
Jan. 1-Dec.31, 1990 325
Jan. 1-Dec.31, 1991 325
Jan. 1-Dec.31, 1992 325
Jan. 1-Dec.31, 1993 325
Jan. 1-Dec.31, 1994 325
Jan. 1-Dec.31, 1995 325
Jan. 1-Dec.31, 1996 325
Jan. 1-Dec.31, 1997 325
Jan. 1-Dec.31, 1998 325
-----------------------------------------------------------
ARTICLE 5
QUANTITIES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 371
Jan. 1-Dec.31, 1990 371
Jan. 1-Dec.31, 1991 371
Jan. 1-Dec.31, 1992 371
Jan. 1-Dec.31, 1993 371
Jan. 1-Dec.31, 1994 371
Jan. 1-Dec.31, 1995 371
Jan. 1-Dec.31, 1996 371
Jan. 1-Dec.31, 1997 371
Jan. 1-Dec.31, 1998 371
-----------------------------------------------------------
ARTICLE 5
QUANTITIES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 464
Jan. 1-Dec.31, 1990 464
Jan. 1-Dec.31, 1991 464
Jan. 1-Dec.31, 1992 464
Jan. 1-Dec.31, 1993 464
Jan. 1-Dec.31, 1994 464
Jan. 1-Dec.31, 1995 464
Jan. 1-Dec.31, 1996 464
Jan. 1-Dec.31, 1997 464
Jan. 1-Dec.31, 1998 464
-----------------------------------------------------------
ARTICLE 5
QUANTITIES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 186
Jan. 1-Dec.31, 1990 186
Jan. 1-Dec.31, 1991 186
Jan. 1-Dec.31, 1992 186
Jan. 1-Dec.31, 1993 186
Jan. 1-Dec.31, 1994 186
Jan. 1-Dec.31, 1995 186
Jan. 1-Dec.31, 1996 186
Jan. 1-Dec.31, 1997 186
Jan. 1-Dec.31, 1998 186
-----------------------------------------------------------
ARTICLE 5
QUANTITIES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 139
Jan. 1-Dec.31, 1990 139
Jan. 1-Dec.31, 1991 139
Jan. 1-Dec.31, 1992 139
Jan. 1-Dec.31, 1993 139
Jan. 1-Dec.31, 1994 139
Jan. 1-Dec.31, 1995 139
Jan. 1-Dec.31, 1996 139
Jan. 1-Dec.31, 1997 139
Jan. 1-Dec.31, 1998 139
-----------------------------------------------------------
ARTICLE 5
QUANTITIES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 279
Jan. 1-Dec.31, 1990 279
Jan. 1-Dec.31, 1991 279
Jan. 1-Dec.31, 1992 279
Jan. 1-Dec.31, 1993 279
Jan. 1-Dec.31, 1994 279
Jan. 1-Dec.31, 1995 279
Jan. 1-Dec.31, 1996 279
Jan. 1-Dec.31, 1997 279
Jan. 1-Dec.31, 1998 279
-----------------------------------------------------------
ARTICLE 5
QUANTITIES
5.1 Required Deliveries
(a) During each annual period or in each Quarter of the
build-up period in 1988 specified below (each such period is
hereinafter referred to as a "Fixed Quantity Period"), Seller
shall sell and deliver to Buyer, and Buyer shall purchase,
receive and pay for, at the applicable Contract Sales Prices,
the quantity of LPG specified for Buyer for such period (each
such quantity is hereinafter individually referred to as a
"Fixed Quantity" and as "Fixed Quantities" when referring to
more than one such quantity) as follows:
Fixed Quantity Fixed Quantities for
Period Buyer in thousands of
Metric Tons of LPG
-----------------------------------------------------------
Apr. 1 - Jun.30 (to be notified
Jul. 1 - Sep.30 pursuant to
Oct. 1 - Dec.31 Article 5.1(b) below)
Total Build-up Period
(Apr. 1-Dec. 31, 1988)
Jan. 1-Dec.31, 1989 186
Jan. 1-Dec.31, 1990 186
Jan. 1-Dec.31, 1991 186
Jan. 1-Dec.31, 1992 186
Jan. 1-Dec.31, 1993 186
Jan. 1-Dec.31, 1994 186
Jan. 1-Dec.31, 1995 186
Jan. 1-Dec.31, 1996 186
Jan. 1-Dec.31, 1997 186
Jan. 1-Dec.31, 1998 186
-----------------------------------------------------------
(b) By notice given to Buyer on or before September 30,
1986, Seller shall establish the Fixed quantity for each of
the Fixed Quantity Periods during the build-up year 1988,
which notice shall be substantially in the form attached
hereto as Exhibit A.
(c) Each Fixed Quantity specified in paragraph (a) above
or established pursuant to paragraph (b) above is subject to
adjustment as provided in Article 5.2. After giving effect to
any such adjustment, the term "Fixed Quantity" as used herein
shall mean the applicable quantity for the annual or shorter
period listed in paragraph (a) above as so adjusted, and the
respective obligations of Seller to sell and deliver, and of
Buyer to purchase, receive and pay for, the Fixed Quantity in
any Fixed Quantity Period shall apply to the applicable
adjusted Fixed Quantity.
5.2 Adjustments to Fixed Quantities
(a) By notice given to Buyer on or before October 15,
1987, Seller may increase or decrease the Fixed Quantity
established by Seller pursuant to Article 5.1(b), with respect
to all or any of the Fixed Quantity Periods during the 1988
build-up year by an amount not to exceed ten percent (10%) of
the respective Fixed Quantities established pursuant to
Article 5.1(b). Seller shall advise Buyer of its best
estimate of such increase or decrease on or before September
30, 1987.
(b) By notice given to Buyer on or before October 15,
1988, Seller may increase or decrease the Fixed Quantity for
the January 1 - December 31, 1989 Fixed Quantity Period by an
amount not to exceed ten percent (10%). Seller shall advise
Buyer of its best estimate of such increase or decrease on or
before September 30, 1988.
(c) By notice given to Buyer on or before October 15,
1989, Seller may increase or decrease the Fixed Quantity for
the January 1 - December 31, 1990 Fixed Quantity Period by an
amount not to exceed 10%. Seller shall advise Buyer of its
best estimate of such increase or decrease on or before
September 30, 1989.
(d) Seller may increase or decrease the Fixed Quantity
for the January 1 - December 31, 1991 Fixed Quantity Period
and for any Fixed Quantity Period thereafter by an amount not
to exceed five percent (5%) of the Fixed Quantity (as adjusted
pursuant to paragraph (c) above or this paragraph (d), as
appropriate) for the preceding Fixed Quantity Period by giving
Buyer notice on or before October 15 of the calendar year
preceding the Fixed Quantity Period for which the Fixed
Quantity is to be so adjusted; on condition that the Fixed
Quantity so established shall be within ten percent (10%) of
the Fixed Quantity for such Fixed Quantity Period set forth in
Article 5.1(a). Seller shall advise Buyer of its best
estimate of any such increase or decrease on or before
September 30 of the calendar year preceding the Fixed Quantity
Period for which such adjustment is to be made.
(e) It is understood that Seller may use the adjustments
pursuant to this Article 5.2 to alter the ratio of production
volumes between the Arun and Bontang LPG Facilities referred
to in Article 5.3.
5.3 Deliveries of Fixed Quantities
(a) Within each calendar year the quantities to be
delivered by Seller and received by Buyer shall be delivered
and received at rates and intervals which are reasonably
constant over the course of such period, after taking into
consideration all commitments of the Seller, the requirements
of other purchasers of LPG from the Arun and Bontang LPG
Facilities, constraints at the Loading Ports and each Loading
Terminal and fluctuations in production rates of LPG due to
changes in production rates of LNG at the Arun and Bontang LNG
Facilities, so as to ensure as nearly as practicable
uninterrupted operation of the Arun and Bontang Facilities.
(b) The Fixed Quantity to be delivered to Buyer in any
fixed quantity Period will consist of the production
quantities of each grade for LPG available at the Arun and
Bontang Loading Ports in accordance with the following:
(i) the aggregate volumes of Propane and Butane
produced at the Arun LPG Facilities and the Bontang
LPG Facilities in any Fixed Quantity Period will be
allocated among Buyer and other purchasers of LPG
from the Arun and Bontang LPG Facilities on an
essentially pro-rata basis such that the proportion
between Propane and Butane delivered to Buyer in
any Fixed Quantity Period will be essentially the
same as the proportion between the aggregate
Propane production at the Arun and Bontang LPG
Facilities in such Fixed Quantity Period and the
aggregate Butane production at the Arun and Bontang
LPG Facilities in such Fixed Quantity Period.
Seller's estimate, as the date hereof, of what
such allocation would be for each Fixed Quantity
Period is set forth in Exhibit B hereto. It is
understood that such estimate is based on Seller's
production forecasts as of the date hereof referred
to in subparagraph (iii) below.
(ii) Production of LPG at the Arun LPG Facilities shall
be comprised of fifty (50) to sixty-five (65)
percent Propane and thirty-five (35) to fifty (50)
percent Butane and the production of LPG at the
Bontang LPG Facilities shall be comprised of sixty-
five (65) to seventy-five (75) percent Propane and
twenty-five (25) to thirty-five (35) percent
Butane.
(iii) Seller's production forecasts, as of the date
hereof, of the total production quantities of
Propane and Butane to be produced at the Arun
and Bontang LPG Facilities during each Fixed
Quantity Period for the calendar years 1988
through 1990 are set forth in Exhibit C
hereto. Commencing October 15, 1989 and each
calendar year thereafter, Seller shall provide
Buyer with a production forecast of Propane
and Butane production at the Arun and Bontang
LPG Facilities for the three year period which
commences on January 1 of the second calendar
year after the date of such notice. Such
forecasts will be subject to revision by
Seller from time to time to reflect changes in
operating conditions and feed gas composition,
repair and maintenance requirements and actual
Propane and Butane production experience at
the Arun and Bontang LPG Facilities. Seller
will notify Buyer of any such revision in
accordance with Article 11.1.
(c) Seller will endeavor to allocate delivery of the
Fixed Quantity in any Fixed Quantity Period between the Arun
Loading Port and the Bontang Loading Port on an essentially
pro-rata basis such that the proportion between LPG delivered
to Buyer at the Arun Loading Port and LPG delivered to Buyer
at the Bontang Loading Port will be essentially the same as
the proportion between the total LPG production at the Arun
LPG Facilities and the total LPG production at the Bontang LPG
Facilities in such Fixed Quantity Period.
5.4 First Loading
It is estimated that the construction of the Arun LPG
Facilities will commence in the third Quarter of 1986 and the
construction of the Bontang LPG Facilities will commence in
the third Quarter of 1986. It is understood that the timing
of commencement of sales hereunder depends on the on-stream
dates of the Arun and Bontang LPG Facilities (including
commissioning and start-up), which is now estimated to be in
April , 1988 in respect of the Arun LPG Facilities, and
November, 1988 in respect of the Bontang LPG Facilities.
Seller shall keep Buyer informed of the progress in
construction, commissioning and start-up of the Arun and
Bontang LPG Facilities, and shall give Buyer at least three
(3) months advance notice of the calendar month in which the
initial loading at each facility hereunder will be made, and
the estimated date of first loading at each facility (the
"First Loading Notice").
Immediately after such notice, programming for initial
loading shall take place as specified in Article 11. The
initial loading of LPG hereunder (the "First Loading") shall
be the earliest loading date specified in the program pursuant
to Article 11.3.
5.5 Buyer's Obligation to Lift
(a) Buyer will be obligated to lift in accordance with
Article 11, the Fixed Quantity during each Fixed Quantity
Period (such obligation is hereinafter referred to as the
"Lifting Obligation" of Buyer). The Lifting Obligation of
Buyer shall be reduced by the quantity of LPG which Buyer was
unable to receive because of Force Majeure affecting Buyer's
ability to receive LPG or because of Seller's failure to make
such quantity available for delivery due to Force Majeure
affecting Seller or due to breach by Seller of its obligations
hereunder.
(b) If Buyer should fail to take delivery of LPG or if
at any time Seller shall have reason to believe that Buyer
will be unable to take delivery of LPG in accordance with
Article 11, Seller shall so notify Buyer, specifying the
quantities of each garde of LPG involved (quantities with
respect to which Seller issues a notice pursuant to this
paragraph (b) are hereinafter referred to as the "Unlifted
Quantities"). Upon receipt of such notice from Seller, Buyer
shall promptly advise Seller in writing whether Buyer wishes
to reschedule the lifting of the Unlifted Quantities during
the remainder of the Fixed Quantity Period in question, and if
so. specifying a Nominated Date Range. If such rescheduling
is acceptable to Seller, having regard to Seller's and the
Loading Terminals's operations and schedules, Seller will so
notify Buyer and the Unlifted Quantities will be rescheduled
and lifted pursuant to Article 11 accordingly.
(c) If Buyer fails promptly to provide notice as
provided in paragraph (b) or if the rescheduling pursuant to
paragraph (b) above is not acceptable to Seller, Seller may
take at any time thereafter whatever steps Seller determines,
in its sole discretion, are appropriate and may flare, sell,
curtail LPG production, "spike" or combine such LPG with LNG
or condensate or otherwise dispose of Unlifted Quantities.
Seller shall use all reasonable efforts to sell such Unlifted
Quantities to a third party. If Seller flares, sells, spikes
or otherwise disposes or curtails production of LPG, Seller
shall so notify Buyer and keep Buyer apprised of all such
actions being taken and shall provide Buyer with reasonable
access to plant operating data and records relating thereto,
including Seller's records of sales to third parties.
(d) If Buyer fails to lift the Accepted Quantities
within the Accepted Date Range, as the same may have been
modified by Seller pursuant to paragraph (b) above, Buyer will
pay to Seller the amount equivalent to the Damages" determined
in accordance with (i) below after the deduction of the sum of
the "Credits" referred to in paragraph (ii) below; provided,
however, that if the sum of such Credits equals or exceeds the
Damages, Seller shall have no obligation to the Buyer to
account for the Credits or any such excess.
(i) Damages shall be calculated as follows:
D = (AQ x 95% - LQ) x P
D -- Damages
AQ -- Accepted Quantity (less any quantities
rescheduled by Seller)
LQ -- That portion of Accepted Quantities
lifted by Buyer during the Accepted Date
Range.
P -- the Contract Sales Price for the applicable
grade of LPG in effect on the last day of the
Accepted Date Range of the Accepted Quantity.
(ii) Credits for any acts taken by Seller pursuant to
paragraph (c) above in respect of Unlifted Quantities shall be
calculated in accordance with the following:
(A) the amount of proceeds actually received by
Seller for any sales made to a third party
referred to in paragraph (c) above (after
deducting direct expenses of the sale) up to
the amount Seller would have received from
Buyer based on the Contract Sales Prices in
effect on the last day of the Accepted Date
Range; and
(B) the value of Butane "spiked" with condensate
from Natural Gas which is itself sold to third
parties calculated on the basis of ninety
percent (90%) of the Contract Sales Price for
Butane in effect on the last day of the
Accepted Date Range; and
(C) the value of LPG "spiked" with LNG or LPG not
produced as a consequence of curtailed
production ("Spiked and not Produced LPG")
calculated on the basis of fifty percent (50%)
of the Contract Sales Price for the applicable
grade of LPG in effect on the last day of the
Accepted Date Range, provided, the aggregate
quantity of Spiked and Not Produced LPG in the
fixed Quantity Period in question does not
exceed ten percent (10%) of the fixed
Quantity. No credit will be given for Spiked
and Not Produced LPG exceeding ten percent
(10%) of the Fixed Quantity for such Fixed
Quantity Period.
(e) the undertakings referred to in Article 11.4(e)
shall be deemed to have been discharged in case that the
actual lifting is made within the plus or minus five percent
(5%) operational lifting tolerance referred to in Article
12.1(d).
(f) Seller shall invoice the amount calculated on the
basis of (d) above, to Buyer on the forty-fifth (45th) day of
the next calendar year following the end of the year in which
such failure to lift has occurred. Such invoice shall be
payable by Buyer within fifteen (15) days of receipt.
5.6 Allocation of Supplies Between Buyers and Other
Purchasers of LPG
If by reason of an event or circumstance of Force Majeure,
there are or will be available to Seller for sale and delivery
at a Loading Port quantities of Butane and/or Propane which in
Seller's reasonable judgment are less than those required to
be delivered under Seller's commitments for the supply of such
grade of LPG to Buyers and other purchasers of LPG from the
Arun and/or Bontang LPG Facilities pursuant to sales contracts
which provide for deliveries of LPG from such facilities for
a term of at least ten (10) years, Seller shall be entitled to
allocate its curtailed availabilities of such grade of LPG to
Buyers and to such other purchasers. Such allocation shall be
made on a basis which is substantially pro-rata in the ratio
of the remaining respective quantities of such grade of LPG
committed to be supplied to Buyer and such purchasers for the
remainder of the year, subject, however, to such adjustments
as are fair and reasonable but made in Seller's absolute
discretion to maintain, to the extent practicable, loading
schedules and operations at the Arun and/or Bontang
Facilities.
<PAGE>
ARTICLE 6
CONTRACT SALES PRICES
6.1 Contract Sales Prices
The prices applicable to quantities of Propane and Butane
delivered hereunder and to quantities of LPG not taken by
Buyer for which Buyer is subject to payment of damages
pursuant to Article 5.5 are herein called the "Contract Sales
Prices", and are expressed in United States Dollars per Metric
Ton ("U.S. $/MT"). Buyer shall pay for LPG, in the manner
provided in Article 10, at the Contract Sales Price for the
applicable grade of LPG calculated in accordance with Article
6.2 (a) or (b), as the case may be, as of the bill of lading
date, or, in the case of LPG not taken for which Buyer is
subject to payment of damages pursuant to Article 5.5, as of
the last day of the applicable Accepted Date Range. Either
such date is hereinafter referred to as the "Calculation
Date".
6.2 Calculation of Contract Sales Prices
(a) The Contract Sales Price for the applicable grade of
LPG shall be calculated as of the Calculation Date in
accordance with the following formula:
P = A + $3.00
in which:
"P" = The Contract Sales Price for the applicable
grade of LPG expressed in U.S. $/Metric Ton.
"A" = P1Q1 + P2Z2 + P3Q3 ... + PnQn where,
Q1 + Q2 + Q3 ... + Qn
P1, P2, P3... Pn = The government selling price ("GSP")
and/or official governmental price
of each country which supplied
Calculation Quantities (as defined
below), prevailing on the
Calculation Date. The source of
data for P1, P2, P3 ... Pn shall be
Platt's LPG Gas Wire.
Q1, Q2, Q3... Qn = Quantities of the applicable grade
of LPG imported into Japan from
those countries which have GSP's
and/or official governmental prices
for such grade of LPG prevailing on
the Calculation Date, during the one
(1) year period ending on the last
day of the Quarter which commenced
two (2) Quarters before the first
day of the quarter in which the bill
of lading is dated, or, with respect
to a grade of LPG not taken, in the
Quarter in which the last day of the
applicable Accepted Date Range falls
(such quantities are hereinafter
referred to as "Calculation
Quantities"). The applicable
quantities shall be based on the
statistics published by the Japan
LP-Gas Association. throughout the
term of this Contract Buyer shall
promptly submit to Seller for the
purpose of calculating Contract
Sales Prices hereunder a copy of
each issue of such publication as
soon as it becomes available.
For the purpose of the above calculation LPG imported
from Indonesia and Das Island, Abu Dhabi shall be excluded.
(b) Notwithstanding paragraph (a) above, in calculating
the Contract Sales Prices applicable during the build-up year
1988 the following formula shall apply :
P = A
in which "P" and "A" are defined as in paragraph (a) above.
6.3 Quantity and Price Statistics
(a) If on a Calculation Date any quantity or price
statistic referred to in Article 6.2 is unavailable from the
source specified therein, the parties shall jointly endeavor
to obtain and agree upon the relevant statistic from another
source.
(b) In the case the above GSP's and/or official
governmental prices no longer reflect the actual market price
of LPG imported into Japan under long term contracts or if
such GSP's and/or official governmental prices are no longer
available, then, by notice to the other, Seller and Buyer
shall each promptly propose in writing to the other an
alternative pricing method which would reflect such actual
market price. The parties shall meet to discuss in good faith
and, within three (3) months of the date of the above notice,
agree on an alternative pricing method.
Until such time as the matter is finally determined,
Seller shall invoice Buyer on the basis of Article 10.6 at the
Contract Sales Prices last calculated prior to the notice
referred to above.
<PAGE>
ARTICLE 7
QUALITY AND STATE
7.1 Specifications
Propane and Butane purchased and sold hereunder shall be
delivered to Buyer in a refrigerated liquid condition and
shall have the respective specifications set forth in Exhibit
D for Propane and Butane.
7.2 Disclaimer of Warranties
THERE ARE NO GUARANTIES OR WARRANTIES EXPRESS OR IMPLIED
OF MERCHANTABILITY, FITNESS, SUITABILITY OF THE LPG FOR ANY
PARTICULAR PURPOSE, OR OTHERWISE, OR OF ITS COMPOSITION EXCEPT
AS STATED IN ARTICLE 7.1.
<PAGE>
ARTIC LE 8
TITLE AND RISK OF LOSS
Delivery shall be deemed completed and title and risk of
loss shall pass at the Loading Port as the LPG reaches the
Delivery Point, at which point Seller's responsibility shall
cease and each Buyer shall assume all risk of loss, damage,
deterioration or evaporation as to the LPG so delivered. It
is expressly understood that the passage of title and risk as
aforesaid is not conditioned on delivery of a bill of lading
or other title document.
<PAGE>
ARTIC LE 9
VERIF ICATION AND MEASUREMENT
9.1 Inspection
The quality and quantity of each shipment of LPG
hereunder shall be determined by measurement and calculations
conducted at the Loading Port by an independent firm of
inspectors (to be mutually agreed upon) in accordance with
agreed sampling, measurement, and calculation procedures based
on recognized good standard practice (such firm is hereinafter
referred to as the "Independent Surveyor"). On completion of
loading, the Independent Surveyor shall prepare and sign
certificates stating the quality and quantity of each grade of
LPG loaded, such certificates to conform to a mutually-agreed
standard form for this purpose. the Independent Surveyor
shall promptly provide Seller with a copy of such certificates
and Seller shall thereupon prepare a bill of lading in
accordance with the reasonable instructions of Buyer. The
bill of lading shall be promptly signed and issued by the
vessel's master or the authorized representative of the
carrier. The data in such certificates of quality and
quantity prepared by the Independent Surveyor shall, absent
fraud or manifest error, and subject to the provisions of
Article 17, be binding and conclusive upon both parties, and
shall be used by Seller in preparing the invoice. Any costs
attendant to utilizing the Independent Surveyor shall be borne
equally by Seller and Buyer.
9.2 Measurement and Samples
Measurement of the quantities and the sampling and
analysis for the purpose of determining the quality of the LPG
in each shipment shall be carried out in accordance with the
procedures set forth in Appendix A to this Contract, and
samples shall be retained by Seller for at least ninety (90)
days.
<PAGE>
ARTIC LE 10
INVOI CES AND PAYMENT
10.1 Invoices and Cargo Documents
Promptly after completion of loading of each LPG Tanker,
Seller shall furnish by telex or telegram to Buyer an invoice,
stated in U.S. Dollars, in the amount of the Contract Sales
Prices for the number of Metric Tons delivered. At the same
time, Seller shall send to Buyer a signed copy of the invoice
and relevant documents showing the basis for the calculation
thereof, together with such other customary documents
concerning the cargo as may be reasonably requested by such
Buyer(s) for the purpose of Japanese customs clearance.
10.2 Other Invoices
Except as provided in Article 10.1, in the event that any
moneys are due from one party to the other hereunder
(including, without limitation, amounts payable pursuant to
Article 5.5 on account of failure by Buyer to meet its Lifting
Obligation) then the party to whom such moneys are due shall
furnish or cause to be furnished an invoice therefor and
relevant documents showing the basis for the calculation
thereof. Such invoice may be sent by telex or telegram,
provided that signed copies of such invoice and such relevant
documents are also sent at the same time.
10.3 Invoice Due Dates, etc.
(a) Each invoice to Buyer referred to in Article 10.1
shall become due and payable by Buyer on the thirtieth (30th)
calendar day after the date of the bill of lading for the LPG
cargo in question. The failure by a vessel's master or
authorized representative of the carrier to promptly sign and
issue a bill of lading, shall not constitute grounds for delay
of payment by Buyer. Each invoice referred to in Article 10.2
(except the invoice referred to in Article 5.5) shall become
due and payable on the thirtieth (30th) calendar day after
receipt thereof by the party to which it was sent.
(b) If any invoice would become due on a date which is
not a Business Day, such invoice shall, notwithstanding the
provisions of paragraph (a) above, become due and payable on
the next succeeding Business Day.
(c) In the event the full amount of any invoice is not
paid by either Seller or Buyer when due, any unpaid amount
thereof shall bear interest from the due date until paid, at
an interest rate, compounded annually, two (2) percentage
points greater than the time-weighted average rate being
charged during the period of delinquency by Citibank, N.A.,
New York, New York, to its prime commercial customers for 90
day loans.
10.4 Payment
Buyer shall pay, or cause to be paid, in U.S. Dollars by
telegraphic transfer remittance in immediately-available
funds, all amounts which become due and payable by Buyer
pursuant to any invoice issued hereunder, to a bank account or
accounts in the United States to be designated by Seller,
provided that each such designation or change thereto shall be
effective only upon the written consent of Mobil, in the case
of payments arising in respect of the Arun Facilities, and the
Huffco Group, the Total Group and the Unocal Group in the case
of payments arising in respect of the Bontang Facilities, as
third-party beneficiaries hereunder. Sell shall pay, or cause
to be paid, in U.S. Dollars by telegraphic transfer remittance
in immediately-available funds, all amounts which become due
and payable by Seller pursuant to any invoice issued
hereunder, to a bank account designated by Buyer. The paying
party shall not be responsible for a designated bank's
disbursement of amounts remitted to such bank, and a deposit
in immediately-available funds of the full amount of each
invoice with such bank shall constitute full discharge and
satisfaction of the obligations under this Contract for which
such amounts were remitted. Each payment of any amount owing
hereunder shall be in the full amount due without reduction or
offset for any reason, including, without limitation, taxes,
exchange charges or bank transfer charges.
10.5 Seller's Rights Upon Buyer's Failure to Make Payment
If payment of any invoice for quantities of LPG sold
hereunder or for that portion of Buyer's Lifting Obligation
for which Buyer is subject to payment of damages pursuant to
Article 5.5(d) is not made within ten (10) days after the due
date thereof, Seller shall be entitled, upon giving written
notice to Buyer, to suspend subsequent shipments and sales to
Buyer until the amount of such invoice and interest thereon
has been paid. Buyer shall not be entitled to any make-up
rights in respect of such suspended shipments and sales. If
any such invoice is not paid within thirty (30) days after the
due date thereof, then Seller shall have the right, at
Seller's election to terminate this Contract and such
termination shall become effective upon the date of such
notice of termination from Seller. Seller's rights under this
Article 10.5 and Seller's exercise of any of such rights shall
be without prejudice to any other rights and remedies of
Seller arising hereunder or by law or otherwise (including
without limitation the right of Seller to demand adequate
security of Buyer's performance under circumstances permitted
by New York law, and to receive payment of all obligations and
claims which arose or accrued prior to termination or by
reason of default in payment by Buyer).
10.6 Disputed Invoices
In the event of disagreement concerning any invoice, the
invoiced party shall make provisional payment of the total
amount thereof and shall immediately notify the other party of
the reasons for such disagreement, except that in the case of
obvious error in computation the correct amount shall be paid
disregarding such error. Invoices may be contested or
modified only if, within a period of ninety (90) days after
receipt thereof, Buyer or Seller serves notice on the other,
questioning their correctness. If no such notice is duly
served, invoices shall be deemed correct and accepted by all
parties. Promptly after resolution of any dispute as to an
invoice, the amount of any overpayment or underpayment shall
be paid by Seller or Buyer to the other, as the case may be,
plus interest at the rate provided in Article 10.3 from the
date payment was due to the date of payment.
<PAGE>
ARTIC LE 11
PROGR AMMING AND SHIPPING MOVEMENTS
11.1 Annual Programs
Not later than October fifteenth (15th) of each year
(beginning with the year prior to the year in which the First
Loading is scheduled to occur), Seller shall give written
notice to Buyer of the quantities of Propane and Butane
available for delivery hereunder at each of the Loading Ports
during the next calendar year as well as the total quantities
of LPG to be produced at the Arun LPG Facilities and the
Bontang LPG Facilities during the next calendar year.
On or before October twenty-fifth (25th) of each calendar
year after receipt of the foregoing notice, Buyer shall advise
Seller in writing of the portion of the Fixed Quantity Buyer
wishes to take during each Quarter of the following year (the
"Program Year") specifying the quantities of each grade of LPG
it wishes to take in each such Quarter and its preferences for
Loading Port(s) with respect to such quantities each quarter.
Seller and Buyer shall thereupon consult together with a view
to reaching agreement upon, by November eighth (8th) of the
year preceding the Program Year, a program for the quantities
of each grade of LPG to be shipped hereunder from each Loading
Port during each Quarter during the Program Year (the "Annual
Program"). If no such agreement shall have been reached as to
an Annual Program by November eighth (8th) of the year
preceding the Program Year, or if Buyer shall have not
notified Seller of its requested quarterly quantities of LPG
by October twenty-fifth (25th) of such year, Seller shall be
entitled, using reasonable discretion, to establish upon
notice made to Buyer by November tenth (10th) of the same
year, the Annual Program for the Program Year (including,
without limitation, the breakdown of the Fixed Quantity into
each grade of LPG and the quantities of each grade of LPG to
be shipped from each Loading Port). In so doing, Seller shall
take into consideration the contents of the above notice from
Buyer, Seller's commitments to other purchasers of LPG from
the Arun and Bontang LPG Facilities, the production ratio of
Butane and Propane at each Loading Port and the provisions of
Article 5.3.
11.2 Quarterly Schedule
(a) Not later than the twenty-fifth (25th) day of the
first month of each Quarter (commencing with the Quarter in
which the First Loading is scheduled to occur), Buyer shall
advise Seller in writing of the quantities of each grade of
LPG Buyer wishes to take during each calendar month of the
succeeding Quarter (the "Shipment Quarter") specifying its
preferred Lading Port(s) with respect to each calendar month
based on the quantities and Loading Ports established under
the Annual Program for such Quarter; provided, however, that
with respect to such notice given in the last Quarter of any
calendar year, the quantities and Loading Port(s) shall be
based on Buyer's notice referred to in, and shall be subject
to adjustment in accordance with, Article 11.1.
(b) Following receipt of the notice referred to in
Article 11.2(a), Seller and Buyer shall thereupon consult
together with a view to reaching agreement upon, by the eighth
(8th) day of the second month of the Quarter preceding the
Shipment Quarter, a loading schedule for the Shipment Quarter,
specifying the month in which each shipment of LPG is to be
made in the Shipment quarter, the quantities of each grade of
LPG to be shipped and the Loading Port ("Quarterly Schedule").
If no such agreement shall have been reached as to a Quarterly
Schedule by the eighth (8th) day of the second month of the
Quarter preceding the Shipment Quarter, or if Buyer shall have
not issued a notice to Seller in accordance with Article
11.2(a), Seller shall be entitled, using reasonable
discretion, to establish, upon notice made to Buyer by the
tenth (10th) day of the second month of the quarter preceding
the Shipment Quarter, the Quarterly Schedule. In so doing,
Seller shall take into consideration the contents of the
notice from Buyer referred to in Article 11.2(a), Seller's
commitments by other purchasers of LPG from the Arun and
Bontang LPG Facilities, and the provisions of Article 5.3.
11.3 First Programs
Seller shall deliver to Buyer, together with the First
Loading Notice, a notice covering the remainder of the
calendar year in which the First Loading is scheduled to
occur, specifying the quantities of LPG anticipated to be
available hereunder during such period. Buyer and Seller
shall thereupon consult together with a view to reaching
agreement on, and Seller shall issue, a program substantially
similar to an Annual Program but covering only the remainder
of the calendar year in which the First Loading is scheduled
to occur, containing the matters referred to in Article 11.1
by no later than the tenth (10th) day of the calendar month
prior to the calendar month in which the First Loading is
scheduled. Such program shall also contain the matters
referred to in Article 11.2 with respect to the Quarter in
which the First Loading is scheduled to occur. Such program
as so issued shall be deemed to be the Annual Program for the
period in question and shall also be deemed to be the
Quarterly Schedule for the quarter in which the First Loading
is scheduled to occur.
11.4 Nominations
(a) An Accepted Date Range shall be a five (5) day period
of time determined in respect of each shipment hereunder in
accordance with the provisions of this Article 11.4. Each
date range proposed by either party or established by the
Seller as the Accepted Date Range shall, unless otherwise
agreed, be a period of five (5) days.
(b) No later than the twentieth (20th) day of the second
calendar month preceding each month in which shipments of LPG
are projected to be made hereunder in accordance with the most
recent Quarterly Schedule covering such month ("Shipment
Month"), Buyer shall notify Seller of the range(s) of days
which Buyer proposes ("Nominated Date Range(s)"), as to each
shipment in that month, the quantity of each grade of LPG to
be shipped ("Nominated Quantities") and Loading Port based on
the quantities established in the quarterly Schedule for such
month, and the name of the LPG Tanker ("Named LPG Tanker") or
that it is a "to be named" LPG Tanker ("TBN").
(c) Seller shall respond to Buyer's notice referred to in
paragraph (b) above no later than the first (1ST) day of the
calendar month immediately preceding the Shipment Month as to
whether Nominated Date Range(s), Nominated quantities and
other requests are acceptable, and if they are, the Nominated
Date Range(s) and Nominated Quantities of each grade of LPG
shall be the Accepted Date Range(s) and the Accepted
Quantities for the Shipment Month. If the Nominated Date
Range(s) or Nominated quantities or other requests are not
acceptable to Seller, Seller shall propose the minimum
modifications to Buyer's requests required to accommodate
Seller's and the Loading Terminal's operations and schedules.
Buyer and seller shall consult together with a view to
reaching agreement upon, by the sixth (6th) day of the
calendar month immediately preceding the Shipment Month, a
mutually-acceptable schedule of shipments, quantities and date
range(s).
(d) If no agreement shall have been reached as to date
range(s) and/or quantities, by the sixth (6th) day of the
calendar month immediately preceding the shipment Month,
Seller shall be entitled, using reasonable discretion, to
establish, upon notice to Buyer by the eighth (8th) day of the
calendar month immediately preceding the shipment Month, the
necessary date range(s) for shipments hereunder which shall be
deemed to be the Accepted Date Range(s), and/or the quantity
of each grade of LPG to be shipped in relation to each such
range, which shall be deemed to be the Accepted Quantities,
for the Shipment Month.
(e) Buyer and Seller shall be deemed to have undertaken
to receive and to deliver, respectively, the Accepted
Quantities from the relevant Loading Port during the Accepted
Date Range(s).
11.5 Notification of Expected Arrival
Not later than seven (7) days prior to the first day of
each Accepted Date Range, Buyer shall notify Seller of the
expected date of arrival of the LPG Tanker scheduled to
receive the LPG, and written instructions regarding the making
up and disposition of bills of lading and orders for port(s)
of discharge, which, if reasonable, shall be complied with by
Seller. Buyer shall notify Seller of the name of any LPG
Tanker previously advised as a TBN as soon as possible but in
no event later than the last day for the naming of a vessel
under Terminal Procedures. Buyer may thereafter substitute
another LPG Tanker of similar class, type, size, capacity ad
position, provided all other provisions hereof are complied
with and further provided that the advice of substitution is
timely under Terminal Procedures.
11.6 LPG Tanker to Arrive Precooled
Upon arrival at the Loading Port, any LPG Tanker which
does not have its cargo tanks adequately precooled, or is in
any other way not fit or ready for the receipt of the LPG as
required by the Terminal Procedures will, if scheduling and
other operational considerations permit, be cooled down at the
berth at Buyer's expense. Laytime will be extended for any
time required for cooldown, such time to begin when the vessel
starts to receive LPG for cooling and to end when the required
loading temperature is reached. Cooldown LPG will be measured
in the same manner as LPG for delivery and charged at the
Contract Sales Prices in effect at the time at the time of
delivery. Should the extended berth time cause a conflict
with LNG delivery schedules, Buyer shall cause the LPG Tanker
to vacate the berth and return later to continue cooldown or
loading, as the case may be. All laytime, harbor fees and
port charges for vacating and returning to the berth under
these circumstances will be for Buyer's account.
<PAGE>
ARTIC LE 12
DELIV ERY AND NOMINATION
12.1 Delivery
(a) Delivery of the LPG shall be made F.O.B. by Seller
to Buyer at the Loading Terminal determined by Seller pursuant
to Article 11 in bulk into LPG Tankers arranged by such Buyer.
(b) Buyer shall return to Seller free of charge the
vapor from Buyer's LPG Tankers during loading and cooling
operations.
(c) It is intended that all deliveries will be made in
full LPG Tanker cargo lots. However, Seller and Buyer will
endeavor to accommodate the other party's requests for
part-cargo shipments if such accommodation is possible taking
into account shipping and production schedules and ullage at
the Arun and Bontang Facilities.
(d) Buyer shall take delivery of the full quantity of
LPG scheduled to be loaded, subject to a plus or minus five
percent (5%) operational lifting tolerance to account for
operational limitations of LPG Tankers.
12.2 Loading Terminal, LPG Tankers and Terminal Procedures
(a) Buyer shall provide LPG Tankers at each Loading Port
indicated below to take delivery of LPG which have the
following general specifications applicable to such Loading
Port and such other specifications as may be required pursuant
to paragraph (b) below:
LPG Tanker capacity: 40,000 to 100,000 Cubic Meters at Arun;
15,000 to 100,000 Cubic Meters at
Bontang.
Total deadweight: Up to 65,000 metric tons at Arun;
Up to 65,000 metric tons at Bontang.
Length overall : 175 to 255 meters at Arun;
159 to 255 meters at Bontang.
Beam extreme : up to 40 meters at Arun;
up to 40 meters at Bontang.
Maximum draft : up to 12.5 meters at Arun;
up to 12.5 meters at Bontang.
(b) Seller shall provide at the Loading Terminals a
berth, mooring or other area capable of handling LPG Tankers
which are within the specifications set out in paragraph (a)
above and Article 12.1(c). Seller shall furnish with
reasonable dispatch, upon a Buyer's request therefor, all
necessary information concerning restrictions applicable at
the Loading Ports and the Loading Terminals with respect to
maximum draft, length and the like in addition to those set
out in paragraph (a) above, Terminal Procedures relevant to
LPG Tanker operations, and special or non-customary
requirements of governmental authorities at each Loading Port
with respect to LPG Tanker operations therein. Buyer shall be
deemed to be fully familiar with such restrictions, Terminal
Procedures, and requirements, provided that Seller has
furnished and Buyer has received such information as has been
requested as aforesaid. Buyer shall not nominate or furnish
a LPG Tanker which does not conform to the aforesaid
restrictions, Terminal Procedures, and requirements. Buyer
acknowledges that the Terminal Procedures and regulations of
governmental authorities with jurisdiction over each Loading
Port apply to the loading and receipt of the LPG and to
Buyers' LPG Tankers thereat. If Buyer's LPG Tanker does not
conform to the Terminal Procedures or the requirements or
regulations of governmental authorities with respect to
safety, size, age of the vessel, vessel movements, navigation
and operating standards, discharge, and the like, or the
master of the LPG Tanker fails to execute Conditions of Use
then employed at the Loading Port, Seller may refuse to berth
or load the LPG Tanker and any delays or expenses of Seller
and such Buyer due to such non-conformance, whether Seller so
refuses or proceeds with berthing or loading, shall be for
Buyer's account.
(c) Each of Buyer's LPG Tankers shall be designed and at
all times be equipped and manned so as to safely receive, at
the Delivery Point, Propane and Butane simultaneously for
loading at a rate for each grade of LPG of not less than 1,700
Cubic Meters per hour or, if loading one grade of LPG through
two loading arms (if the LPG Tankers' manifold configuration
so permits), 3,00 Cubic Meters per hour or, ? Butane and
Propane sequentially, at a rate of not less than 1,700 Cubic
Meters per hour.
(d) The provisions of this Contract applicable to LPG
Tankers shall apply whether an LPG Tanker is owned or operated
by Buyer or otherwise employed by Buyer.
<PAGE>
ARTICLE 13
ARRIVAL, LOAD ING TIME AND DEMURRAGE
13.1 Notice of Arrival
(a) Buyer shall arrange for each LPG Tanker to report by
radio to the Loading Terminal or to Seller at the Loading Port
a notice of the LPG Tanker's estimated time of arrival,
initially within seventy-two (72) hours prior the LPG Tanker's
arrival at the Loading Port. Such notice shall include a
statement of the expected temperature of the bottom of the
cargo tanks on arrival.
(b) Buyer shall arrange for each LPG Tanker to report by
radio to the Loading Terminal or to Seller at the Loading Port
forty-eight (48) and twenty-four (24) hours before arrival
thereat (or at such other times as Buyer may be advised by
Seller), stating the estimated time of arrival.
13.2 Notice of Readiness and Loading
As soon as the LPG Tanker arrives at the sea buoy of the
designated Loading Port, the master shall give notice of
readiness to Seller ("Notice of Readiness"); provided,
however, that in the event an LPG Tanker should arrive at the
Loading Port prior to the first day of the Accepted Date
Range, Notice of Readiness shall be deemed effective at the
earlier of (i) 6:00 a.m. local time on the first day of the
Accepted Date Range or such earlier time as applicable port
regulations designate that vessels are permitted to proceed to
berth, or (ii) the time loading commences.
13.3 Laytime
(a) The allotted laytime for Seller to load each LPG
Tanker ("Allotted Laytime") shall be four (4) hours plus
either (i) one hour for every 1,700 Cubic Meters comprising
the accepted Quantities, if loading Propane or Butane
sequentially, or (ii) one hour for every 3,400 Cubic Meters
comprising the Accepted Quantities, if loading Propane and
Butane simultaneously or if loading one grade of LPG through
two loading arms, subject to adjustment as provided below and
in Article 12.1(d).
(b) The actual laytime for each LPG Tanker ("Used
Laytime") shall commence (i) six (6) hours after the time when
the Notice of Readiness is tendered by the LPG Tanker's master
or six (6) hours after the Notice of Readiness is deemed
effective pursuant to Article 13.2, whichever is later, or
(ii) when the LPG Tanker is "all fast alongside" the berth and
ready to receive cooldown LPG or cargo, whichever of the
foregoing first occurs, and shall end when the loading and
return lines of the LPG Tanker are disconnected from the
Loading Terminal's loading and return lines. Where delay is
caused to an LPG Tanker getting into berth after giving Notice
of Readiness for any reason over which neither Seller nor the
Loading Terminal has control, such delay shall not count as
Used Laytime. If an LPG Tanker's Notice of Readiness is
tendered on a date later than the last day of the Accepted
Date Range, the LPG Tanker shall await its turn to load in
accordance with Terminal Procedures, and Used Laytime shall
commence when the LPG Tanker is "all fast alongside" the berth
and ready to receive LPG. Any delay due solely to the LPG
Tanker's condition or breakdown or inability of the LPG
Tanker's facilities to load LPG within the time allowed or at
the rate set forth in Article 12.2(c) shall not count as Use
Laytime or time on demurrage.
(c) The periods mentioned below shall be reduced from
Used Laytime and shall not count as time on demurrage:
(i) any period during which proceeding from the
anchorage, berthing, loading or clearing of the LPG
Tanker to proceed to sea after completion of loading
is delayed, hindered or suspended by Buyer, the LPG
Tanker's owner, the LPG Tanker's master, or any
third party or governmental authority for reasons of
safety, weather or for other reasons over which
Seller has no control;
(ii) any period of delay attributable to the
operation of the LPG Tanker including the
period of time such LPG Tanker awaits a berth
by reason of the LPG Tanker being unable to
receive LPG under this Contract or under the
Terminal Procedures;
(iii any period during which the LPG Tanker's tanks
are being cooled to a temperature that will
permit continuous loading of LPG in accordance
with Terminal Procedures;
(iv) any period in excess of Allowed Laytime
required to load the LPG Tanker due to the LPG
Tanker's inability to load at the Loading
Terminal's normal operational loading rate due
to limitations placed on the loading rate by
the LPG Tanker; and
(v) any period during which the LPG Tanker is waiting
for all necessary port clearances.
13.4 Demurrage
(a) If Used Laytime exceeds Allotted Laytime (as
adjusted in accordance with Article 13.3) in loading any LPG
Tanker, Seller shall pay to Buyer demurrage at the "Annual
Demurrage Rate" per day in effect in the calendar year in
which Used Laytime commenced for the LPG Tanker The "Annual
Demurrage Rate" for each calendar year shall be the rate (in
U.S. Dollars per day) determined in accordance with the
procedures set out in Exhibit E.
(b) If demurrage shall be incurred at Loading Ports by
reason of fire, explosion, storm or by a strike, lockout,
stoppage or restraints of labor or by breakdown of machinery
or equipment in or about the plant of Seller, demurrage shall
be reduced one-half of the amount set out in Exhibit ?
shall not be liable fro any demurrage for delay caused by
strike, lockout, stoppage or restraints of labor for master,
officers and crew of the LPG Tanker or tugboat or pilots.
(c) Buyer shall invoice Seller for amounts due under
this Article 13.4 and Seller shall pay the invoice in
accordance with the terms of Article 10.
<PAGE>
ARTICLE 14
DEPARTURE, MI SCELLANEOUS CHARGES AND INSURANCE
14.1 Departure
Each LPG Tanker shall vacate the berth as soon as loading
is completed, subject to and in accordance with the Terminal
Procedures. Any loss or damage incurred by Seller as a result
of the LPG Tanker's failure promptly to vacate the berth,
except for any cause over which Buyer has no control, shall be
paid by the Buyer to Seller.
14.2 Miscellaneous Charges
Dues and other charges on the LPG loaded shall be paid by
Seller. Dues and other charges on the LPG Tanker, whether or
not such dues or charges are based on the quantity of LPG
loaded or the freight and regardless of who is initially
required to pay or withhold such dues and charges, shall be
paid or borne by Buyer. Any taxes on freight shall be borne
by the Buyer.
14.3 Insurance and Conditions of Use
Buyer shall ensure that all LPG Tankers shall be entered
in a reputable P&I Club acceptable to Seller for all risks,
including, without limitation, those provided for in the
Conditions of Use. All costs related to entering LPG Tankers
with reputable P&I Clubs shall be at Buyer's expense. Buyer
shall ensure that the owner, operator or charterer and master
of each LPG Tanker shall accept the Conditions of Use.
<PAGE>
ARTIC LE 15
FORCE MAJEURE
15.1 Events of Force Majeure
(a) Neither Seller nor Buyer shall be liable for any
delay or failure in performance hereunder if and to the extent
such delay or failure in performance is directly caused by any
of the following causes or events (any such cause or event is
hereinafter referred to as an event of Force Majeure):
(i) As to the Arun and Bontang Facilities and the
Receiving Facilities:
(A) fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado,
earthquake, landslide, soil erosion,
subsidence, washout or epidemics;
(B) war, riot, civil war, blockade, insurrection,
sabotage, acts of public enemies or civil
disturbances;
(C) strike, lockout or other industrial
disturbances;
(D) accidental damage to Natural Gas reservoirs or
Natural Gas production facilities in the Arun
or East Kalimantan Gas Supply Area or to the
facilities for transportation of Natural Gas
from the Arun or East Kalimantan Gas Supply
Area;
(E) accidental damage to any of the Arun and
Bontang LPG Facilities or the Arun and Bontang
LNG Facilities;
(F) accidental damage to the Receiving Facilities
capable of receiving the LPG cargo(es) in
question;
(G) inability or reduced capacity of facilities to
produce or ship LNG or other hydrocarbons, in
either case, requiring a cessation,
suspension, interruption or curtailment in
production or transmission of Natural Gas, LPG
or LNG;
(H) delay in construction, completion,
commissioning or testing of any stage of the
Arun or Bontang LPG Facilities so as to
prevent them from becoming operational on a
continuing basis, which delay is caused by (a)
any of the events referred to in
sub-paragraphs (A), (B) and (C) above, or (b)
delay in receiving major items of equipment or
materials from the manufacturer or vendor
thereof, provided that the Seller shall have
taken all steps reasonably available to obtain
timely delivery of such items including the
placing of purchase orders within such time
was prudent under the existing circumstances;
(I) depletion, reduction or insufficiency of
reserves of, or a change in the
characteristics of Natural Gas from, or a
change in the reservoir characteristics of,
either the Arun or East Kalimantan Gas Supply
Area such that the contractual quantities of
LPG hereunder cannot be produced in a
commercial manner; or
(J) act of government or governmental authorities
or any law, decree, order or the like, or
taking or confiscation whether or not acting
under color of law, that directly affects the
ability of a party to perform any obligation
hereunder other than the obligation to remit
payments as provided in Article 10.4 hereof on
account of LPG delivered and taken or not
taken and subject to payment of damages under
this Contract.
(ii) As to Named LPG Tankers:
(A) loss of a Named LPG Tanker or serious damage
thereto;
(B) closing of harbors, ports or other facilities;
(C) accident of navigation or perils of the sea;
(D) fire, flood, atmospheric disturbance,
lightning, storm, typhoon, tornado, or
epidemics;
(E) war, riot, civil war, blockade, insurrection,
acts of public enemies, or civil disturbance;
(F) strike or other industrial disturbance
occurring aboard a Named LPG Tanker; or
(G) acts of government.
(iii) As to the Arun and Bontang Facilities, the
Receiving Facilities and LPG Tankers:
any event or cause whether or not of the same type
or class as described above and whether or not
foreseeable, reasonably beyond the control of the
party affected which by the exercise of due
diligence that party is unable to overcome.
(b) Notwithstanding the provisions of paragraph (a)
above:
(i) Buyer shall in no event be relieved of its
obligations to pay Seller for LPG sold and
delivered to it hereunder or for payment of damages
pursuant to Article 5.5 for LPG not taken;
(ii) neither party shall be relieved from any other
obligations to make payments required
hereunder to another party; and
(iii) neither party shall be relieved from its
obligation to make payments in immediately
available U.S. Dollars in the place or places
otherwise provided for herein.
(c) Settlement of strikes, lockouts or other industrial
disturbances shall be entirely within the discretion of the
party experiencing such situations, and nothing herein shall
require such party to settle industrial disputes by yielding
to demands made on it when it considers such action
inadvisable.
15.2 Notice, Resumption of Normal Performance
(a) Immediately upon the occurrence of an event of Force
Majeure that gives a party warning that the event may delay or
prevent the performance by Seller or Buyer of any of its
obligations hereunder, the party affected shall give notice
thereof to the other party describing such event and stating
the obligations the performance of which are, or are expected
to be, delayed or prevented, and (either in the original or in
supplemental notices) stating (i) the estimated period during
which performance may be suspended or reduced, including, to
the extent known or ascertainable, the estimated extent of
such reduction in performance, and (ii) the particulars of the
program to be implemented to ensure full resumption of normal
performance hereunder.
(b) In order to promote resumption of normal performance
of this Contract within the shortest practicable time, the
party affected by an event of Force Majeure shall take all
measures to that end which are reasonable in the
circumstances, taking into account the consequences resulting
from such event of Force Majeure, provided that such party
shall not be required to take measures which would involve it
in material additional expense or in a material departure from
its normal practices. Prior to resumption of normal
performance the parties shall continue to perform their
obligations under this Contract to the extent not prevented by
such event of Force Majeure.
15.3 Effect on Deliveries, Supplies, Term
(a) No curtailment or suspension of deliveries or
receipt of deliveries shall operate to extend the duration of
this Contract or to terminate this Contract (except as
specified in paragraph (c) below). Neither Buyer nor Seller
shall be obliged to make up shipments omitted due to Force
Majeure, whether affecting Seller or Buyer.
(b) Under no circumstances shall Seller be obliged to
purchase or otherwise obtain LPG lost or not produced as the
result of Force Majeure, or to replace or supplement the Arun
or East Kalimantan Gas Supply Area as the source of supply of
Natural Gas for LPG or to replace or supplement the Arun or
Bontang LPG Facilities for production of LPG. Should Seller
obtain or acquire alternate LPG supplies, Seller shall not be
obligated to allocate any such supplies to Buyer.
(c) If either Buyer's or Seller's performance hereunder
is delayed or prevented by Force Majeure for more than one
hundred eighty (180) consecutive days, the other party shall
have the right to terminate this Contract upon sixty (60)
days' prior notice after expiration of such period of one
hundred eighty (180) days to the other party provided that
such event of Force Majeure is not remedied within such period
of notice.
<PAGE>
ARTICLE 16
EARLY TERMINA TION
16.1 Financing
Seller shall have the option, which shall be exercised
(if at all) by notice to Buyer given not later than September
30, 1986, to terminate this Contract sixty (60) days after the
date of the notice, without any liability to Buyer whatsoever
as a consequence of such termination, if Seller has not by the
date of such notice and by the specified date of termination
obtained, and executed or caused the execution of definitive
agreements for, financing which, in its sole opinion, (a) are
upon terms and conditions satisfactory to it and (b) cover the
full construction costs of the Arun and Bontang LPG Facilities
(together with whatever additions or alterations, if any, are
required to be made to the Arun and Bontang LNG Facilities by
virtue of construction and operation of the Arun and Bontang
LPG Facilities in order for Seller to maintain its commitments
to its buyers of LNG).
16.2 Governmental Approvals
Either Seller or Buyer shall have the option, which shall
be exercised (if at all) by notice to the other given not
later than September 30, 1986, to terminate this Contract
sixty (60) days after the date of the notice, without any
liability to the other whatsoever as a consequence of such
termination, if, by the date of such notice and by the
specified date of termination, all authorizations and
governmental approvals required for the performance of this
Contract have not been obtained.
16.3 Bankruptcy, etc.
If Buyer shall become insolvent or unable to pay its
debts as they mature, or commits or suffers any act of
bankruptcy (including filing or failing to have discharged any
petition in bankruptcy, reorganization, winding-up,
liquidation or similar proceeding, the appointment of a
receiver or trustee of Buyer or its assets, and assignment for
the benefit of its creditors or similar composition), then
Buyer shall be in material breach hereunder and (in addition
to such other remedies as it may have) Seller shall have the
right to terminate this Contract forthwith upon notice to
Buyer.
<PAGE>
ARTIC LE
ARBIT RATION
Any dispute between Seller and Buyer in connection with
this Contract or the interpretation, performance or
non-performance hereof shall be finally settled by arbitrator
pursuant to the Rules of Conciliation and Arbitration of the
International Chamber of Commerce ("ICC"), in effect at that
time, by three (3) arbitrators appointed in accordance with
said Rules. The place at which such arbitration proceedings
shall be held shall be Paris, France and the arbitrators shall
be bound to apply the laws of the State of New York in
determination of the dispute. The award rendered by the
arbitrators shall be final and binding upon the parties, and
may be entered and enforced in any court having jurisdiction.
The arbitration proceedings shall be conducted in the English
language.
<PAGE>
ARTIC LE 18
APPLI CABLE LAW
This Contract shall be governed by and interpreted in
accordance with laws of the State of New York, United States
of America.
<PAGE>
ARTIC LE 19
CONFI DENTIALITY
Information or documents furnished by a party to the other
party hereunder in connection with the performance of this
Contract, and which the disclosing party identifies as
confidential, may not be used or communicated to third parties
without the agreement of Seller, in the case of information and
documents furnished to Buyer, and of the Buyer, in the case of
information and documents furnished to Seller. This restriction
shall not apply to information or documents which:
(a) have fallen into the public domain otherwise than
through the act of failure to act of the party that has
received them;
(b) are communicated to any Supplier or any Affiliate of
a party or a Supplier, with the obligation of the receiving
persons to maintain confidentiality;
(c) are communicated to legal counsel, accountants,
other professional consultants or advisers, underwriters or
lenders of a party or a Supplier, or other persons that are
participating in the implementation of sales of LPG from the
Arun and Bontang Facilities, with the obligation of the
receiving persons to maintain confidentiality;
(d) are communicated to contractors for or operators of
the Arun or Bontang Facilities, a Loading Port, any LPG
Tanker, or a Loading Terminal, provided that such
communication is necessary for the performance by a party of
its obligations under this Contract and provided further that
said contractors and operators shall be subject to an
obligation to maintain confidentiality; or
(e) are communicated to any governmental authorities of
Japan or the Republic of Indonesia, or the United States of
America, or the country of incorporation of any Supplier
claiming authority to require such disclosure, in accordance
with that authority.
The foregoing obligations of the parties shall survive the
termination of this Contract.
<PAGE>
ARTICLE 20
NOTICES
All notices and other communications for purposes of this
Contract shall be in English and in writing, which shall include
transmission by telex, cable, or other electronic means such as
facsimile transmission, except that notices given from ships at sea
may be by radio in English. Notices and other communications given
by telex cable or other electronic means shall be confirmed by air
mail unless otherwise agreed by the parties. Notices and
communications shall be directed as follows:
A. To Seller at the following mail address :
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
Attention:
Bureau of Gas Marketing
Sub-Directorate of Foreign Marketing
Medan Merdeka Timur 1A,
Jakarta Pusat, Indonesia
and at the following cable and telex addresses --
cable: PERTAMINA
JAKARTA, INDONESIA VIA RCA
Attention:
Bureau of Gas Marketing
Sub-Directorate of Foreign Marketing
telex: PERTAMINA
44134 or 44152
JAKARTA, INDONESIA
facsimile: 62-21-343882
<PAGE>
B. To Buyers at the following mailing addresses:
COSMO OIL CO., LTD.
Attention:
and at the following cable, telex and facsimile
addresses:
telephone:
cable:
telex:
FACSIMILE:
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between <PAGE>
B. To Buyers at the following mailing addresses:
MITSUBISHI CORPORATION
Attention: Gas Department B
6-3, Marunouchi 2-chome
Chiyoda-ku, Tokyo 100, Japan
and at the following cable, telex and facsimile
addresses:
telephone: 81-3-210-2121 (Switch)
81-3-210-6041
cable: MITSUBISHI TOKYO
telex: J33333 MCTOK A
FACSIMILE: 81-3-21C-8071
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between
B. To Buyers at the following mailing addresses:
NIPPON PETROLEUM GAS CO., LTD.
Attention: Supply Department
4-2, Marunouchi 3-Chome,
Chiyoda-ku, Tokyo 100, Japan
and at the following cable, telex and facsimile
addresses:
telephone: 81-3-286-4872
cable: NIPPETGASCO
telex: 222-8308 NPGCTK-J
FACSIMILE: 81-3-214-3661
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between
B. To Buyers at the following mailing addresses:
SHOWA SHELL SEKIYU K.K.
Attention: LPG Division
2-5, Kasumigaseki 3-chome
Chiyoda-ku, Tokyo 100, Japan
and at the following cable, telex and facsimile
addresses:
telephone: 81-3-581-9326 (Direct)
cable: SHELL
telex: J22373 SHELLTOK
FACSIMILE: 81-3-581-9304
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between <PAGE>
B. To Buyers at the following mailing addresses:
KYODO OIL CO., LTD.
Attention: International Trade Department
11-2, Nagata-Cho 2-Chome,
Chiyoda-ku, Tokyo 100, Japan
and at the following cable, telex and facsimile
addresses:
telephone: 81-3-593-6309
cable: KDOCO SUNWAY
telex: 222-5297 KYOOIL J
J28872 KYODOIL
FACSIMILE: 81-3-581-2158
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between <PAGE>
B. To Buyers at the following mailing addresses:
IDEMITSU KOSAN CO., LTD.
Attention: Overseas Operations Department
1-1, Marunouchi 3-chome
Chiyoda-ku, Tokyo 100, Japan
and at the following cable, telex and facsimile
addresses:
telephone: 81-3-213-3111
cable: -
telex: J22219 IDEMITSU
FACSIMILE: 81-3-211-3521
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between <PAGE>
B. To Buyers at the following mailing addresses:
MITSUI LIQUEFIED GAS CO., LTD.
Attention: Supply & Operations Dept.
Yaesudai Building
1-1, Kyobashi, 1-chome,
Chuo-Ku, Tokyo 104, Japan
and at the following cable, telex and facsimile
addresses:
telephone: 81-3-276J-7121
cable: MITLPG
telex: 2225347 MITLPG J
FACSIMILE: 81-3-276-7043
Either party may designate additional addresses for
particular communications as required from time to time, and
may change any address, by notice given thirty (30) days in
advance of such addition or change. Immediately upon
receiving communications by telex, cable, facsimile or radio,
a party shall acknowledge receipt by the same means (or may
acknowledge receipt of facsimile by telex or cable), and may
request a repeat transmittal of the entire communication or
confirmation of particular matters.
If the sender receives no acknowledgement of receipt
within twenty-four (24) hours, or receives a request for
repeat transmittal or confirmation, said party shall repeat
the transmittal or answer the particular request. Unless
otherwise expressly provided herein, all notices hereunder
shall become effective upon receipt, and for the purposes
hereof, "receipt" in the case of a telex shall refer to a
message sent for which an "answer-back" was received by the
sender. Prior to the date of First Loading, the parties shall
establish radio channels, frequencies and procedures for all
communications between <PAGE>
LPG Tankers, the Arun and Bontang Facilities and the
authorities for each Loading Port and Loading Terminals.
<PAGE>
ARTICLE 21
ASSIGNMENT
Neither this Contract nor any rights or obligations
hereunder may be assigned by Buyer without the prior written
consent of Seller, or by Seller without the prior written
consent of the Buyer.
<PAGE>
ARTIC LE 22
AMEND MENTS
This Contract may not be amended, modified, varied or
supplemented except by an instrument in writing signed by the
President-Director or other duly authorized representative of
Seller and by a Director or other duly authorized representative of
Buyer.
Performance of any condition or obligation to be performed
hereunder shall not be deemed to have been waived or postponed
except by an instrument in writing signed by an authorized
signatory, as specified in the preceding paragraph, of the party
who is claimed to have granted such waiver or postponements.
<PAGE>
ARTICLE 23
ENTIRE AGREEMENT
This Contract constitutes the entire agreement between the
parties relating to the subject matter hereof and supersedes and
replaces any provisions on the same subject contained in any other
agreement or communications between the parties prior to the
execution of this Contract, whether written or oral.
<PAGE>
ARTICLE 24
LANGUAGE OF THE CONTRACT
This Contract has been made and executed only in the English
language.
<PAGE>
ARTICLE 25
HEADINGS
The headings and captions in this Contract are inserted solely
for the sake of convenience and shall not affect the interpretation
or construction of this Contract.
<PAGE>
ARTICLE 26
COUNTERPARTS
This Contract has been executed in two (2) identical
counterparts, each of which shall have the force and dignity of an
original, and both of which shall constitute but one and the same
Contract.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK COSMO OIL CO., LTD.
DAN GAS BUMI NEGARA (PERTAMINA)
By /S/ A.R. RAMLY By /S/ T. KOJIMA
PRESIDENT DIRECTOR GENERAL MANAGER
GAS DEPT.<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK MItSUBISHI CORPORATION
DAN GAS BUMI NEGARA (PERTAMINA)
By /S/ A.R. RAMLY By /S/ O. MOTOOKA
PRESIDENT DIRECTOR GENERAL MANAGER
GAS DEPT.
B<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK NIPPON PETROLEUM GAS
DAN GAS BUMI NEGARA (PERTAMINA) CO., LTD.
By /S/ A.R. RAMLY By /S/ M. YUASA
PRESIDENT DIRECTOR PRESIDENT
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK SHOWA SHELL SEKIYU K.K.
DAN GAS BUMI NEGARA (PERTAMINA)
By /S/ A.R. RAMLY By /S/ K. KASUGA
PRESIDENT DIRECTOR GENERAL MANAGER
LPG DIVISION<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK KYODO OIL CO., LTD.
DAN GAS BUMI NEGARA (PERTAMINA)
By /S/ A.R. RAMLY By /S/ S. SHIMURA
PRESIDENT DIRECTOR GENERAL DIRECTOR AND
GENERAL MANAGER
INTERNATIONAL TRADE
DEPARTMENT<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK IDEMITSU KOSAN CO., LTD.
DAN GAS BUMI NEGARA (PERTAMINA)
By /S/ A.R. RAMLY By /S/ A. IDEMITSU
PRESIDENT DIRECTOR DIRECTOR AND
GENERAL MANAGER
OVERSEAS OPERATIONS
DEPARTMENT<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this
Contract to be executed in Jakarta by its duly authorized
representative as of the date first written above.
SELLER : BUYERS:
PERUSAHAAN PERTAMBANGAN MINYAK MITSUI LIQUEFIED GAS CO., LTD.
DAN GAS BUMI NEGARA (PERTAMINA)
By /S/ A.R. RAMLY By /S/ S. SUZUKI
PRESIDENT DIRECTOR MANAGING DIRECTOR
GAS DEPT.
WITNESS:
MITSUI & CO., LTD.
By : /S/ T. KINOSHITA
GENERAL MANAGER
GAS DIVISION<PAGE>
Exhibit A
(Sample) Notice to Buyer of Build-up Year 1988 Fixed Quantities<PAGE>
Exhibit B
Estimate of Allocation of Propane and Butane
in accordance with Article 5.3 (b) (i)<PAGE>
Exhibit C
Production Forecast of Production Quantities
of Propane and Butane, 1988 th rough 1990<PAGE>
Exhibit D
Specifications<PAGE>
Attachment 2
Testing Method of LPG Residual Matter
(Mass Analysis Method)<PAGE>
Attachment 3
Precision for Residual Matter<PAGE>
Exhibit E
Procedure for Calculating Annual Demurrage Rate<PAGE>
Exhibit F
Example of Calculation of Contract Sales Prices
in accordance with Article 6.2 (b)<PAGE>
Appendix A
Measurement and Sampling Procedures
<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
SHOWA SHELL SEKIYU K.K.
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
SHOWA SHELL SEKIYU K.K.
By: /S/ K. SASUGA
GENERAL MANAGER LPG DIV.
<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
COSMO OIL CO., LTD.
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
COSMO OIL CO., LTD.
By: /S/ T. KOJIMA
GENERAL MANAGER
GAS DEPARTMENT
<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
KYODO OIL CO., LTD.
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
SHOWA SHELL SEKIYU K.K.
By: /S/ S. SHIMURA
MANAGING DIRECTOR
AND GENERAL MANAGER,
INTERNATIONAL TRADE DEPT.
<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
MITSUI LIQUEFIED GAS CO., LTD.
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
SHOWA SHELL SEKIYU K.K.
By: /S/ S. SUZUKI
MANAGING DIRECTOR
WITNESS:
MITSUI & CO., LTD.
By: /S/ T. KINOSHITA
GENERAL MANAGER
GAS DIVISION<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
IDEMITSU KOSAN CO., LTD.
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
SHOWA SHELL SEKIYU K.K.
By: /S/ A. IDEMITSU
DIRECTOR AND GENERAL MANAGER
OVERSEAS OPERATIONS DEPT.
<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
NIPPON PETROLEUM GAS CO., LTD.
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
SHOWA SHELL SEKIYU K.K.
By: /S/ M. YUASA
PRESIDENT
<PAGE>
July 15, 1986
SIDE LETTER TO
LPG ARUN AND BONTANG
SALES AND PURCHASE CONTRACT
MITSUBISHI CORPORATION
Dear Sirs,
I. Sales of Additional Quantities
During our discussions leading to the execution today of the LPG
Sales and Purchase Contract (the "Contract"), you have indicated
your interest in considering the purchase of quantities of LPG
from the LPG Facilities in addition to those which are to be sold
and purchased under the Contract.
It is anticipated that, in addition to the quantities you have
agreed to purchase under the Contract, additional quantities of
LPG may from time to time be available for additional sales.
Pertamina may wish under such circumstances to sell such
additional quantities, either under long-term or short-term
contracts, as spot sales, or any combination of these
arrangements.
Having in mind the business relationship which has been
established between Pertamina and you, Pertamina wishes to
provide to you the opportunity to purchase such additional
quantities to the extent Pertamina is able to do so consistent
with its existing commitments, including the obligations of
Pertamina under its other LPG sales contracts.
You can be assured that Pertamina will inform you of the
availability of excess quantities of LPG before selling such
quantities to parties other than yourself, and will, if you wish,
enter into discussions with you to determine whether Pertamina
and you can reach agreement on terms and conditions of sale with
respect to such excess quantities.
We all must understand, however, that Pertamina will retain its
right to sell such additional quantities to third parties if,
after discussions with you, we are unable to reach agreement on
terms and conditions of sale, including price, quantities, time
of deliveries, term of contract and other similar important
matters.
II. Conditions of Use
Conditions of Use ("COU") for the Arun and Bontang Loading Ports
will be signed by the master of each LPG Tanker before using such
Loading Ports' facilities. However, in view of the general COU
terms, it is necessary to agree to the principle for determining
liability under the COU with regard to LPG Tankers using the
Loading Ports for which adequate insurance is available to
protect the interests of all parties, taking into account the
current availability of protection and indemnity cover.
After signing of the Contract, legal advisers and insurance
advisers of Seller, Buyer and Buyer's transporters shall
cooperate to modify the obligations under the COU for LPG Tankers
in a manner consistent with the attached drafts.
III. Relationship with LNG Processing
It is understood that the production of LPG at the Arun and
Bontang Facilities (as defined in the Contract) is dependent on
the processing of Natural Gas into LNG and that any interruption,
curtailment or suspension of LNG production or deliveries of LNG
at the Arun or Bontang Facilities will directly and adversely
affect the production and availability for export of LPG from
such Facilities.
Furthermore, Seller has entered into and made certain commitments
prior to the date hereof to its LNG buyers in respect of
operational limitations, quantities and specifications of LNG
produced at the Arun and Bontang Facilities.
The annual Fixed Quantities (as defined in the LPG Sales and
Purchase Contracts) have been determined as of the date hereof
after taking these quantities, specifications and limitations
into account.
As soon as Seller becomes aware of any circumstance which may
require Seller to take action to meet the above commitments which
would affect LPG production Seller shall promptly enter into good
faith discussions with Buyer to determine whether alternative
action is available or possible that could enable Seller to
satisfy both its commitments to Buyer as well as the commitments
referred to above. It is understood that Seller shall take
reasonable actions to avoid the occurrence of any event which
would affect LPG production. However, if Seller nevertheless
determines that it must take action which affects LPG production,
such circumstances would constitute an event of Force Majeure
under the Contract.
If you are in agreement with the foregoing, please indicate your
concurrence by signing a copy of this letter in the space
provided below.
Very truly yours,
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By: /S/ A.R. RAMLY
PRESIDENT DIRECTOR
Consented and Agreed to
SHOWA SHELL SEKIYU K.K.
By: /S/ O. MOTOOKA
GENERAL MANAGER
GAS DEPARTMENT B
ADDENDUM TO
BADAK IV LNG SALES CONTRACT
SUPPLY AGREEMENT
THIS ADDENDUM, made and entered into in Jakarta the 31st day
of January, 1994, but effective as of the 23rd day of October,
1990, by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN 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:
WHEREAS, PERTAMINA and Contractors are parties to the Badak IV
LNG Sales Contract Supply Agreement, made and entered into the 12th
day of August, 1991, but effective as of the 23rd day of October,
1990 (the "Supply Agreement") (unless otherwise stated, any terms
defined in the Supply Agreement shall have the same meanings when
used herein); and
WHEREAS, under the Supply Agreement PERTAMINA and Contractors
have committed to supply and deliver from proved 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 Badak IV Base Net
Gas Requirement and the Badak IV Additional Net Gas Requirement
over the term of the Supply Agreement; and
WHEREAS, the initial figures for the VICO Contract Gas, the
Other Contract Gas and the Producers' Percentage set forth in the
Supply Agreement were established by PERTAMINA to be used only on
a provisional basis until such time as DeGolyer and MacNaughton
certified such reserves, following which the identity of the
participating fields was to be documented and the quantities in
each field which comprise the VICO Contract Gas and the Other
Contract Gas and the Producers' Percentage were to be adjusted and
documented in a supplemental memorandum (the "Supplemental
Memorandum") in accordance with the Memorandum of Understanding Re:
Supply Agreements and Package IV Sales dated August 12, 1991; and
WHEREAS, upon completion of such adjustments, but not later
than the date of loading the initial cargo of LNG for delivery
under the Badak IV LNG Sales Contract, PERTAMINA and Contractors
agreed to execute an addendum to the Supply Agreement confirming
the VICO participating fields, the quantities in each field which
comprise the VICO Contract Gas and the Other Contract Gas, and the
Producers' Percentage; and
WHEREAS, such adjustments have been completed and agreed to by
PERTAMINA, Contractors and the production sharing contractors in
the Other Contract Areas and the Supplemental Memorandum has been
entered into of even date herewith.
NOW, THEREFORE, the parties agree as follows:
1. The Producers' Percentage is 27.2064%.
2. The VICO Contract Gas is 0.650570 t.s.c.f.
3. The VICO participating fields and the quantities in each
field comprising the VICO Contract Gas are as follows:
Participating Field Quantity of Gas (t.s.c.f.)
Badak 0.159137
Nilam 0.257704
Mutiara 0.092838
Semberah 0.136132
Pamaguan 0.004759
4. Subject to the foregoing, the undersigned parties hereby
ratify and confirm the Supply Agreement.
5. By separate addenda similar hereto and compatible
herewith, executed and delivered at the same time as this
Addendum, PERTAMINA and the production sharing
contractors in the Other Contract Areas shall confirm the
quantity of the Other Contract Gas.
IN WITNESS WHEREOF, PERTAMINA and Contractors have caused their
duly authorized representatives to execute this Addendum as of the
day and year first written above.
PERUSAHAAN PERTAMBANGAN CONTRACTORS:
MINYAK DAN GAS BUMI
NEGARA (PERTAMINA) VIRGINIA INDONESIA COMPANY
BY /s/ F. Abda'oe BY /s/ Charles Reimer
LASMO SANGA SANGA LIMITED
BY /s/ I. D. Brown
OPICOIL HOUSTON, INC.
BY /s/ Ching-Yung Chung
UNION TEXAS EAST KALIMANTAN
LIMITED
BY /s/ A. Peabody
UNIVERSE GAS & OIL COMPANY, INC.
BY /s/ Hidesuke Nanjo
VIRGINIA INTERNATIONAL COMPANY
BY /s/ I. D. Brown
MEMORANDUM OF AGREEMENT
BETWEEN
PERTAMINA AND KOREA GAS CORPORATION
FOR
PURCHASE AND SALE OF LNG
DURING 1995 - 1999
<PAGE>
MEMORANDUM OF AGREEMENT
FOR
PURCHASE AND SALE OF LNG DURING 1995-1999
This Memorandum of Agreement ("Agreement") dated September 30,
1994 is made by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA ("PERTAMINA") ("Seller") and Korea Gas
Corporation ("KGC") ("Buyer"), for the sale and purchase of
certain quantities of LNG as described below. Seller and Buyer
are collectively referred to herein as the "Parties".
WHEREAS, Seller and Buyer are parties to an Amended and Restated
LNG Sales and Purchase Contract, effective as of January 1, 1991
("Arun III Contract") which is in full force and effect and which
is unaffected by this Agreement; and
WHEREAS, Seller and Buyer are parties to the LNG Sales and
Purchase Contract (Korea II), effective as of May 7, 1991 ("Korea
II Contract") which is in full force and effect and which is
unaffected by this Agreement ; and
WHEREAS, Seller desires to sell and Buyer desires to purchase
certain quantities of LNG during the period 1995 to 1999.
NOW THEREFORE, in consideration of the mutual promises contained
herein, the Parties agree as follows :
ARTICLE I - TERM
The term of this Agreement shall commence on January 1, 1995 and
shall terminate on December 31, 1999.
ARTICLE II - FIXED QUANTITIES
During each calendar year specified below ("Fixed Quantity
Period"), Seller shall sell and deliver to Buyer and Buyer shall
purchase, receive and pay for, at the applicable Contract Sales
Price, the quantity of LNG specified for such Fixed Quantity
Period (each such quantity being called a "Fixed Quantity") as
follows :
Fixed Quantity
Fixed Quantities (Number of Cargoes)
Period Ex-Ship F.O.B. Total
1997 7 6 13
1996 23 3 26
1997 20 3 23
1998 15 4 19
1999 - 27 27
One Ex-Ship cargo is equivalent to 2,900 Billion BTU's.
One F.O.B. cargo is equivalent to 2,940 Billion BTU's.
ARTICLE III - TRANSPORTATION
(a) Seller shall be responsible for providing transportation for
the Ex-Ship Fixed Quantities specified in Article II above,
on an Ex-Ship basis.
(b) Buyer shall be responsible for providing transportation for
the F.O.B. Fixed Quantities specified in Article II above,
on an F.O.B. basis.
(c) In providing transportation hereunder, the Parties shall use
LNG Tankers which are compatible with the Loading Port and
the Receiving Facility and which have the required port
clearances, authorizations and approvals. The Parties shall
use their respective best efforts to obtain such clearances,
authorizations and approvals.
ARTICLE IV - CONTRACT SALES PRICE
(a) Ex-Ship Fixed Quantities
The Contract Sales Price for the Ex-Ship Fixed Quantities
shall be the sum of an LNG related portion ("LNG Related
Portion") and a transport related portion ("Transport
Related Portion").
The LNG Related Portion shall be 0.159 REP, where REP is the
arithmetic average of the realized export prices, in U.S.
Dollars per barrel, F.O.B. Indonesia, of all field
classifications of Indonesian crude oils (including
condensate) then being sold and exported, except premiums
and except such prices for spot sales.
The Transport Related Portion shall be U.S.$0.62/MMBTU as at
January 1, 1994, escalating 2.5% per annum thereafter.
(b) F.O.B. Fixed Quantities
The Contract Sales Price for the F.O.B. Fixed Quantities
shall be equal to the LNG Related Portion for the Ex-Ship
Quantities referred to in (a) above, multiplied by a boil-
off adjustment factor of 0.9865.
ARTICLE V - SOURCES OF SUPPLY
The Natural Gas to be processed into LNG and sold and delivered
hereunder is to be produced from the areas in East Kalimantan
covered by production sharing contracts between PERTAMINA and its
relevant suppliers, and loaded at PERTAMINA's facility at
Bontang, East Kalimantan.
ARTICLE VI - GENERAL TERMS AND CONDITIONS
(a) Ex-Ship Fixed Quantities
All of the terms and conditions of the Arun III Contract
shall apply to the Ex-Ship Fixed Quantities and shall be
incorporated in this Agreement (mutatis mutandis) except for
terms which are specifically excluded below, or which
conflict with the terms herein. Capitalized terms used
herein in connection with the Ex-Ship Fixed Quantities shall
have the same meaning as set forth in the Arun III Contract
unless otherwise specifically defined herein.
The following Articles of the Arun III Contract are hereby
expressly excluded from this Agreement :
7.1 Fixed Quantity (save that each of the calendar years
1995-1999 shall be referred to as a "Fixed Quantity
Period" and the quantity of LNG set out for delivery
hereunder in each such calendar year shall be referred
to as the "Fixed Quantity" for such Fixed Quantity
Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between
Buyer and Other Purchasers;
7.6 Make-Up LNG;
7.7 Allocation for Make-Good LNG, Make-Up LNG and
Restoration Quantities; and
7.8 Priority Order.
(b) F.O.B. Fixed Quantities
All of the terms and conditions of the Korea II Contract
shall apply to the F.O.B. Fixed Quantities and shall be
incorporated in this Agreement (mutatis mutandis) except for
terms which are specifically excluded below, or which
conflict with the terms herein. Capitalized terms used
herein in connection with the F.O.B. Fixed Quantities shall
have the same meaning as set forth in the Korea II Contract
unless otherwise specifically defined herein.
The following Articles of the Korea II Contract are hereby
expressly excluded from this Agreement :
7.1 Fixed Quantity (save that each of the calendar years
1995-1999 shall be referred to as a "Fixed Quantity
Period" and the quantity of LNG set out for delivery
hereunder in each such calendar year shall be referred
to as the "Fixed Quantity" for such Fixed Quantity
Period);
7.3 Buyer's Obligation to Take-or-Pay;
7.4 Allocation of Deliveries of Fixed Quantities Between
Buyer and Other Purchasers;
7.5 Make-Up LNG;
7.7 Allocation for Make-Up LNG and Restoration Quantities;
and
7.8 Priority Order.
<PAGE>
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed and signed by its duly authorized officer as of
this __________ day of ____________, 1994.
SELLER : BUYERS :
PERUSAHAAN PERTAMBANGAN MINYAK KOREA GAS CORPORATION
DAN GAS BUMI NEGARA (PERTAMINA)
_________/s/________________ ____________/s/______________
By : F. Abda'oe By : Park, Chung-Boo
Title : President Director Title : President
& C.E.O. & C.E.O.
FOURTH AMENDED AND RESTATED
IMPLEMENTATION PROCEDURES FOR
CRUDE OIL LIFTINGS
Effective Date: January 1, 1994
<PAGE>
FOURTH AMENDED AND RESTATED
IMPLEMENTATION PROCEDURES FOR
CRUDE OIL LIFTINGS
TABLE OF CONTENTS
ARTICLE PAGE
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
II. EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
III. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . .9
IV. NOTICES TO CONTRACTORS REGARDING PSC AND IJV
AVAILABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
V. NOTICES TO CONTRACTORS REGARDING CONTRACTORS'
AVAILABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
VI. VESSEL NOMINATION AND SCHEDULING. . . . . . . . . . . . . . . . . . 16
VII. LAYTIME AND DEMURRAGE . . . . . . . . . . . . . . . . . . . . . 25
VIII. EMERGENCY DISPOSAL. . . . . . . . . . . . . . . . . . . . . . . 25
XI. ACCOUNTING PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . 28
X. CONFLICTS AND ORDER OF PRECEDENCE . . . . . . . . . . . . . . . . . 28
XI. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
XII. SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . 31
XIII. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 31
XIV. CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
XV. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 32
XVI. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
XVII. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXHIBIT A - Example of IJV Party Year-End (Over)/Under Carry
Forward A-1
EXHIBIT B - Accounting Procedures for Final Settlement with Pertamina
and Tax Matters B-1<PAGE>
FOURTH AMENDED AND RESTATED
IMPLEMENTATION PROCEDURES FOR
CRUDE OIL LIFTINGS
THESE FOURTH AMENDED AND RESTATED IMPLEMENTATION PROCEDURES
FOR CRUDE OIL LIFTINGS are entered into as of the Effective Date by
and among VIRGINIA INDONESIA COMPANY, LASMO SANGA SANGA LIMITED,
OPICOIL HOUSTON, INC., UNION TEXAS EAST KALIMANTAN LIMITED,
UNIVERSE GAS & OIL COMPANY, INC. and VIRGINIA INTERNATIONAL
COMPANY.
Capitalized terms used herein, unless otherwise defined, have
the meanings set forth in Article I.
W I T N E S S E T H :
WHEREAS, pursuant to the Third Amended and Restated
Implementation Procedures, Contractors established procedures
pursuant to which each Contractor lifts its crude oil entitlement
under the PSC; and
WHEREAS, Contractors wish to enter into this Agreement to
amend and restate the Third Amended and Restated Implementation
Procedures to provide for certain revisions thereto.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, Contractors hereby agree as follows:
ARTICLE I - DEFINITIONS
In this Agreement, the following terms shall have the meanings set
forth below:
"Agreement" shall mean the Fourth Amended and Restated
Implementation Procedures for Crude Oil Liftings.
"Annual Crude Oil Gross Receipts" attributable to a Contractor
shall mean the sum of the gross receipts determined for each
Month of a Year by multiplying the number of Barrels such
Contractor Lifted in the Month by the applicable Crude Oil
Price for such Month, including any payments made to or by
such Contractor pursuant to the Final Settlement with
Pertamina.
"Barrel", "Crude Oil", "Natural Gas", "Operating Costs",
"Contract Area", and such other words not specifically defined
herein shall have the meanings set forth in the PSC.
"Contractors" shall mean VICO, LASMO Sanga Sanga Limited,
OPICOIL Houston, Inc., Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc. and Virginia International
Company, collectively. "Contractor" shall refer to any one of
the Contractors.
"Contractor's Availability" shall mean, with respect to a
Crude Oil Stream, as of any given date, a Contractor's Working
Interest Share of IJV Availability, as adjusted downward or
upward, respectively, by such Contractor's then current
Overlift or Underlift.
"Contractors' Share Oil" shall mean, as to each Crude Oil
Stream, the quantity of Crude Oil to which Contractors are
entitled under Section 6.1.3 and 6.3.1 of the PSC.
"Cost Oil" shall mean, as to each Crude Oil Stream, the
quantity of oil which is for recovery of Operating Costs under
Section 6.1.2 of the PSC and the quantity of oil to which
Contractors are entitled under Section 6.1.7 of the PSC.
"Crude Oil Offtake Coordinator" shall have the meaning
attributed to it in Section 3.4 hereof.
"Crude Oil Price" shall mean the price of Crude Oil in effect
for a particular period, as provided in Section 7.1.1(a) of
the PSC, used to determine the weighted average price of Crude
Oil for a Year for purposes of calculating cost recovery
pursuant to Section 6.1 of the PSC.
"Crude Oil Stream" shall mean at any particular time each type
of Crude Oil available for Lifting by the Contractors that the
Terminal Operator segregates and stores separately at the
Santan Terminal from other types of Crude Oil available for
Lifting by the Contractors.
"Domestic Market Obligation" shall mean the quantity of PSC
Availability which Contractors are obligated to furnish to
fulfill the obligation towards the supply of the domestic
market in Indonesia under Section 5.1.2 (p) of the PSC.
"Effective Date" shall mean the date specified in Article II
hereof.
"Emergency Lifting Quantity" shall have the meaning attributed
to it in Section 8.2 hereof.
"Final Settlement" shall have the meaning attributed to it in
Exhibit B hereof.
"IJV Availability" shall mean, with respect to a Crude Oil
Stream, as of any given date, all PSC Availability, less any
portion thereof nominated by Pertamina to be Lifted pursuant
to the terms of the PSC, including Pertamina Share Oil, Cost
Oil or the Domestic Market Obligation.
"Interparty Imbalance" shall be calculated pursuant to Exhibit
A at the end of each Year and shall mean, for each Contractor
and with respect to each Crude Oil Stream, the Contractor's
Working Interest Share of the IJV's entitlement, pursuant to
the PSC, to all Liftings by the IJV and Pertamina during the
Year, less the Contractor's Liftings for the Year, adjusted
for the Contractor's Working Interest Share of the Final
Settlement for such Year.
"Lift", "Lifted" and "Lifting" all refer to the act of taking
Crude Oil at the Point of Lifting. A Lifting shall be deemed
to have occurred in the Month designated on the corresponding
bill of lading.
"LNG" shall mean liquefied Natural Gas.
"Month" shall mean a calendar month.
"Offtake Procedure" shall mean the Crude Oil Offtake
Procedure, Santan Terminal dated October 23, 1974, by and
among Roy M. Huffington, Inc. (predecessor to VICO as operator
for activities conducted pursuant to the PSC), on behalf of
the Contractors (or their respective predecessors in
interest), Union Oil Company of Indonesia (whose successor in
interest is Unocal Indonesia Company), Japex Indonesia Limited
(whose successor in interest is Indonesia Petroleum, Ltd.) and
Pertamina, as hereafter amended.
"Overlift" or "Underlift" shall be calculated separately for
Pertamina and for each Contractor as of any date specified
herein, and shall mean, with respect to a Crude Oil Stream:
a. for Pertamina, the cumulative amount, expressed in
Barrels, by which the quantity of Crude Oil Pertamina has
Lifted during that Year up to such date is, respectively,
greater or less than the sum of (i) the quantity of PSC
Availability as of the first day of that Year to which
Pertamina was entitled under the terms of the PSC plus
(ii) the quantity of additions to PSC Availability during
such period to which Pertamina was entitled under the
terms of the PSC; and
b. for each Contractor, the cumulative amount, expressed in
Barrels, by which the quantity of Crude Oil that
Contractor has Lifted during that Year (Y) up to such date
is, respectively, greater or less than the sum of (i) the
quantity of PSC Availability as of the first day of that
Year to which the Contractor was entitled under the terms
of the PSC (including the Interparty Imbalance carried
forward from the prior Year (Y-1) pursuant to Section 5.3
hereof) plus (ii) the quantity of additions to PSC
Availability during such period to which the Contractor
was entitled under the terms of the PSC.
"Pertamina" shall mean PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA, the Indonesian State Enterprise established
on the basis of Law No. 8/1971.
"Pertamina Share Oil" shall mean the quantity of Crude Oil to
which Pertamina is entitled under Section 6.1.3 and 6.3.1 of
the PSC.
"Point of Lifting" shall mean the flange between the Santan
Terminal's delivery hose and cargo intake of a vessel at
Santan Terminal.
"PSC" shall mean the Amended and Restated Production Sharing
Contract dated April 23, 1990, but effective August 8, 1968,
and the Production Sharing Contract dated April 23, 1990, but
effective August 8, 1998, both between Pertamina and the
Contractors (or their predecessors in interest), as such
contracts may be subsequently amended, amended and restated or
extended.
"PSC Availability" shall mean, with respect to a Crude Oil
Stream, as of any given date, all quantities of that Crude Oil
Stream available for Lifting by Pertamina and the Contractors
under the terms of the PSC, the Santan Operating Agreement and
the Offtake Procedure.
"Quarter" shall mean a quarter of a Year beginning on the
first day of January, April, July or October.
"Santan Operating Agreement" shall mean the Santan Terminal
Facilities Joint Operating Agreement dated October 22, 1974,
by and among Union Oil Company of Indonesia (whose successor
in interest is Unocal Indonesia Company), as Terminal
Operator, Japex Indonesia Limited (whose successor in interest
is Indonesia Petroleum, Ltd.) and Roy M. Huffington, Inc.
(predecessor to VICO as operator for activities conducted
pursuant to the PSC), as hereafter amended.
"Santan Terminal" shall mean those facilities described in
Section 1.1 of the Santan Operating Agreement.
"Terminal Operator" shall mean the party designated under the
provisions of Section 3 of the Santan Operating Agreement to
act as Operator thereunder.
"Third Amended and Restated Implementation Procedures" shall
mean the Third Amended and Restated Implementation Procedures
for Crude Oil Liftings, effective as of July 1, 1993, among
the Contractors.
"VICO" shall mean Virginia Indonesia Company.
"Working Interest Share" of a Contractor shall mean the
working interest of such Contractor in the Indonesian Joint
Venture established pursuant to the Joint Venture Agreement
dated August 8, 1968 among the Contractors (or their
predecessors in interest).
"Year" shall mean a calendar year.
ARTICLE II - EFFECTIVE DATE
Effective January 1, 1994 (the "Effective Date"), this Agreement
shall supersede and replace the Third Amended and Restated
Implementation Procedures.
ARTICLE III - GENERAL PROVISIONS
3.1 Each Contractor shall have the right and obligation to take in
kind and separately dispose of its respective Contractor's
Availability of each Crude Oil Stream. The Contractors agree
that as of August 1, 1994 there are two Crude Oil Streams
available at the Santan Terminal: (i) Bontang Mix, which
results from the commingling of Crude Oil from VICO-operated
fields with liquid condensates from the Bontang LNG plant; and
(ii) Attaka/Badak, which results from the commingling of
Bontang Mix with Crude Oil from fields operated by other
parties. From the Effective Date through July 31, 1994, the
Contractors agree that only Badak Crude Oil was available at
the Santan Terminal.
3.2 Any Contractor shall have the right to nominate for Lifting in
any Month any portion of IJV Availability of a Crude Oil
Stream not nominated for Lifting by any other Contractor as of
the tenth (10th) day of the preceding Month.
3.3 The Contractors recognize that of primary importance in the
operation of the Contract Area as well as the Santan Terminal
is the uninterrupted production of Natural Gas and its
subsequent transformation into LNG at the Bontang liquefaction
facilities in order to meet contractual obligations and market
demands therefor.
3.4 VICO is hereby appointed and authorized by the Contractors to
schedule and control all Crude Oil Liftings in conjunction
with the Terminal Operator and to act on behalf of the
Contractors when dealing with Pertamina pursuant to the terms
and conditions of the Offtake Procedure.
3.5 VICO shall appoint a representative to be designated as the
Crude Oil Offtake Coordinator who shall coordinate Liftings
among the Contractors and at the same time endeavor to ensure
that all Liftings are scheduled such that (i) the production
of Natural Gas from the Contract Area and subsequent
transformation thereof into LNG is not interrupted or
otherwise adversely affected and (ii) planned Crude Oil
production can at all times be contained within the limits of
available storage.
3.6 Each Contractor shall consult with and seek advice and
assistance from the Crude Oil Offtake Coordinator on matters
relating to scheduling of Liftings and shipments.
3.7 Title to and risk of loss of all Crude Oil Lifted shall pass
to the Lifting Contractor at the Point of Lifting.
3.8 All deliveries of IJV Availability shall be made at the Santan
Terminal to a vessel nominated pursuant to the terms of this
Agreement.
3.9 All Lifting Contractors shall comply with the applicable
Santan Port Rules which have been properly adopted pursuant to
Sections 4.4 and 4.5 of the Santan Operating Agreement in
order to ensure the safe operation of the Santan Terminal and
its harbor. VICO shall provide copies of the Santan Port
Rules to the Contractors upon request and shall advise of any
proposed and actual changes with respect thereto.
3.10 Each Contractor shall pay or arrange for payment of all
consular, agency, towage, pilotage, customs, quarantine,
tonnage and port fees, taxes, charges and expenses
assessed against or with respect to a vessel engaged in
Lifting Crude Oil on behalf of that Contractor.
3.11 Except as otherwise provided in this Agreement, each
Contractor shall be responsible for all taxes and other
payments arising with respect to all Crude Oil Lifted by
such Contractor.
ARTICLE IV - NOTICES TO CONTRACTORS REGARDING PSC AND IJV
AVAILABILITY
4.1 On or before October 15th of each Year (Y), VICO shall notify
all Contractors of the following:
a. VICO's estimate of PSC Availability of each Crude Oil
Stream as of the last day of each Month of the ensuing
Year (Y+1);
b. VICO's estimate for each Crude Oil Stream of Crude Oil
Price, Cost Oil, Pertamina Share Oil and Domestic Market
Obligation for the ensuing Year (Y+1); and
c. VICO's estimate of PSC Availability of each Crude Oil
Stream allocated to each Contractor for Lifting during
each Quarter of the following Year (Y+1).
4.2 Upon notification, if any, by Terminal Operator of the receipt
from Pertamina of the notice issued pursuant to Section 4(c)
of the Offtake Procedure, VICO shall send to each Contractor
a notice detailing the following for each Crude Oil Stream:
a. VICO's estimate of PSC Availability for each Month of the
following Year (Y+1);
b. Pertamina's estimate, if available, of the Domestic Market
Obligation and Pertamina Share Oil which Pertamina will
nominate for Lifting during each Quarter of the following
Year (Y+1); and
c. VICO's estimate of IJV Availability for each Quarter
of the Year (Y+1).
4.3 VICO shall immediately notify the Contractors of the receipt
from Pertamina of any notice of its decision to market Cost
Oil under Section 7.1.1(d) of the PSC. Within twenty (20)
days of receipt of VICO's notice of Pertamina's decision, each
Contractor shall notify VICO if it elects to match the sales
price designated by Pertamina for such Cost Oil and the volume
of Cost Oil it plans to Lift from each Crude Oil Stream. All
estimates of IJV Availability previously delivered under this
Article shall be subject to revision in the event Pertamina
should exercise its right to and does, in fact, market Cost
Oil pursuant to Section 7.1.1(d) of the PSC.
4.4 VICO shall issue each Month a revised estimate of IJV
Availability of each Crude Oil Stream for the current Year
(Y) by Quarters reflecting changes, if any, in the
estimated PSC Availability, the applicable Crude Oil Price
or in any other factor used by a Contractor to calculate
the volume of Cost Oil as to that Crude Oil Stream.
ARTICLE V - NOTICES TO CONTRACTORS REGARDING CONTRACTORS'
AVAILABILITY
5.1 On or before the first (1st) day of each Month (M), VICO shall
send to each Contractor a notice setting out the following
information, which shall be presented separately for each
Crude Oil Stream:
a. Estimated Overlift or Underlift position of each
Contractor and of Pertamina at the end of the preceding
Month (M-1);
b. Estimated PSC Availability at the end of the preceding
Month (M-1);
c. The estimated additions to PSC Availability during the
Month (M), the following Month (M+1) and a provisional
forecast for the succeeding two (2) Months (M+2 and M+3);
d. Pertamina's and each Contractor's Liftings for the Year to
date and cargo nominations for the Month (M); and
e. Each Contractor's Availability for the following Month
(M+1) and the PSC Availability which is available for
Lifting by Pertamina during such Month (M+1). For
purposes of calculating a Contractor's Availability for
the following Month (M+1) under this subsection, a
Contractor shall be deemed to have Lifted the quantity of
Crude Oil equal to its accepted nomination, if any, for
the Month (M).
5.2 In the event VICO determines that there is a significant
increase or decrease in the Cost Oil being attributed to the
Contractors, VICO may choose to allocate such increased or
decreased volumes to the Contractors in varying increments
over any given period of Months (thereby increasing or
reducing IJV Availability for such Months) in order to avoid
any problems associated with a significant one-time alteration
in the amount of Crude Oil available for Lifting by the
Contractors or Pertamina.
5.3 Each Contractor's Interparty Imbalance shall be carried
forward from each Year (Y) to the following Year (Y+1) and
shall be included in the Contractor's Overlift or Underlift
for such following Year (Y+1). Such carry-forward shall be
performed in the manner prescribed by Section 5.4 hereof.
5.4 For each Year (Y) following the Effective Date, as to each
Crude Oil Stream, VICO shall provide to all Contractors the
following information (substantially in the form of Exhibit A
attached hereto and made a part hereof) by March 1 of the
following Year (Y+1):
a. Each Contractor's Interparty Imbalance at the beginning of
the Year (Y);
b. Each Contractor's Working Interest Share of additions to
PSC Availability during the Year (Y);
c. The actual quantities of Crude Oil Lifted by each
Contractor during the Year (Y);
d. The actual quantities of Crude Oil Lifted by Pertamina
during the Year (Y); and
e. Each Contractor's Interparty Imbalance at the end of the
Year (Y).
5.5 In reporting quantities of Crude Oil Lifted by each Contractor
during any period pursuant to this Article V, VICO shall
utilize the best information available at the time of each
such report. The Contractors recognize, however, that events
occurring subsequent to a report may result in adjustments to
the reported quantities of Crude Oil Lifted by one or more
Contractors. Pending any such adjustment, information
reported by VICO shall be considered valid for all purposes of
this Agreement.
ARTICLE VI - VESSEL NOMINATION AND SCHEDULING
6.1 The Lifting of Crude Oil by the Contractors shall be scheduled
by VICO in conjunction with the Terminal Operator, which is
the party ultimately responsible pursuant to the terms of the
Santan Operating Agreement for coordinating the shipping
program at the Santan Terminal. The actual Lifting of Crude
Oil at the Santan Terminal shall be governed by the provisions
of the Santan Operating Agreement (including the Offtake
Procedure) and, as between the Contractors, the terms and
conditions set forth herein, to the extent they do not
conflict with the Santan Operating Agreement.
6.2 Not later than the fifth (5th) day of each Month (M), each
Contractor shall advise VICO of its requested nomination(s)
for each Crude Oil Stream for the forthcoming Month (M+1) and
its provisional nominations for the following two (2) Months
(M+2 and M+3). With respect to Month (M+1), such
nomination(s) shall include the following:
a. The name of each vessel nominated to be loaded at Santan
Terminal (the designation "TBN" being acceptable);
b. The quantity to be delivered to each vessel, such quantity
(when considered with other quantities co-loaded from the
Santan Terminal pursuant to Section 6.7 hereof) not to
exceed the applicable maximum or be lower than the
applicable minimum established for an individual Lifting
by Terminal Operator; and
c. The date range for each vessel, which range shall be two
(2) days before and two (2) days after the expected
arrival date.
6.3 If, in the opinion of VICO, cargo nominations received from
the Contractors exceed the estimated IJV Availability of a
Crude Oil Stream for any Month (M+1), then as to that Crude
Oil Stream VICO shall bring such amounts into balance by
application of the following procedures, in the sequence
indicated:
a. First, VICO shall endeavor to bring such amounts into
balance by consultation among the Contractors.
b. Second, should consultation be unsuccessful, then each
nominating Contractor shall be allocated an amount equal
to such Contractor's Availability or the amount of its
nomination, whichever is less. For purposes of this
Section 6.3, a Contractor's Availability shall be deemed
to be zero (0) if it is otherwise determined to be a
negative number.
c. Third, should the aggregate of the amounts allocated
pursuant to Subsection b. above exceed the estimated IJV
Availability for Month (M+1), then in lieu of such
allocation the IJV Availability shall be allocated for
each Contractor based on the lesser of the following:
i. The Contractor's nomination; or
ii. An amount determined for each nominating Contractor
by multiplying the IJV Availability for Month (M+1)
by a fraction having a numerator equal to such
Contractor's Availability for Month (M+1) and a
denominator equal to the sum of Contractor's
Availabilities of all Contractors nominating for such
Month.
d. Fourth, any balance of the Crude Oil Stream available for
Lifting following the procedure set out in Subsections a.
through c. above shall be allocated to the nominating
Contractors in the following order of priority:
i. First, to a Contractor with a positive Contractor's
Availability for Month (M+1) in an amount not
exceeding such Contractor's nomination (or the
balance thereof, as the case may be), and if there is
more than one such Contractor, priority shall be
established in sequence commencing first with the
nomination submitted by the Contractor with the
greatest Contractor's Availability for such Month;
and
ii. Second, to a Contractor with a negative Contractor's
Availability for Month (M+1) in an amount not
exceeding such Contractor's nomination (or the
balance thereof, as the case may be), and if there is
more than one such Contractor, first priority shall
be established in sequence commencing with the
nomination submitted by the Contractor with the
smallest negative Contractor's Availability for such
Month.
Should two or more Contractors have Contractor's
Availabilities of identical size, whether positive or
negative, the highest ranking shall be given to the Contractor
whose last Lifting (including, for this purpose, scheduled
Liftings for the remainder of the Month) prior to the end of
the Month (M) was earliest in time.
6.4 A Contractor whose Lifting has been reduced in accordance with
Section 6.3 hereof shall have the right to withdraw its
nomination by notice given promptly to VICO. In the event of
such withdrawal, VICO shall reapply the priorities according
to Section 6.3 hereof to all other nominations. With respect
to any Month (M+1), all the adjustments, if any, which are to
be made pursuant to Section 6.3 hereof and to this Section to
the Contractors' nominations shall be taken into account
before it is determined whether any conflict exists as
described in Section 6.5 hereof.
6.5 If VICO receives two or more nominations, as adjusted pursuant
to Sections 6.3 and 6.4 to the extent that such sections are
applicable, which in terms of loading date conflict (which
shall include being insufficiently separated in time to allow
for the accumulation at Santan Terminal of PSC Availability
necessary to supply in full the accepted nominations of the
Contractors during the period under consideration), VICO shall
endeavor to resolve such conflict (by means of one or more
loading date alterations or loading quantity reductions, or
both) by consultation with the Contractors. Should such
endeavor be unsuccessful, then the nomination having the
highest ranking (as determined in accordance with Section
6.3.d hereof) shall be accepted and the nomination(s)
conflicting with it rejected. This Section shall be invoked
whether the two or more nominations which conflict as to
loading date are nominations for Lifting of the same or of
different Crude Oil Streams. Any Contractor whose nomination
is so rejected shall promptly be notified accordingly by VICO
and shall have the right to submit, within two (2) working
days of such notice, a further nomination for a date range in
Month (M+1) other than (but which may overlap with) the date
range for which it originally nominated and for a quantity of
Crude Oil not greater than the quantity accepted by VICO in
respect of the original nomination. The foregoing provisions
of this Section shall be applied to any conflict between such
further nomination and any other nomination with respect to
Month (M+1). Notwithstanding the above, should the terms and
provisions of the Offtake Procedure, including Exhibit 1,
Tanker Nomination Procedure, attached thereto, conflict with
the scheduling priorities as determined above, the provisions
of the Offtake Procedure shall control.
6.6 With respect to Month (M+1), if insufficient nominations are
received from the Contractors to enable, in VICO's reasonable
opinion, a shipping program for that Month to be compiled
which will keep available Crude Oil stocks of any Crude Oil
Stream within available storage capacity of the Santan
Terminal, then VICO shall endeavor through consultation with
the Contractors to achieve a sufficient increase in such
nominations. If such endeavor is unsuccessful, VICO shall
determine the minimum acceptable level of production for that
Crude Oil Stream and, should the aforesaid nominations be
insufficient to permit that level of production to be
maintained, one or more of the Contractors with a positive
Contractor's Availability for that Crude Oil Stream shall be
deemed to have nominated a quantity (or an additional
quantity) of Crude Oil, beginning with the Contractor with the
largest positive Contractor's Availability and followed
successively, as necessary, by the Contractor(s) with the next
largest positive Contractor's Availability, equal to the
lesser of (i) the difference between the Contractor's
Availability of such Contractor and its nomination submitted
for the Month (M+1), or (ii) the remaining Barrels required to
be Lifted to maintain the acceptable level of production. No
Contractor shall be required to nominate a volume of Crude Oil
pursuant to this provision which, when combined with any
existing nomination of such Contractor, would be less than any
minimum lift requirement imposed by Terminal Operator.
6.7 Contractors may nominate for less than full cargoes of Crude
Oil, and the nominations of more than one Contractor may be
Lifted and loaded onto the same vessel. Further, one or more
Contractors may combine Liftings of a Crude Oil Stream with
liftings of a fungible Crude Oil by another non-Contractor
party from Santan Terminal.
6.8 Within one (1) day of receipt by VICO of the shipping program
from Terminal Operator pursuant to Section 1.4 of Exhibit 1,
Tanker Nomination Procedure, to the Offtake Procedure [but no
later than the 18th day of each Month (or, in the case of
February, the 16th day of such Month), assuming the proper and
timely notice is given by Terminal Operator], VICO shall
notify each Contractor of the accepted shipping program for
the Month (M+1) and provisional programs for the following two
(2) Months (M+2 and M+3) together with an expected loading
date for the Month (M+1) within the five (5) day date range
notified under Section 6.2 hereof (or applicable under Section
6.5 or 6.6 hereof).
6.9 At least twelve (12) days prior to the expected loading
date(s) referred to in Section 6.8, each Contractor Lifting in
Month (M+1) shall:
a. Establish with VICO a firmly scheduled three (3) day date
range(s) of arrival at the Santan Terminal (within the
date range(s) specified in Section 6.2.c hereof) for the
Lifting(s) during Month (M+1) of nominations which are
acceptable to the Lifting Contractor and VICO; and
b. Submit to VICO the following information for each such
Lifting in order that such information can be conveyed to
Terminal Operator:
i. Designation of the tanker, including both its name
and size (the designation "TBN" being acceptable only
if it is acceptable to Terminal Operator);
ii. Date range of the Lifting(s) (as established pursuant
to a. above);
iii. Designation of Crude Oil Stream from which the
Lifting is to be made;
iv. Quantity of Crude Oil to be loaded on each tanker;
v. Designation of the Consignor and Consignee along with
the required number of documentation copies needed
for each (the standard documentation passing from
Jakarta to the Santan Terminal to include a Bill of
Lading reading "Freight Payable as Arranged",
Certificate of Quantity, Certificate of Quality,
Certificate of Origin, Cargo Manifest, Ullage Report,
Tanker Time and Loading Report, the Master's Receipt
for Sample, the Master's Receipt for Shipping
Documents, the Dry Certificate and the Notice of
Readiness);
vi. Destination of the tanker(s); and
vii. Name of the Lifting Contractor or Contractors.
The failure of a Lifting Contractor to provide the above-
referenced information (with the exception of the name of the
designated tanker) shall result in VICO having the right to
invoke the emergency sale provisions of Article VIII hereof
for the exclusive account of such Contractor,
notwithstanding any provisions thereof to the contrary.
Except as otherwise provided below, such accepted program for
the forthcoming Month (M+1) shall be considered final and
binding.
6.10 If as a result of circumstances arising after the
establishment of a firm shipping program for a Month (M+1)
such program becomes infeasible, VICO shall, in
consultation with Terminal Operator and the Contractors,
make such equitable revisions to the scheduled Lifting(s)
of one or more Contractors as are necessary to restore the
feasibility of the program.
6.11 In order to ensure continuous production, VICO shall be
further empowered to request alterations to the programs
notified pursuant to Section 6.8 hereof.
6.12 Any Contractor may at any time request changes to its
scheduled Lifting and VICO shall endeavor to implement
such changes to the extent practicable under the terms of
the Offtake Procedure, provided such changes do not
jeopardize the scheduled Lifting of any other Contractor
or cause a reduction of production.
6.13 All other matters concerning the actual Lifting of Crude
Oil at Santan Terminal, whether or not specifically
addressed in this Agreement, including, but not limited
to, substitution of vessels, changes in Lifting date
ranges, notification requirements and other harbor
procedures, applicable safety regulations and Santan
Terminal documentation requirements, shall be governed by
the Santan Operating Agreement and the Offtake Procedure
attached thereto (including the Tanker Nomination
Procedure which is attached as Exhibit 1 thereto), all of
which are incorporated herein by reference as though fully
set forth herein. The actual Liftings shall be ultimately
scheduled and implemented by Terminal Operator; therefore,
any notices required to be given to Terminal Operator by
a Lifting Contractor shall be first submitted to VICO
within a reasonable time prior to the date such notice is
due under the applicable terminal procedures to allow VICO
to relay such notice to Terminal Operator as required.
VICO shall use its best efforts to relay by the
appropriate time any notice to Terminal Operator on behalf
of a Contractor but shall in no way be held responsible
for a failure to do so.
ARTICLE VII - LAYTIME AND DEMURRAGE
The provisions of Part II of Exhibit 1, Tanker Nomination
Procedure, to the Offtake Procedure concerning laytime and
demurrage shall be specifically incorporated herein for all
purposes, including, but not limited to, the calculation of laytime
and amounts due for demurrage, if any.
ARTICLE VIII - EMERGENCY DISPOSAL
8.1 If the production of Crude Oil or Natural Gas from the
Contract Area is in jeopardy because insufficient quantities
of any Crude Oil Stream have been Lifted or scheduled for
Lifting and if, in the opinion of VICO, an emergency has
thereby arisen, then VICO may take such action as may be
reasonably necessary, including arranging for the disposition
of sufficient quantities of that Crude Oil Stream so as to
maintain the production of Crude Oil and Natural Gas at an
acceptable rate. Such Crude Oil shall be sold by VICO through
an independent broker selected by VICO on an F.O.B. Santan
Terminal basis. VICO shall use its best efforts to receive
the current market price for such Crude Oil sold, but in no
way warrants its ability or the ability of the broker to do
so. The quantities allocated to the Contractors as set forth
below shall be sold by VICO for the separate accounts of the
respective Contractors concerned.
8.2 Except as otherwise provided in Section 6.9 and in this
Section, the quantity of Crude Oil in each Lifting under this
Article (the "Emergency Lifting Quantity") shall be allocated
to those Contractors (if any) which have an Underlift with
respect to the relevant Crude Oil Stream as of a time
immediately prior to the Lifting in question. However, if a
Contractor has been scheduled to make a Lift pursuant to an
accepted shipping program during a Month in which VICO deems
an emergency to exist hereunder but such Lift has not occurred
or been completed, or if a Contractor's nomination for the
Month in which an emergency Lift occurs had been rejected
pursuant to Section 6.5 hereof and was not rescheduled for
such Month despite the best efforts of such Contractor to do
so, the Barrels such Contractor is scheduled to Lift from the
relevant Crude Oil Stream, or the Barrels attributable to such
Contractor's rejected nomination, shall be subtracted from the
Underlift attributable to such Contractor, if any, when
determining the existence or size of a Contractor's Underlift
for purposes of this Section. In addition, notwithstanding
the foregoing, if a Contractor is underlifted at the time of
an emergency Lift but has a positive Contractor's Availability
for the relevant Crude Oil Stream at the beginning of the
month in which such Lift occurs which is less than the minimum
Lift requirement imposed by Terminal Operator, the Barrels
comprising such Contractor's Underlift shall not be considered
for purposes of allocating to such Contractor an Emergency
Lifting Quantity hereunder. The Emergency Lifting Quantity
(or a portion thereof) shall first be allocated to the
Contractor having the largest Underlift for the relevant Crude
Oil Stream. The number of Barrels allocated to such
Contractor shall equal the number of Barrels that, when
subtracted from such Contractor's Underlift, reduces such
Underlift to the extent that it equals the Underlift of the
second most underlifted Contractor. Thereafter, any remaining
Emergency Lifting Quantity shall be allocated to both such
underlifted Contractors equally, on a Barrel per Barrel basis,
until their respective Underlifts, when reduced by the number
of Barrels allocated hereunder, equal the size of the
Underlift of the third most underlifted Contractor. This
process shall continue in similar fashion until the entire
Emergency Lifting Quantity has been allocated or until all
Underlifts for the relevant Crude Oil Stream attributable to
the Contractors have been eliminated. If the combined
Underlifts of the Contractors pursuant to this Section is less
than the Emergency Lifting Quantity, the volume in excess of
such combined Underlifts shall be allocated to each respective
Contractor based on such Contractor's Working Interest Share.
Those Barrels allocated to a Contractor hereunder comprising
a portion of the Emergency Lifting Quantity shall be
considered as having been Lifted by such Contractor under the
terms of this Agreement.
8.3 The proceeds from the sale of the Emergency Lifting Quantity
(after deduction of all related costs, including the fee
charged by the above-mentioned broker) shall be distributed to
the Contractors in the proportion in which the Emergency
Lifting Quantity was allocated to the Contractors in Section
8.2 hereof.
8.4 VICO shall immediately advise each Contractor by means of
facsimile transmission or telex whenever VICO decides to make
a Lifting in accordance with this Article VIII. Upon
confirmation of an emergency sale, VICO shall immediately
advise each Contractor by means of facsimile transmission or
telex of the terms of the sale, including the price, credit
terms and the volume sold.
ARTICLE IX - ACCOUNTING PROCEDURES
9.1 Exhibit B, attached hereto and made a part hereof, prescribes
the manner of Final Settlement with Pertamina and the manner
in which Indonesian taxes shall be shared among the
Contractors.
ARTICLE X - CONFLICTS AND ORDER OF PRECEDENCE
10.1 The provisions of this Agreement shall be controlling as
among the Contractors with regard to the matters referred
to herein, and shall take precedence over any conflicting
provisions of the Operating Agreement dated August 8, 1968
among the Contractors (or their predecessors in interest).
10.2 Should the provisions of this Agreement be inconsistent
with the provisions of the Santan Operating Agreement, the
Santan Operating Agreement shall be controlling.
ARTICLE XI - NOTICES
11.1 All notices related to this Agreement shall be in writing
and delivered by certified mail, return receipt requested,
or transmitted by telex or facsimile communication to the
designated addresses listed below:
LASMO SANGA SANGA LIMITED
c/o Lasmo Trading Limited
100, Liverpool Street
London EC2M 2BB
United Kingdom
Attention: David Barter
Fax No.: (011-44) 71-945-4602
Telex No.: 8812970
w/c.c. LASMO SANGA SANGA LIMITED
c/o The LASMO Companies in Indonesia
10th Floor, Landmark Centre, Tower A
Jalan Jenderal Sudirman No. 1
P. O. Box 3415/Jkt.
Jakarta 12910, Indonesia
Attention: Ian D. Brown
Fax No.: (011-62) 21-571-1004
Telex No.: 45218 LOMSL 1A
OPICOIL HOUSTON, INC.
2801 Post Oak Blvd., Suite 300
Houston, Texas 77056
Attention: C. Y. Chung
Fax No.: 713-297-8108
UNION TEXAS EAST KALIMANTAN LIMITED
c/o Union Texas Petroleum Corporation
1330 Post Oak Boulevard
P. O. Box 2120
Houston, Texas 77252
Attention: Crude Oil Marketing Department
Fax No.: 713-968-2837
Telex No.: 637-3790
UNIVERSE GAS & OIL COMPANY, INC.
NYK Tennoz Building
2-20, Higashi-shinagawa 2-chome
Shinagawa-ku, Tokyo 140
Japan
Attention: Hitoshi Yamatoya
Fax No.: (011-81) 3-5462-0679
Telex No.: J26268
w/c.c. Houston Liaison Office
c/o Japex (U.S.) Corporation
2700 Post Oak Boulevard, Suite 1200
Houston, Texas 77056
Attention: Hideaki Miyakawa
Fax No.: 713-871-9619
VIRGINIA INDONESIA COMPANY
P. O. Box 1551
Houston, Texas 77251-1551
Attention: Crude Oil Offtake Coordinator
Fax No.: 713-754-6998
Telex No.: 166100
VIRGINIA INTERNATIONAL COMPANY
c/o The LASMO Companies
One Houston Center
1221 McKinney, Suite 600
Houston, Texas 77010-2015
Attention: Andy Crouch
Fax No.: 713-654-8527
w/c.c. Virginia International Company
c/o Union Texas Petroleum Corporation
1330 Post Oak Boulevard
P. O. Box 2120
Houston, Texas 77252
Attention: Crude Oil Marketing Department
Fax No.: 713-968-3606
Telex No.: 203109
11.2 A Contractor may change its address or designated
addressee(s) by written notice to the other Contractors.
ARTICLE XII - SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon each of the Contractors and
their respective successors and assigns.
ARTICLE XIII - GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Texas. Any dispute relating to the
interpretation of or performance under this Agreement shall be
finally settled by arbitration in accordance with Section 9 of the
Joint Venture Agreement, dated August 8, 1968, as amended, among
the Contractors (or their predecessors in interest).
ARTICLE XIV - CAPTIONS
All captions, headings or titles appearing within the body of this
Agreement are used solely for the purpose of identification and are
not to be used in interpreting the rights, duties and obligations
of the Contractors.
ARTICLE XV - ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the
Contractors and supersedes all previous negotiations, commitments
and writings with respect to the subject matter hereof.
ARTICLE XVI - AMENDMENTS
This Agreement may not be changed or modified in any manner, except
by an instrument executed by the Contractors, in writing, and
signed by each Contractor's duly authorized officer or
representative.
ARTICLE XVII - WAIVER
No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.
IN WITNESS WHEREOF, each of the Contractors has caused this
Agreement to be executed by its duly authorized officer as of the
Effective Date.
VIRGINIA INDONESIA COMPANY LASMO SANGA SANGA LIMITED
By__________/s/____________________By__________/s/_________________
OPICOIL HOUSTON, INC. UNION TEXAS EAST KALIMANTAN
LIMITED
By___________/s/__________________ By___________/s/______________
UNIVERSE GAS & OIL COMPANY, INC. VIRGINIA INTERNATIONAL COMPANY
By___________/s/___________________ By___________/s/_______________
<PAGE>
Exhibit A
EXAMPLE OF IJV PARTY YEAR-END (OVER)/UNDER CARRY-FORWARD
[See ANDERSON - M:\123\CRUDE-4A]
<PAGE>
Exhibit B
ACCOUNTING PROCEDURES
FOR FINAL SETTLEMENT WITH PERTAMINA
AND TAX MATTERS
1. Final Settlement with Pertamina
With respect to each Crude Oil Stream, within sixty (60) days
after the end of each Year (Y), VICO shall send to each
Contractor a notice setting forth the respective underlift or
overlift position of the Contractors and Pertamina for each
Crude Oil Stream, as documented in that certain report filed
by VICO each year with Pertamina/BPPKA, entitled "Fourth
Quarter Financial Status Report for East Kalimantan Area"
(the "4th Quarter Report"). For purposes of this Exhibit B,
any payment owed by either the Contractors or Pertamina for a
Year (Y) based on the applicable underlift or overlift
position described in the 4th Quarter Report shall be referred
to as the "Final Settlement" for such Year (Y).
Any Final Settlement payment received from Pertamina shall be
distributed by VICO, within two (2) business days after
receipt thereof, to the Contractors in proportion to their
Working Interest Shares. Any Final Settlement amount due
Pertamina by the Contractors shall be borne by the Contractors
individually in proportion to their Working Interest Shares.
Upon VICO's request, each Contractor shall advance to VICO its
respective share of any payment due Pertamina pursuant to this
Exhibit B.
With respect to each Crude Oil Stream, if the Contractors make
a payment to Pertamina or Pertamina makes a payment to the
Contractors with respect to the Year (Y), the amount of Crude
Oil Lifted by each Contractor during the Year (Y), as reported
pursuant to Section 5.4 hereof, shall be adjusted, provided
that, until the 4th Quarter Report is filed with
Pertamina/BPPKA, the corresponding unadjusted positions shall
be considered valid for the purposes of applying the
provisions of Section 5.1 of this Agreement. If the
Contractors make a payment to Pertamina, the amount of Crude
Oil Lifted by each Contractor during the Year (Y) shall be
reduced by the number of Barrels determined by dividing the
amount (expressed in United States Dollars) the Contractor
contributed to the payment to Pertamina by the price per
Barrel utilized in the 4th Quarter Report, being the weighted
average Crude Oil Price in effect during such Year. If
Pertamina makes a payment to the Contractors, the amount of
Crude Oil Lifted by each Contractor during the Year (Y) shall
be increased by the number of Barrels determined by dividing
the amount (expressed in United States Dollars) a Contractor
received by the price per Barrel utilized in the 4th Quarter
Report.
2. Contractor's Share of Taxes
As to each Crude Oil Stream, when the Final Settlement
position between the Contractors and Pertamina is determined,
a settlement between Contractors shall be made to ensure that
the amount of Indonesian income taxes paid by each Contractor
corresponds to the tax liability on each Contractor's final
year-end lifting entitlement. The amount of Indonesian income
taxes incurred on Crude Oil Lifted by a Contractor shall be
computed as if such Contractor's Indonesian tax return was
prepared taking into consideration such Contractor's Annual
Crude Oil Gross Receipts but excluding therefrom such
Contractor's Working Interest Share of cost recovery and
investment credit. For purposes of the above computation, the
Domestic Market Obligation adjustment shall be allocated to
the Contractors based on their respective Working Interest
Shares. Each Contractor shall bear its own lifting price
variance. An adjustment will be made to each Contractor's
taxable income for the Interparty Imbalance (in Barrels)
multiplied by the price per Barrel utilized in the 4th Quarter
Report.
An illustration of the calculation of each Contractor's share
of the final tax liability is attached.
Each Contractor's income tax liability as determined above
shall be compared to actual Indonesian income taxes paid,
including each Contractor's share of taxes paid on Domestic
Market Obligation receipts. As soon as practicable after the
end of a Year, VICO shall notify the Contractors of the amount
of taxes owed and paid by each Contractor with respect to such
Year, and if during the course of such Year a Contractor has
paid an amount in taxes which is below or in excess of its
income tax liability, an appropriate adjustment shall be made
with respect to such Contractor in the following month's cash
call.
3. Termination of Production, P.S.C.
Once production of Crude Oil ceases or the Contract Area is
returned to Pertamina, or at such earlier time as shall be
agreed by the Contractors, the Contractors shall, within
ninety (90) days of such date, meet to determine an interim
settlement procedure among the Contractors, pending Final
Settlement with Pertamina.<PAGE>
<TABLE>
<CAPTION>
Total Contractor Pertamina
PSC Share Share
<S> <C> <C> <C>
PSC Liftings for the Year-mbbls 6,800
PSC Average Price for Year-$/bbl 17.42
Gross Revenue-$000s 118,475
Cost Recovery-$000s 50,000 50,000 0
Equity-$000s 68,475 23,344 45,131
DMO Requirement-$000s 0 (10,097) 10,097
118,475 63,246 55,229
Entitlement-mbbls 6,800 3,630 3,170
PARTNERS
<CAPTION>
A B C D Total Pertamina Total PSC
Working Interest % 40% 25% 20% 15% 100%
Barrels
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Actual Liftings ICP
Q1 20.00 250 200 150 75 675 950 1,625
Q2 18.00 300 225 175 100 800 850 1,650
Q3 17.00 0 575 225 100 900 800 1,700
Q4 15.00 100 950 650 125 1,825 0 1,825
Total Liftings 17.42 650 1,950 1,200 400 4,200 2,600 6,800
Entitlement 1,452 908 726 545 3,630 3,170 6,800
Total (Over)/Under Lift 802 (1,042) (474) 145 (570) 570 0
Settlement with Pertamina (1) 228 142 114 85 570 (570) 0
Remaining (Over)/Under Balance 1,030 (900) (360) 230 0 0 0
Interparty Imbalance in
Barrels (2) (1,030) 900 360 (230) (0) 0 (0)
0 0 0 0 (0) 0 0
VALUES
Revenues for Tax Purposes
Liftings Revenue at ICP 11,900 32,075 19,725 6,875 70,575 47,900 118,475
DMO Revenue (Assuming Old Oil) 46 29 23 17 116 (116) 0
Over/Under Lift Adjustments at
Weighted Average ICP:
Final Settlement (3,972) (2,482) (1,986) (1,489) (9,929) 9,929 0
Interparty Imbalance 17,945 (15,681) (6,272) 4,007 0 0 0
Taxable Revenue-Entitlements
Basis 25,920 13,941 11,490 9,410 60,762 57,713 118,475
Less Cost Recovery (20,000)(12,500) (10,000) (7,500) (50,000)
Taxable Income 5,920 1,441 1,490 1,910 10,762
Tax @ 56% 3,315 807 834 1,070 6,027
(1) Settlement is in cash at the end of the first quarter in year Y+1. Entitlements are adjusted accordingly in equivalent
barrels.
(2) Settlement is in barrels in Year Y+1.<PAGE>
</TABLE>
January 1, 1994
Mr. David Barter
LASMO SANGA SANGA LIMITED
c/o Lasmo Trading Limited
100, Liverpool Street
London EC2M 2BB
England, United Kingdom<PAGE>
Mr. C. Y. Chung
OPICOIL HOUSTON, INC.
2801 Post Oak Boulevard, Suite
300
Houston, Texas 77056<PAGE>
Mr. Chris J. Biggs
UNION TEXAS EAST KALIMANTAN
LIMITED
c/o Union Texas Petroleum
Corporation
1330 Post Oak Boulevard
P. O. Box 2120
Houston, Texas 77252<PAGE>
Mr. Hitoshi Yamatoya
UNIVERSE GAS & OIL COMPANY,
INC.
NYK Tennoz Building
2-20, Higashi-shinagawa 2-chome
Shinagawa-ku, Tokyo 140
Japan
<PAGE>
Mr. Andy Crouch
VIRGINIA INTERNATIONAL COMPANY
c/o The LASMO Companies
One Houston Center
1221 McKinney, Suite 600
Houston, Texas 77010-2015<PAGE>
<PAGE>
Re: Establishment of Lifting Groups;
Side Letter to Fourth Amended and Restated
Implementation Procedures for Crude Oil Liftings
Gentlemen:
For purposes hereof, please refer to the Fourth Amended and
Restated Implementation Procedures for Crude Oil Liftings (the
"Agreement") dated effective January 1, 1994, by and among the
undersigned. All references to article and section numbers herein
are to the corresponding provisions in the Agreement, and all the
terms used herein shall have the meanings attributed to them in the
Agreement.
The Contractors hereby agree that, for the period herein stated,
the right and obligation to Lift the Contractor's Availability of
each Crude Oil Stream attributable to Virginia International
Company ("Virginia International") and Virginia Indonesia Company
("VICO") under the terms and provisions of the Agreement shall be
allocated and transferred in equal portions to LASMO Sanga Sanga
Limited ("LASMO") and Union Texas East Kalimantan Limited ("UTP").
These two combinations of interests shall be referred to
respectively as the "LASMO Lifting Group" and "UTP Lifting Group".
The interests of those Contractors comprising each of the LASMO
Lifting Group and UTP Lifting Group shall be combined, and each
group shall be considered as a Contractor under the Agreement, for
purposes of determining or allocating, as the case may be, Working
Interest Share, Contractor's Availability, Overlifts, Underlifts,
annual and monthly nominations and entitlements, Emergency Lifting
Quantity, Final Settlement and Domestic Market Obligation, subject
to the further provisions hereof. Notwithstanding the foregoing,
each of the Parties shall continue to prepare its individual tax
returns based on its specific interest and shall be entitled to
receive all notices as specified in Article XI.
As among the members of the two lifting groups created hereby, the
nominations and Liftings of such groups shall be allocated based on
a Contractor's prorata share of the combined interests of the
lifting group participants. These percentages are as follows:
LASMO or UTP . . . . . . . . . . 69.42148%
Virginia International . . . . . 20.66116%
VICO . . . . . . . . . . . . . . 9.91736%
The agreement set forth herein shall remain in effect for so
long as (i) each of LASMO plc and Union Texas Petroleum Holdings,
Inc., directly or indirectly through their respective subsidiaries,
continues to own fifty percent (50%) of the Unimar Company, which
in turn indirectly owns Virginia International and VICO or (ii) the
Agreement is terminated, whichever first occurs.
If the foregoing fully and accurately sets forth our
agreement, please indicate your acceptance of this letter in the
appropriate space below.
Sincerely,
VIRGINIA INDONESIA COMPANY
By: _______________/S/_____________________
Name:
Title:
ACCEPTED and AGREED to
this ________ day of ________________, 1995
<PAGE>
LASMO SANGA SANGA LIMITED
By: _______________/S/_____________________
Name:
Title:
ACCEPTED and AGREED to
this ________ day of ________________, 1995
OPICOIL HOUSTON, INC.
By: _________________/S/___________________
Name:
Title:
ACCEPTED and AGREED to
this ________ day of ________________, 1995
UNION TEXAS EAST KALIMANTAN LIMITED
By: __________________/S/__________________
Name:
Title:
ACCEPTED and AGREED to
this ________ day of ________________, 1995
<PAGE>
UNIVERSE GAS & OIL COMPANY, INC.
By: _________________/S/___________________
Name:
Title:
ACCEPTED and AGREED to
this ________ day of ________________, 1995
VIRGINIA INTERNATIONAL COMPANY
By: _________________/S/___________________
Name:
Title:
ACCEPTED and AGREED to
this ________ day of ________________, 1995
<PAGE>
cc: LASMO SANGA SANGA LIMITED
c/o The LASMO Companies in Indonesia
10th Floor, Landmark Centre, Tower A
Jalan Jenderal Sudirman No. 1
P. O. Box 3415/Jkt.
Jakarta 12910, Indonesia
Attention: Ian D. Brown
UNIVERSE GAS & OIL COMPANY, INC.
Houston Liason Office
c/o Japex (U.S.) Corporation
2700 Post Oak Boulevard, Suite 1200
Houston, Texas 77056
VIRGINIA INTERNATIONAL COMPANY
c/o Union Texas Petroleum Corporation
1330 Post Oak Boulevard
P. O. Box 2120
Houston, Texas 77252
Attention: Crude Oil Marketing Department
File 246-2
EXHIBIT (21)-1-
COMPANIES OWNED BY UNIMAR COMPANY
The following is a list of companies owned, directly and
indirectly, by Unimar Company, together with their respective
jurisdictions of incorporation. In each case, all of the
outstanding voting securities of each company listed are owned by
the company indicated by indentation as its parent, except as
otherwise noted.
State of
Incorporation
Unimar Company (a General Partnership under The
Texas Uniform Partnership Act)
Unimar Financing Corporation Delaware
ENSTAR Corporation Delaware
Alaska Interstate International Finance N.V. Netherlands
Antilles
Alaska Interstate International Finance B.V. The Netherlands
AKI International Finance N.V. Netherlands
Antilles
VICO 7.5, Inc. Delaware
Virginia Indonesia Company Delaware
Virginia Services, Inc. Delaware
Virginia Services, Ltd. Delaware
Purchasing Services, Inc. Delaware
ENSTAR Indonesia, Inc. Delaware
Virginia International Company Delaware
VICO Trading, Inc. Delaware
ENSTAR Petroleum Ltd. Canada
EXHIBIT (23)-1-
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Post-effective amendment No. 2 on Form S-3
to Form S-14 (No. 2-93037)) of Unimar Company and in the related
Prospectus of our report dated February 24, 1995, with respect to
the consolidated financial statements of Unimar Company and
subsidiaries included in this Annual Report (Form 10-K) for the
year ended December 31, 1994.
Ernst & Young LLP
Houston, Texas
March 22, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,421
<SECURITIES> 0
<RECEIVABLES> 5,882
<ALLOWANCES> 0
<INVENTORY> 12,467
<CURRENT-ASSETS> 24,452
<PP&E> 1,025,659
<DEPRECIATION> 631,499
<TOTAL-ASSETS> 422,179
<CURRENT-LIABILITIES> 30,562
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 422,179
<SALES> 197,925
<TOTAL-REVENUES> 197,925
<CGS> 70,177
<TOTAL-COSTS> 72,964
<OTHER-EXPENSES> 1,923
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55
<INCOME-PRETAX> 122,633
<INCOME-TAX> 86,421
<INCOME-CONTINUING> 36,212
<DISCONTINUED> 0
<EXTRAORDINARY> 3,108
<CHANGES> 0
<NET-INCOME> 33,104
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
